Hospitals, Physicians, Insurers Eager for Obama Administration Final Payment, Quality Rules

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By Sara Hansard, Alex Ruoff, James Swann, Nathaniel Weixel, Michael D. Williamson, Mindy Yochelson

Sept. 6 — The health-care industry isn't expecting the Obama administration to propose any new major rules in its final months, but it is expected to issue a number of final rules with potentially far-reaching impact.

It's standard practice for an incoming administration to delay the progress of any regulations proposed by the outgoing administration but that have not yet been made final, and there wouldn't be much time for a full notice-and-comment period should anything new develop. Another possibility is the rarely used Congressional Review Act, which can come into play when a president from another political party takes office. Under the CRA, if a Republican president is elected in November, regulations made final in the last months of the Obama administration would be subject to repeal in the first few months of the next Congress.

Enacted in 1996, the CRA allows Congress to review economically significant rules issued by federal agencies before the rules take effect. Congress may also vote to disapprove new rules, resulting in the rules having no force or effect. If a rule is disapproved, an agency isn't allowed to issue a substantially similar rule later.

The following outlines proposed rules that are expected to be made final by the end of the year.

Part B Drug Payment Model (RIN:0938-AS85).

This controversial proposal tests new ways of footing the bill for expensive therapies, such as chemotherapy, that are administered to Medicare beneficiaries in doctors' offices or on an outpatient basis.

Although the current method of paying for Part B drugs, based on the average sales price, has its share of detractors, many say the proposed two-part model that tests alternative payment designs is a step in the wrong direction.

Health Care Regulations At-A-Glance

Opponents say it will impede patient access to therapies and leave providers with fewer resources to obtain the drugs.

While there's some support in Congress and from lobbyists, most groups—ranging from drugmakers to specialists—have told the Medicare agency to kill the proposal.

Although it may not come out until after the election, the CMS may release the final rule as early as September, according to the American Society of Clinical Oncology.

Merit-Based Incentive Payment System and Alternative Payment Models in Medicare Fee-for-Service (RIN:0938-AS69).

The replacement system for the old sustainable growth rate payment formula was proposed in May and is officially set to be made final in November.

The CMS is rushing to complete the regulations for its proposed new Medicare payment system for doctors before the close of 2016, Rob Tennant, director of health information technology policy for the Medical Group Management Association, told Bloomberg BNA.

The proposal would implement provisions of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) by consolidating current value-based programs into one, known as MIPS. It will also develop the details for alternative payment models that begin in 2019.

However, physician reporting of quality scores, which would be a basis for physician payments for 2019, is slated to start Jan. 1, 2017. Doctors' prime concern revolves around the start date for reporting.

“Hopefully, the agency will delay the program’s initial start date until at least July 1, 2017, to give physicians more time to implement this payment overhaul,” Katie O. Orrico, director of the American Association of Neurological Surgeons' Washington office, told Bloomberg BNA.

Orrico said her group is eager for the CMS to release the final regulations so it “can launch our MACRA-101 crash course and begin educating neurosurgeons on the requirements of Medicare’s new quality payment program.”

Acting CMS Administrator Andy Slavitt has said he would consider such a delay (135 HCDR, 7/14/16).

Lobbyists told Bloomberg BNA that other top concerns are for more opportunities for practices to participate in alternative payment models, and increased flexibility for small and solo practitioners.

MIPS and Meaningful Use.

Under the same proposed merit-based payment rule, CMS will also replace the meaningful use program with the Advancing Care Information program. The proposal doesn't include the meaningful use program's all-or-nothing approach—which penalizes doctors for missing a single requirement—but continues its yearlong reporting periods.

Because of these yearlong reporting periods, doctors will need to be ready to meet the new payment system requirements starting Jan. 1, 2017, which will require changes to their EHR system.

Health IT industry groups are worried technology developers won't have updates ready for doctors by Jan. 1. These groups are pushing for the CMS to shorten the reporting period for the first year of MIPS to 90 days, which would give both doctors and EHR vendors as many as nine more months to prepare.

“Lot of people are looking at January 1 as an unrealistic start date,” Jeff Coughlin, senior director for federal and state affairs for the Healthcare Information and Management Systems Society (HIMSS), told Bloomberg BNA.

However, health IT groups are also still waiting for the CMS to release a final rule that would shorten the reporting period of the meaningful use program in 2016.

Physician groups are pushing for the CMS to publish its final rule as soon as possible to avoid a repeat of 2015, when the agency gave them a similar break but only after the last 90-day reporting period for the year had already begun. The last publication forced the CMS to grant reporting extensions or hardship exceptions for many doctors and hospitals.

CY 2017 Revisions to Physician Fee Schedule, Other Revisions to Medicare Part B (RIN:0938-AS81).

The annual Medicare physician payment rule, due out each Nov. 1, will, for some, take a back seat to the MIPS/APM payment rule.

“The 2017 physician fee schedule proposals are not as far-reaching as we’ve seen in the past, primarily because the agency did not propose many changes to the current federal quality reporting programs, which are headed for the history books,” Jennifer McLaughlin, senior associate director, government affairs, Medical Group Management Association, told Bloomberg BNA.

Although comments were due Sept. 6, concerns mounted earlier on what some consider a burdensome code collection system for global surgery that would replace the existing coding structure.

“Under this system, neurosurgeons would be required to use a new set of so-called G-codes to report on each 10-minute increment of services provided, which would essentially require surgeons to use a stopwatch to track their time,” Orrico said.

The Medical Group Management Association, the American College of Surgeons, and the American Medical Association are working with others to oppose the plan, McLaughlin said.

Programs of All-Inclusive Care for the Elderly (RIN:0938-AR60).

Comments are due Oct. 17 on a proposal that would update regulations for the program that offers community-based services to beneficiaries who might otherwise be in nursing homes. A spokesman for the National PACE Association told Bloomberg BNA Aug. 30 that the group is encouraged by the provisions, which provide “several areas of additional flexibility that should help PACE organizations grow faster and innovate, particularly around the use of an interdisciplinary team.”

He said he hopes the rule will be finalized early in 2017.

Hospital Outpatient Rule (RIN:0938-AS82).

A final rule detailing Medicare's calendar 2017 payment rates for hospital outpatient departments is expected to be released in late October or early November, Lester said.

Payments to outpatient hospitals under the proposal, released in July, are slated to increase 1.6 percent in calendar 2017.

In the same rule, the CMS proposed to increase reimbursements to ambulatory surgical centers 1.2 percent in calendar 2017. The proposal also would implement a policy known as site-neutral payments, the CMS said in a July fact sheet. Hospital industry groups chided the CMS for the site-neutral payment regulations (130 HCDR, 7/7/16).

Section 603 of the Bipartisan Budget Act of 2015 required that beginning in 2017, certain items and services provided by hospital off-campus outpatient departments would no longer be paid under the hospital outpatient prospective payment system. The law attempts to equalize Medicare payment rates for hospital outpatient departments and hospital-owned physician offices and was meant to address the practice of hospitals acquiring physician offices and then billing patients under the outpatient prospective payment system, which has higher reimbursement rates than the Medicare physician fee schedule.

The reimbursement changes will apply to hospital-owned physician practices acquired or opened since the date the law was signed—Nov. 2, 2015—that are located farther than 250 yards from a hospital's main campus.

The CMS Office of the Actuary estimates that implementing the site-neutral policies should save Medicare about $500 million in 2017. Site-neutral payment policies are a way to focus payments on patients rather than the care setting where service is offered, according to the CMS.

The proposed outpatient hospital rule would also allow hospitals and doctors that have previously participated in the meaningful use program to report during any continuous 90-day period within the calendar year on their compliance with meaningful use program requirements.

The proposed rule would also eliminate the clinical decisions support and the computerized provider order entry objectives for hospitals participating in the second and third phases of the program (130 HCDR, 7/7/16).

Nursing Home Requirements of Participation (RIN:0938-AR61).

Contentious updates to a Medicare final nursing home rule involving arbitration clauses are under review by the White House and are likely to be released in September.

Under the 2015 proposed rule, if a nursing home includes binding, or pre-dispute, arbitration agreements in their admission contracts, the facility must explain the agreements and the residents must acknowledge they understand them.

Plaintiffs' attorneys and some consumer advocacy groups have argued that pre-dispute arbitration is unfair to patients and their families and is more likely to benefit nursing home owners. The process removes an individual's right to have their case heard by a judge and jury, and instead moves disputes to private arbitration firms, typically hired by the company accused of wrongdoing. This practice has led to allegations that arbitration firms usually resolve disputes in a way that benefits nursing home owners.

The Office of Management and Budget on Aug. 16 started reviewing the final rule, which governs conditions of participation that more than 15,000 long-term care facilities must implement to qualify for the Medicare program (160 HCDR, 8/18/16). The Centers for Medicare & Medicaid Services released the proposed rule with the arbitration proposal in July 2015 (200 HCDR 200, 10/16/15).

The final rule will likely cover issues beyond arbitration. It “will affect every aspect of resident care, services and life for decades to come,” Robyn Grant, director of public policy and advocacy at the National Consumer Voice for Quality Long-Term Care, a patient advocacy group, told Bloomberg BNA Aug. 26.

For example, the final rule may address reporting of suspicious activities and crimes in nursing homes, Grant said. “We believe, but are not sure, that they may be part of” the final rule, according to Grant. When crimes are committed in nursing homes, police involvement has been infrequent, and when police are involved, it is often late in the investigatory process, making collection of evidence and prosecution difficult, she said.

Requiring long-term care facilities and their employees to report suspected crimes to law enforcement officials will help prevent repeat abuse and remove abusers from employment in long-term care facilities, Grant told Bloomberg BNA.

Long-term care pharmacies, which supply nursing homes with medications, are also paying attention to the rule, Alan G. Rosenbloom, president and CEO of the Washington-based Senior Care Pharmacy Coalition, told Bloomberg BNA Aug. 26. In the proposed rule, the CMS outlined an overly broad definition for psychotropic drugs, he said.

For example, under the proposal, a psychotropic drug would be any prescription that affects brain activities associated with mental processes and behavior, Rosenbloom said. Moreover, the proposal would limit nursing homes from dispensing psychotropic drugs for more than 48 hours. This could prevent nursing homes from dispensing Tylenol to a resident for more than two days at a time, because it affects brain activities associated with mental processes or behavior, he said.

Rosenbloom told Bloomberg BNA the final rule should come out in September.

Home Health Payment Rule (RIN:0938-AS80).

A final rule detailing Medicare's payment rates for home health providers is expected in late October, William Dombi, the National Association for Home Care & Hospice's (NAHC) vice president for law, told Bloomberg BNA Aug. 25. The NAHC is a Washington-based industry group.

The CMS calendar year 2017 home health proposed rule would reduce overall payments $180 million.

About 3.4 million beneficiaries received home health services from about 11,400 home health agencies, costing Medicare about $17.8 billion in 2015, the CMS said June 27, when the agency proposed the rule (124 HCDR, 6/28/16).

ESRD/DME Rule (RIN:0938-S83).

A final rule detailing Medicare's payment rates for the end-stage renal disease (ESRD) calendar 2017 prospective payment system is likely to be released in November, Kathleen J. Lester, an attorney with Lester Health Law PLLC, told Bloomberg BNA Aug. 26. She works with Kidney Care Partners, a group representing dialysis providers, patient advocates and drugmakers.

The ESRD proposed rule would modify the methodology for determining how dialysis sessions beyond three a week are reimbursed and introduced payment to dialysis facilities providing dialysis to patients with acute kidney injury, Lester said.

Medicare payments to cover dialysis treatments would increase $50 million (0.5 percent) in calendar year 2017 compared with 2016, under the ESRD proposed rule released June 24 (123 HCDR, 6/27/16). The increase is larger than the estimated $10 million (0.2 percent) increase announced last fall for 2016, and would affect about 6,000 freestanding and hospital-based ESRD facilities. Large U.S. dialysis providers include DaVita Healthcare Partners Inc. and Fresenius Medical Care.

Another part of the same rule alters aspects of the durable medical equipment (DME) competitive bidding program.

These prospective changes include a requirement for suppliers to obtain a $100,000 surety bond for each area in which the supplier is making a bid (167 HCDR, 8/29/16).

The rule also proposes to limit bid ceilings for DME based on higher rates from the fee schedule rather than the lower rates that were adjusted based on bidding, a move that was generally supported by the Medicare Payment Advisory Commission, which advises Congress on Medicare policy (152 HCDR, 8/8/16).


The health-care industry is still sorting out the impact of a long-awaited April 25 final rule that would align Medicaid and Children's Health Insurance Program (CHIP) managed care plans with other sources of health insurance coverage. Industry sources told Bloomberg BNA they expect the agency to issue guidance documents to tweak the final rule, but not propose anything ground-breaking.

Alex Shekhdar, a policy expert at the Medicaid Health Plans of America, said he expects “subregulatory guidance” on the final managed care rule from the agency in the form of frequently asked questions and informational bulletins.

Shekhdar told Bloomberg BNA the CMS acts quickly to issue guidance and corrections on issues that have an immediate impact— like the Affordable Care Act's insurance exchanges, but the agency doesn't have the same imperative for Medicaid.

DSH Hospital Payments (RIN:0938-AS92).

The CMS Aug. 15 proposed clarifications to the treatment of third-party payers in calculating safety-net hospitals' uncompensated care costs. Comments are due Sept. 14.

Disproportionate share, or safety-net, hospitals' (DSH) uncompensated care costs may only include those costs for Medicaid-eligible individuals that remain after accounting for payments from Medicare or other third-party payers, according to the proposed rule.

State Medicaid programs make disproportionate share hospital payments to qualifying hospitals that serve a large number of “low-income patients with special needs,” the agency said. The CMS establishes a yearly DSH allotment for each state that limits the federal government's spending (or federal financial participation) on total statewide DSH payments. The proposed rule could reduce payments to safety-net hospitals from state Medicaid programs, because the facilities could only calculate uncompensated care costs after first considering payments from Medicare or other third-party payers.

Emergency Preparedness (RIN:0938-AO91).

A final disaster planning rule for Medicare and Medicaid providers could be issued in the next few days. The White House Office of Management and Budget Aug. 29 wrapped up its review of the rule , which contains emergency preparedness requirements for Medicare and Medicaid providers and suppliers to ensure that they adequately plan for both natural and man-made disasters.

The rule from the Department of Health and Human Services “ensures providers and suppliers are adequately prepared to meet the needs of patients, residents, clients, and participants during disasters and emergency situations,” according to a description on the OMB’s website. The proposed version was published in December 2013, and the final rule was at the OMB since November 2015.

Supplemental Payments (RIN:0938-AS61).

The CMS is also expected to issue a proposed rule on supplemental payments to Medicaid providers. The Centers for Medicare & Medicaid Services proposal would establish new reporting requirements for states to provide to the agency certain information on supplemental payments to Medicaid providers, including supplemental payments approved under either Medicaid state plan or demonstration authority.

The proposal was received by the Office of Management and Budget July 19.

In addition to regular Medicaid payments to providers, states are permitted to make supplemental payments—not necessarily to cover specific claims—that are intended to offset some of the uncompensated provider costs of caring for Medicaid. The rule has been on the CMS regulatory agenda for over a year; the original timetable called for fall 2015 publication of the proposed rule.

Notice of Benefit and Payment Parameters (RIN:0938-AS95).

The most important health insurance regulation to be issued in 2016 will be the final notice of benefit and payment parameters governing the 2018 Affordable Care Act marketplaces.

A proposed rule aimed at shoring up the faltering marketplaces was published Sept. 6 (168 HCDR, 8/30/16)and a final version is likely to be issued in 2016 before the end of the Obama administration, Timothy Jost, a consumer representative to the National Association of Insurance Commissioners, told Bloomberg BNA.

The annual notice of benefit and payment parameters, with an accompanying letter to issuers, covers a wide range of ACA regulatory policies and previously it has been finalized early in the year prior to the marketplace calendar year covered by the rule. Most major marketplace rules are in place from prior years, and the 2018 proposed rule includes changes to the ACA's risk adjustment program to help issuers that have had to make large payments to cover sick enrollees in other health plans.

Beginning with the 2017 benefit year, the proposed rule would modify the risk adjustment program to account for enrollees covered for only part of a year, who generally have higher health costs than people covered a full year. Starting in 2018, prescription drug data would be used to calculate the risk of covering people with high-cost conditions such as hepatitis C and human immunodeficiency virus under the proposal.

The proposed rule also includes provisions to ensure that people enrolling outside of normal open enrollment periods, who have proved to be costlier to insure, are eligible to do so because of life changing events such as the birth of a child or a job change.

The proposals would “support issuers with high-cost enrollees, while updating risk adjustment; strengthen the risk pool; promote additional enrollment; and support issuers in entering the Marketplace or growing their Marketplace business,” Health Insurance Marketplace CEO Kevin Counihan said in a blog posting Aug. 29.

Short-Term, Limited Duration Insurance (RIN:1545-BN44) (RIN:1210-B75) (RIN:0938-AS93).

A proposed rule issued in June that would sharply restrict short-term health plans that don't comply with the ACA is expected to become final in October, Jost said.

The proposal, which would reduce the term of the plans from less than a year to less than three months, includes rules for expatriate health plans, excepted benefits such as accident and disability insurance that aren't subject to the ACA, as well as lifetime and annual limits.

The proposal has divided the industry, with most health insurers supporting the restrictions in the hope of getting more healthy people into the marketplaces, and state insurance regulators and health insurance brokers opposing it. The opponents argue that many people between employer plans or who didn't sign up during open enrollment could lose coverage (157 HCDR, 8/15/16).

UnitedHealthcare, Aetna and Humana are withdrawing from most of the marketplaces in 2017 due to losses on the plans, and the HHS is looking for ways to make the marketplaces more economically viable.

Information Reporting of Catastrophic Health Coverage and Other Issues (RIN 1545–BN23).

The Internal Revenue Service released a proposed rule July 29 aimed at easing challenges faced by health insurers and employers in complying with minimum essential coverage reporting requirements (147 HCDR, 8/1/16). The comment period on that rule ends Oct. 3.


The first half of 2016 saw a wave of fraud and abuse final rules, including the so-called 60-day overpayment rule and an expansion of the civil monetary penalty authority.

As the year nears its end, several additional final rules are expected, with two focused on anti-kickback safe harbors and additional civil monetary penalties, and one focused on increasing the government's power to exclude individuals from participating in federal health-care programs.

Anti-Kickback Statute Safe Harbors, Expanded Use of Gainsharing (RIN:0936-AA06).

One expected final rule would revise anti-kickback statute safe harbors as well as expand the use of gainsharing arrangements.

The final rule, which was proposed in October 2014 and is now being reviewed by the White House Office of Management and Budget, would add safe harbors covering some Medicare Part D activities as well as programs offering free medical services to patients.

As for gainsharing, the final rule would narrow the scope of the gainsharing CMP. In gainsharing arrangements, hospitals reward physicians by giving them part of the cost savings the physicians generate when they contribute to overall efficiency through innovative and streamlined procedures, without negatively affecting patient care.

The gainsharing CMP has already been revised courtesy of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Prior to MACRA, hospitals were prohibited from paying cost-savings bonuses to doctors, because presumably that could induce a reduction or restriction of services to patients, even if the services were medically unnecessary. MACRA revised the wording of the gainsharing CMP to prohibit only payments that triggered reduction or restriction of medically necessary services.

Civil Penalties for False Statements by Doctors on Enrollment Applications (RIN:0936-AA04).

A second expected final rule would expand provider CMPs to situations such as a physician making false statements on an enrollment application. The final rule would also cover providers who failed to provide the HHS OIG with timely access to documents and providers who prescribed or ordered medication while excluded from Medicare or Medicaid.

The rule was originally proposed in May 2014 and is also being reviewed by the OMB.

Expanded OIG Exclusion Authority (RIN 0936-AA05).

A final rule expanding the OIG's exclusion authority is also expected by the end of the year. Originally proposed in May 2014, the final rule would allow the OIG to exclude individuals from participating in federal health-care programs if they had previously been convicted of obstructing a government audit.

Exclusions would also be allowed for individuals who didn't provide Medicare or Medicaid with payment information, and individuals who made false statements on provider enrollment applications.

EHR Oversight (RIN 0955-AA00).

The ONC's proposed rule would give the agency the ability to directly review federally certified EHRs and other health information technologies. Currently, the agency relies on a few designated organizations in the private sector that ensure certified EHRs are working properly.

The final rule could be released before the fall. The Office of Management and Budget Aug. 16 started reviewing the final rule, which would give the ONC the ability to respond directly to complaints that certified EHRs aren’t working as advertised or could pose a threat to patient safety, particularly when used with other health IT tools.

Industry observers were surprised the ONC decided to continue with its proposal after it was criticized by dozens of health IT groups and lawmakers. HIMSS' Coughlin said he expects the ONC to have made some changes to its proposal, but wasn't sure what they would be.

Health IT industry groups have said they're worried the agency is seeking overly broad and ambiguous authority over federally certified EHRs and other health IT. A group of Republican lawmakers in July sent a letter to the then-head of the ONC Karen DeSalvo questioning whether the proposed changes might overstep the agency's authorities.

To contact the reporter on this story: Sara Hansard in Washington at, Alex Ruoff in Washington at, James Swann in Washington at, Nathaniel Weixel in Washington at, Michael D. Williamson in Washington at, Mindy Yochelson in Washington at

To contact the editor responsible for this story: Kendra Casey Plank at

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