Life Science Compliance Update

August 26, 2016

Rocky Start to CMS ACO Program


Three of the 21 participants in CMS’ newest accountable care organizations program, the Next Generation ACOs, have withdrawn since the start of the year. Heritage California ACO in Northridge, Calif., River Health ACO in Harrisburg, Pa., and WakeMed Key Community Care in Raleigh, N.C. now leave the program with 18 ACOs. This model allows ACOs to assume higher risk for a promise of a higher reward than the Pioneer Model and Medicare Shared Savings Program.

Leaving New Model

The Next Generation ACO model uses a new benchmarking methodology that incorporates one year of historical costs as well as regional and national costs and an organization’s quality score. This is seen by many as an improved benchmarking methodology. As reported by Healthcare Finance, RiverHealth ACO released a statement: "While RiverHealth ACO managed the rate of increase in costs to below the national average, projections do not indicate that the ACO would be able to meet the current target set by CMS”.

Also reported, WakeMed Key Community Care also cited the difficult financial metrics. The ACO is a joint venture between WakeMed Health and Hospitals and Key IPA. WakeMed Key Community Care's Board of Managers made a business decision to withdraw from the Next Generation ACO program for 2016 after evaluating financial and operational metrics, according to the provider. "Though we were committed to the program, developments in Q1 led the board to reconsider the Next Generation participation decision," WakeMed Key Community Care said by statement according to the report.

State of other ACO Models

As reported by Leavitt Partners, the most popular of Medicare’s models, the MSSP, gained 100 new participants this year, increasing the total to 434 covering 7.7 million lives. Of those 434 MSSP ACOs, 22 have risk-bearing arrangements, including six in Track 2 and 16 in the new Track 3. Although CMS announced 100 new ACOs, the MSSP had 404 active ACOs in 2015, giving this new cohort a net increase of only 30. Eight MSSP ACOs moved to the Next Generation model and are accounted for, but further analysis will be needed in order to conclude how many ACOs merged with others vs actually leaving the program. CMS also announced that 147 MSSP ACOs chose to renew, continuing their participation in the program.

ACOs’ Future

A recent study indicates that ACOs may unintentionally create further disparities in healthcare. According to the report, physicians who participate in ACOs are more likely to practice in affluent areas. The study found an inverse relationship between ACO participation and the percentage of the population a physician served that was black, living in poverty, uninsured or disabled or had less than a high school education. This means patients who are already more vulnerable have less access to the benefits of ACOs.

Additionally, in 2015, 45% of Medicare ACOs costed more money than the government originally predicted based on historic patient costs. It was reported that 196 ACOs saved money last year, while 157 cost more than expected. Regardless, ACOs continue to be a major part of CMS’ policy agenda to move into value-based healthcare reimbursement. MACRA’s regulatory changes will encourage physicians to join ACOs, especially those with enough risk (and meeting other requirements) to be an Advanced APM. Other ACOs will attest to the new Merit-Based Incentive Payment Program (MIPS).

While until recently little has been known about the effect of Medicare ACOs on overall spending, and whether they have been able to reduce the use of high-cost care settings such as hospital stays and emergency department visits, new evidence suggests some modest gains. This is especially true when it comes to treating patients with multiple conditions who are responsible for the greatest proportion of spending.

Weighing in on the Recent Acquittals - Former HHS Inspector General Offers Practical Suggestions for Compliance Officers


Richard Kusserow served as Health and Human Services Inspector General from 1981 to 1992. In this article, he discusses the implications for compliance officers of the recent Warner Chilcott acquittals.

When asked if the recent acquittals of former Warner Chilcott president W. Carl Reichel and Vascular Solutions CEO Howard Root altered his initial views regarding the potential impact of the Yates Memo, former Health and Human Services (HHS) Inspector General (IG) Richard Kusserow succinctly replied, “Not really.”

 Read Full Article in the August 2016 Issue of Life Science Compliance Update

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August 25, 2016

Deep Dive Analysis of 2017 Proposed Physician Fee Schedule


As we previously covered, in July CMS released its annual proposed updates to the Physician Fee Schedule. There are a number of potentially important areas of this proposal to our readers, including a section on Open Payments. The proposed rule can be found here, along with its page on the Federal Register website. The “Proposed Physician Fee Schedule 2017 - Open Payments Section” can be downloaded here. Comments are due to CMS by 5 p.m. on September 6, 2016. When commenting, refer to file code CMS-1654-P. Comments may be submitted electronically at Follow the instructions for "submitting a comment." Below, we provide additional information on the proposal’s impact on Open Payments, the Stark law, ACOs, physician reimbursement codes, and more.

Open Payments Program

Since the publication and implementation of the Open Payments Final Rule, stakeholders have provided feedback to CMS regarding aspects of the Open Payment program. CMS writes that it has identified areas in the rule that might benefit from revision. In order to consider the views of all stakeholders, CMS is soliciting comments to inform future rulemaking. CMS specifically says it does not intend to finalize any requirements related to Open Payments directly as a result of this proposed rule; rather, it expect to conduct future rulemaking.

While the proposed rule solicits input concerning a host of issues, a number of key areas of note including request for information on: (1) allowing physicians to review manufacturer reports prior to submission to CMS; (2) whether the categories used by the CMS to identify the nature of the payments is adequate; and (3) recommendations on how to streamline and improve accuracy of the program. The failure of CMS to streamline the review process has prevented the overwhelming majority of physicians from reviewing the reports and seeking correction. The data currently lacks validation and cannot be reasonably relied upon to provide information about physician and industry financial interactions. 

Stark Law

In June 2015, the D.C. Circuit Court of Appeals concluded in Council for Urological Interests v. Burwell that CMS’ previous attempts to administratively codify a prohibition on “per click” leases for offices and equipment was based on an unreasonable interpretation of the Stark law. In the proposed rule, CMS is “re-proposing” the physician self-referral per-click restrictions related to arrangements involving the rental of office space or equipment.

Specifically, CMS proposes adding a requirement that rental charges for office space or equipment may not be determined using a formula based on per-unit of service rental charges, to the extent that such charges reflect services provided to patients referred by the lessor to the lessee. CMS believes that most parties already comply with these regulatory provisions since they originally became effective in October 2009, before the D.C. Circuit struck down the ban on per-click rental charges in 2015. Thus, per-unit payments for the rental of office space or equipment will be permissible under the proposal, but only where the referral for the service to be provided in the rented office space or using the rented equipment does not come from the lessor. 


The proposal includes changes applicable to specific programs and payors, including Medicare Shared Savings, Medicare Advantage, and Accountable Care Organizations. For the Medicare Shared Savings Program, potential changes include quality reporting, including changes to measures, revisions that would permit eligible professionals in ACOs to report quality apart from the ACO, and updates to align with the Physician Quality Reporting System and the proposed Quality Payment Program. The proposed rule also includes modifications to align beneficiaries to an ACO when a beneficiary has designated an ACO professional as responsible for their overall care.

Proposed changes related to the Medicare Advantage (MA) Program include requiring MA providers or suppliers that furnish health care items or services to Medicare enrollees who receive Medicare benefits through a MA organization to be enrolled in Medicare and be in an approved status, effective two years from the publication date of the final rule.

New Service Payments 

In this rule, CMS proposes numerous policy updates for primary care services. The proposed policy updates in this rule include recognizing two new CPT codes for separate payment for non-face-to-face prolonged E/M services, which are currently considered to be bundled under the fee schedule. CMS is also proposing to make separate payments for a broader application of care management for beneficiaries with diagnosed behavioral conditions in a primary care setting. 

CMS is also aiming to increase payment for chronic care management (CCM) services. CMS will recognize payment for existing CPT codes and adding a G-code that improves payment for visits that qualify as initiating visits for CCM services. CMS is also proposing a G-code that would provide separate payment to a physician for assessing and creating a care plan for beneficiaries with cognitive impairment.  The CPT code will be available for this service in 2018.

Medicare Telehealth Services

After receiving requests from various stakeholders to add telehealth services as Medicare-covered services effective for CY 2017, CMS responded by proposing to expand the list of telehealth services eligible for Medicare reimbursement. Additionally, CMS proposed modifications to current policies on Place of Service (POS) coding.

As telehealth has grown in popularity as a means of delivering healthcare to patients, CMS has recognized its value by continuing to add related services to the list of services eligible for Medicare reimbursement.

CMS proposes to add the following services to the list of telehealth services eligible for Medicare reimbursement beginning CY2017: (1) End-stage Renal Disease (ESRD) Related Services; (2) Advance Care Planning Services; and (3) Critical Care Consultations. CMS also received requests to add services to the telehealth list that it determined did not meet CMS’s criteria for reimbursable telehealth services. CMS considered, but rejected, adding the following procedures for Medicare reimbursement: observation codes; emergency department services; psychological testing; physical therapy, occupational therapy and speech-language pathology services.

Conversion Factor

Under the proposed rule, the 2017 MPFS conversion factor (CF)would be $35.7751, down slightly compared to the 2016 CF of $35.8043. This update reflects a 0.5% update factor specified under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which is offset by a -0.51% relative value unit (RVU) budget neutrality adjustment and a -0.07% adjustment resulting from implementation of a multiple procedure payment reduction policy.

Global period

In the proposed rule, CMS is hoping to implement a controversial data collection related to the Medicare Access and Chip Reauthorization Act of 2015 (MACRA) that requires CMS to collect data on global packages. CMS believes that it may have misvalued these global packages because CMS lacks accurate data on the services provided to Medicare beneficiaries during the 10 day and 90 day post-surgery period.

CMS pays for global packages by grouping the procedure and services in periods both before and after the procedure. Currently, CMS does not have data to indicate the number, or value, of services provided as part of the global package, particularly the pre and post-operative services. Prior to MACRA, CMS had proposed to require physicians to bill all 10 and 90 day global surgery packages as 0 day global surgeries and then bill separately the post-operative care, which would normally be included in the 10 and 90 day episode. The reason for this 0 day requirement was to allow CMS to collect the data necessary to increase the accuracy of Medicare’s payments for the 10 and 90 day surgery packages in the future. One provision in MACRA prohibited CMS from implementing its 0 day strategy and also requires CMS to collect claims-level data to more accurately value, and pay for, services that are paid as part of a global package.

CMS proposes that all practitioners who bill 10 day and 90 day global surgery packages use specific G-codes for documenting in 10-minute intervals their time providing patient care during the global package period. The PFS lists activities included in a typical visit for the proposed G-codes, including taking interim patient history; managing medications; writing progress notes, post-operative orders, prescriptions, and discharge summaries; coordinating care with clinical staff; and, in general, completing forms. Reporting of these activities in 10-minute intervals is required. MACRA provides CMS the authority to impose a 5% payment withhold for practitioners who do not comply with the required claims-based information. CMS, however, is proposing that it would not immediately implement its authority for payment withholds but might do so depending on whether there is an acceptable level of participation.

Appropriate Use Criteria

CMS proposes to continue implementation of a Protecting Access to Medicare Act of 2014 (PAMA) requirement that physicians who order advance diagnostic imaging services consult with appropriate use criteria (AUC) via a clinical decision support mechanism (CDSM). The proposed rule proposes eight priority clinical areas for AUC, sets forth CDSM requirements and the CDSM application process, and proposes exceptions for ordering professionals for whom consultation with AUC would pose a significant hardship. While PAMA mandates that CMS fully implement the AUC program by January 1, 2017, CMS confirmed that it will not meet this deadline. The requirement that ordering professionals begin consulting CDSMs and furnishing professionals append AUC related information to the Medicare claim will not begin earlier than January 1, 2018.

CMS Diabetes Prevention Program

In the program, CMS proposes to allow beneficiaries to participate by “self-referral, community-referral, and healthcare practitioner-referral.” CMS further proposes using a 12-month CDC-approved Diabetes Prevention Program (DPP) curriculum, with 16 core sessions over 16-26 weeks, with the option for monthly core maintenance sessions after 6 months. CMS furthermore proposes that those who successfully complete the yearlong program and maintain the minimum weight loss, be eligible for additional monthly maintenance sessions. CMS also proposes a reimbursement table using a pay-for-performance model, linking payment with number of sessions attended and achievement of weight loss goals, as attested and documented by DPP providers. Documentation should be detailed and kept for 7 years, including status, sessions attended, coaches, date and place, and weight, and comply with HIPAA and all privacy laws. CMS requests feedback on the payment structure and guidance on the technical infrastructure to meet these requirements and other regulatory obligations. Finally, CMS recognizes the importance of patient choice to select the DPP provider that best meets each individual’s unique needs and preferences. CMS requests guidance on quality metrics for public reporting that benchmark DPP performance to support member choice.


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