NCQA’s Final ACO Standards in July May Have Later Impact on Medicare

Reprinted from ACO BUSINESS NEWS, a hard-hitting monthly newsletter on the latest industry actions to design and create ACOs, for hospitals, physicians, health plans and their advisers.

By Jennifer Lubell, Editor

June 2011Volume 2Issue 6

The National Committee for Quality Assurance tells ABN it will release final ACO accreditation standards in July “or soon thereafter,” and also will submit comments by the June 6 deadline on provisions in the draft Medicare Shared Savings Program regulations related to ACO quality metrics. An industry lawyer asserts that the recent issuance of the rule without any mention of NCQA accreditation calls the relevance of the private-sector organization’s forthcoming standards into question. But NCQA disputes that point — blaming it on timing and saying Medicare eventually may use its ACO accreditation.

Last fall, health care lawyers explained to ABN that nothing in the federal health reform statute grants NCQA any role to play in the accreditation process. Yet they acknowledged that NCQA had assembled a highly qualified group to set ACO standards and said that while NCQA lacks a government-sanctioned role, it could make an impact with its criteria (ABN 12/10, p. 8).

Included in that group was attorney Kathy Roe, a partner in the Chicago-based Health Law Consultancy, who said in November 2010 that using NCQA standards to accredit Medicare ACOs could provide a way to lift some of the burden off regulators — as long as the federal government thinks NCQA’s requirements are robust. But she said she didn’t expect CMS to publish a rule saying NCQA accreditation would suffice without seeing the final standards.

Roe now tells ABN that she doesn’t see any signs that CMS is looking at incorporating NCQA accreditation standards into its final rule on the Medicare Shared Savings Program. But she notes it is unknown how CMS may respond to public comments dealing with the accreditation issue.

“CMS didn’t really need to rely on [Medicare ACO] accreditation because in the proposed rule they draw from Medicare Parts C and D,” Roe explains. Given health care organizations’ publicly voiced concerns that proposed federal requirements are prescriptive and could prove challenging for many would-be ACO sponsors to meet, she adds: “At this point…for CMS to come back in and add accreditation I think would just pile on way too much for the industry.…I just don’t see the winds blowing that way right now. CMS spent a lot of time on the regs and drew a lot from existing programs.”

Whatever happens in this regard, Roe points out that NCQA’s year-long initiative to design ACO accreditation standards won’t be construed as an empty exercise. “If folks want a test run to see how they’re measuring up, certainly accreditation is the way to go,” she says. If organizations are successful in their efforts, she says, then NCQA’s stamp of approval could be used for marketing purposes in touting the ACO’s merits to group accounts and others. “ACOs could say they’ve passed muster with NCQA as well as CMS.”

Sarah Thomas, NCQA’s vice president of public policy and communications, tells ABN that NCQA’s forthcoming comment letter to CMS on the rule will “talk about the quality measures themselves and the data collection approach as well as the plan for benchmarking.”

Thomas says NCQA is hopeful that federal regulators ultimately will find it useful to deem certain requirements met if organizations go through NCQA’s accreditation process for ACOs — which she says wouldn’t be unprecedented since this occurred after the fact for Medicare Advantage plans. But she explains that NCQA hasn’t finalized its ACO program — and neither has Medicare — to show the degree of alignment needed for this to occur yet.

NCQA ‘Could Have Significance’

Thus, she says, NCQA wouldn’t expect its accreditation to be mentioned in the rule now — but it still could have significance later. She notes that NCQA’s “multi-cultural health care distinction program” was mentioned in the rule’s preamble, and she speculates that this occurred because CMS expects ACOs to reach out to diverse populations.

“We are going to make the case our program aligns with certain elements of CMS’s regulations, but neither program is final so it’s a little fluid at this point,” Thomas says. “We really do want to maximize the possibility that these organizations [i.e., ACOs] will be successful” in improving health outcomes, patient experience and the cost of care.

NCQA, a private, not-for-profit organization that accredits many health plans, wellness and health promotion programs, managed behavioral health care organizations and disease management programs, ended a public comment period on its draft ACO criteria last November that drew more than 2,200 recommendations from 220-plus organizations. NCQA proposes a set of core capabilities that entities should demonstrate at the outset — and every two to three years thereafter — to be recognized as ACOs. Its draft ACO standards fall into seven categories, ranging from program structure operations to performance reporting.

NCQA said April 18 that 10 organizations — four integrated health systems, four independent practice associations and two multi-specialty group practices — had successfully pilot-tested its ACO accreditation standards, thus clearing the way for the release of final standards. NCQA explained that the month-long pilot test — the final stage of a process that began in April 2010 — analyzed whether organizations could reasonably collect and submit information for the program.

Medicare Regional Pay Adjustments Flawed, IOM Says

WASHINGTON -- The data Medicare relies on to adjust for regional variation in reimbursements for hospitals and doctors is flawed and leads to inaccurate payments, concludes a report released Wednesday by the Institute of Medicine (IOM). The Centers for Medicare and Medicaid Services tweaks Medicare payments to hospitals and private practices to account for regional variations in the cost of doing business. For instance, a hospital located in a major city likely pays its workers higher wages to keep competitive with area businesses. In addition, rents are higher in a big city, and other costs incurred by hospitals and individual healthcare practitioners are likely more expensive than a hospital located in a rural area, or even in a suburb. To account for those higher costs of doing business, Medicare will reimburse the city hospital more. Medicare is required to make the adjustments budget-neutral, so any increase in pay for providers in one area must be offset by a decrease in pay to providers in another area. But the new report from the IOM calls into question the accuracy of the data Medicare uses to support such adjustments. The report found that nearly 40% of hospitals had been granted exceptions to how their adjustments are calculated. "The rate of exceptions strongly suggests that the mechanisms underlying the adjustments are inadequate," said the committee that wrote the report. The idea behind "fine-tuning Medicare payments based on geographic variations in expenses beyond providers' control" is a good one and shouldn't be discontinued, the committee said. But "the Medicare program needs more precise and objective tools and methods to assure the nation that the billions being spent are appropriately and fairly disbursed," said committee chair Frank Sloan, an economics professor at Duke University, in a press release. The committee recommended the following changes to help CMS make more accurate regional Medicare adjustments: Use Bureau of Labor Statistics data on salary and benefits in order to calculate wage adjustments for hospitals and private-practice health workers. Use wage data from all types of healthcare workers to calculate median wage data. Currently, Medicare calculates regional wage differences based on data for registered nurses, licenced practical nurses, health technicians, and administrative staff only. Rely on the same regional boundaries for hospitals or private health practices located in the same area. Currently, Medicare breaks hospitals into one of 441 regional areas, and private health practices into 81 regional areas. The report recommends using the same regional areas, since a hospital and a private practice within a few miles of each other are likely competing in a nearly identical labor market. Use commercial rent information to determine the variations of renting office space instead of the data on the median subsidized rents for a two-bedroom apartment in the area where a medical practice operates, which is what Medicare currently uses. There is no source that tracks commercial rent data, so a new source should be developed, the committee recommended. "Taken as a whole, the committee's recommendations are intended to improve accuracy of geographic adjustments to Medicare payment," concluded the Committee on the Geographic Adjustment Factors in Medicare Payment, a panel composed of academics and private and government economists. "Implementation will involve changes in the calculations of the indexes, but in the long run, it will bring the advantages of improved accuracy and greater consistency within the Medicare program." The study was sponsored by CMS and is the first part of a three-part series aimed at improving the accuracy of Medicare payments.

Medicaid to Quit Paying for Preventable Events

WASHINGTON -- The Centers for Medicare and Medicaid Services (CMS) has announced that hospitals and healthcare providers will no longer be reimbursed for treating their Medicaid patients for illnesses, injuries, or readmissions that should have been prevented. A final rule announced Wednesday enacts a portion of the Affordable Care Act (ACA) that prohibits states from making Medicaid payments to providers for conditions that are deemed "reasonably preventable." In 2008, Medicare stopped reimbursing hospitals for treating conditions, infections, or illnesses that were acquired in the hospital, and for any readmissions associated with treating those hospital-acquired conditions. The Medicaid list of what is preventable mirrors the Medicare list, which includes transfusing the wrong blood type; falls that result in dislocation, fractures, or head injuries; burns and electric shocks; catheter-associated urinary tract infections; surgical site infections after bariatric surgery or coronary artery bypass; and manifestations of poor glycemic control. In addition, CMS has issued National Coverage Decisions stating that Medicare won't pay for certain so-called "never events" -- those which should never happen -- including performing the wrong procedure; performing the procedure on the wrong body part, or performing the correct procedure, but on the wrong patient. Medicaid will also follow Medicare's lead on that issue and not pay for never events. "These steps will encourage health professionals and hospitals to reduce preventable infections and eliminate serious medical errors," CMS Administrator Donald Berwick, MD, said in a press release. "As we reduce the frequency of these conditions, we will improve care for patients and bring down costs at the same time." States can identify additional preventable conditions for which Medicaid payment will be denied. The final rule is effective July 1, 2011, but gives states the option to implement between its effective date and July 1, 2012. Since Medicare enacted its policy of not paying for preventable events, private insurers have begun to do the same.

For instance, Aetna doesn't reimburse for eight hospital-acquired infections or for three never events, according to information provided by America's Health Insurance Plans (AHIP), an industry trade group. Cigna doesn't pay for never events, reduces payments for hospital-acquired infections in certain cases, and offers payment incentives for

Affordable Care Act Gives States Tools to Improve Quality of Care in Medicaid, Save Taxpayer Dollars

DEPARTMENT OF HEALTH & HUMAN SERVICES
Centers for Medicare & Medicaid Services
Room 352-G
200 Independence Avenue, SW
Washington, DC 20201
Office of Media Affairs

FOR IMMEDIATE RELEASE                                                          Contact: CMS Office of Media Affairs

June 1, 2011                                                                                            (202) 690-6145

Affordable Care Act Gives States Tools to Improve Quality of Care in Medicaid, Save Taxpayer Dollars

New rule will reduce payments for preventable healthcare acquired conditions

WASHINGTON, D.C. – The Centers for Medicare & Medicaid Services (CMS) today issued a final Affordable Care Act rule that will reduce or prohibit payments to doctors, hospitals and other health care providers for services that result from certain preventable healthcare acquired illnesses or injuries.  This rule will help reward providers who provide high quality care to people in Medicaid leading to better care for patients and lower costs.

This final rule builds on States’ successes and Medicare policies, which already reduce or prohibit hospital payments for preventable conditions.  The new rule would better align Medicare and Medicaid payment policy, while giving States the flexibility to expand the list of preventable conditions the program would no longer pay for.  In recent years, many States have been at the forefront of these improvements.   

“Today, we are partnering with States to give them the tools to improve the quality of care for patients and lower costs for taxpayers,” said CMS Administrator Donald M. Berwick, M.D.  “These steps will encourage health professionals and hospitals to reduce preventable infections, and eliminate serious medical errors.  As we reduce the frequency of these conditions, we will improve care for patients and bring down costs at the same time.”

This step is part of CMS’ ongoing efforts to improve the quality of care that patients receive and reduce overall health care costs.  These efforts include tying payment to quality standards, investing in patient safety initiatives to reduce preventable hospitalizations such as the Partnership for Patients, and implementing broad reform of our health care delivery system.

The new rule prohibits States from making payments to providers under the Medicaid program for conditions that are reasonably preventable.  It uses Medicare’s list of preventable conditions in inpatient hospital settings as the base (adjusted for the differences in the Medicare and Medicaid populations) and provides States the flexibility to identify additional preventable conditions and settings for which Medicaid payment will be denied. 

The final rule is effective July 1, 2011 but gives States the option to implement between its effective date and July 1, 2012.

To learn more, please visit:

·       Final rule at the Federal Register:  Payment Adjustment for Provider-Preventable Conditions Including Health Care-Acquired Conditions

http://www.ofr.gov/OFRUpload/OFRData/2011-13819_PI.pdf

·       AHRQ Patient Fact Sheet: 20 Tips to Help Prevent Medical Errors

Despite Complaints, Humana-Walmart Plan Surges Ahead of the Rest of the Field

Reprinted from MEDICARE PART D NEWS, monthly business, compliance and management news and strategies to help Part D plans increase enrollment, boost revenues and minimize their risks of CMS fines, penalties and repayments.

June 2011 Volume 6 Issue 6

Humana Inc. said on May 2 that membership in its stand-alone Prescription Drug Plans (PDPs) increased to 2,353,100 on March 31 from 1,670,300 on Dec. 31, 2010. “This increase resulted primarily from higher gross sales year-over-year,” particularly for the company’s Humana-Walmart Preferred Rx Part D plan, offered in partnership with Wal-Mart Stores, Inc. Despite its popularity among seniors, beneficiary advocacy groups continue to oppose the plan.

This is a net gain of about 680,000 PDP enrollees. According to Adam Fein, president of Pembroke Consulting Inc., that growth is “more than any other organization [experienced] in 2011.” He also claims on his Drug Channels blog that the Humana-Walmart plan is “now the fifth-largest PDP in the U.S.”

Other Part D sponsors are following Humana’s lead. UnitedHealth Group’s Prescription Solutions said in April that it had created a “Value Network” of 20,000 pharmacies across the U.S. that will provide lower costs and discounts to members.

But all is not perfect. The Humana-Walmart plan has come under fire once again from a group of pharmacies, this time for operating contrary to the “any willing pharmacy” provision of the Part D regulations. According to American Pharmacies, a member-owned independent pharmacy cooperative operating in Arkansas, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee and Texas, CMS’s regulation allowing Part D plans to establish preferred pharmacy networks violates another regulation allowing any willing pharmacy to participate in the Part D program.

Under the Humana-Walmart plan, said the co-op, beneficiaries will pay more for prescriptions purchased at a pharmacy other than Walmart.

The Part D regulation requires plans to allow the participation of any pharmacy that meets its terms and conditions. But it also allows plans to reduce coinsurance or copayments for Part D-eligible individuals who obtain their covered Part D drugs through in-network pharmacies, differentiate between preferred and nonpreferred in-network pharmacies, and reduce copays even more for prescriptions purchased through a preferred pharmacy.

Amanda Fields, counsel for American Pharmacies, tells PDN that “the allowance of preferred networks in Part D plans negates the ‘any willing pharmacy’ requirement mandated by Congress.”

According to the cooperative, the regulation allows Part D plans “to discriminate among pharmacies” and create “different classes of in-network pharmacies.” The Humana-Walmart Preferred Rx plan “improperly provides strong financial incentives for patients to choose Walmart-owned pharmacies over other of the plan’s in-network retail pharmacies,” it asserted.

The co-op calls this the most harmful aspect of the plan, as there is a huge disparity in copays between preferred pharmacies and nonpreferred ones.

For example, under the plan’s formulary, a 30-day supply of Tier 1 preferred generic drugs has a $2 copay if distributed by Walmart. But that same drug costs the member $10 if distributed by a nonpreferred in-network retail pharmacy.

By enabling a Part D plan to make preferred pharmacies “so cheap and nonpreferred pharmacies comparatively so expensive,” CMS is discouraging members from enrolling in the plan, American Pharmacies said. For example, a senior in a rural area would not enroll in the plan because there was no Walmart close enough and because the copay at the non-Walmart pharmacy is too expensive, it asserted.

Preferred Networks Are Allowed

Fein tells PDN that he disagrees with the American Pharmacies’ interpretation, “which sounds like sour grapes rather than an accurate statement about the [Part D law].” He adds that “CMS has clearly stated that a [Part D plan] can set up a more limited pharmacy network and use reduced cost-sharing to direct enrollees to those in-network pharmacies.”

On his blog, Fein calls this an “incentivized preferred network design,” under which a Part D beneficiary’s out-of-pocket costs are lower at 4,200 preferred pharmacies — Walmart, its subsidiaries Sam’s Club and Neighborhood Market, and Humana’s RightSource mail-order pharmacy.

“While I’m not a lawyer, I believe that the paragraph immediately following the ‘any willing pharmacy’ section of the [Part D law] supports the establishment of preferred pharmacy networks such as the Walmart-Humana PDP or the Prescription Solutions’ Pharmacy Value Network,” says Fein.

This is not the first time Humana has come under fire. Last year the National Community Pharmacists Association (NCPA) complained to CMS that the agency should not have approved the plan because it “violates the spirit and intent of the rules and regulations surrounding the Part D program” and specifically Part D marketing guidelines (PDN 1/11, p. 1).

It appeared, based on NCPA comments, that the association had concerns with some of the larger Part D plans that it sees taking a huge market share and hurting community pharmacies.

Fields says that “CMS has still not responded to American Pharmacies’ letter, nor has there been any contact from Humana or Wal-Mart regarding the issues raised in American Pharmacies’ letter.”

CMS and Humana did not respond to PDN’s request for comments by press time

Actuaries: PPACA Could Help with Increasing Medicare Eligibility Age

By ALLISON BELL

Published 5/31/2011 

Affordable Care Act health insurance access requirements could make pushing back the normal Medicare enrollment age easier to implement.

Cori Uccello and Thomas Wildsmith, representatives from the American Academy of Actuaries (AAA), Washington, presented that suggestion Friday during a briefing in a U.S. House office building.

The actuaries went to Capitol Hill to help members of Congress and their aides understand how actuaries see the 2011 report prepared by the trustees of the Medicare trust funds.

The trustees now are predicting that the Medicare Part A hospitalization trust fund will be empty in 2024 – 5 years earlier than the trustees had projected in 2010.

In 2024, hospitalization fund tax revenues will cover about 90% of the benefits promised.

Policymakers could address that shortfall by taking steps such as putting limits on growth in Medicare spending, shifting to a voucher program, changing provider reimbursement rates, revising the program benefit design or raising the Medicare eligibility age from 65 to 67 or some other age, the trustees said, according to a written version of their remarks.

Traditionally, one objection to the idea of increasing the Medicare eligibility age is the reality that, in states that allow medical underwriting, people ages 55 and older often have a difficult time buying private health insurance. The difficulty could be even greater for peoples ages 65 to 67.

But the Affordable Care Act – the federal legislative package that includes the Patient Protection and Affordable Care Act of 2010 (PPACA) – is supposed to ban use of most health information in underwriting individual and small group health insurance starting in 2014, and the government also is supposed to create a new system of tax credit subsidies to help low-income and moderate-income people buy health coverage.

Health insurers could charge older people higher premiums, but the price for the oldest insureds could only be 4 times as high as the price for the youngest insureds.

In part because of PPACA, increasing the Medicare eligibility age could increase federal spending in other areas, such as on premium subsidies, but the PPACA provisions would increase the ability of older people to buy coverage, Uccello and Wildsmith said.

In related news, two other AAA representatives – Janet Barr and Stephen Gross – went to Capitol Hill to give a briefing on actuaries’ thoughts on the 2011 Social Security Trustees Report.

Trustees’ projections show the main Social Security trust fund will be empty in 2036.

“Now is the time to act,” Barr and Gross told participants in that briefing, according to a written version of the briefing.

If members of Congress address the trust fund problems today, they can fill the gap by increasing the payroll tax rate to 14.55% of affected wages, from 12.4%, or cutting benefits 13.8%, the actuaries said.

If Congress waits until 2036, the lawmakers of the future will have to increase the tax rate to 16.45%, from 12.4%, or cut benefits 23%, if current projections prove to be correct, the actuaries said.Affordable Care Act health insurance access requirements could make pushing back the normal Medicare enrollment age easier to implement.

Genworth: Average Nursing Home Cost Rises 3.4%

By NU ONLINE NEWS SERVICE

Published 5/31/2011 

The average annual cost of a private room in a U.S. nursing home has increased to $77,745 this year, up 3.4% from the 2010 average.

Analysts at Genworth Financial Inc., Richmond, Va. (NYSE:GNW), have published those figures in a summary of results from a survey of 15,500 long term care providers in 437 regions throughout the United States.

Although the rate of increase is only about half the rate of increase in acute care costs, the rate of increase is up from 1.3% in 2010.

The cost of assisted living care has increased 2.4% this year, to $39,135, and the cost of in-home care has held steady at $18 per hour.

The average cost of home health aide services is $19 per hour.

- Allison Bell