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Insights and Trends

Healthcare Headlines from the Hill: February Edition

Stay ahead of the latest regulatory shifts and healthcare breaking news with Headlines from the Hill.

In this month’s edition you will find:

Medicare Advantage plan denials: Quality measure proposal approved.

A quality measure developed by the Federation of American Hospitals (FAH), aimed at providing increased transparency and accountability in the prior authorization process used by Medicare Advantage (MA) plans, was overwhelmingly approved by an independent, outside expert panel.  

The announcement was included in the Pre-Rulemaking Measure Review (PRMR) results released on February 1 by the Partnership for Quality Measurement. The Level 1 Upheld Denial Rate Measure developed by FAH will make transparent the extent to which MA plans’ denials of care or services are overturned on appeal, providing additional insights to seniors and regulators on whether plans are abusing the prior authorization process to arbitrarily deny or delay care.

The recommendations will be sent to CMS after a public comment period. Additional information on FAH’s Level 1 Upheld Denial Rate Measure include: 

    • This measure will enhance CMS’ oversight of MA plans, help expose patterns of inappropriate care denials by insurance companies and hold health plans accountable. The measure will also provide beneficiaries with needed insights to inform their decision-making about plan membership.

    • Specifically, the FAH measure will reveal the percent of Level 1 appeals where a plan’s determination was “upheld” by the plan out of all the reconsiderations made by the plan (upheld, overturned, and partially overturned determinations).  

    • The measure was recommended with nearly 90% of the Clinician Recommendation Group members voting in favor. The committee noted the measure may “(1) reduce burden and improve transparency for patients and beneficiaries; (2) alleviate undue anxiety and delays; and (3) complement the existing Level 2 measure that is currently in the Star Ratings program. Together, the measures could reduce frustration of obtaining unnecessary prior authorizations with MA. The committee reached consensus on this measure and voted to Recommend the measure for inclusion in the Part C and D Star Ratings program.”

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Healthcare spending in the United States: Unsustainable for patients, employers and taxpayers.

The House Energy and Commerce Subcommittee on Health held a hearing to discuss healthcare consolidation, improving transparency, healthcare spending, site-neutral payments and health disparities. Here are some of the key takeaways:

    • Subcommittee Chair Brett Guthrie (R-KY) emphasized the importance of policies that empower patients, providers and payers by advancing and codifying price transparency for hospitals and insurance companies. He said the U.S. is currently spending $4.5 trillion on health expenditures, which is expected to grow faster over the next decade.

    • Subcommittee Ranking Member Anna Eshoo (D-CA) said the U.S. spends approximately $14,000 per person for healthcare each year. She said half of Americans say it is difficult to afford healthcare and two-thirds say the healthcare system does not meet their needs.

    • Full Committee Ranking Member Pallone (D-NJ) said employers cannot find data to negotiate prices and design high-value plans. He added that the wide price variations and lack of transparency make it difficult for employees to compare providers. He said providing care with Medicare Advantage (MA) costs more than traditional Medicare due to the lack of data available to provide oversight.

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Behavioral health: CMS announces new model to advance integration.

The new model seeks to improve quality of care, access, and outcomes for people with mental health conditions and substance use disorders in Medicaid and Medicare. The model will launch in Fall 2024 and is anticipated to operate for eight years in up to eight states.

CMS will release a Notice of Funding Opportunity for the model in Spring 2024. The Department of Health and Human Services (HHS), through CMS, is announcing a new model to test approaches for addressing the behavioral and physical health, as well as health-related social needs, of people with Medicaid and Medicare.

The Innovation in Behavioral Health (IBH) Model’s goal is to improve the overall quality of care and outcomes for adults with mental health conditions and/or substance use disorders by connecting them with the physical, behavioral, and social supports needed to manage their care.

The model will also promote health information technology (health IT) capacity building through infrastructure payments and other activities. The IBH Model will be tested by the CMS Innovation Center. Under IBH, community-based behavioral health practices will form interprofessional care teams consisting of behavioral and physical health providers, as well as community-based supports. This new model supports the President’s mental health strategy and implements an action item in the HHS Roadmap for BH integration.

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Clinician committee votes in favor of Federation of American Hospitals measure.

FAH has been a developer on a managed care measure of accountability for MA plans regarding their initial determinations on prior authorization decision appeals. This has been part of an ongoing effort to bring more transparency to the insurance practices of MA plans and to prod CMS to hold plans more accountable for abusive performance.

The FAH objective is to have the high level of reversals of MA plan prior authorization decisions exposed and ultimately not only to have it publicly reported but become part of the Stars program that greatly affects CMS plan payment. The first step in having the FAH measure included in the CMS programs was to have CMS put it on the Measure Under Consideration (MUC) list. The FAH accomplished that in 2023.

Next the CMS submits the MUC list to an outside contractor, Battelle's PQM Pre-Rulemaking Measure Review (PRMR). There, the FAH measure was considered by the PRMR’s Clinician Committee Recommendation Group. FAH reported the committee voted overwhelmingly (15-1) in favor of supporting the inclusion of the Federation’s appeals measure into the Medicare Part C & D Star Ratings Program. Many people are optimistic that CMS will adopt the measure for reporting in its annual regulatory process in 2024 (for plan year 2026).

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MedPAC proposes new inpatient rehab payment reform during annual session.

The Medicare Payment Advisory Commission (MedPAC) convened its yearly session on payment adequacy within the Inpatient Rehabilitation Facility (IRF) prospective payment system (PPS).

As expected, the Commission finalized its recommendation to implement a 5% reduction to fiscal year (FY) 2025 IRF PPS payments. The vote was unanimous, with numerous Commissioners citing IRF Medicare fee-for-service (FFS) margins as the rationale for recommending the cut.

American Medical Rehabilitation Providers Association (AMRPA) identified several concerns and questions about MedPAC’s newest approach to IRF payment reform, particularly with respect to the use of the 2019 modeling data used by MedPAC. It is believed this type of assessment should be based on payment data for a period where CMS did not make significant changes to the Case Mix Groups (CMGs) or the underlying guidelines used for assessments. MedPAC has recommended a payment reduction (ranging from 3-5%) in the IRF PPS for the last 5+ years, and this recommendation has never been acted upon by Congress.

In this year’s meeting, MedPAC proceeded with a session dedicated to “improving the accuracy of” IRF payments. The session focused on payment-to-cost differences among the various Rehabilitation Impairment Categories (RICs) and CMGs. Based on their findings, the MedPAC staff asserted that reforming the CMG payment weight calculation could address several issues in the IRF field - such as payment incentives that impact admission and coding practices for certain conditions.

As background, IRF CMG payment weights are currently updated using a Hospital-Specific Relative Value (HSRV) method, under which CMG payment weights are set in a manner proportional to “within-IRF” relative costs per stay. MedPAC staff suggested that HSRV may be overly sensitive to relative costs between IRFs, where payment weights may “overvalue” higher-cost providers. 

MedPAC staff discussed (for the first time) the potential use of the “Average Cost” method as an alternative to IRF CMG weighting, under which CMG payment weights are set to be proportional to costs per stay across all IRFs. In effect, this method would combine CMG payments and costs for all IRFs and create a payment-to-cost ratio reflecting all IRFs (instead of the HSRV average value used for each IRF). 

It was noted that this could represent a more accurate methodology and would address the variability in payment-to-cost ratios among RICs and CMGs. Specifically, MedPAC staff noted that the Average Cost method would cause payment weights to decrease if “lower cost IRFs” concentrated on patients from particular RICs or CMGs. 

MedPAC analysis finds that the move to the Average Cost method would cause payment-to-cost ratios to shift across RICs – staff noting that this change could “smooth out” potential profitability across all RICs. This could, in turn, decrease the current payment-to-cost ratio for some conditions, while increasing the payment-to-cost ratio for other conditions.

Advantages identified by MedPAC staff in pursuing this type of payment change include: 

    • This policy is budget-neutral
    • This method is already used in the IPPS and Skilled Nursing Facility payment systems
    • The reform will not create additional administrative burden
    • The Average Cost method may help “reduce financial incentives to admit certain types of patients over others or to code patients as more functionally impaired.”
    • This policy would not require any statutory change

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