(480) 923-0802

Our Take: CMS had a busy week

Apr 29, 2019

This week we’re diverting a bit from our format, as a torrent of news came from CMS — so much that we could dedicate an “Our Take” to each announcement. We’ll spare you that analysis and just tell you what the agency has proposed.

CMS Primary Cares Initiative
CMS is offerinfive new payment models for primary care practices, three of which are direct-contracting models. Each is aimed at tying payment to performance.

Under Primary Care First, CMS is focusing on “advanced primary care practices ready to assume financial risk in exchange for reduced administrative burdens and performance-based payments.” CMS said the model is based on the underlying principles of CPC+ and is designed to strengthen primary care practices that are “central to a high-functioning health care system.” A second option, Primary Care First–High Need Populations, focuses on high-need, seriously ill beneficiaries.

The three other models fall under Direct Contracting, which is focused on large physician practices, health systems and other organizations that have experience managing risk. CMS said the three models are based on the agency’s experience with accountable care organizations and the Medicare Advantage program. All three are based on population-based payment (PBP) in a capitated model with varying degrees of shared risk. The agency is seeking public input for the third option, Geographic PBP, which will become a five-year demonstration in 2021.

The other models start in 2020 and also will span five years. All of the new initiatives are voluntary, and CMS expects about 25% of primary care practices to participate.

The American Medical Association has endorsed the new payment models.

“Many primary care physicians have been struggling to deliver the care their patients need and to financially sustain their practices under current Medicare payments,” said Dr. Gerald Harmon, immediate past chair of the AMA board of trustees. “The new primary care payment models announced today will provide practices with more resources and more flexibility to deliver the highest-quality care to their patients.”

Focus on dual-eligibles
CMS is inviting state Medicaid directors to test new, innovative approaches to serve patients eligible for both Medicare and Medicaid.

The agency said states spend $300 billion on 12 million dual-eligible patients annually and that patients often have multiple, chronic conditions that aren’t well-served by a fragmented system.

“Less than 10% of dually eligible individuals are enrolled in any form of care that integrates Medicare and Medicaid services, and instead have to navigate disconnected delivery and payment systems,” said CMS Administrator Seema Verma. “This lack of coordination can lead to fragmented care for individuals, misaligned incentives for payers and providers, and administrative inefficiencies and programmatic burdens for all. We must do better, and CMS is taking action.”

Approaches discussed in the letter that CMS sent to the directors include a capitated financial alignment model, a managed fee-for-service model and state-specific models.

Proposed changes to inpatient payment rule
CMS is proposing a 3.2% increase in Medicare rates for 2020 for hospitals that report quality data and are meaningful users of electronic medical records. The agency is proposing another potential 0.5% in uncompensated care payments and new technology add-on payments.

The agency is proposing increasing the amount distributed to disproportionate share hospitals by $216 million, to $8.5 billion, in 2020.

It is also proposing a change in the inpatient hospital wage index. Hospitals with low wage index values (below the 25th percentile) would see an increase, while those with high wage index values (above the 75th percentile) would see a decrease, capped at 5%. Further, the agency is proposing increasing wage index values for rural hospitals by making changes to the “rural floor” calculation.

Finally, CMS is increasing the amount it will pay for CAR-T cancer therapy, from 50% of estimated costs to 65%. The agency said the maximum add-on payment would increase from $186,500 to $242,450. Novartis’ Kymriah and Gilead Sciences’ Yescarta are priced at $373,000.

CMS is accepting comments on the proposed rule through June 24.

Separately, CMS proposed increasing payments to skilled nursing facilities by 2.5% in 2020. The agency said it would use a new case-mix model, beginning in October, that focuses on outcomes rather than the amount of care delivered.

CMS’ Verma speaks at NAACOS
Iremarks given at the National Association of Accountable Care Organizations (NAACOS) spring conference, Verma took aim at the Affordable Care Act and some Democratic presidential candidates’ call for “Medicare for All.”

“Proponents of Medicare for All call for a government takeover of health care not because the last experiment with government intervention — ObamaCare — worked, but because it failed,” Verma said. “Instead, we must focus on keeping what works, and fixing what doesn’t.”

This means moving toward a value-based system, she said, but that change isn’t happening as fast as she wants.

One barrier to value-based transformation is a set of regulations related to the Stark Law, which Verma said made sense in a fee-for-service world.

“But in a system in which providers take accountability for total costs, and providers have incentives to control volume, there isn’t nearly as much of a risk of inappropriate or over-utilization,” said Verma. “When payment is for outcomes, and not for services, providers need more flexibility to make referrals.”

Stark Law safeguards limit providers’ ability to coordinate care in innovative ways, she said, noting that CMS is undergoing a thorough review of the regulations “to ensure that they are encouraging, rather than hindering, the move to value.”

What else you need to know
Humana, partnering with Doctor on Demand, announced the launch of On Hand, a comprehensive virtual primary care plan. The companies said employers and members who choose On Hand will gain access to a variety of virtual care services, including a virtual care team, and a dedicated primary care physician for preventive care, urgent care and behavioral health. On Hand offers virtual visits with a $0 copay and a $5 copay for common labs and prescriptions. Some members will also receive a standard medical device kit, which includes a blood pressure cuff, thermometer and log.

The FDA cleared the first medical device to treat attention-deficit/hyperactivity disorder (ADHD). The device, which will be available by prescription, is called the Monarch external Trigeminal Nerve Stimulation (eTNS) System. It’s about the size of a mobile phone and generates a low-level electrical pulse; it connects via a wire to a small patch that adheres to the patient’s forehead. It is indicated for patients aged 7 to 12 years who are not taking ADHD medication and is intended for home use under the supervision of a caregiver. The Monarch eTNS System is manufactured by Los Angeles-based NeuroSigma.

Amazon rolled out its PillPack at-home prescription drug delivery service to Amazon Prime members. The company is offering free next-day delivery for Prime customers, and no cost to fill prescriptions. Members pay only their copay. Amazon acquired PillPack in October 2018 for just under $1 billion. Emails sent to some customers last week are the first sign that Amazon is starting to market the service.

Civica Rx, the non-profit generic drug company established by some of the nation’s largest health systems, has found its new headquarters in Lehi, Utah. In a statement, Civica Rx said Lehi is known locally as “Silicon Slopes,” being a hub for tech startups, with Utah’s major universities nearby. Initially, the facility will have about 40 employees. Notable attendees at the grand opening ceremony included Gov. Gary Herbert, U.S. Rep. Ben McAdams, Intermountain Healthcare CEO Dr. Marc Harrison and Civica Rx Board Chair Dan Liljenquist, who is also senior vice president of strategy at Intermountain Healthcare.

What we’re reading

Contact Darwin Research Group and we will get right back to you.