Weekly Health Care Policy Update – July 5, 2022

July 12, 2022

In this update: 

  • Congressional Updates
    • House Energy and Commerce Committee Holds Hearing on Medicare Advantage
  • Federal Agencies
    • CMS Proposes Rule Establishing Rural Emergency Hospital Conditions of Participation
    • FDA Proposes New Pathway for Some Prescription Drugs to Be Available OTC
    • CMMI Announces Successor to Oncology Care Model to Start in 2023
    • HHS OCR Issues Guidance on HIPAA and Reproductive Care Information
    • CMS Updates Nursing Home Conditions of Participation in Advance of Minimum Staffing Rule
  • Other Updates
    • GAO Issues Report on Medicaid State-Directed Payments
    • Insurers Begin Releasing Price Data under Transparency in Coverage Rule
    • Supreme Court Overturns Physicians’ Opioid Overprescription Convictions
  • New York State Updates
    • Governor Hochul Extends Disaster Emergency Due to Health Care Staffing Shortages
    • CMS Approves New York SPAs Amending PACE Rate Methodology and Implementing Rate Enhancements for Mental Health Services
    • DOH Issues Notice of Proposed SPAs Updating Regulations for Mental Health and Article 16 Clinic Services
    • DOH Posts Submitted SPAs Implementing Budget and Enhanced HCBS Provisions
    • OMH Approves Crisis Stabilization Center Regulations, Releases Supportive Crisis Stabilization Center RFP
    • Governor Hochul Signs Legislation Extending Requirements for Employee Paid Leave for Covid-19 Vaccinations

Congressional Updates

House Energy and Commerce Committee Holds Hearing on Medicare Advantage
On June 28th, the House Energy and Commerce Committee held a hearing on Medicare Advantage (MA) oversight. The hearing brought together several recent reports that raised concerns about MA practices, including:

  • An April 2022 report from the Department of Health and Human Services (HHS) Office of the Inspector General (OIG) that MA plans sometimes delayed or denied medically necessary care that would have been covered under Original Medicare;
  • A series of HHS OIG reports, the most recent in September 2021, on MA plans’ use of non-claims-based diagnoses (e.g., from health risk assessments) in risk adjustment;
  • A series of Government Accountability Office (GAO) reports on MA issues, including a June 2021 report which found that end-of-life disenrollments were more than twice as common as other disenrollments and earlier reports on incomplete validation of risk adjustment data; and
  • Reports from the Medicare Payment Advisory Commission (MedPAC) on recommended changes to: 
    • MA diagnostic coding and other risk adjustment practices;
    • The MA Star Ratings system and associated incentives; and
    • Requirements for plans to submit encounter data.

America’s Health Insurance Plans (AHIP) submitted a statement (available here) pushing back on the reports, suggesting that there were “inaccuracies in reporting on several recent government studies of MA,” including the OIG and GAO studies discussed at the hearing. Notably, at the hearing, lawmakers from both parties expressed concerns regarding MA practices and openness to legislation that would address payment reform, prior authorization delays, and other related issues.
 
More information on the hearing, including the testimony from OIG, GAO, and MedPAC, is available here.

Federal Agencies

CMS Proposes Rule Establishing Rural Emergency Hospital Conditions of Participation
On June 30th, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule to establish Medicare Conditions of Participation (CoPs) for rural emergency hospitals (REHs). The REH category was established in statute in the federal 2020 year-end omnibus spending bill to help small rural hospitals at risk of closure to close their inpatient units while continuing to provide 24-hour emergency services as well as observation and other outpatient services, if elected by the REH, of up to 24 hours per patient annually. By statute, Medicare will reimburse designated REHs at a rate 5% higher than the Outpatient Prospective Payment System (OPPS) rate and will provide an additional monthly payment to help subsidize costs, based on the additional amount paid by Medicare to Critical Access Hospitals (CAHs). However, this rule does not establish the payment framework for REHs; CMS will establish proposed payment policies and enrollment policies for REHs separately as part of the OPPS rule and other rulemaking.
 
In general, the CoPs for REHs align closely with those of Critical Access Hospitals (CAHs), outside of inpatient unit requirements that will not apply. For example, like CAHs, REHs would have the flexibility to grant medical staff privileges to nurse practitioners and physician assistants, if allowable under state law. CMS is seeking comment on certain REH-specific standards:

  • Whether REHs should be permitted to perform certain maternal care services, such as low-risk deliveries, and whether they should be required to also provide outpatient surgical services in such cases; and
  • Whether REHs should be required to have staff trained in emergency medicine on call at all times.

CMS is also issuing minor updates to the CAH CoPs, including codifying the definition of “primary roads” which is used to determine whether a hospital is remote enough to qualify as a CAH. A fact sheet on the rule is available here. The full rule is available here.
 
FDA Proposes New Pathway for Some Prescription Drugs to Be Available OTC
On June 27th, the Food and Drug Administration (FDA) proposed a rule to establish a new pathway for the approval of nonprescription drug products with an additional condition for nonprescription use (ACNU). Products with an ACNU would be eligible to be sold over the counter (OTC) even if they are otherwise identical to a prescription drug (i.e., active ingredient, dosage form, strength, etc.). Applicants would be required to submit a separate application for a drug to receive an ACNU, even if the drug is already an approved prescription drug product.
 
FDA proposes to define an ACNU as any FDA-approved condition that must be implemented by the applicant to “ensure consumers’ appropriate self-selection or appropriate actual use, or both, of the nonprescription drug product without supervision of a healthcare practitioner.” An ACNU would be necessary if FDA determines that labeling alone is not sufficient for this purpose. For example, an ACNU could be a (self-administered) quiz or test on a smartphone app, or a required video or other educational material with questions to confirm understanding.
 
FDA’s press release is here. The full proposed rule is available here. Comments may be submitted through October 26th.
 
CMMI Announces Successor to Oncology Care Model to Start in 2023
On June 27th, the CMS Innovation Center (CMMI) announced the launch of a new voluntary model called the Enhancing Oncology Model (EOM). The EOM is a successor to the Oncology Care Model (OCM), which ran from July 2016 through June 2022. Like OCM, EOM is a total cost of care payment model under which oncology practices and practitioners will be eligible for a performance-based payment (PBP) by meeting quality thresholds and reducing costs below a target benchmark. Providers will continue to bill Medicare fee-for-service and may also bill a monthly per-member per-month (PMPM) rate for enhanced oncology services, which will be $70 for Medicare-only beneficiaries and $100 for dual eligibles (down from $160 under OCM).
 
Unlike OCM, all EOM participants must take downside risk from the start of the model. Participants may choose from two options for risk arrangements, which differ by offering a narrower risk corridor with a higher savings target or vice versa. In either arrangement, there is also a “neutral zone” between the savings target and a threshold of 98% of the benchmark in which no risk would be shared. The risk arrangements are:

  • Risk Arrangement 1 
    • Shared savings between 92% and 96% of the benchmark; maximum savings of 4%
    • Neutral zone between 96% and 98% of the benchmark
    • Shared losses between 98% and 100% of the benchmark; maximum losses of 2%
  • Risk Arrangement 2 
    • Shared savings between 85% and 97% of the benchmark; maximum savings of 12%
    • Neutral zone between 97% and 98% of the benchmark
    • Shared losses between 98% and 104% of the benchmark; maximum losses of 6%

Shared savings or losses are up to 100% shared risk within these corridors; they will be adjusted by a quality performance multiplier, so that participants would earn less shared savings with lower quality performance or be responsible for less shared losses with higher quality performance.
 
Other notable changes in EOM include: 

  • The inclusion of a health equity framework, similar to that in the ACO REACH model, requiring participants to: 
    • Screen patients for health-related social needs;
    • Collect social and demographic data on patients; and
    • Create a health equity plan.
  • Reduction of the scope of the qualifying patient population to include only seven specific cancer types.
  • Implementation of risk adjustment models specific to the patient’s cancer type.

EOM will launch July 1, 2023 and run through June 2028. More information is available on the CMMI EOM website here. Applications are open through September 30th.
 
HHS OCR Issues Guidance on HIPAA and Reproductive Care Information
On June 29th, the HHS Office of Civil Rights (OCR) issued guidance on the application of the HIPAA Privacy Rule to reproductive health care information. The guidance notes that the HIPAA Privacy Rule permits, but does not require, covered entities to disclose protected health information (PHI) about individuals without their consent under three circumstances:

  • If disclosures are expressly required by an enforceable law;
  • If disclosures are made for law enforcement purposes; and
  • If disclosures are made to avert a serious and imminent threat to health.

The guidance gives several examples under which disclosures of PHI would be prohibited under the HIPAA Privacy Rule, such as: 

  • A hospital disclosing that a medical practitioner suspects a self-administered abortion in a state that does not explicitly require hospitals to report such information;
  • A reproductive care clinic disclosing records of abortions to a law enforcement official in the absence of a court order or other enforceable mandate;
  • A practitioner voluntarily reporting to law enforcement a patient’s statement that she wants to obtain an abortion in another state. OCR emphasizes that it believes this statement would not qualify as a “serious and imminent threat to the health or safety of a person or the public.”

The guidance is available here.
 
CMS Updates Nursing Home Conditions of Participation in Advance of Minimum Staffing Rule
On June 29th, CMS issued updated subregulatory guidance that adds additional minimum safety standards for long-term care facilities that participate in Medicare or Medicaid. CMS is currently engaging in a rulemaking process to establish minimum staffing levels in nursing homes, but is issuing this guidance “to begin helping address the staffing issue while the rulemaking process is underway.” Some of the notable updates in the new guidance include:

  • Requiring all facilities to have a trained Infection Preventionist (IP) on staff onsite at least part-time;
  • Revising requirements for State agency oversight of nursing home complaints;
  • Directing CMS surveyors to use Payroll Based Journal (PBJ) staffing data in staffing investigations;
  • Requiring nursing homes to have evidence that residents meet discharge criteria when they are discharged from the nursing home during an emergency hospital transfer (i.e., when the hospital does not allow the resident to return); and
  • Issuing new recommendations for resident room conditions, including urging them to include no more than two residents in a room.

CMS’s press release is available here. The full memorandum is available here.

Other Updates

GAO Issues Report on Medicaid State-Directed Payments
On June 28th, the GAO published a study on state-directed payments in Medicaid managed care. Under new Medicaid managed care regulations published in 2016, states were generally prohibited from engaging in “pass-through payments” in which the State would seek to pay a supplemental payment to a Medicaid provider by passing the funds through a managed care organization (MCO), which frequently enabled states to claim federal matching funds. Instead, states seeking to direct MCOs’ use of funds must apply to CMS for a state-directed payment approval.
 
In the study, GAO notes that CMS approved a total of 170 state-directed payment arrangements in calendar year 2021, including 17 from New York, which was the state with the most such approvals. New York is using state-directed payments for large funding initiatives, most recently including about $1 billion for financially distressed hospitals and more than $100 million for licensed home care services agencies.
 
Starting July 1, 2021, state-directed payment preprint applications were required to include an estimated total cost of the preprint. GAO found that the 79 approved proposals that began after that date had an estimated total cost of $20 billion. GAO noted that CMS has expressed an intention to further enhance oversight and disclosure of state-directed payment information, with possible actions including making approved proposals public, hiring a contractor to consolidate information from approved proposals, and providing additional technical assistance to support greater detail in evaluations.
 
The full GAO report is available here.
 
Insurers Begin Releasing Price Data under Transparency in Coverage Rule
On July 1st, the Transparency in Coverage final rule’s requirements for health insurers began to take effect. On that date, non-grandfathered health plans and issuers, including self-insured employers, were required to post machine-readable files that disclose their reimbursement rates for both in-network services (negotiated rates) and out-of-network services (billed and allowed amounts). These files should be updated on a monthly basis. Later stages of the rule will take effect in 2023 and 2024, which will require further disclosure of prices and estimated cost-sharing through consumer-friendly cost estimator tools for covered services. As of today (July 5th), hundreds of large insurers, including most of the large national carrier, have posted such files.
 
Supreme Court Overturns Physicians’ Opioid Overprescription Convictions
On June 27th, the Supreme Court unanimously overturned the convictions of two physicians for illegal overprescription of opioids in the cases Ruan v. United Statesand Kahn v. United States. The Court’s opinion held that prosecutors must prove beyond a reasonable doubt that a physician knows or intends to prescribe drugs in an “unauthorized” manner to secure a conviction. Justice Stephen Breyer wrote the majority opinion, while Justice Samuel Alito wrote a concurring opinion that suggested the Court should have established a “good-faith defense” for such prosecutions.

New York State Updates

Governor Hochul Extends Disaster Emergency Due to Health Care Staffing Shortages
On June 29th, Governor Hochul issued Executive Order 4.10 (available here), which extends through July 29th the provisions in Executive Order 4 and its successors that reinstate many workforce and scope of practice flexibilities that applied during the original New York State Covid-19 public health emergency.
 
CMS Approves New York SPAs Amending PACE Rate Methodology and Implementing Rate Enhancements for Mental Health Services
This past week, CMS approved the following New York State Plan Amendments (SPAs): 

  • Updating the Amount that Would have Otherwise been Paid (AWOP) calculation and rate methodology description for Programs of All-Inclusive Care for the Elderly (PACE) plans due to modifications in the premium rate structure and available data sources. Specifically, beneficiary cost data in managed care will also be used in the development of the AWOP and in the rate methodology, in addition to fee-for-service and other acceptable data sources. Rates will continue to be subject to Upper Payment Limit provisions. (SPA; Approval).
  • Providing a temporary rate increase of 11.5 percent to base rates for Outpatient Mental Health Rehabilitative Services for workforce recruitment and retention activities, effective from February 1, 2022 through September 30, 2022 (SPA; Approval).
  • Providing a permanent 5 percent increase to rates for Outpatient Mental Health Rehabilitative Services, effective February 1, 2022. (SPA; Approval)

DOH Issues Notice of Proposed SPAs Updating Regulations for Mental Health and Article 16 Clinic Services
On June 29th, the New York State Department of Health (DOH) posted several public notices in the State Register proposing the following SPAs, to be effective July 1, 2022: 

  • Revising the Ambulatory Patient Group (APG) reimbursement methodology to include recalculated weight and component updates in order to maintain consistent reimbursement for APG Payments and establishing reimbursement rates for Licensed Mental Health Counselors and Licensed Marriage and Family Therapists in hospital outpatient departments and freestanding clinics;
  • Removing “Behavioral Health Utilization Controls” and the payment reduction for Article 16 clinics;
  • Increasing Comprehensive Psychiatric Emergency Program (CPEP) reimbursement, including fees paid for full emergency visits, triage and referral visits, and extended observation bed services;
  • Adjusting rates statewide to reflect a five percent increase for Continuing Day Treatment, Day Treatment for Children, and Partial Hospitalization services;
  • Authorizing psychologist services provided to children/youth by agencies designated under the Child and Family Treatment and Support Services (CFTSS) designation process; and
  • Adjust rates for Residential Treatment Facilities (RTFs) to allow for more accurate representation of the needed resources and actual costs of the service provisions via an update to the rate setting methodology.

The notices can be accessed in the State Register here. Comments may be submitted to spa_inquiries@health.ny.gov.
 
DOH Posts Submitted SPAs Implementing Budget and Enhanced HCBS Provisions
On June 30th, DOH posted a number of proposed SPAs that would implement initiatives passed in the FY 2022-23 New York State Enacted Budget or included as a use of Section 9817 Enhanced HCBS funding. These include:

  • Increased rates for private duty nursing and applied Behavior Analysis (ABA);
  • Implementation of the 5.4% Cost of Living Adjustment (COLA) for a wide array of non-DOH-licensed providers; and
  • Elimination of the 1.5% across-the-board Medicaid rate reductions and addition of a 1% across-the-board investment.

The June 29th State Register also includes notice of another SPA that will implement the Budget provision that will increase the minimum wage for home care aides by $2.00 beginning October 1, 2022, and by an additional $1.00 beginning October 1, 2023.
 
Posted SPAs are available on DOH’s website here. The notices can be accessed in the State Register here. Comments may be submitted to spa_inquiries@health.ny.gov.
 
OMH Approves Crisis Stabilization Center Regulations, Releases Supportive Crisis Stabilization Center RFP
On June 29th, OMH approved regulations establishing standards for Crisis Stabilization Centers. Crisis Stabilization Centers are a new licensure category authorized by the New York State Fiscal Year 2021-22 Enacted Budget. There are two types of Crisis Stabilization Centers, Supportive and Intensive, which will be jointly licensed by OMH and the OASAS under Article 36 of the Mental Hygiene Law.
 
Earlier this year, OMH released a Request for Proposals for the development of 12 new Intensive Crisis Stabilization Centers within the 10 economic development regions of New York. On June 30th, OMH released an RFP for the development of 12 new Supportive Crisis Stabilization Centers within the 10 economic development regions. Eligible applicants are not-for-profit 501(c)(3) organizations or public benefit corporations with experience providing mental health and substance use treatment services to individuals with serious mental illness and/or substance use disorders.
 
The Notice of Adoption is available in the State Register here and the regulations are available here. The Supportive Crisis Stabilization Center RFP is available here and SPG’s summary of the opportunity is here. Applications are due on October 5th.
 
Governor Hochul Signs Legislation Extending Requirements for Employee Paid Leave for Covid-19 Vaccinations
On June 28th, Governor Hochul signed legislation (S8529/A9513) extending through December 31, 2023 amendments to the civil service and labor laws providing employees with paid time off to receive Covid-19 vaccinations. The amendments, which were originally set to expire on December 31, 2022, provide employees with paid leave of up to four hours per injection.