Medicare Update

MedPAC Releases Updated Medicare Payment Basics Documents

On October 14, 2009, the Medicare Payment Advisory Commission (MedPAC) released updated documents for its Medicare Payment Basics series, which provide an overview of 18 Medicare payment systems. 

To view the updated documents, visit the Medicare Payment Basics page of the MedPAC website or click on any of the following links:

• Oxygen and oxygen equipment payment system
• Skilled nursing facility services payment system
• Physician services payment system
• Psychiatric hospital services payment system
• Rehabilitation facilities (inpatient) payment system
• Part D payment system
• Outpatient therapy services payment system
• Medicare Advantage program payment system
• Outpatient dialysis services payment system
• Outpatient hospital services payment system
• Home health care services payment system
• Hospice services payment system
• Hospital acute inpatient services payment system
• Long-term care hospitals payment system
• Clinical laboratory services payment system
• Critical access hospitals payment system
• Durable medical equipment payment system
• Ambulatory surgical centers payment system

MedPAC is an independent Federal body established by the Balanced Budget Act of 1997 to advise Congress on issues affecting the Medicare program.

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OIG Reports on E-Prescribing and Medicare Part D Plan Sponsors

The Department of Health and Human Services' Office of Inspector General (OIG) recently released a report titled Medicare Part D E-Prescribing Standards: Early Assessment Shows Partial Connectivity (Report).

As part of the Report, the OIG surveyed all Medicare Part D plan sponsors for plan year 2008 to determine the extent to which the plan sponsors had implemented the e-prescribing standards to support connectivity with prescribers and dispensers. The OIG reports that it received responses from 262 plan sponsors.

In brief, the OIG found:

• Nearly 80 percent of plan sponsors reported at least partial plan-to-prescriber connectivity but few reported complete connectivity;
• Problems implementing Formulary & Benefits Standard 1.0 limit complete plan-to-prescriber connectivity; and
• Only 5 percent of plan sponsors reported no plan-to-dispenser connectivity.

Based on its review, the OIG recommends that the Centers for Medicare & Medicaid Services (CMS):

• Ensure that plan sponsors completely implement the plan-to-prescriber and plan-to-dispenser standards. To achieve this, the OIG suggests that CMS could: (i) continue to educate plan sponsors about e-prescribing requirements; (ii) clarify e-prescribing standard exemptions; or (iii) use available compliance mechanisms when necessary (such as corrective action plans and civil monetary penalties) to bring plan sponsors into compliance.
• Collaborate with plan sponsors and industry representatives to address barriers to full implementation of Formulary & Benefits Standard 1.0.  The OIG also recommends that CMS consider pilot-testing a real time standard that enables plan sponsors to transmit beneficiary specific formulary and benefits information.

For more information, see the Report.

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CMS Releases Proposed Rule Intended to Improve Protections for Medicare Advantage Enrollees

The Centers for Medicare & Medicaid Services (CMS) recently issued a Press Release and released a display copy of a Proposed Rule that is intended to improve the performance of Medicare Advantage and Medicare Part D Prescription Drug Plans by strengthening Medicare participation standards.

Among other things, CMS reports that the Proposed Rule would:

• Strengthen CMS's ability to identify and approve qualified drug and health plans;
• Improve beneficiary protections from discriminatory cost sharing by clarifying health plan requirements related to out-of-pocket costs and cost sharing; and
• Eliminate duplication in drug and health plan bids submitted by the same organization by requiring a meaningful difference between an organization's product offerings with regard to premiums, beneficiary out-of-pocket costs, plan types, and formulary offerings.

The comment period on the Proposed Rule will close on December 8, 2009.  The Proposed Rule is scheduled to appear in the Federal Register on October 22, 2009.

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CMS Directs Medicare Contractors to Take Action on OIG Reports

The Centers for Medicare & Medicaid Services (CMS) recently issued Transmittal 574 and alerted various Medicare contractors (including Part A/B Medicare Administrative Contractors) about 4 Department of Health and Human Services' Office of Inspector General reports (OIG Reports).

Among other things, Transmittal 574 instructs certain Medicare contractors to "review the claims data particularly for services mentioned in the OIG reports" and "take appropriate action consistent with their individual prioritized strategy (e.g., establish automated prepayment edits, develop pre and postpayment reviews, educate physicians/suppliers), if the data warrants any action." 

Transmittal 574 has an effective/implementation date of November 9, 2009.

The OIG Reports identified in Transmittal 574 are set forth below.

• Medicare Part B Chemotherapy Administration: Payment and Policy (OEI-09-08-00190)
• Prevalence and Qualifications of Nonphysicians Who Performed Medicare Physician Services (OEI-09-06-00430)
• Inappropriate Medicare Payments for Chiropractic Services (OEI-07-07-00390)
• Medicare Part B Billing for Ultrasound (OEI-01-08-000100)

Certain Medicare providers and suppliers may want to take a look at the OIG Reports.

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CMS Expects a Wide Range of Medicare Advantage Options in 2010

Today, the Centers for Medicare & Medicaid Services (CMS) issued a Press Release announcing that beneficiaries in Medicare Advantage (MA) and Part D plans will have a wide range of options in 2010.

According to the Press Release, the same percentage of beneficiaries who currently have access to an MA plan (i.e., 99.9 percent) will have access to an MA plan in 2010.  CMS also reports that only 1.5 percent of all beneficiaries (and about 7 percent in MA plans) will have to choose a new plan or original Medicare in 2010 because their current plan would not renew in 2010.

In addition to highlighting CMS efforts to strengthen its oversight of plan marketing activities, the Press Release provides other facts associated with MA and Part D plans in 2010 including:

• Beneficiaries in MA plans can expect an average premium of about $39/month (a $7 difference from 2009)
• Almost 87 of beneficiaries will have access to an MA plan that does not require a premium
• Part D plan premiums will average $30 (a $2 difference from 2009)

The Press Release also encourages beneficiaries enrolled in MA and Part D plans to review their current coverage for any changes in 2010 before the annual enrollment period begins on November 15, 2009. See the Press Release for more details.

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America's Affordable Health Choices Act May Raise Medicare Part D Premiums

On August 28, 2009, the Congressional Budget Office (CBO) reported that, as introduced, the America's Affordable Health Choices Act of 2009 (H.R. 3200) may lead to an average increase in Medicare Part D premiums of about 5 percent in 2011 and an increase of about 20 percent in 2019.

According to the CBO, Medicare Part D premiums would rise in part because H.R. 3200 would phase out the so-called donut hole.  The CBO also believes that H.R. 3200 may cause pharmaceutical manufacturers to charge higher prices for new drugs (particularly "breakthrough" drugs) and possibly lower the rebates that they pay to prescription drug plans. However, the CBO estimates that the provisions of H.R. 3200 may collectively save the Federal government about $30 billion over a 10 year period (i.e., 2010 - 2019). 

For more information, see the CBO's letter, which can be found here.

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CMS to Host Pharmacy, Pharmaceutical & Device Manufacturers Open Door Forum

The Centers for Medicare & Medicaid Services (CMS) will host the next Pharmacy, Pharmaceutical & Device Manufacturers Open Door Forum at 3:30 p.m. (ET) on August 26, 2009.

CMS reports that this Open Door Forum will focus on accreditation and surety bond implementation for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS).

To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 23827900. 

Beginning 2 hours after the call ends, CMS will also make an audio recording of the Open Door Forum available.  To access the audio recording, one must dial 1-800-642-1687 and enter the conference ID.  The recording will be available for 3 business days.

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CMS Announces that Medicare Part D Premiums May Increase in 2010

On August 13, 2009, the Centers for Medicare & Medicaid Services (CMS) issued a Press Release announcing that beneficiaries enrolled in Medicare Part D plans may see an increase in premiums in 2010.

According to the Press Release, CMS estimates that the average monthly premium for standard Medicare Part D coverage in 2010 will be $30, which is $2 more than the 2009 average premium. Consequently, CMS estimates that about 800,000 beneficiaries, who receive the low-income subsidy (LIS), may need to move to a new plan below the benchmark amount or be automatically reassigned.

In addition to the average premiums for 2010, the Press Release indicates that CMS has announced the:

• 2010 national average monthly bid;
• Base beneficiary premium;
• Regional LIS premium amounts for 2010; and
• 2010 Medicare Advantage regional preferred provider organization benchmarks.

The above information can be found here.

CMS also reports that the premiums and benefits for Medicare Advantage plans will be announced in September 2009, including the plans that will not be renewing their contracts with Medicare for 2010.

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OIG Releases Compendium of Unimplemented Recommendations

On May 29, 2009, the Department of Health and Human Services' (HHS) Office of Inspector General (OIG) released its Compendium of Unimplemented Office of Inspector General Recommendations (May 2009).

The Compendium includes information about OIG recommendations that had not been fully implemented as of December 31, 2008.  The Compendium also includes a list of "priority recommendations," which the OIG believes represent the most significant opportunities to positively impact HHS programs.

The list of "priority recommendations" includes a number of recommendations for the Medicare program. In brief, those recommendations (and any estimated savings) include:

• Ensure accurate Medicare Part D sponsors bids and prospective payments
• Implement safeguards to prevent and detect fraud and abuse in Medicare prescription drug plans
• Ensure durable medical equipment suppliers' compliance with Medicare standards
• Modify payment policy for Medicare hospital bad debts (estimated savings $340 million)
• Reduce the rental period for Medicare home oxygen equipment (estimated savings $3.2 billion)
• Modify payments to managed care organizations (estimated savings $1.97 billion)
• Place a ceiling on administration costs included in managed care organizations' rate proposals
• Improve Centers for Medicare & Medicaid Services performance evaluation process for program safeguard contractors
• Ensure the appropriate processing of denial of Medicare payment remedies for noncompliant nursing homes
• Improve oversight of Medicare hospices

The Compendium also includes other unimplemented OIG recommendations pertaining to the Medicare program, including (but not limited to):

• Identify duplicate Medicaid and Medicare home health payments
• Require physician examination before ordering home health services
• Revise graduate medical education payment methodology
• Reduce Medicare end stage renal disease payment rates
• Improve quality oversight of ambulatory surgical centers in the Medicare program

See the Compendium for more detailed information (including background information, OIG findings, recommendations, status and any estimated savings). 

CMS Releases 2010 Medicare Advantage Capitated Rate Information

On April 6, 2009, the Centers for Medicare & Medicaid Services (CMS) released the Announcement of Calendar Year 2010 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies (Announcement). 

In the Announcement, the final estimate of the 2010 national per capita Medicare Advantage growth percentage (NPCMAGP) for aged and disabled enrollees is .81 percent.  The NPCMAGP for 2010 is higher than the NPCMAGP in CMS's February 2009 Advance Notice, but much lower than the NPCMAGPs for 2008 and 2009.

CMS updates the Medicare Advantage (MA) capitated rates annually by the NPCMAGP.  The NPCMAGP reflects growth in all Medicare expenditures, including expenditures under Medicare Part A and B payment rules (e.g., the estimated 21 percent Medicare physician fee reduction for 2010).

However, CMS reports that the 2010 rates also reflect a multi-year phase out of indirect medical education costs in MA rates.  The maximum phase out reduction is approximately .60 percent per year. In addition, CMS makes a "coding pattern differences adjustment" in 2010 to MA risk scores, reducing MA payments to account for differences in disease coding patterns between MA organizations and the original Medicare program (Parts A and B).  According to CMS, this adjustment will be applied as a uniform 3.41 percent reduction to all MA plans' risk scores in 2010.

With respect to Medicare prescription drug program enrollees, the Announcement includes information about the Medicare Part D deductible, initial coverage limit, out-of-pocket threshold, and related parameters for the standard benefit. Further, CMS reports that the annual percentage increase in average per capita Part D spending, which is used to update the deductible, initial coverage limit, and out-of-pocket threshold for the 2010 standard benefit, is 4.66 percent.

In addition to the Announcement, CMS has posted a related Press Release and Fact Sheet on the CMS website.