New N. Calif. Report Suggests High Cost of Giving Birth Linked to Increased Health System Consolidation

Childbirth is the leading indication for hospital admission in California, with roughly 500,000 deliveries in the state each year. This is particularly challenging for health plans serving Northern California, the most expensive region in the country to give birth. New research suggests that increased health system consolidation may be a factor contributing to high prices, and sheds light on considerable regional differences in costs of delivery across the US. Furthermore, rising rates of Caesarian Section (C-section) deliveries statewide may be driving costs despite evidence of increased risks to mother and baby.
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CMS Oncology Care Model Reforming Payment for Beneficiaries with Cancer

The Center for Medicare & Medicaid Innovation first introduced its Oncology Care Model (OCM) last year. OCM went into effect July 1, 2016, and will run through June 30, 2021. The new multi-payer model is the first CMS physician-led care model aimed at improving cancer treatment for Medicare beneficiaries. CMS hopes to see improvements in care coordination and access, as well as a decrease in unnecessary services and Medicare expenditures.  OCM may be an important experiment for Medicare’s initiatives to implement alternative payment models for specialists, but will the rewards be enough to move the dial away from entrenched payment arrangements that reward volume?

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New Affordable Care Act and Medicaid Regulations Will Require Covered Entities Providing Healthcare Programs and Services to Have Accessible Websites

There has been a proliferation of ADA lawsuits alleging that websites are not accessible to the blind or deaf.  Individuals who are blind or have low vision may require assistive devices and specialized software to access the Internet.  These devices often include software that enables them to magnify the content of a web page, reads the content to them, or enables them to use a braille reader to read a website.  Some individuals with disabilities cannot use a mouse and can only navigate with a keyboard, touchscreen, or voice recognition software.  For persons with hearing impairments, the visual aspects of a website are accessible, but audio on a website may not be.

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The Overpayment Rule and the Implied False Claims Theory: “What You Don’t Know Can Still Hurt You”

In 2010, the Affordable Care Act (“ACA”) enacted new rules governing overpayments made by the Medicare and Medicaid programs. Under these rules, providers have 60 days from the date that the overpayment has been identified to return the overpayment or face penalties and treble damages under the False Claims Act (“FCA”).  As described below, recent regulations have clarified some of the issues surrounding the ACA obligation to refund overpayments, at least for overpayments under Medicare Parts A and B.  But, determining whether a provider has “identified” an overpayment – and thus started the 60 day countdown – can still be nuanced and complex.  Diligent providers that have proactive and robust compliance and audit functions in place may find some comfort, since such providers are presumably able to respond quickly to credible information that there has been a potential overpayment, as required by the new regulations, and thereby have a reasonable period of time to conduct an investigation and quantify the amount of any overpayment before the 60 day clock begins to run.

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New EU Rules for Medical Devices

After four years of negotiations, European lawmakers agreed on June 15 on a new EU Medical Devices Regulation (MDR).

The MDR is the equivalent to the FDA’s CDRH regulations in the United States and essentially specifies the applicable rules when importing medical devices into Europe, which is the world’s second-largest device market. Rules relate, for example, to product classification; quality system standards; pre-market authorization; and reporting of adverse events.

The final version of the MDR – a hefty 352 pages – was published on June 27 and is now reviewed by the EU’s legal editor for drafting or law-technical errors. It then needs to be translated into all EU member languages, followed by formal publication. After publication, expected in late 2016 or early 2017, there will be a three-year transition period as the medical device industry will need time to comply with the new requirements.

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CMS Proposes to Limit Site Neutral Payment Exceptions Applicable to Certain Off-Campus Hospital Departments Following Relocation, Service Expansion, or Certain Ownership Changes

On July 6, 2016, CMS released the 2017 Outpatient Prospective Payment System (OPPS) Proposed Rule which, among other things, implements Section 603 of the Bipartisan Budget Act of 2015.  Despite extensive lobbying efforts by the hospital industry, CMS’ proposed rule would effectively preclude the relocation or the expansion of service lines of existing off-campus provider-based departments.  In reaching this position, CMS noted its belief that Section 603 was intended to “curb the practice of hospital acquisition of physician practices that then result in receiving additional Medicare payment for similar services.”

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FTC Stands Down in Latest Head-to-Head Battle Between Federal and State Oversight of Healthcare Collaborations

In what will undoubtedly be seen by all interested parties as a significant setback in the Federal Trade Commission’s active opposition to potentially anticompetitive healthcare collaborations, the FTC voted unanimously on Wednesday to dismiss its challenge to Cabell Huntington Hospital’s acquisition of St. Mary’s Medical Center – two hospitals serving patients in the Huntington area of West Virginia.  While the FTC continues to believe that the merger will result in significant anticompetitive harm, it chose to abandon the fight in light of the recent passage of West Virginia Senate Bill 597 (SB 597).

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Medicare Board of Trustees Releases 2016 Annual Report: Hospital Trust Fund Insolvency Projected by 2028

The Medicare Board of Trustees is calling for urgent legislative action to address the impending financial insolvency of the Medicare hospital benefit program. The Board’s 2016 report reveals the trust fund that pays for hospital services under Medicare Part A will be depleted by year 2028. At that time, the report indicates Medicare revenue will cover only 87% of payments for anticipated hospital benefits. Although the Trustees have projected inadequate Medicare financing in the past, this year’s insolvency projection comes in two years earlier than last year’s report.

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CMS 2017 Proposal Reduces Home Health Reimbursements by $180 Million

On June 27, CMS issued a proposal for the 2017 Medicare home health prospective payment system (HH PPS).

CMS is proposing a $180 million reduction in 2017. This equates to a 1% drop in reimbursements for home health agencies caring for Medicare beneficiaries. This cut is the next in a series of reductions mandated by the Affordable Care Act. In 2015 the cut totaled $60 million, and in 2016 it totaled $260 million. The ACA called for reductions to home health service agencies to counter overspending dating back to 2000.

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Maryland Co-Op Claims Risk Adjustment Formula Discriminates Against Smaller Insurers

Maryland’s Evergreen Health Cooperative has filed for an injunction against the federal government to halt payment by the  Consumer Operated and Oriented Plan (co-op) of the $22 million it owes to CareFirst BlueCross BlueShield based on the Affordable Care Act’s risk adjustment formula.  Of the 23 co-ops that launched in 2014, at least half of them have failed, with nine failures in the Fall of 2015. More recently, the Centers for Medicare & Medicaid Services loosened financing rules for the co-op plans in an effort to allow them to tap the markets for capital.

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