2/26/2019

Alignment and Incentive Strategies in Value-Based

Arrangements

Lindsey Lonergan, Navicent Health

Aaron Elias, PYA
Bruce A. Johnson, Polsinelli

Overview

 Trends in alignment and alternative payment

models – provider and payor perspectives

 Alternative payment model and alignment

goals, incentives and challenges

 Strategic alternatives to traditional

alignment and incentive models

1
 2/26/2019

APM AND ALIGNMENT TRENDS

Alignment and APM Trends

Alternative Payment Model (APM) Framework

A public-private partnership established to

accelerate transition in the healthcare system
from a fee-for-service (FFS) payment model to
ones that pays providers for quality care,
improved health, and lower costs.

2
 2/26/2019

Risk Based Contracting - Risk Continuum

Shared Bundled
FFS Capitation
Savings Payments

• More • FFS until end of year • Payment per episode • Per member/per
volume, reconciliation of care month (PMPM)
more • Carve-outs
• Bonus if quality
payment
goals met
• Upside only; both
up and downside

Alignment and APM Trends

3
 2/26/2019

Alignment and APM Trends

ACOs and Covered Lives over Time

Source: Health Affairs. Recent Progress In The Value Journey: Growth Of ACOs And Value-Based Payment Models In 2018 & Leavitt Partners ACO Database

Alignment and APM Trends

ACO Contracts over Time, by Payer

Source: Health Affairs. Recent Progress In The Value Journey: Growth Of ACOs And Value-Based Payment Models In 2018 & Leavitt Partners ACO Database

4
 2/26/2019

Alignment and APM Trends

Medicare APM Participants

Source: Health Affairs. Recent Progress In The Value Journey: Growth Of ACOs And Value-Based Payment Models In 2018

ALIGNMENT GOALS, INCENTIVES, AND

CHALLENGES

5
 2/26/2019

Alignment and APM Goals,

Incentives and Challenges
 Health care goals and mixed messages 2010-
2019:
– Expand access
– Improve quality and “value”
– Transition to Medicare (or lower) rates
– Consolidation may increase costs and impair
competition
– Volume is bad
– Move to risk . . . faster

MACRA/”Quality Payment Program”

Timeline
MACRA Performance Year 2017 2018 2019 2020 2021 2022 2023 2024

MACRA Payment Year 2019 2020 2021 2022 2023 2024 2025 2026

Medicare Physician Fee Schedule 0.5% 0% 0% 0% 0% 0% 0% 0.75% or 0.25%

Updates
MIPS +/-4% +/-5% +/-7% +/-9% +/-9% +/-9% +/-9% +/-9%
• Quality
• Resource use
• Improvement activities
• Adv. Care Info/CEHRT

Advanced Alternative Payment

Models (APMs) Excluded from MIPS

• Medicare Payment Threshold 25% 25% 50% 50% 75% 75% 75% 75%
• Medicare Patient Ct. Threshold 20% 20% 35% 35% 50% 50% 50% 50%

• All Payer Payment 50%+25% MC 75%+25% MC 75%+25% MC

• All Payer Patient Count 35%+20% MC 50%+20% MC 50%+20% MC

12
Source: Medicare Access and CHIP Reauthorization Act of 2015, Path to Value (CMS)

6
 2/26/2019

Trends in Value-Based Contracting

• AMGA 2017 Medical Group Compensation and Productivity Survey

• Dobosenski, Tom. “Hospital Impact – The intersection of physician compensation and value-based payment.”
FierceHealthcare, Aug. 16, 2017. https://www.fiercehealthcare.com/hospitals/hospital-impact-a-look-at-
intersection-compensation-and-value-based-payment. Accessed May 1, 2018.

The Incentive Conundrum

Internal Compensation Model Consideration of Primary Incentive/ Works Best With
(Prof. Svs) Practice Costs What’s Rewarded External Payment
Model
• $ wRVU None FFS production FFS
• % Prof. Colls
• $wRVU + Quality Metrics None FFS /some quality FFS w/ value-based

• % Prof. Colls + Quality &
Financial Surplus
• Hourly
• Revenues - Expense (private
practice and virtual private
practice models)
• Base + Incentive
Possible (surplus) FFS, quality and cost FFS w/ limited risk and
(possible) value-based
None Hours worked FFS, risk (with uncertain
patient volume)
Possible (surplus) FFS, quality, cost and FFS and risk
performance under risk

Observation: Few incentive models directly “align” provider incentives with external
payment models by focusing provider attention on practice cost (operational and
medical), financial success, quality and other “at-risk” success variables

7
 2/26/2019

STRATEGIC ALTERNATIVES TO
TRADITIONAL ALIGNMENT MODELS

Future Alignment and Incentive

Models
 Evolution of provider compensation models
– Migration from pure volume (RVUs)
– Incorporation of costs (operations and cost of care)
– “Mixed” models including professional service
compensation with incentives and investment income
– Financial and structural incentives to move to and
succeed under risk
 Full/partial divestiture with “equity/JV” models

8
 2/26/2019

Strategic Considerations and

Options – Key Questions
1. Where you stand depends on where you sit
– HS/hospital, physician or other owned?
2. Should we stay or should we go?
3. Should we create or should we join?
4. Should we keep, trim, expand or bring on
new partners?
5. Exit strategy?

Perceptions and Observations

 Consolidation may increase costs and reduce
competition; physician-driven models preferred
 Physician enterprise operating losses
 Disintegration with contractual alignment
 Importance of data, financial and other
incentives to value-based performance

18

9
 2/26/2019

Future Models
 Adjustment of APM sponsors & participants
 Adjustment of roles in APMs
 Expansion of risk – pharmacy, other services
 Disintegration and equity models
 Compensation for services, savings and
investment returns
 New marriages/relationships and “partnerships”

19

Keys to Innovation
 Ability to blur the lines between HC sectors
 Partner with “non-traditional” partners
 Concurrent operation of volume and value-based models
 Ability to move quickly
 Believe and act on data re patient demands/needs
 Strategy based on patient/community need; not financial
needs
 Accept change as necessary (even if difficult)
 Take risks to better meet patient/community needs
 Comfort with revenues/margin from new sources
 Willing to redeploy capital in different ways
 Embrace digital health technology
 Build a sustainable innovation infrastructure
Source: Adapted from AHA Center for Health Innovation webinar, January 16, 2019.

10
 2/26/2019

Reimbursement Trends in Behavioral Health

Jennifer Evans, Shareholder, Polsinelli
Bragg Hemme, Shareholder, Polsinelli

The Landscape

11
 2/26/2019

Key Drivers

 Opioid crisis and an increase in the population in need of treatment

 Destigmatization of mental health and substance abuse treatment
 Growth in manage care-covered population
 Growth in coverage by government payers
 ACA / Obamacare: expanded insured population and named mental
health/ SUD as essential health benefits
 Parity Law: equivalent coverage for BH as medical
 Greater push to integrate behavioral health services into primary
care

REIMBURSEMENT TRENDS

12
 2/26/2019

Medicare Coverage
• Inpatient/Residential
• SBIRT
• PHP/IOP
• Diagnostic lab
• Prescription drugs (Part D)
– Limited, but expanding coverage
• Professional Services

Changes in Medicare
 Integrating Behavioral Health into Primary Care
– Billable codes for physicians and NPPs for BHI services in a
calendar month
– 2018 – 4 CPT codes for services furnished unsing the
Psychiatric Collaborative Care Model (“CoCM”)
• 1 CPT for services under different models of care
– RHC/FQHCs – 2 codes available
• General Care Management
• CoCM
 Quality Reporting (tied to payment) tied to Mental Health
– Inpatient/Outpatient
– Inpatient Psychiatric Facility Quality Reporting
– MIPS

13
 2/26/2019

Medicare – SUPPORT Act

 SUPPORT Act – Medicare Provisions

– Expanded Telehealth
– Expanded coverage of certain opioid treatment
programs
• Medication-Assisted Treatment at Opioid Treatment
Programs
– Broader screening
– Part D changes for at-risk beneficiaries
– Potential payment suspensions for pharmacies

Medicaid Coverage
 Coverage varies by states, as some services required and others
are optional
 Optional services:
Prescribed medications Peer Supports
Targeted Case Management IMD
Rehab services Telemedicine
Therapy MAT
Medication Management Detox
Clinic Services Residential/IOP/PHP
LCSW

 For Medicaid-expansion population, alternative benefit plans

(“ABPs”) must contain essential health benefits, including mental
health and SUD benefits
 Despite expansion of Medicaid-coverage lives and increased
coverage opportunities, many non-hospital providers do not take
Medicaid

14
 2/26/2019

Medicaid Trends
 Increase in number of patients covered
– Medicaid expansion
– Waivers for expanded eligibility based mental health
needs
 Integration of BH into primary care –
Collaborative Care Models
 Changes to IMD Payment Exclusions
 Accountability on Medicaid Managed Care Plans
 Increased Demonstration Project Opportunities

Medicaid Provider Issues

 Provider Agreement
 Most Favored Nation Rate Arguments
 Covered/Non-Covered Services
 Billing Beneficiaries & Out of Pocket

15
 2/26/2019

Medicaid - SUPPORT Act

 SUPPORT Act – Medicaid Provisions
- Additional flexibility for coverage of services by IMD
- Medicaid Protection for at-risk and former foster youth
- Demonstration project to increase substance abuse
provider capacity
- Medicaid drug review and utilization
- Medicaid health homes
- Expanded telehealth
- Moms/babies
- Assessing barriers to treatment
- Studies of MAT utilization controls

Private Pay Trends

 Out-of-Network Reimbursement
– Decreased rates
– Increased denials and audits
– Increased delays in payment
– Increased pre-pay medical records requests
– Tying payment to Medicare or Medicaid rates
 In-Network
– Move to narrow networks
– Starting to consider bundled/value-based models

16
 2/26/2019

Changing Reimbursement
Models
 Value-Based Payment
- Substance abuse treatment is prime target
because currently largely unmanaged
- Must assume risk to some degree
 Arrangements with Capitated Providers
- Health systems, IPAs, etc. financially responsible
for substance abuse treatment
- Opportunity to partner

Private/Patient Pay
 Increase in disposable income, can lead to increase
demand by population willing and able to pay
 Negotiate term 1:1
 Consider discount strategy (e.g., self-pay, prompt or
pre-pay)
 Determine under what circumstances insured person
can opt to not use insurance (e.g., mandatory
assignment for Medicare, payer contracts)
 If patient uses insurance, determine what services are
not covered and whether center can bill patient

17
 2/26/2019

MENTAL HEALTH PARITY &

ADDICTION EQUITY

Mental Health Parity & Addiction

Equity Act of 2008
Financial and Treatment Limitations on Mental
Health and Substance Use Disorder benefits may
be no more restrictive and applied no more
stringently than Medical or Surgical benefits

Sens. Paul Wellstone (MN)|Pete Domenici (NM)

 IF Mental Health and SUD benefits included

18
 2/26/2019

Mental Health Parity & Addiction

Equity Act
Financial and Treatment Limitations on Mental
Health and Substance Use Disorder benefits may
be no more restrictive and applied no more
stringently than to Medical/Surgical benefits

 Extended by the Affordable Care Act | EHBs

 Applies to:
– Employer Group Health Plans
– Federal Employee Health Benefit Plans
– Medicaid Managed Care
– Medicaid Alternative Benefit Plans (EHB)
• “Expansion” Medicaid up to 138% FPL

19
 2/26/2019

Parity and Addiction Equity

Financial and Treatment Limitations on Mental

Health and Substance Use Disorder benefits may
be no more restrictive and applied no more
stringently than to Medical/Surgical benefits

IMPACT ON REIMBURSEMENT
 Coverage – Yes/No
 Out of Pocket Costs/Deductibles
 Limits on Service

Parity and Equity

Benefits | Classifications
Define Benefits
Medical/Surgical | Mental Health| SUD

Classifications*
1. Inpatient
2. Outpatient (office visits may be distinct)
3. Emergency Care
4. Prescription Drugs (tiers permitted)
* If Behavioral Health offered in any classification,
it must be covered in every classification where
medical/surgical benefits offered

20
 2/26/2019

Parity and Equity

Benefits | Classifications |Scope
Define Benefits
Medical/Surgical | Mental Health| SUD
Classifications
Inpatient|Outpatient|Emergency|RxDrugs
Scope
1. Financial Limitations|Quantitative Tx Limits
2. Non-Quantitative Tx Limits (NQTL)
3. Aggregate Lifetime/Annual Dollar Limits

Parity and Equity

Benefits | Classification | Scope

Benefits
Medical/Surgical | Mental Health| SUD

CLASSIFICATIONS SCOPE
1. Inpatient 1. Financial Requirements,
2. Outpatient Quantitative Tx Limits
2. Non-Quantitative Tx Limits
3. Emergency Care (NQTLs)
4. Rx Drugs 3. Aggregate Lifetime/Annual
parity for all classifications Dollar Limits

21
 2/26/2019

Parity and Equity

Practical Issues
 Restrictions based on location, facility type,
certification, provider specialty
 Higher Copays/Deductibles/Financial Limits
 Differential Prior Authorization requirements
 Day Limits
 Higher Cost Prescription Medications

Parity and Equity

Practical Difficulties to Enforce
 Denials – Must Appeal
 Standing can be difficult to establish for
providers
 Facts and comparisons can be difficult to
obtain, request documents and plan
information from payor
 Medicaid Evaluation Tool for ABP SPA
 Some Government Interest in Enforcement
 Overpayment/Audit Defense

22
 2/26/2019

AUDIT TRENDS

Audit Trends
 Increased Audits
- In-network and Out-of-network
- Government and Private Payer
- Pre- and post-pay
- Increased focus on substance abuse programs
- Easy target for audit departments due to lack of
history and guidance re: documentation

23
 2/26/2019

Audit Trends
 In-network and Out-of-network audits up
 Payors spending more on substance abuse treatment
due to increased coverage mandates
 Audit priority area
 BH/SUD is a “soft target” due to:
- “diversity” of treatment models and payer
standards
- subjectivity of “medical necessity”
- resistance to documentation and compliance norms

Audit Hot Spots

- Physician orders/certification
- Labs
- “FL Model”
- Therapy Hours
- Level of Care/Medical Necessity
- Billing/Coding

24
 2/26/2019

FRAUD AND ABUSE TRENDS IN

BEHAVIORAL HEALTH

Fraud and Abuse: Federal

 EKRA: Eliminating Kickbacks in Recovery Act
 Federal all-payor anti-kickback targeted at
OPIOID treatment
– Recovery Home
– Treatment Facility
– Laboratory
 no AKS safe harbor – no commissions, no
FMV, no employee protections
 Title 18 – Criminal -- DoJ

25
 2/26/2019

Fraud and Abuse: State

 California Anti Brokering

Prohibits Substance Use Disorder treatment
facilities from giving or receiving anything of
value for the referral of a person to the
facility.
– No commissions or recruitment payments
 Florida
 Illinois

Top 10 Reimbursement Trends

Ryann Schneider – Parallon/HCA
Butch Bullock - PYA
Colleen Faddick – Polsinelli
Ross Burris – Polsinelli
Ray Lindholm - Polsinelli

26
 2/26/2019

Introduction
 Panelist Introduction
 Top 10 Reimbursement Trends
– Government
• Contesting Recoupment while Seeking Appeal
• Self-reporting Obligations from Industry Error Rates?
• Cost Report Audit Issues
• CMS Revocations, Terminations, and Provider-Based Denials
• 340B Underpayment Appeals
• Medicaid Work Requirements
– Commercial Payer
• New Policies Designed to Prevent Pass-through & Under-arrangements
billing
• Cross-plan Offsetting
• M&A Reimbursement Issues
• Referenced-based Pricers

Section Subtitle
SEEKING A TEMPORARY RESTRAINING
ORDER TO STOP RECOUPMENT WHILE IN
THE APPEAL PROCESS

27
 2/26/2019

Family Rehabilitation
Forging a New Path
 Home health provider Family Rehabilitation received
$7.88 million extrapolated demand
– ZPIC audited 43 claims and claimed 93% error rate
 Lost at appeal levels 1 and 2
 Sought TRO injunction to keep HHS from recouping
demand while waiting for ALJ hearing (Level 3)
– Argued “immediate harm” – laid off 89% of staff, was only
serving 8 of its previous 289 patients
– because ALJ hearing would take 3-5 years, recoupment would
bankrupt business
 Action dismissed by District Court, but was reversed by
Circuit Court, which ruled TRO suit was “collateral Claim”
– See Family Rehabilitation, Inc. v. Azar, No. 17-11335 (5th Cir.
Mar. 27, 2018)

Family Rehabilitation
Forging a New Path
 On remand District Court identified four factors to weigh in
deciding whether to prevent HHS from recouping:
– (1) a substantial likelihood of success on the merits;
– (2) a substantial threat of immediate and irreparable harm for which
it has no adequate remedy at law;
– (3) that greater injury will result from denying the temporary
restraining order than if it is granted; and
– (4) that a temporary restraining order will not disserve the public
interest.”
 After weighing factors, Court granted TRO against HHS
– See Family Rehabilitation, 3:17-cv-03008-K (N.D. Tex. June 4, 2018)
 Laid groundwork for other providers
– Federal courts do have subject matter jurisdiction
– Massive appeal delay opens door for TRO

28
 2/26/2019

Post Family Rehab

 Providers have experienced Mixed Results
– Accident, Injury & Rehab. PC v. Azar , No. 4:18-cv-02173-DCC.
• District of South Carolina issued TRO to stop HHS recoupment
• Showed it had lost $6 mm in revenue and terminated 24 employees
• CMS appealed to 4th Circuit
– Adams EMS Inc. v. Azar , No. 4:18-cv-01443.
• S.D. of Texas granted TRO to stop recoupment of $401,611
• Showed it was forced to sell assets and reduce workforce to 2 employees,
and faced bankruptcy and closure
– Alpha Home Health Solutions LLC v. HHS, No. 6:18-cv-1577-PGB-TBS
• M.D. of Florida denied TRO request, finding inability to demonstrate
“substantial likelihood of success” on the merits
– no constitutionally protected interest in an overpayment of federal funds
• Also opined that provider had no “irreparable injury”
– Stated that providers take a knowing risk that payment might be delayed when they
choose to participate in Medicare on a cash-poor basis
• Alpha Home Health Solutions filed appeal in 11th Circuit

Section Subtitle
CAN DUTY TO SELF-AUDIT AND REPORT BE
TRIGGERED BY A GENERAL GOVERNMENT
NOTICE?

29
 2/26/2019

“Credible Information”
 The 60 day rule requires providers to self-report any overpayments they
identify
– An overpayment is “identified” when the provider has conducted a
“reasonably diligent” inquiry following “credible information” that an
overpayment may exist, and has quantified the overpayment
 Comments to final rule raised potential that general government
notices, even the annual OIG workplan, could constitute notice that
triggers a suppliers duty to identify an overpayment
 CMS contractors have sent letters out to providers notifying them of
high error rates in the provider’s market segment
– Contractors believe this constitutes “credible information” that an
overpayment may exist
– Triggers duty to conduct reasonable inquiry to determine if an overpayment
exists
 Ex. - Wisconsin Physician Services sent notices out to Bariatric Oxygen
Therapy providers following an audit indicating that WPS had incorrectly
paid BOT therapy claims 85% time

Section Subtitle
COST REPORT AUDIT ISSUES

30
 2/26/2019

S-10 Uncompensated Care Cost Audits

UCC Background
 Over $8 Billion Distributed to Medicare DSH Hospitals
 Distribution Factors
– Originally Medicaid and SSI Patient Days
– Transitioning to S-10 UCC Information

S-10 UCC Components

 Charity Write-Offs
 Uninsured and Indigent Discounts, Write-Offs, and
Payments
 Bad Debts (Excluding Reimbursable Medicare)

S-10 Uncompensated Care Cost Audits

S-10 UCC Audit Inconsistencies

 Hospitals Selectively Picked for Audit
 Varied Scope of Review and Interpretation

S-10 Audit Issues

 Date of Service vs. Date of Write-Off
 Adherence to Financial Assistance Policy
 Partial Discounts/Actual vs. Expected Payments
 Extrapolation of Sample Results

31
 2/26/2019

Medicare Bad Debt Audits And Reopenings

Background
 Hospital Medicare Deductibles and Coinsurance
 Long Standing Collection and Write-off
Requirements

Emerging Issues
 Zero Balance Policy
 Bad Debt vs. Contractual Adjustment/Medicaid
Cross-Overs
 Reopening Requirements

Section Subtitle
CMS REVOCATIONS, TERMINATIONS
AND PROVIDER-BASED DENIALS

32
 2/26/2019

Enrollment Actions

 CMS revocations and terminations

– CMS has broad authority to deny, revoke and
terminate provider/supplier enrollment
• Some reasons are not surprising (felony convictions)
• Some reasons are highly technical (licensure lapses
that are characterized as an “abuse of billing
privileges”)
• All reasons are discretionary

Enrollment Actions

 Enrollment denials and revocations are on

the rise
– Many revocations are based on technical errors
• Billing errors that constitute a pattern or practice of
abusive billing
– How many errors trigger “abusive billing”?
– What if the error was corrected?
• Licensure lapses
– What happens when the lapse is inadvertent and
corrected?

33
 2/26/2019

Enrollment Actions
 Response to revocations
– Appeal
– Reporting issues (other Medicare enrollments,
Medicaid, private payers)
 Response to denials
– Appeal
– Re-enroll (timing-must ride-out appeal
deadlines)
– Reporting issues

Provider-Based Denials
 CMS/MAC scrutiny and denial of provider-based
attestations
– Mostly based on space-sharing concerns
– Relief on the horizon?
• November 27 – CMS (David Wright, Director – Quality, Safety, and
Oversight) promises new provider-based guidance in first part of
2019
• CMS signaled a shift in provider-based enforcement priorities
– Recognition of rural provider challenges
– Moving away from rigid application of space sharing/co-location rule
– Focus on key issues impacting patient health/safety
– More lenient view towards common areas
 In the meantime:
– New guidance expected to be more lenient than existing CMS
position – but unclear how far CMS will go

34
 2/26/2019

Section Subtitle
STRATEGIES TO RESERVE RIGHTS TO
CORRECT PAYMENT FOR 2018/2019 340B
CLAIMS

340B Payment Issue

 HHS revised payment formula for separately
payable 340B drugs in 2018 Outpatient
Prospective Payment System (OPPS) to Average
Sales Price (ASP) - 22.5%
– 2017 OPPS reimbursement model was ASP + 6%
 District Court for D.C. found that the Secretary
had unlawfully exceeded his authority in
establishing the new 340B drug payment model
– See AHA v. Azar, No. 18-2084 (Dec. 27, 2018 Order)

35
 2/26/2019

340B Payment Issue

 Court found that the 2018 OPPS model unlawfully
violates the foundational authority governing payment
for 340B and other covered outpatient drugs, because it:
– is not an “adjustment” to the statutory default rate (ASP +
6%);
– is based on acquisition cost, when all parties conceded that
reliable data on acquisition costs are unavailable; and
– is for the explicit purpose of significantly reducing benefits
provided by the statutorily-created 340B program
 Court did NOT rule on a remedy for the 340B drugs paid
post Jan. 1, 2018 under the 2018 OPPS formula
– Parties submitted briefs to the court in late January with
proposed solutions

340B Payment Issue

 To preserve their appeal rights and possibly
receive corrected payment, providers are:
– Requesting reopening and revisions of the claims
under the lawful payment formula
– Requesting Redetermination from the MAC of claims
paid under the 2018 OPPS formula
• For claims paid w/in 120 calendar days – standard request
• For claims paid outside of 120 calendar days – good cause
request
 Part A providers may be able to simply
electronically adjust

36
 2/26/2019

Section Subtitle
COMMERCIAL PAYOR POLICIES DESIGNED
TO PREVENT PASS THROUGH BILLING OR
BILLING UNDER ARRANGEMENT

New Commercial Payer Policies

 Commercial plans have begun to prohibit hospital billing
for off-campus departments under the hospital’s name
– Payers argue that these services are not hospital procedures
and allow them to reimburse at lower rate
– Some have argued that this type of billing is fraudulent, even
though it is a common practice that is paid by Medicare
 Many prior contracts either explicitly permit under-
arrangements billing or do not directly address
 Commercial plans have begun to:
– change their internal billing policies to prohibit this billing
practice; and,
– assert that under arrangements billing practices are
prohibited by providers’ existing contracts

37
 2/26/2019

Section Subtitle
CROSS-PLAN OFFSETTING BY
COMMERCIAL HEALTH INSURERS

Cross-Plan Offsetting

 Practice of recovering overpayments to out-of-network providers

by offsetting payments to the provider from a completely
different plan
 8th Circuit found that this practice by United Health was improper
especially where :
– United was operating as a TPA for a self-funded plan governed by
ERISA
– Nothing in the plan’s documents remotely allowed the practice
– Even the broad authority granted to United to administer a self-
funded benefit does not permit the practice
– Practice creates a tension in United’s fiduciary duty as a TPA
– Practice may violate ERISA if its constitutes transferring money from
one plan to another
 See Peterson et al. v. UnitedHealth Group, Inc., et al., Eighth
Circuit Appeal No. 17-1744 (January 15, 2019)

38
 2/26/2019

Section Subtitle
M&A REIMBURSEMENT ISSUES

M&A Reimbursement Issues

 Upward trend in Provider M&A expected to

continue
 Detailed transition planning for relevant
payers
 CHOW enrollment processing timelines and
timely filing requirements
 Operational reality of historical file and
records access

39
 2/26/2019

Section Subtitle
REFERENCED-BASED PRICERS

Referenced-Based Pricers

 Non-traditional plans without contracted

rates
 Attempting to resolve in conjunction
available pricing references
 Can be challenging identifying these plans
early in processing
 Strategy considerations touch on sensitive
areas

40
 2/26/2019

Section Subtitle
MEDICAID WORK REQUIREMENTS

Medicaid Changes

 Medicaid Work Requirements

– CMS Waivers allow states to implement new
eligibility standards
– At least 5 states have CMS approval for work
requirements
– Even with Medicaid expansion, overall eligibility
will likely decrease and may increase
uncompensated care

41
 2/26/2019

QUESTIONS?

Major Trends in Healthcare

David McMillan and Robert Dempsey

42
 2/26/2019

Alternative Payment Models

43
2/26/2019

44
 2/26/2019

Focus and Simplicity

“Simple can be harder than complex.

You have to work hard to get your thinking

clean
to make it simple.

But it’s worth it in the end because once you

get there,
you can move mountains.”

The $3.5 Trillion Question

What happens when

the buyer wants to buy
health instead of healthcare?

45
 2/26/2019

Seven Big Things To Think About

1. Provider Purchaser
2. Health Influencers
3. The Most Expensive Piece of Equipment
4. Silver Tsunami
5. Means To an End
6. Single-Funder System
7. Expansion of Healthcare Clusters

1. Provider Purchaser

46
 2/26/2019

2. Health Influencers

3. The Most Expensive Piece of

Equipment

47
 2/26/2019

4. Silver Tsunami

4. Silver Tsunami

48
 2/26/2019

5. Means To an End

6. Single-Funder System

49
 2/26/2019

7. The Expansion of Healthcare

Clusters

Source: Cluster Mapping Website Sponsored by the

Harvard Business School and the U.S. Economic
Development Administration -
http://www.clustermapping.us/content/clusters-101

THE WASHINGTON LANDSCAPE

Julius W. Hobson, Jr.
Senior Policy Advisor
Polsinelli

50
 2/26/2019

THE CAPITOL

116th CONGRESS

 U.S. House of Representatives

– 235 Democrats
– 198 Republicans
– 2 Vacancies [North Carolina 3rd (late Walter
Jones) & 9th]
 United States Senate
 53 Republicans
 45 Democrats & 2 Independents

51
 2/26/2019

116th CONGRESS DEMOGRAPHICS

House of Representatives U.S. Senate

 African American: 52  African American: 3
 Hispanic: 42  Hispanic: 3
 Asian/Pacific  Asian/Pacific
Islander: 14 Islander: 3
 Native American: 4  Native American: 0
 Women: 102  Women: 24

House Leadership

House Democrats House Republicans

Speaker: Nancy Pelosi (D-CA)
Majority Leader: Steny Hoyer (D-MD)
Whip: Jim Clyburn (D-SC)
Assistant Speaker: Ben Ray Lujan (NM)
Caucus Chair: Hakeem Jeffries (D-NY)
DCCC Chair: Cheri Bustos (IL)
Minority Leader: Kevin McCarthy (R-CA)
Whip: Steve Scalise (R-LA)
Conference Chair: Liz Cheney (R-WY)
Policy Committee Chair: Gary Palmer (AL)
NRCC Chair: Tom Emmer (MN)

52

Senate Leadership
Senate Republicans
Whip: John Thune (R-SD)
LeadershipMinority
Elections:
Majority Leader: Mitch McConnell (R-KY)
Whip: Dick Durbin (D-IL)
Conference Chair: John Barrasso (R-WY)
Policy Chair: Roy Blunt (R-MO)
Conference Vice Chair: Joni Ernst (R-IA)
NRSC Chair: Todd Young (IN)
116th HEALTH CARE PRIORITIES
House Democrats
 Prescription Drug Prices
– Importation from Canada
– HHS negotiate Medicare Part D drug
prices?
 Affordable Care Act
– ACA Court Case Intervention
 Health Care Access
 Oversight: HHS, Medicare and
Medicaid
– Center for Medicare and Medicaid
Innovation (CMMI)
 Medicare for All?
 Administration’s Short-Term,
Limited-Duration Insurance Plans
 Immigration
2/26/2019
Senate Democrats
Leader: Chuck Schumer (D-NY)
Assistant Leader: Patty Murray (D-WA)
Policy & Communications Chair: Debbie
Stabenow (D-MI)
DSCC Chair: Catherine Cortez Masto (NV)
Senate Republicans
 Prescription Drug Prices
 Health Care Costs
 Roll back ACA provisions
 Health Care
Consolidation/Antitrust
Oversight
 Reforming 340B Drug Pricing
Program
 Anti-Fraud Statutes
Enforcement Oversight
 Pharmacy Benefit Managers
 Health Care Workforce Issues
53
 2/26/2019

CONGRESSIONAL BUDGET OFFICE

BUDGET & ECONOMIC OUTLOOK
Budget
 FY 2019 deficit projected to be $900 billion, exceeding $1 trillion in FY
2022
 Federal revenues rise from 16.5% of GDP in 2019 to 17.4% in 2025 and
then grow rapidly, reaching 18.3% of GDP near the end of the decade
 Projected growth in revenues after 2025 is largely attributable to the
scheduled expiration of nearly all of the individual income tax provisions
of the 2017 tax act
 Federal outlays are projected to increase from 20.8% of GDP in 2019 to
23.0% in 2029.
 The aging population and rising health costs contribute significantly to
the growth in spending for major benefit programs, such as Social
Security and Medicare
 Rising debt and higher interest rates drive up the federal government’s
net interest costs

CONGRESSIONAL BUDGET OFFICE

BUDGET & ECONOMIC OUTLOOK
Economy
 Real GDP projected to grow by 2.3% in 2019—down
from 3.1% in 2018—as effects of the 2017 tax act on
the growth of business investment wane and federal
purchases decline sharply in the 2019 fourth quarter
 Output is projected to grow slightly faster than its
maximum sustainable level this year
 After 2019, annual economic growth is project to
slow further—to an average of 1.7% through 2023
 From 2024 to 2029, economic growth and potential
growth are projected to average 1.8% per year

54
 2/26/2019

THE WHITE HOUSE

TRUMP ADMINISTRATION
 Federal Departments & Agencies—Health Care
 Executive Office of the President
– Chief of Staff—Mick Mulvaney [Acting]
– Office of Management & Budget—Mick Mulvaney [Russell T. Vought, Acting]
• Office of Information and Regulatory Affairs--Neomi Rao [Judicial Nominee, D.C.
Circuit Court of Appeals]
 Health and Human Services—Alex Azar
– Centers for Medicare and Medicaid Services—Seema Verma
– Health Resources and Services Administration--George Sigounas, PhD
 Commerce--Wilbur Ross
 Labor--Alexander Acosta
 Treasury--Steven Mnuchin
– Internal Revenue Service—Charles P. Rettig
 Justice—William Barr
 Veterans Affairs—Robert Wilkie

55
 2/26/2019

PRESIDENTIAL POLICY PROCESS

 Executive Orders
 Presidential Memoranda
 Proposed & Final Rules
 Regulatory Guidance Notices
 Interpretive Rules
 Presidential Policy Decisions
 Presidential Nominations

FEDERAL RESERVE BOARD

56
 2/26/2019

FEDERAL RESERVE BOARD

 New Fed Chairman

 Interest rate increases in 2019
 Trump’s displeasure with Fed interest
rate increases
–February 4th Presidential Dinner
 Impact of trade war
 2019 inflation?

2019 KEY ISSUES

 Executive Branch
– President’s FY 2020 budget proposals
 Congress
– Debt Limit: March 2, 2019
– FY 2020 Budget Resolution
– FY 2020 Appropriations Bills
– National Defense Authorization Bill
 More Federal Government Shutdowns?
– Key Date: October 1, 2019

57
 2/26/2019

PARTIAL FEDERAL GOVERNMENT

SHUTDOWN IMPACT
 Economic Impact
– $1.2 billion a week from unpaid federal workers cutting
back on spending
– Government contractors losing out on business
– Federal government employees will owe about $438
million in rent & mortgage payments in January
 Health Aspects
– Native American Clinics
– FDA food inspections
 Small Businesses
 Nonprofit Sector
– United Way contributions

CONGRESSIONAL BUDGET OFFICE:

PARTIAL GOVERNMENT SHUTDOWN IMPACT

 800,000 of 2.1 million federal government employees affected

(40% of workforce), of which 300,000 actually furloughed
 5-week shutdown delayed approximately $18 billion in federal
discretionary spending for compensation and purchases of goods
and services and suspended some federal services
 Spending on goods and services was about $9 billion lower
 CBO estimates real GDP in the fourth quarter of 2018 was
reduced by $3 billion in relation to what it would have been
otherwise
 As a share of quarterly real GDP, the level of real GDP in the
fourth quarter of 2018 was reduced by 0.1%
 More significant effects on individual businesses and workers—
direct negative effects on federal workers who faced delayed
compensation and private-sector entities that lost business

58

DEPARTMENTS & AGENCIES
SHUTDOWN AFFECTED
 Judicial Branch
 Agriculture
– Food & Nutrition Service
– Food Safety & Inspection Service
 Commerce
– Census Bureau
 Health and Human Services
– Indian Health Service
 Homeland Security
– U.S. Coast Guard
– U.S. Secret Service
– Customs & Border Protection
– Transportation Security
Administration
 Housing and Urban Development
– Federal Housing Administration
OTHER ISSUES
 Russia/2016 Presidential
Campaign Investigations
– Indictments/Plea agreements
– Trump Inaugural Committee
 Complete Fiscal Year 2019
Appropriations
 Debt Limit
 Future Federal Government
shutdowns
 Infrastructure Reform
 Trade
– Rise in farm bankruptcies
 Syria/Iraq/Afghanistan/Somalia
 IMF Treaty Withdrawal
2/26/2019
 Interior
– National Park Service
– Smithsonian Museums
 Justice
– Bureau of Prisons
– US Marshalls Service
 State
 Transportation
– Federal Aviation Administration
 Treasury
– Internal Revenue Service
 Environmental Protection Agency
 National Aeronautics and Space
Administration
 National Science Foundation
 Immigration
 Environmental Policy
 North & South Korea
 Energy policy
– Coal mines
– Oil and Gas drilling
– Ethanol in gasoline
 Other National
Intelligence/Security Issues
 2020 Presidential Campaign
 Unknown
59
 2/26/2019

CONTACT INFORMATION

Julius W. Hobson, Jr.

Senior Policy Advisor
jhobson@polsinelli.com
Polsinelli PC
1401 Eye Street, N.W.
Suite 800
Washington, D.C. 20005

State Policy Update

Martie Ross, JD
mross@pyapc.com

60
 2/26/2019

Hot Topics

1. Medicaid
a. Expansion
b. Waivers
c. Managed Medicaid
2. Telehealth
3. Certificates of Public Advantage
4. Social Determinants of Health

Medicaid Expansion

61
 2/26/2019

Political Intrigue

 Voters in Nebraska (53%), Utah (54%), and Idaho (60%)

approved Medicaid expansion in November 2018
– Utah proposing to CMS to expand up to 100% FPL + federal
and state spending caps
 Maine elects Democratic governor, finally implements
Medicaid expansion approved by voters in 2017 (59%)
 Kansas’ new Democratic governor supports expansion,
but Republican legislators running for open senate seat
now opposing

Medicaid Work Requirements

 7 states have CMS-approved work & reporting
requirement waivers; 8 more under consideration
– Kentucky’s program stalled in federal court
– Arkansas’ program effective 06-01-18 (ages 30-49 only)
• 18,000 disenrolled due to failure to report for 3 months
• Lack of awareness, issues with online portal, failure to identify
exempt individuals
– Indiana’s program effective 01-01-19
 CMS’ rejected Kansas’ lifetime limits proposal
(although Kansas never actually presented the
proposal)

62
 2/26/2019

Retrospective Eligibility Waivers

 States must provide coverage beginning 3 months

prior to application if individual would have then
been eligible
– Protects providers that furnish services to uninsured
Medicaid-eligible individuals
 7 states now have CMS-approved waiver limiting
retrospective eligibility (scope varies)

Other Waivers
 8 states have waivers requiring premium/monthly
contribution
 1 state (Wisconsin) has waiver requiring completion
of Health Risk Assessment as condition of coverage
 26 states have waivers providing expanded
behavioral health services; another 12 having
pending requests

63
 2/26/2019

Managed Medicaid
 Growing trend
– 39 states now contract with MCOs
– 80% of beneficiaries enrolled in some form of managed
care
– Accounts for one-half of state and federal Medicaid
spending
 Small number of players
– ~ 280 Medicaid MCOs (vs. ~ 2,700 MA plans)
– 6 dominant companies: Aetna, Anthem, Centene,
Molina, United Healthcare, WellCare
– Provider-sponsored MCOs in Massachusetts and Oregon

Traditional Provider Contracts

64
 2/26/2019

Telehealth – Patchwork Quilt

Next Up: Social Determinants

 Accountable health communities
 Universal screening tools
 Cross-agency cooperation
 Managed Services Networks
– Health system collaboration with state agencies and local
social service organizations

65
 2/26/2019

Clinical Trial Reimbursement:

Sweet Dreams or a Ring of Fire?
Jim Fredman, Polsinelli PC
Susan Thomas, PYA, P.C.

Objectives

 Key considerations for clinical trials

 Regulatory framework
 Operational and compliance challenges
 Focus of government investigations and
legal actions

66
 2/26/2019

Clinical Trials Key Considerations

Legal aspects of contractual agreements

Budgeting

Protocol requirements

Regulatory framework

Life Cycle of a Clinical Trial

Investigator or Develop Negotiate

Sponsor Initiates Protocol Budget/Contracts
$

Enroll Subjects Provide Clinical

IRB Approval
Informed Consent Services

Return Unused
Bill for Services
Funds

67
 2/26/2019

Regulatory Framework

ORI
Conflicts of
Interest ACA
OHRP
FDA GLP
Clinical
U.S. Attorney Oversight
Agencies
Medicare
GCP
Trials
NIH
FDA

OIG
Common HIPAA
Rule
Sunshine 42 CFR
Act CMS
Part 50 GDPR

Who Has Oversight?

FDA HHS NIH

U.S.
OHRP ORI
Attorney

OIG CMS FBI

68
 2/26/2019

Open Payments, aka Sunshine Act

 Manufacturers spent over $4B on research

payments and associated funding
 This includes payments to teaching hospitals
and payments listed under a specific physician’s
name.
 CMS notes that this physician research payment
total includes:
– “[P]ayments where the company making the payment
has named a physician as the primary recipient, and
payments to a research institution or entity where the
physician is named as a principal investigator on the
research project.”
Source -- Policy & Medicine: “Inside the Open Payments Data”
Found at https://www.policymed.com/2015/07/inside-the-open-payments-data-two-thirds-of-transactions-worth-20-or-less-research-and-royalties-acc.html

Open Payments (Cont.)

Source -- Policy & Medicine: “Open Payments in 2017”

Found at https://www.policymed.com/2018/07/open-payments-data-2017-shows-significant-drop-in-number-of-payments.html

69
 2/26/2019

Open Payments (Cont.)

Source -- Policy & Medicine: “Open Payments in 2017”

Found at https://www.policymed.com/2018/07/open-payments-data-2017-shows-significant-drop-in-number-of-payments.html

Open Payments (Cont.)

Source -- Policy & Medicine: “Open Payments in 2017”

Found at https://www.policymed.com/2018/07/open-payments-data-2017-shows-significant-drop-in-number-of-payments.html

70
 2/26/2019

Competing Pressures

Investigator Site

Sponsor Patient
Clinical
Trial

Clinical Trial Coverage

CMS
ACA

State
Law

Clinical Trial
Coverage

71
 2/26/2019

CMS Coverage

 NCD 310.1:
– Qualifying trial
– Routine costs

Qualifying Trial

 Deemed automatically qualifying trial (Any one

criterion must be “Yes”):
– Is funded/supported by NIH, CDC, AHRQ, CMS, DOD or VA
– Is supported by centers or cooperative groups that are
funded by the NIH, CDC, AHRQ, CMS, DOD and VA
– Has an IND number: Trial conducted under an investigational
new drug application (IND) reviewed by the FDA
– Trial is exempt from having an IND
 Qualifying criteria (All three criteria must be “Yes”):
– Evaluates a Medicare benefit
– Has therapeutic intent
– Enrolls diagnosed beneficiaries

72
 2/26/2019

CMS: Routine Costs Include…

 NCD 310.1: Routine costs of qualifying trials

– Included:
• Items/services generally provided absent clinical trial
• Items/services required solely for
provision/administration of item/service, clinically
appropriate monitoring of the effects of the item or
service, or prevention of complications
• Items/services needed for reasonable and necessary
care arising from provision of investigational
items/services

CMS: Routine Costs Exclude…

 NCD 310.1: Routine costs of qualifying trials

(continued)
– Excluded:
• Investigational item or service unless otherwise
covered outside the trial
• Solely for data collection and analysis needs (not used
in direct clinical management
• Provided by sponsor free of charge for any enrollee
 All Medicare rules apply
 MMA expanded IDE coverage to Category A
devices effective January 1, 2005.

73
 2/26/2019

CMS: Claims Modifiers Required

 Modifier
– Q1 – designates routine clinical service/item
provided in approved clinical study
– Q0 – investigational service/item provided in
approved clinical study
– 8-digit clinical trial number

ACA: Obligations of Other Payers

 Health insurer must cover routine patient costs, for

a qualifying individual, participating in approved
clinical trial
– Approved clinical trial
• Phase I through IV
• Life Threatening Disease (likelihood of death unless disease or condition is
interrupted)
• Approved by or funded by specified government programs (NIH, CDC, CMS, DOD,
VA, FDA approved or exempt)
– Qualifying individual
• Covered under plan;
• Eligible for trial – referred by in-network provider or individual provides
information that shows eligibility is appropriate
– Routine costs
• Typically provided absent clinical trial
• Provided by Network Provider (out-of-network ok, if usually paid by Plan)
• Cannot impose additional requirements on patient

74
 2/26/2019

ACA v. CMS

Routine Costs

Approved Qualifying
Usual Clinical Trial Trial
Patient
Costs

Is the ACA Mandate Helping?

 MD Anderson Study
– 95% approval rate (5x rates pre-ACA)
– Shorter times for approval

Designed by jcomp / Freepik

Source -- Clinical Cancer Research July 20, 2017

75
 2/26/2019

UnitedHealthcare Commercial

 Coverage Determination Guideline 006.13

 Effective February 1, 2019
 Hybrid coverage that aligns more closely
with Medicare
– Approved clinical trial
• Phase I through IV conducted to detect, prevent or treat life-threatening
disease
• Plus, Phase I through III, detect or treat, cardiac/stroke, disorders of
spine, hip or knees, certain other trials

UnitedHealthcare Commercial (Cont.)

 Hybrid coverage that aligns more closely with

Medicare (cont.)
– Qualifying trial – ACA definition, plus IRB approval and
evaluates service or item that is a Covered Service
– Qualifying individual – ACA definition
– Routine costs – Medicare definition as applied to Covered
Services
• May also cover experimental item or service for certain Category B
Devise and certain promising interventions for patients with a terminal
illness (immunotherapy?)

76
 2/26/2019

State Law

 Most states and DC have laws or agreements

that require Plans to cover “routine costs” of
clinical trial.
 Sponsor still required to cover costs of
experimental procedures, tests, and
therapies specifically related to research
and data collection.
 Not pre-empted by ACA

Coverage Comparison
Medicare ACA United WA
Trial • Government funded or • Phase 1 – 4 • ACA plus • ACA like
approved • Life-threatening • IRB Approved • Plus Fred Hutch (i.e.,
• Therapeutic intent disease • Evaluates covered cooperative groups,
• Evaluates Medicare • Government funded or service certain IRB approval,
benefit approved • Life-threatening plus NIH support grant)
others with approval
Patient • Medicare including MA • Covered under plan • ACA • ACA
• Qualifies for trial • Qualifies for trial

Routine • Covered absent trial
Costs • Administrative of
item/service
• Monitoring
• Care arising from
provision of item/service
• Covered absent trial
• In network
• Trial injuries included?
• Administrative
investment in
item/service included?
• Medicare plus • ACA
• Certain Category B
devices
• Promising interventions
for patients with
terminal illness

Exclusion • Item or service • Not as specific as • Medicare like with • Data collection
• Data collection solely Medicare exceptions above • Not used for clinical
for trial management

Special • Yes • Payer determines • Payer determines • Payer determines

Coding

77
 2/26/2019

Clinical Trials Billing Scenarios

A B C
A.Mixed
A.Study-related A.Study related services
clinical services clinical services
are paid by the are standard of
study care and would
be provided to
the research
subject even if
not on a clinical
research study

Risk Areas

78
 2/26/2019

Common Billing Errors

 Double-billing
 Billing for services not rendered
 Billing for items or services provided for free
 Billing for services that are not covered
– Non-qualifying trial
– Non-routine services

Common Billing Errors (Cont.)

 Missing documentation
– No order
– No informed consent
– No medical necessity
 Upcoding
– Assigning diagnosis code that does not match
medical documentation to obtain participants.
 Waiving co-pays and deductibles
 Billing without proper codes, modifiers, or
NCT number

79
 2/26/2019

CMS: Beneficiary Inducement

 Beneficiary inducement prohibited:

– Free services to indigent only or Medicare not pay
– OIG Advisory Opinion 04-01
• “[M]any clinical trials...will study items and services for
which there are effective, well-established treatments
already available. In such cases, enrollees could well be
induced to forgo equally effective or more appropriate
care. . . . Payments to providers and participating
patients potentially present a risk of fraud and abuse.”
 Issue also addressed in OIG Advisory
Opinions: 17-02, 15-07, 00-05, and 98-06

Medicare Secondary Payer

 Basic Rule – 42 C.F.R. § 411.32

 Medicare is secondary to every other payer
except Medicaid, even if contract, policy, state
law states otherwise.
 Clinical Research: CMS has interpreted the
agreement to pay for research related injuries
in many clinical trial agreements as triggering
the MSP rule and thus prohibiting primary
payment from Medicare.

80
 2/26/2019

Other Common Risks

 False Claims Act

 Anti-Kickback Statute
 Misconduct

Billing Program

Policy
Roles and development Auditing and
Training
responsibilities and reporting
implementation

81
 2/26/2019

Departments Impacted

IRB

Clinicians

Patient
Compliance
Registration

Finance – Documentation
Budget & Coding

Patient
Legal –
Financial Marketing
Contracts
Services

Consequences of Non-Compliance

 Fines and penalties

 Shutdown of projects – loss of research funding
 Institution considered “exceptional” by funding agency
 Loss of “expanded authorities” Federal Demonstration
Partnership (FDP)
 Additional oversight/monitoring by the government
 Potential reduction in funding
 Professional integrity compromised
 Reputational risk

82
 2/26/2019

Recommendations

 An organizational compliance culture that

includes:
– Alignment with strategic goals
– Committed leadership by senior managers
– Robust training and education
– Reinforcement of good behavior

Risk Area Examples

 How does government/payer discover?

– Whistleblowers and self-disclosure

83
 2/26/2019

Double-Billing

 Rush Memorial Hospital (2005)

– Paid $1 million settlement after self-report that
billed Medicare for cancer research services that
were not routine costs
 University of Alabama at Birmingham (2005)
– Paid $3.4 million to settle claims that that it
overstated the percentage of effort devoted to
grants and that it billed Medicare for trials that
were also billed to the sponsor

Double-Billing (Cont.)

 Norris Cancer Center (2010)

– Paid $1.9 million settlement for improperly billing for:
• “[I]tems or services that were paid for by clinical research sponsors
or grants under which the clinical research was conducted;
• [I]tems or services intended to be free of charge in the research
informed consent;
• [I]tems or services that were for research purposes only and not
for the clinical management of the patient; and/or
• [I]tems or services that were otherwise not covered under the
...(CMS) Clinical Trial Policy.”
 Emory University (2013)
– Paid $1.5 million settlement for billing Medicare and
Medicaid for clinical trial services that sponsor had agreed
to pay
Source – HHS OIG (2010) : Semiannual Report to Congress Part III: Legal and Investigative Activities Related to Medicare and Medicaid
Found at https://oig.hhs.gov/publications/sar/2010/Fall2010SAR03-Legal508.pdf

84
 2/26/2019

AKS

 Medtronic (2011)
– Paid $23.5 million to settle alleged violations
of the False Claims Act by using physician
payments related to post-market studies
studies and device registries as kickbacks to
induce doctors to implant Medtronic
pacemakers and defibrillators

FCA

 Spectranetics (2009)
– Paid $5 million settlement for importing
unapproved devices and conducting clinical trials
that did not comply with federal regulations,
causing others to submit false claims

85
 2/26/2019

NIH Grant Fraud

 Duke University (2019)

– Settlement pending for whistleblower allegations regarding
false data in cancer research
 Columbia University (2014)
– Paid $9 million FCA settlement for charging grant for work
not performed on the project
 Northwestern University (2013)
– Paid $3 million FCA settlement for Cancer researcher who
submitted false claims under NIH grants for unqualified
services of his relatives, as well as food, hotel, and travel
for himself and his family and friends.

NIH Grant Fraud (Cont.)

 Cornell University (2009)

– Paid $2.6 million FCA settlement, allegedly a researcher
omitted information grant applications that “deprived the
Government of its ability to assess the researcher’s ability
to perform the projects and the amount of research time
they plan to devote to each project”
 University of Florida (2015)
– Paid $19.87 million to settle claims that it had overcharged
salary and administrative costs on hundreds of federal
grants

86
 2/26/2019

NIH Grant Fraud (Cont.)

 Columbia University (2016)

– Paid $9.5 million to settle claims that it sought and
received excessive cost recoveries
 New York University Medical Center (1997)
– Paid $15.5 million settlement for inflated research grant
costs

Source – NIH Foreign Influence Letter to Grantees 8.2018

California Biotechnology Company Settles

Case Involving False Grant Claims

 Sonata Biosciences, Inc. (Sonata)

– Knowingly presented to HHS two specified claims under an
HHS grant that Sonata knew or should have known were
false or fraudulent
– Drew down $37,384.74 from a National Institutes of
Health Small Business Innovation Research Grant for costs
unrelated to the grant
– Entered into a $37,716.30 settlement agreement with OIG

87
 2/26/2019

Researcher as Whistleblower

 Michigan Hospital System

– Nationally renowned neuroscientist hired as vice
president for research and medical director of the
organization’s research institute
– A group of highly compensated physicians controlled
contracts and research grants and “could make life
miserable on any doctor who stepped out of line”
– Paid $84.5 million settlement for violations of Stark and
Anti-Kickback related to lucrative perks, excessive
compensation by the hospital for medical directorships,
given the use of hospital employees for their office
practice without charge

CEO Agrees to Voluntary Exclusion

 DNA Stat, LLC (DNA Stat)

– Entered into an agreement with a laboratory to market a
pharmacogenomics clinical trial of which the laboratory
was the sponsor
– CEO, Mitch Edland, caused the submission of claims to
Medicare that were false and fraudulent because of the
following conduct in violation of the Anti-Kickback Statue

88
 2/26/2019

CEO Agrees to
Voluntary Exclusion (Cont.)
– CEO paid $270,000 to settle various violations:
• Paying physicians to participate in a clinical study (which was not
a legitimate clinical study) to induce physicians to order
pharmacogenetic tests from the laboratory
• Paying physicians based on the volume of referrals made to his
company, to induce those physicians to order pharmacogenetics
tests from the laboratory
• Providing physicians with in-office medical technicians to induce
those physicians to order pharmacogenetic tests from the
laboratory
• Entering into a marketing arrangement with the laboratory and
individual marketers that took into account the volume or value
of referrals with the intention of inducing the referrals of tests to
the laboratory
Source: DOJ (2018) Laboratory and Owner of Lab Management Services Company to Pay $3.77 Million to Resolve Kickback and Medical Necessity Claims
Found at https://www.justice.gov/usao-ndtx/pr/laboratory-and-owner-lab-management-services-company-pay-377-million-resolve-kickback

Questions?

89
 2/26/2019

Thank you!

Jim Fredman Susan Thomas

Shareholder CHC®, CIA, CRMA, CPC®, CCSFP
jim.fredman@polsinelli.com Manager
sthomas@pyapc.com

Medicare Advantage and Medicare Part D: “What’s

the Buzz?”

Anthony H. Choe, Counsel, Polsinelli

Robert S. Paskowski, Consulting Principal, PYA
Marissa R. Urban, Associate, Polsinelli
180

90
 2/26/2019

Discussion Topics

 Overview of Medicare
 Unique differences between Medicare
Advantage and Traditional Medicare
 Industry trends and regulatory updates
 Providers: strategic considerations and
contracting approaches
 Open discussion

181

OVERVIEW OF MEDICARE

182

91
 2/26/2019

Medicare: History

 In 1966, Medicare became the national

health insurance program for Americans
aged 65 and older.
 Administered by the Centers for Medicare
and Medicaid Services (CMS).
 For 2017, approximately 58 million
individuals were enrolled in Medicare as
beneficiaries.

183

Medicare: Four Parts

 Part A: inpatient hospital, skilled nursing and
hospice services
 Part B: outpatient hospital and provider
services and some drugs (i.e. “incident to”
and statutorily-identified drugs)
 Part C: Parts A and B services and additional
coverages via managed care
 Part D: Outpatient prescription drugs not
covered by Part A or B

184

92
 2/26/2019

Medicare Part C Basics

MA Health Plan

 Health Plans receive capitated  Providers contract with Health Plan

payment from CMS per enrollee
– Based-upon geographic benchmarks
and risk scores.
– Incentive to negotiate risk-based and
quality-based contracts with providers.
– Evaluated by CMS using “Star Ratings”:
• Outcomes, Intermediate Outcomes, Patient
Experience, Access, and Process
• Higher Ratings; higher bonuses and open
enrollment
 Health Plans pay providers under
managed care contract (FFS).
 Typically riskier than MSSP.
 Enhanced opportunity compared to
MSSP.
 Coding and documentation vital to
success and (plan’s success).
 Hierarchical Condition Category
(HCC)

185

Medicare Part D Basics

Part D Sponsor PBM Pharmacy

Sponsors receive capitated  Sponsors contract with

payment from CMS per
enrollee
– Based on Sponsor bids that
represent estimated costs to
provide Part D coverage in each
geographic region.
– Based-upon geographic
benchmarks and risk scores.
– Evaluated by CMS using “Star
Ratings”.
pharmacy providers via
pharmacy benefits managers
(PBMs)
– Sponsors pay pharmacies based on
privately negotiated rates
– Some pharmacy reimbursement
typically at risk (e.g. rebates,
incentive payments)
– Managing drug spend is vital to
Sponsor’s success
186

93
 2/26/2019

MEDICARE ADVANTAGE (MA)

V.
TRADITIONAL MEDICARE

187

Program Differences
Attributes Medicare Advantage Traditional Medicare
• Customized by MA Payer • Providers
Network participating in
Medicare

• Part A • Part A
• Part B • Part B
• Additional benefits – • Part D (if enroll in MA-
Benefits
preventives services, out-of- PD)
pocket limit and typically able
to couple with Part D plan
• Various: Part B premiums + • Part A: $0
Monthly MA premiums • Part B: $135.50 (2019)
Premiums • Part D: Varies with
MA-PD plan
188

94
 2/26/2019

Part C – Overall Cost Differences

 December 2018 MedPAC study

demonstrates MA payments now equal to
Medicare FFS and continue to drop.
– MA plan payments have fallen nearly every year
since 2010.
– MA plans may include additional benefits and
out-of-pocket limits.
– 90% of MA members report satisfaction with
coverage and preventive services; 84% satisfied
with prescription drug coverage.

189

Part C - MA Success Factors

 Comprehensive risk coding – direct impact on CMS
capitated revenue
– For every 10 basis points (1.0 to 1.1 risk score) = approximately $1,080 per member
per year based on an average $10,000 per member per year capitation revenue.

 Focus on quality measures – measured under the CMS

Star rating system
– For a Payer that has a 4+ Star rating, the Payer earns a 5% bonus, which amounts to
approximately $540 per member per year.

 End of life care – use of robust palliative and hospice care

programs
 Acute utilization – ensure right care in right setting

190

95
 2/26/2019

Part D – Overall Cost Differences

191

Part D – Overall Cost Differences

 Program relies upon private market forces to

control drug spend
 CMS statutorily prohibited from interfering in
price negotiations between Sponsors and
providers (i.e. the “non-interference clause”)
 Sponsors report associated drug spend via
prescription drug event (PDE) reporting,
which is used in determining benchmark bids
for the following year

192

96
 2/26/2019

Part D Success Factors

 Managing utilization
– Formulary management, for both beneficiaries and
manufacturers
– Therapeutic interchange
– Quantity limits and step therapy
– Tiered cost-sharing for specialty pharmaceuticals
 Preferred pharmacy networks
– Reduced pharmacy reimbursement for preferred pharmacies
– Selective contracting with specialty pharmacies
– But must meet “any willing pharmacy” laws
 Encouraging adherence to therapeutic regimes (annual
costs estimated at $100-300 billion)

193

INDUSTRY TRENDS AND REGULATORY

UPDATES

194

97
 2/26/2019

Industry Trends - Spending

195

Industry Trends - Spending

196

98
 2/26/2019

Industry Trends - Spending

Industry Trends - Enrollment

198

99
 2/26/2019

Industry Trends - Enrollment

Industry Trends - Quality

100
 2/26/2019

Part C: Regulatory Updates

 Developments in Risk Adjustment

 Expansion of Supplemental Benefits
 Re-engagement by CMMI
 VBID / hospice benefit
 Continued focus on opioids
 “Medicare Advantage for All”

201

Part D: Industry Trends

202

101
 2/26/2019

Part D: Industry Trends

 Vertical mergers and integration within the
pharmaceutical supply chain
– In-house PBMs for all major payers (e.g., CVS/Aetna;
ESI/Cigna; Anthem/IngenioRx)
– Integrating provider and pharmacy care
 State price transparency and notification laws
 Drug pricing calculations that consider
qualitative elements (e.g., quality life years,
patient experience) and performance
warranties

203

Part D: Regulatory Updates

 Incorporating drug costs into Alternative
Payment Models (APMs)
– Loosening regulatory requirements to allow for therapy
and cost management
– Examples include Part D Enhanced Medication Therapy
Management (MTM) Model; Maternal Opioid Misuse
Model
 Addressing the opioid epidemic
– Supply limits and drug utilization review edits
 Coordinate across programs to reduce drug
spending (e.g. MSSP request for information)

204

102
 2/26/2019

Part D: Regulatory Updates

 Presidential proposals on drug pricing
– Rebate sharing at point-of-sale
– Exclude manufacturer rebate from out-of-
pocked beneficiary cost calculations
– Reallocate responsibility for reinsurance costs
– Loosen formulary requirements and protected
classes
– Eliminate generic cost-sharing for LIS
 Part D Payment Modernization Model (2020)

205

Section Subtitle
PROVIDERS: STRATEGIC
CONSIDERATIONS AND CONTRACTING
APPROACHES

206

103
 2/26/2019

MA: Strategic Considerations

 MA Landscape
 Infrastructure
 Market Dynamics
 Network considerations
 Risk Tolerance

207

MA: Contracting Options

 FFS only (traditional)

 FFS + quality incentives R
 FFS + shared savings I
 FFS + risk-sharing
S
 Full capitation
K
 Joint-venture with a payer
 Provider-sponsored plan

208

104
 2/26/2019

Part D: Strategic Considerations

 Expanding scope of practice for existing
providers
– Establishing generic manufacturers
– Creating in-house specialty pharmacies
 Considering prescribing behavior given current
enforcement environment (i.e., opioids) and
data mining
 Implementing processes now regarding value-
based drug spend, to well position for future
participation in value-based models

209

Part D: Contracting Options

 Requesting transparency in pharmacy/provider
reimbursement
– But remember, Sponsors only need offer standard terms and
conditions and specialty pharmacies (and others) particularly
vulnerable in negotiations
 Offering “value add” pharmacy services to contracting
partners and patients
– Adherence services, prior authorizations, chronic care
management
 Participating in APMs addressing drug spend
 Considering new technology to control drug spend (e.g.,
clinical decision-making software; price transparency
information)

210

105
 2/26/2019

Open Discussion

QUESTIONS???

211

Anthony H. Choe, Counsel, Polsinelli

achoe@polsinelli.com

Robert S. Paskowski, Consulting Principal, PYA

bpaskowski@pyapc.com

Marissa R. Urban, Associate, Polsinelli

murban@polsinelli.com

212

106
 2/26/2019

Reimbursement Impact on Oncology

Transactions
Sean Timmons, Polsinelli Tynan Kugler, PYA
Kyle Vasquez, Polsinelli Sara Bowman, PYA
Ross Sallade, Polsinelli Ashley Mains, SCL Health

107