With major health care legislation at risk due to a distinct lack of, shall we say, bipartisanship, President Trump was rumored to be getting out his "pen and phone" to implement his health care agenda. The rumors appear to be true as yesterday in Florida, the president announced a new Executive Order to encourage Medicare Advantage adoption, among other things.
The EO requires:
Within 1 year, CMS shall propose a regulation and implement other administrative actions to enable the Medicare program to provide beneficiaries with more diverse and affordable plan choice.
The pathways for accomplishing these goals are greater use of Medicare Savings Accounts; more flexibility in supplemental benefits and use of care innovations like telehealth; and payment models that permit use of rebates and other cash incentives. The EO also demands that Medicare FFS will not be advantaged over Medicare Advantage plans with respect to administration.
In this high deductible era, turning 65 while still employed creates a lot of confusion. An individual enrolled in a high deductible health plan integrated with an HSA cannot continue to make contributions to their HSA if they have elected to receive Social Security benefits. This prohibition is due to the requirement that anyone turning 65 is automatically enrolled on Medicare Part A if the are receiving Social Security benefits, thus violating rules governing HDHP-HSA integrated plans.
The EO appears to contemplate new rules to expand the use of MSAs to be used in conjunction with a high deductible MA plan. In the past, CMS has waived certain restrictions on MSAs via demonstration programs to make them behave more like HDHP-HSAs and they could do so again.
With respect to eliminating any disadvantage MA may have in the administering the program, CMS may be contemplating changes to the auto-enrollment system. As we noted when an American turns 65 and elects to received Social Security benefits, enrollment in original Medicare FFS Parts A and B is triggered. Many people, especially if they are still employed and Medicare is acting as secondary payer, will take no additional steps and remain enrolled in FFS. The administration's EO suggest they may want to make changes to that system.
CMS shall submit a report within 180 days that identifies approaches to modify Medicare FFS payments to more closely reflect the prices paid for services in MA and the commercial insurance market, to encourage more robust price competition, and otherwise to inject market pricing into Medicare FFS reimbursement.
As we note below, the Medicare Prospective Payment System certainly needs to be revisited since it has been over 20 years since implementation. However, this provision has caught the attention of the "Medicare for All" proponents who see it as potentially increasing the Medicare spend and endangering the Trust Fund. Such concerns are premature as the provision is only calling for a study and those are a dime a dozen in Washington.
Further, while commercial insurance tends to reimburse for services above Medicare rates, academic research suggest Medicare Advantage pays 5-8% less on average than FFS. A study, then, would probably have mixed recommendations.
And, of course, any change to the PPS system will require a change in law which seem...unlikely in the next 180 days.
Within 1 year, CMS shall propose a regulation to provide beneficiaries with improved access to providers and plans by adjusting network adequacy requirements for MA plans to account for the competitiveness of the health market in the States in which such plans operate, including whether those States maintain certificate-of-need laws or other anti-competitive restrictions on health access; and the enhanced access to health outcomes made possible through telehealth services or other innovative technologies.
Certificate of Need laws have been a thorn in the federal government's side for decades. They survive at the state level courtesy of the significant influence state hospital association enjoy on their respective legislative plazas. Increasingly, those laws have come under fire. Most recently, Florida completely eliminated all CON laws. The EO seems to be suggesting that MA networks that find themselves wrestling with a dominate and likely expensive market player (such as Atrium in Western North Carolina) may get some relief from network adequacy requirements, thus enhancing their negotiating postiion.
The EO also suggests that plans can enhance access that would otherwise be limited by the state of competition in a particular market with telehealth services and other innovations. This provision makes us think of dialysis services. Although MA will be able to accept ESRD patients beginning in 2021, plan sponsors have expressed concerns about how they will meet network adequacy standards while negotiating with a duopoly. CMS's recent push to encourage home dialysis and the development of alternatives to in-center care would dovetail nicely with greater flexibility in dialysis networks for MA plans.
Otherwise, the use of telehealth services could put pressure on dominant providers of behavioral health, dermatology and other practice areas ideally suited for telehealth.
Within 1 year, CMS shall propose reforms to the Medicare program to enable providers to spend more time with patients.
This part of the EO has several components. First, it contemplates eliminating rules that prohibit clinicians from practicing "at the top of their license." Medicare rules such as the "incident to" requirement that certain services must be provided under direct supervision instead of general supervision contribute to inefficient use of human resources. The direct supervision definition means that a physician must be located in the same building as the clinician providing the service even when the clinician is adequately trained and has necessary credentials. Rules like direct supervision have contributed to limiting proliferation of technology-driven access solutions like remote patient monitoring.
A second feature of this section of the EO appears to be an increase in Medicare reimbursement for E/M codes.
The final section looks like a departure from the current approach used in quantifying physicians' services through Medicare reimbursement. The current system relies on the AMA's development of RVUs at a secret meeting in Chicago every year. The committee that determines each RVU, or Relative Value Unit, is disproportionately populated by specialists. Over the years reimbursement for common services, like a follow-up visits after a procedure, have moved higher for specialists but not for primary care physicians.
The EO seeks to address disparities between payment made to non-physician pracitioners who would be included in "practice expense" under the RVU system and physicians for the same service.
Similarly, this provision of the EO could take on facility fees. An E/M visit to an outpatient clinic at a hospital will result in a professional and a facility fee. The same visit to an independent physician's office generates just the professional fee. CMS could modify the payment system so the facility fee is only paid if the service requires use of the considerable facility infrastructure for which the fee was designed to compensate.
Within 1 year, CMS shall propose regulatory changes to the Medicare program to encourage innovation for patients.
This provision is addressing issues related to parallel review by CMS and the FDA. The program, which was implemented in 2016, has not lived up to expectations. The lack of interest in parallel review is the result of differing agency review standards. CMS considers a "reasonable and necessary" standard while FDA's approval is predicated on a "safe and effective" benchmark.
Further, because there is are two options for obtaining Medicare coverage - Local Coverage Determination and National Coverage Determination - manufacturers of new devices may choose to take the route demanding a lower evidentiary standard - an LCD - which precludes parallel review.
Finally, the executive order calls out coding issues as a limiting factor in obtaining Medicare coverage. In recent years, the AMA and CMS have moved to a more responsive system with certain code changes being considered quarterly. The White House appears to think more needs to be done there but change is difficult. The coding system is owned by the AMA whose editorial board is legendary for its lack of interest in adapting to innovation.
CMS shall ensure that Medicare payments and policies encourage competition and a diversity of sites for patients to access care.
Is the White House trying to revisit site neutral payments after court losses? Maybe.
But it there are also a number of ways to skin a cat. The administration has already begun that process through recent rules that permit certain orthopedic and cardiac procedures to be conducted in outpatient and ambulatory surgical centers. CMS has also revised the reimbursement system for ASCs from an annual update tied to CPI-U to one connected to the hospital market basket. Given the broad latitude Congress gave CMS to set rates for ASCs, it is possible that they are going to do more.
Within 1 year, HHS shall propose a regulation that would provide seniors with better quality care and cost data.
And
Within 1 year HHS shall use Medicare claims data to give health providers additional information regarding practice patterns for services that may pose undue risks to patients, and to inform health providers about practice patterns that are outliers or that are outside recommended standards of care.
These provisions represent a continuation of CMS's advocacy for data transparency and liquidity. The Medicare Compare function and Medicare Plan Finders seem likely candidates for upgrade given the accumulation of data and CMS's committment to making it freely available.
CMS shall propose regulatory changes to the Medicare program, to take effect by January 1, 2021, and shall propose such changes annually thereafter, to combat fraud, waste, and abuse in the Medicare program.
The Holy Grail in program integrity is prospective control. The private sector has been using algorithms for decades to prospectively identify inappropriate medical claims. Medicare, on the other hand, has relied on a system known as "pay and chase." A big stumbling block has been CMS's dearth of data and the talent to manage it, compounded by MACs that appear to not care. There has been an effort in recent years to improve on this and perhaps they are now ready to move forward with a new model.
The HHS Secretary shall study and, within 180 days, recommend approaches to transition toward true market-based pricing in the FFS Medicare program.
The Prospective Payment System is certainly getting long in the tooth and the advent of Medicare Advantage provides an alternative system for determining what the federal Treasury should pay for services. The White House is proposing consideration of an expansion of competitive bidding similar to the system used in DMEPOS with, we should add, mixed results. The White House is also suggesting rates negotiated by MA plans could be the benchmark which flips the script a bit.
Within 1 year CMS shall propose regulatory changes to the Medicare program to reduce the burden on providers and eliminate regulations that create inefficiencies or otherwise undermine patient outcomes.
This administration has made regulatory reduction a priority and the EO suggests they will continue to do so.
Within 180 days, the HHS Secretary, in coordination with the Commissioner of Social Security, shall revise current rules or policies to preserve the Social Security retirement insurance benefits of seniors who choose not to receive benefits under Medicare Part A, and propose other administrative improvements to Medicare enrollment processes for beneficiaries.
As we mentioned earlier, when an American elects to receive their Social Security benefit they are automatically enrolled in Medicare Part A, thus rendering them ineligible to make contributions to an HSA. The EO is suggesting that the Commissioner of Social Security and the HHS Secretary can figure out a way to suspend Part A benefits even as an individual elects to receive Social Security benefits. If they are right, then HSAs would continue to be available to the million of people who are still working and enrolled in a health plan after turning 65.
This provision accomplishes in a way one of the legislative objectives to House Republicans who proposed for several years to expand HSA enrollment to the Medicare population.
Within 1 year, CMS shall identify and remove unnecessary barriers to private contracts that allow Medicare beneficiaries to obtain the care of their choice and facilitate the development of market-driven prices.
Like HSAs, changes to limits on direct contracting has been on the Republican wish-list for years. Federal law permits physicians to opt-out of Medicare and contract directly with patients. If they do so, physicians must opt-out of Medicare completely and not select certain patients and services for which it will not bill Medicare. Less than 1% of physicians opt-out of Medicare and most of those are psychiatrist or dentists.
Two changes that have been proposed in the past are one that would permit physicians to select certain patients or services with whom it would contract directly. Another change would be to permit physicians who have opt-ed out to seek reimbursement from Medicare for the fee the federal government would have otherwise paid. The point of the second provision would be for the physician to eliminate compliance with the conditions of participation in the Medicare program, among other things.
For the most part, the EO is designed to encourage Medicare Advantage enrollment by making it easier and more attractive to beneficiaries. That isn't the entirety of the proposal, however. The White House also appears interested in discovering market prices for health services through things like direct contracting while encouraging physician participation and innovation. In that sense, the EO has a broad reach.
Most of these recommendations are likely to be accomodated in next year's rulemaking. In the meantime, expect more "pen and phone" out of the White House as drug prices remain an issue.
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Emily Evans
Managing Director – Health Policy
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Thomas Tobin
Managing Director
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