OMB Receives CMS Rule Overhauling Medicaid

The Office of Management and Budget (OMB) has received a final rule by the Centers for Medicare & Medicaid Services (CMS) with major changes made to Medicaid managed-care regulations. The changes include:

  • Capping insurer profits;
  • Requiring closer supervision of plans’ provider networks by the states;
  • Encouraging the growth of managed long-term care;
  • Allowing more behavioral care in institutional settings; and
  • Encouraging the states to establish quality rating systems for plans.

For certain types of providers, Medicaid plans’ provider networks must have time and distance standards that more adequately reflect access for beneficiaries. States must also consider whether plans offer providers proficient in languages other than English. 

A medical-loss ratio (MLR) of 85% has been set by the rule so that at least 85 cents of every dollar spent on premiums must be used for medical care. Failure to comply with this ratio could lower future payments.

Managed-care plans represent 46 million subscribers, or 73% of the regular Medicaid population. The proposed rule would also cover millions of children covered by the Children’s Health Insurance Program. A published final rule is expected in mid to late May.1

1 Dickson, Virgil, “OMB receives CMS Rule Overhauling Medicaid”, Modern Healthcare, February 19, 2016,

New Quality Measures

The Centers for Medicare & Medicaid recently posted on their website. With more healthcare quality outcomes being tied to reimbursement, the Core Quality Measures Collaborative has outlined seven sets of quality measures intended to evaluate medical care and provider performance in the following areas:

  • Accountable Care Organizations, Patient Centered Medical Homes, and Primary Care
  • Cardiology
  • Gastroenterology
  • HIV and Hepatitis C
  • Medical Oncology
  • Obstetrics and Gynecology
  • Orthopedics

The Collaborative was formed to identify core sets of quality measures that would be meaningful to patients and providers and to reduce duplication and variability of measures, ultimately decreasing the data collection burden and costs. The Collaborative includes such organizations as the Centers for Medicare & Medicaid Services (CMS), America’s Health Insurance Plans, the American Academy of Family Physicians and the National Partnership for Women and Families.  The National Quality Forum served as technical adviser to the group.

The new measure sets will assist providers and consumers in the following areas:

  • Promotion of measurement that is evidence-based and generates valuable information for quality improvement,
  • Consumer decision-making,
  • Value-based payment and purchasing,
  • Reduction in the variability in measure selection, and
  • Decreased providers’ collection burden and cost.

Continued work will be done on improving the standard measures with the goal of improving care coordination, increasing shared decisions between patients and providers and increasing patient reported outcomes.

CMS is already using measures from each of the core sets and will implement new measures as appropriate. Commercial health plans will implement the new core measures as part of their normal contract cycle.

A comment period regarding the measures will open for input in the near future.

Quality Reporting Costs $40,000 per Physician per Year

According to a recent survey published in Health Affairs and funded by the Physicians Foundation, physicians in four specialties are spending an estimated $15.4 billion each year on quality measure reporting, averaging out to $40,069 per physician per year.

One thousand practices in the specialties of cardiology, orthopedics, primary care and multispecialty services were surveyed with a 39.4% response rate. Practices were randomly selected from the Medical Group Management Association’s membership rolls.

According to the survey results, physician groups reported spending 15.1 hours per week per physician on quality measures including staff hours and data entry time. The actual physician time spent on quality measures was reported at an average of 2.6 hours per week. 

The passage of the Medicare Access & CHIP Reauthorization Act of 2015 and other steps towards value-based care are resulting in quality of care measures influencing physician reimbursement.

With the high cost of reporting quality measures increasing, the reduction and standardization of these measures by insurers and federal programs is becoming a priority.1

1 Kuehn, Bridget M., “Quality Reporting Costs $40,000 per Physician per Year”, Medscape News and Perspective, March 7, 2016,

Program Integrity Enhancements to the Provider Enrollment Process

The Centers for Medicare & Medicaid Services (CMS) recently provided a regarding the (CMS-6058-P) which outlines new regulations that will prevent questionable providers and suppliers from participating in the Medicare program. If approved, CMS will be able to remove or prevent enrollment of healthcare providers and suppliers that have a history of working around the system with name changes and elaborate inter-provider relationships.

Major provisions of the proposed rule are as follows:

  • Disclosure of affiliations with suspect entities
  • Different name, numerical identifier, or business entity
  • Abusive ordering/certifying
  • Increasing Medicare Program Re-enrollment Bars maximum from 3 years to 10 years with 20 years imposed for second Medicare revocation
  • Other public program termination
  • Expansion of ordering/certifying requirements

Transition to Value-based Care to Accelerate in 2016

According to a recent study released by the American Academy of Family Physicians, 33% of family physicians indicated involvement in a type of value-based care program. Another 19% of those surveyed indicated plans to get involved in value-based care.

These results showed that a large percentage of physicians have not committed to share in the responsibility of participating in value-based payments.1

1 HCPRO, February 15, 2016,

According to released by the Centers for Medicare & Medicaid Services (CMS), physicians in 128 groups, out of the 13,813 groups eligible, will receive a Medicare payment increase of 15.92% or 31.84% for high risk patient populations. Poorer performance will result in 59 physician groups seeing a 1% or 2% decrease in 2016 payments. There were 5,418 physician groups that did not meet the minimum reporting requirements that will result in a 2% decrease in payments.

For 8,208 groups, the minimum reporting requirements were met, but the payments will remain the same due to performance or insufficient data to calculate the Value Modifier for the group.

The 2016 Value Modifier is being applied based on 2014 data and will be applicable after March 14, 2016. CMS advises that physician groups can expect to see payment adjustments within the next six weeks.

The were made available last fall to inform physicians about their quality and cost performance.

Time for Physicians and Teaching Hospitals to Complete Open Payments System Registration

In order to review and dispute data submitted by manufacturers and applicable group purchasing organizations, a physician or teaching hospital must register for the system. The reviews are to begin in April 2016 with public posting of the data scheduled for June 30, 2016.

Physicians and teaching hospitals are not required to register if they registered last year. Parties who have not accessed the Enterprise Identity Management System (EIDM) in the past 180 days will find their account has been deactivated and they may contact the Help Desk between the hours of 8:30 a.m. and 7:30 p.m. (EST).

2015 payment data and 2013 and 2014 data updates will be published by the Centers for Medicare & Medicaid Services in June 2016.

CMS Proposes 2017 Payment and Policy Updates for Medicare Health and Drug Plans

The Centers for Medicare & Medicaid Services (CMS) has released a that provides information on the proposed changes for Medicare Advantage and Part D Prescription Drug Programs. The changes would result in a 1.35% average increase for Medicare Advantage plans with plans demonstrating improvement of care seeing higher updates. 

In the proposed changes, CMS aims to improve the precision of payments to Medicare Advantage plans that include low income or dual (Medicare and Medicaid) eligible beneficiaries and will adjust the Star Ratings to demonstrate the socioeconomic and disability status of a plan’s enrollees. The method used to risk adjust payments to plans will also be revised to more closely reflect the cost of care for dually eligible beneficiaries.

Medicare Advantage enrollees are at an all-time high of 17.1 million beneficiaries with nearly 32% of beneficiaries enrolled in a Medicare Advantage plan.

Behind Medicaid’s Move to Pay Psychiatric Hospitals

Medicaid may be providing acute-care coverage for adult treatment in free-standing psychiatric hospitals for the first time. The policy is expected to be finalized in April with implementation scheduled for 2017. The proposed rule states that Medicaid managed-care plans can receive Medicaid payments when those plans cover psychiatric hospital stays for 21-64 year olds for up to 15 days a month.

Psychiatric hospitalization costs in community hospitals are now covered by Medicaid if less than half their beds are licensed for psychiatric care. Federal Medicaid has never reimbursed care delivered in stand-alone psychiatric facilities, as the states did.

The change should increase low-income adult access to mental-health and substance-abuse services instead of populating emergency departments, jails and homeless shelters.

Many agencies, such as the National Alliance on Mental Illness have expressed support of the Medicaid change, but feel that much is needed.1 

1 Evans, Melanie, “Behind Medicaid’s move to pay psychiatric hospitals”, Modern Healthcare, February 13, 2016,