Narrow network health plans: New approaches to regulating adequacy and transparency. Michael S. Adelberg

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1 Compliance TODAY October 2015 a publication of the health care compliance association Combating healthcare fraud in New Jersey an interview with Paul J. Fishman United States Attorney for the District of New Jersey See page Final rule for Accountable Care Organizations: Enabling technologies, Part 1 Paul R. DeMuro 35 Narrow network health plans: New approaches to regulating adequacy and transparency Michael S. Adelberg 43 OIG offers new guidance for healthcare governing boards Paul P. Jesep 49 Telemedicine arrangements: Trends and fair market value considerations Jen Johnson and Mary Fan This article, published in Compliance Today, appears here with permission from the Health Care Compliance Association. Call HCCA at with reprint requests.

2 by Paul R. DeMuro, CPA, MBA, MBI, JD, PhD, CHC, FHFMA, FACMPE Skilled Nursing Facilities: Quality Reporting and Value-Based Purchasing programs, Part 1 CMS believes that the implementation of a SNF Value-Based Purchasing program is a key to changing how Medicare pays for healthcare services, creating incentives for better quality/value, outcomes, and innovations. CMS s plan is to link payment for performance to improve value for Medicare beneficiaries by promoting robust quality measures. The Affordable Care Act requires the creation of a National Quality Strategy to include plans, goals, benchmarks, and standardized quality metrics, where available. Completeness and accuracy of data submission will be critical elements of the SNF Value-Based Purchasing program. Health Information Technology will be key in a successful implementation of a SNF VBP program, but the quality and cost-effectiveness considerations are somewhat different than those in the acute setting. Paul R. DeMuro ([email protected]) is Of Counsel with the Broad and Cassel office in Fort Lauderdale, FL. bit.ly/in-pauldemuro DeMuro When the U.S. Department of Health and Human Services (DHHS) submitted its Report to Congress: Plan to Implement a Medicare Skilled Nursing Facility [SNF] Value-Based Purchasing [VBP] Program, DHHS declared that the SNF prospective payment system does not provide strong incentives for furnishing high quality care to this very fragile patient population. 1 The Medicare Payment Advisory Commission (MedPAC) recommended to Congress in 2008 and 2011 that Congress establish a quality incentive payment policy for SNFs in Medicare. 2 The thinking was that tying payments to beneficiary outcomes could help improve the quality of care in SNFs. Moving to a value-based system The Centers for Medicare & Medicaid Services (CMS) believes that the implementation of a SNF VBP program is a key to changing how Medicare pays for healthcare services and moving the program toward paying for better quality/value, outcomes, and innovations, rather than the volume of the services provided under the current fee-for-service system. CMS s plan for a SNF VBP is to link payment to performance with the intention of improving value for Medicare beneficiaries and other residents of SNFs by promoting the development of robust quality measures. When financial incentives are used to reward quality and improvement in healthcare, such VBP programs can hold providers accountable for the quality of the care they provide. Patients and providers should be able to assess the quality of skilled and nonskilled care provided by SNFs. There should

3 be an emphasis on Medicare beneficiaries functional status, and the program should support the need for data, reporting, and accountable payment systems. DHHS and CMS are interested in ensuring that the SNF VBP program aligns with many of their efforts to improve the coordination of care. CMS s plan is to promote healthcare that is focused on the needs of patients, families, and communities. The strategy seeks to embody the following three aims for the healthcare system: better care, healthy people and communities, and affordable care. The Patient Protection and Affordable Care Act of 2010 (ACA), as amended, requires the Secretary of HHS to develop a plan to implement a VBP program for Medicare payments for SNFs. 3 CMS remains concerned with the quality of care in a number of SNFs. To link payment to the quality of care for Medicare beneficiaries, in the context of designing and implementing a VBP program for SNFs, DHHS believes that the following steps are necessary: Continuous Quality Improvement framework, SNF VBP population determination, Enhanced data infrastructure and validation process, Performance scoring and evaluation model, Funding source/performance incentive funds, Transparency and public reporting, and Coordination across Medicare payment system. CMS has articulated certain goals for implementing a SNF VBP program to align with other value-based payment initiatives including the reliance on a mix of standards, processes, outcomes, and patient experience measures and a focused core set of measures, nationally endorsed by a multi-stakeholder organization and aligned with best practices among other payers. CMS noted that in preparing the Report to Congress, it reviewed existing innovative programs to determine if any could serve as models for the SNF VBP program. It specifically considered the Nursing Home VBP Demonstration. That program seeks to promote high-quality care while preventing costly, potentially avoidable hospitalizations. In that program, the savings that result from lower expenditures are used to fund incentive payments for providers, whereas in the Medicare Hospital Inpatient VBP program, there are withholds of Medicare payments to create a funding pool used for the incentive payments. In the Report, CMS declares: A VBP program, which can be referred to as payfor-performance, uses payment incentives to encourage providers and suppliers to improve the quality of care they provide. The current Medicare payment system for SNFs does not differentiate between high- and low-quality providers; all providers receive the same payment rates for particular types of residents. 4 Thus, there is a recognition (as there is in the acute-care setting) that the Medicare program needs to move from a fee-for-service system to one where payments are made based on quality and cost-effectiveness. It is important to note that the Affordable Care Act requires creation of a National Quality Strategy to include HHS agencyspecific plans, goals, benchmarks, and standardized quality metrics where available. 5 In addition to this Strategy, CMS had already been engaged in a number of quality initiatives for home health agencies, hospices, hospitals, end-stage renal disease services, physicians, and SNFs/NFs. CMS began a national Nursing Home Quality Initiative (NHQI) in November There are also pay-for-performance initiatives under states Medicaid programs

4 Key elements In discussing the key elements that must be considered in developing a plan to implement a SNF VBP program, CMS identifies the following: Target population; The ongoing development, selection, and modification process for measures to the extent feasible and practicable, of all dimensions of quality and efficiency in SNFs; The reporting, collection, and validation of quality data; The structure of value-based payment adjustments, including the determination of thresholds or improvements in quality that would substantiate a payment adjustment, the size of such payments, and the sources of funding; and Methods for public disclosure of information on the performance of SNFs. 6 The current Medicare demonstrations generally rely, to the extent possible, on pre-validated existing performance measures rather than engaging in a separate validation process. CMS notes that there are some potential measures which might not require any new data collection on the part of some SNFs to assess quality of care under a SNF VBP program, including the following: Minimum Data Set (MDS)-derived quality measures, Health inspection citations, Discharge to the community, Potentially avoidable hospitalizations or re-hospitalizations, Staffing levels, Nursing Home Consumer Assessment of Healthcare Providers and Systems (CAHPS ), and The Five-Star Quality Rating System. 7 CMS discusses a study that estimated that 42% of hospitalizations among Medicare and Medicaid dual eligibles who were receiving Medicare-covered SNF care and 47% of hospitalizations among dual eligibles receiving Medicare-covered SNF care were potentially avoidable. These five conditions contributed to more than three-quarters of preventable hospitalizations: Pneumonia Congestive heart failure Urinary tract infections Dehydration Chronic obstructive pulmonary disease/asthma. 8 One important consideration in the use of potentially avoidable hospitalizations as a quality measure for SNFs is that many rehospitalizations occur soon after discharge from a hospital, which might suggest that the hospital discharged the patient too soon, and not that the SNF provided poor-quality care. Completeness and accuracy of data submission will be critical elements of the SNF VBP program. A SNF VBP program would link payment to quality of care and ensure data oversight for CMS to appropriately calculate performance incentives, rather than tying payments to reporting quality data. Completeness and accuracy of MDS data submission will be critical to the VBP program. 9 Under the Affordable Care Act: in developing a plan to implement a SNF VBP program, the Secretary shall consider the structure of valuebased payment adjustments, including the determination of thresholds or improvements in quality that would substantiate a payment adjustment, the size of such payments, and the sources of funding. An important aspect of the SNF VBP plan entails the specific criteria

5 under which SNFs may receive payment incentives. The SNF VBP program could set attainment standards for payment incentives that require SNFs to attain specific prospectively established targets or to rank in a top percentile of performance. The VBP program could also consider improvement standards relative to a baseline to qualify a SNF for a payment incentive. The CMS could also consider a hybrid of these two approaches. 10 CMS notes that the timeliness of valuebased payment incentives is important. That is, the data calculation and timely distribution of the incentive payments should demonstrate a link between a desired behavioral change and the reward for achieving performance metrics. Health information technology (HIT) will be a key in the development and successful implementation of a SNF VBP program. However, the Report notes that as of the date of the Report, there are no electronic health records (EHRs) that have been developed specifically for a SNF setting. Summary The quality and cost-effectiveness considerations faced by SNFs are different than those in the acute-setting, where there already is much focus on the transition from fee-for-service to payment for quality and cost-effectiveness. In Part 2 of this article, we will discuss the Improving Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act) and the Final Rule Medicare Program; Prospective Payment System and Consolidated Billing for Skilled Nursing Facilities (SNFs) for FY 2016, SNF Value-Based Purchasing Program, SNF Quality Reporting Program, and Staffing Data Collection. 1. U.S. Department of Health and Human Services: Report To Congress: Plan to Implement a Medicare Skilled Nursing Facility Value-Based Purchasing Program, p. 1. March Available at 2. Id., citing Medicare Payment Advisory Commission. The recommendation was originally made in the 2008 Report to Congress. 3. Section 3006(a) (1) of the Patient Protection and Affordable Care Act of 2010 (Pub. L ), enacted on March 23, 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (Pub. L ), enacted on March 30, See supra note 1 at Id. at Id. at Id. at Id. at 38, citing Edith G. Walsh, Marc Freiman, Susan Haber, et al.: Cost drivers for dually eligible beneficiaries: potentially avoidable hospitalizations from Nursing Facility, Skilled Nursing Facility, and Home and Community-Based Services Waiver Programs. August Available at 9. Id. at Id. at 54. Don t forget to earn CEUs for this issue Complete the Compliance Today CEU quiz for the articles below from this issue: Final rule for Accountable Care Organizations: Enabling technologies, Part 1 by Paul R. DeMuro (page 27) Narrow network health plans: New approaches to regulating adequacy and transparency by Michael S. Adelberg (page 35) Corporate practice doctrines and fee splitting: Are you in compliance? by Daniel Meier (page 71) To complete a quiz: Visit log in with your username and password, select a quiz, and answer the questions. The online quiz is self-scoring and you will see your results immediately. You may also , fax, or mail the completed quiz. compliancecertification.org FAX: MAIL: Compliance Certification Board 6500 Barrie Road, Suite 250 Minneapolis, MN United States To receive one (1) CEU for successfully completing the quiz: You must answer at least three questions correctly. Only the first attempt at each quiz will be accepted. Each quiz is valid for 12 months, beginning on the first day of the month of issue. Quizzes received after the expiration date indicated on the quiz will not be accepted. Questions: Call CCB at