The Medicare incentive programs with which you and your medical practice are familiar will soon be no more.  As of January 1, 2017, these programs (including the Electronic Health Records (EHR) Meaningful Use Incentive Program, the Physician Quality Reporting System (PQRS), and the Physician Value-Based Modifier Program) will morph into the new Medicare Quality Payment Program (QPP).   The QPP will also include a fourth category of incentives entitled “Clinical Practice Improvement Activities”, which we discuss in more detail below.

The purpose of the QPP is to create one central program that will govern Medicare Part B payments to physicians, while incentivizing physicians to increase quality of care and decrease inefficiencies in the cost of care for Medicare patients.  Participation in the QPP will be mandatory beginning January 1, 2017.  The QPP will either reward or penalize physicians and their practices by adjusting their reimbursement rates under the Medicare Physician Fee Schedule two (2) years after the reporting year.  Therefore, physicians/practices will have their reimbursement rates adjusted in 2019 based on their reporting data for the year 2017.

As we noted in our first blog post in the Series, accessible here, physicians will have the option to choose between two payment tracks under the QPP:  (1) the Merit-Based Incentive Payment System (MIPS); and (2) an Advanced Alternative Payment Model (Advanced APM).  This blog post will discuss the basics of the MIPS and how to qualify for the MIPS in 2017, while our next post will touch on the basics of participation in Advanced APMs.

Basics of the MIPS

Each physician or group practice (you may report individually or as a group) participating in the MIPS in 2017 will earn a “composite performance score” based on the physician/group’s scores within the following four (4) categories:

  1. Quality of Care – 60%
    • Explanation: Scored based on the reporting of “quality measures”, which will be published annually by CMS.  Physicians will be able to choose which quality measures they will report each year.
    • Replaces: PQRS and quality component of the Value-Based Modifier.
  2. Advancing Care Information – 25%
    • Explanation: Scored based on the reporting of EHR use-related measures with which you are familiar from the current EHR Meaningful Use Incentive Program.  However, unlike the existing program, the QPP measures will not have “all-or-nothing” targets.
    • Replaces: EHR Meaningful Use Program.
  3. Clinical Practice Improvement Activities – 15%
    • Explanation: Scored based on attestation by the physician/group that the physician/group has performed certain care coordination, beneficiary engagement, population management and patient safety activities.
    • Replaces:   New Program.
  4. Resource Use – 0%
    • Explanation: Scored based on per capita patient costs and episode-based measures.  CMS collects and analyzes the data from your claims submissions.  No additional reporting will be required.
    • Replaces: Cost component of the Value-Based Modifier.

How to Qualify for 2017

CMS has eased the reporting requirements for the first year of the QPP.  No physician/group will be required to begin collecting data in accordance with the QPP’s requirements on January 1, 2017 (but may elect to do so).  To receive a neutral or positive payment adjustment, physicians/groups will need to report data for only a 90-day performance period during the year.  There are also minimum threshold reporting requirements to avoid a negative payment adjustment and full participation requirements which are more likely to result in a guaranteed positive adjustment.  The table below organizes the requirements in an easy-to-read format:

MIPS Measures Chart

Final Thoughts on Qualifying for the MIPS in 2017

  • Get involved sooner rather than later. CMS has kept reporting requirements minimal in 2017 in order to encourage clinicians to participate in the QPP.  Take advantage of that opportunity to ensure your practice has the right software to report the quality and EHR use-related measures.  Since adjustments will be made based on threshold scores, it may be easier in 2017 to earn a positive adjustment, and even an exceptional bonus, than in later years.
  • Ensure that your current EHR technology meets the requirements for the QPP in 2017, including reporting capabilities for quality measures and EHR use-related measures. The easiest way to do this is to contact your EHR vendor.
  • CMS has given providers plenty of time to report 2017 data. The deadline for reporting 2017 data is March 31, 2018.

As always, if you have questions specific to your practice, please contact a knowledgeable and experienced attorney.

Earlier this month, the Office of Inspector General of the Department of Health and Human Services (“OIG”), the agency charged with enforcement of key federal fraud and abuse laws, published its annual Work Plan identifying the areas of compliance concern under the Medicare program on which it will focus its review efforts in the coming year.

While the Work Plan does not provide much detail in terms of why particular areas have been identified for review, it can serve as a useful tool for physicians and other providers to identify specific areas on which they should be focusing their compliance efforts. Among other areas of potential concern for physician practices, the 2017 Work Plan identifies the following as subjects of focus by the OIG:

-Outpatient Intensity Modulated Radiation Therapy;
-Billing for prosthetics and orthotics;
-Billing for personally performed anesthesia services;
-Chiropractic billing;
-Billing for Physical Therapy by Therapists in Independent Practice.

In addition, the OIG will be studying whether there is any correlation between physicians who receive payments from drug and device manufacturers and the ordering and prescribing activities of those physicians. The basis for this review will be data reported by drug and device manufacturers under the Physician Payments Sunshine Act contained in the Affordable Care Act.

The entire FY 2017 Work Plan can be viewed on the OIG’s website.

The U.S. Department of Health and Human Services (“HHS”) Office for Civil Rights (“OCR”) issued an alert on November 28, 2016, regarding an email purporting to be from OCR.  This phishing email can look like an official government email which may use fake HHS letterhead and may even appear to be signed by OCR’s Director, Jocelyn Samuels.

OCR says:

The email prompts recipients to click a link regarding possible inclusion in the HIPAA Privacy, Security, and Breach Rules Audit Program.  The link directs individuals to a non-governmental website marketing a firm’s cybersecurity services. In no way is this firm associated with the U.S. Department of Health and Human Services or the Office for Civil Rights.”

If you or your organization has a question about whether you received an official communication, OCR suggests that you contact them via email at OSOCRAudit@hhs.gov.

The alert can be found at the following link: OCR Alert.

You may have heard that a transformation of Medicare’s physician payment program is in the works.  However, you may not know that the structure of the new program, called the “Quality Payment Program”, has been finalized and will begin its first reporting year on January 1, 2017.  Now is the time for you and your practice to get up to speed on the new Quality Payment Program.  This post is the first in a new Blog Series that we will be publishing on Fox Rothschild’s Physician Law Blog to help you and your practice prepare for Medicare’s Quality Payment Program.

In October, the Centers for Medicare and Medicaid Services (CMS) issued a Final Rule setting forth the structure of the Quality Payment Program and the parameters for its first year of operation.  The purpose of the Quality Payment Program is to create one central program that will govern Medicare Part B payments to physicians, while incentivizing physicians to increase quality of care and decrease inefficiencies in the cost of care for Medicare patients.  The Quality Payment Program will consolidate the existing Medicare incentive programs (which include the Electronic Health Records (EHR) Meaningful Use Incentive Program, the Physician Quality Reporting System (PQRS), and the Physician Value-Based Modifier Program), along with a new program incentivizing clinical improvement activities, into a single payment program that will either reward or penalize physicians by adjusting their reimbursement rates under the Medicare Physician Fee Schedule.

In each reporting year under the Program, physicians will be required to qualify for one of two (2) payment tracks:  (1) the Merit-Based Incentive Payment System (MIPS); or (2) the Advanced Alternate Payment Model (Advanced APM) model.  The MIPS is the default payment track, and will be the track used by most physicians over the next five years.  Qualification for the Advanced APM model requires participation in a CMS-approved Advanced APM.  The long-term goal of CMS is for most physicians and practices to participate in Advanced APMs.

While calendar year 2017 will be the first reporting year under the Quality Payment Program, payment adjustments for physician performance in 2017 will not be made until the 2019 calendar year.  This two-year gap between reporting and payment adjustment has been carried over from the existing incentive programs and may eventually be shortened.  However, for now, the gap will allow a smoother transition from Medicare existing incentive programs, which have collected data over the last two years for incentive payments in 2017 and 2018, respectively.  To be clear, incentive payments based on data reported under existing incentive programs in 2015 and 2016 will still be made.

The good news is that CMS has eased the reporting requirements for the first year of the Program.  For example, no physician will be required to begin collecting data in accordance with the Program’s requirements on January 1, 2017.  To receive a neutral or positive adjustment to reimbursements in 2019, physicians will need to report data and perform certain practice activities for a 90-day performance period during the year.

Stay tuned to the Physician Law Blog for upcoming posts on what you and your practice need to know about the Quality Payment Program (QPP).  The next posts in the QPP Blog Series will be:

  1. Basics of the MIPS and How to Qualify in 2017
  2. Basics of Advanced APMs and How to Qualify in 2017
  3. Details of the MIPS Scoring System

In the interim, if you would like to learn more about the QPP, we encourage you to check out the excellent website CMS has developed on the QPP, which can be found at this link:  https://qpp.cms.gov

As always, if you have questions regarding the applicability of the QPP to you and your practice, we advise you to consult with a knowledgeable attorney.

The Office of Inspector General (“OIG”) of the Department of Health and Human Services, generally, would have concerns about a potential or existing referral source receiving free goods or services, since these free goods and services could be used to provide unlawful payments for the referral of Federal health care program business.  However, under Advisory Opinion 16-09, the OIG decided not to pursue sanctions against a company that provides computerized point-of-care storage and dispensing systems for vaccines (the “Dispensing System”) to physicians free of charge due to the specific circumstances in this arrangement.

The Arrangement:  A manufacturer of a refrigerated vaccine storage and dispensing system (the “Dispensing System”) would retain title to their Dispensing System and the internal data, but would provide the system free of charge to certain physicians.  The manufacturer would enter into two types of agreements:

1)  Sole-Source Vaccine Agreement – The Dispensing System manufacturer would enter into an agreement with manufacturers who are the sole suppliers of a vaccine (“Sole-Source Vaccine”).  The Sole-Source Vaccine manufacturer would pay the Dispensing System manufacturer a fee for each unit of vaccine that a participating physician dispenses out of the Dispensing System (the “Dispense Fee”).

2) Physician Agreement – Dispensing System manufacturer would enter into agreements with only those Physicians who had not previously stocked adult vaccines previously, or only stocked vaccines sporadically or in low volumes.  The Dispensing System would be free of charge to physicians, provided the physician agrees to stock at least one Sole-Source Vaccine that has an Agreement with the Sole-Source Vaccine manufacturer.  The physician would be responsible for the internet connectivity and utilities for the system.  The physician could use the Dispensing System to store other vaccines.  However, the physician may only store Sole-Source Vaccines if the vaccine manufacturer has an agreement with the Dispensing System manufacturer.

OIG’s Analysis: Due to the following “unique factors” the OIG concluded that the following arrangement would be permissible.

  • No Dispense Fee is shared with the physicians.
  • The Dispense Fee is paid directly to the Dispensing System manufacturer, who does not generate Federal healthcare program business.
  • The risk of unfair competition is reduced because (1) only Sole-Source Vaccine manufacturers can enter into an agreement with the Dispensing System manufacturer; (2) More than one Sole-Source Vaccine manufacturer can have their vaccines in any machine and each would be paying the Dispense Fee; and (4) Since a physician needs the Sole-Source Vaccine for patient, the physician has inherently chosen the manufacturer, since they cannot get the vaccine from anywhere else.
  • Physicians may store any non-sole-source vaccines in the Dispensing System that they wish.
  • The manufacturer will not advertise, market or promote any specific vaccine.
  • Adult vaccines are administered in limited manner and serve to prevent diseases, which if not prevented could lead to costlier services to federal payors.
  • The Arrangement helps achieve the CDC’s goal to improve adult vaccination rates which is a benefit from a public policy perspective.
  • The Dispensing System helps mitigate one of the key challenges – proper vaccine storage and management

While it appears the opinion is likely limited to the discrete issue of vaccine storage, it does demonstate that the OIG may be willing to entertain proposals that align with public health concerns or other government agency goals, even in situations where there could be a risk of fraud or abuse to federal payor programs.

If your practice is interested in guidance regarding free vaccine dispensing systems or similar arrangements, be sure to consult experienced counsel.

In March 2016, we covered the conviction of Dr. Venkateswara Kuchipudi for violating the federal anti-kickback statute by referring nursing home patients to Sacred Heart Hospital (in Chicago) in exchange for kickbacks. For a summary of the case, please see our post here: Nursing Home Fraud Scam Results in Conviction for King of Nursing Homes

Dr. Kuchipudi was convicted of one count of conspiracy to defraud the United States and nine counts of illegally soliciting or receiving benefits in return for referrals of patients covered under a federal health care program. On August 12, 2016, the U.S. District Court for the Northern District of Illinois sentenced Kuchipudi to two (2) years in prison and the return of over $786,000, consisting of overpayments and fines.

According to the Court, Kuchipudi had become more focused on making money than on the best interests of his patients, and knew that his scheme to refer nursing home patients for kickbacks was “morally wrong”.

The Hospital made the following kickbacks to Kuchipudi:  (1) it covered the costs of the physician assistants (PAs) and nurse practitioners (NPs) who exclusively treated Kuchipudi’s patients, while allowing Kuchipudi to bill Medicare and Medicaid for the services of the PAs and NPs treating his patients; (2) it inappropriately paid him rent payments; and (3) it paid him bogus teaching fees.

The prosecutors sought 6 to 8 years in prison for Kuchipudi, and stressed Kuchipudi’s greed in engaging in the scheme.  In his defense, Kuchipudi offered support letters from many of his patients, testifying to his selfless nature and years of patient-centered care. However, some of the most telling evidence of Kuchipudi’s intentions was that he frequently did not know why his patients were admitted to the Hospital or even who they were.  In addition, in the sentencing memorandum, prosecutors noted that Kuchipudi pressured the Hospital to pay for his meals at an expensive steakhouse in Chicago, which a Hospital executive agreed to do expressly in exchange for Kuchipudi’s admissions.

As we noted before, this case is an example of how violations of the federal anti-kickback statute can involve kickbacks in forms other than direct payment for referrals. It also serves as a reminder to physicians to carefully review their hospital relationships and arrangements with other providers to avoid running afoul of federal and state fraud and abuse laws. We encourage you to seek legal counsel with experience in the nuances of these laws and regulations if you have any questions regarding your arrangements with providers.

Many medical groups have difficulty developing a succession plan for practice leadership. Some practices do not even have a formal governance structure in place (though they should), but even those that do may find it challenging to identify and train new leaders to assume responsibility when senior physician leaders step down.

Having a leadership succession plan in place is critical for a number of reasons. In practices where leadership is handled by one physician or concentrated in a small group of physicians, it will inevitably take time for new leaders to learn the nuances of the practice. Introducing future practice leaders to key aspects of practice management early-on will enable them to gain institutional knowledge so that they are better prepared to step into the leadership roles if and when the need arises.

Changes in leadership can occur unexpectedly in the event of catastrophic events for example. Where this occurs, having knowledgeable and willing physicians to step into the leadership roles will help to minimize the disruption caused by such an event. Here are a few things to consider in developing a leadership succession plan:

–Develop job descriptions for existing leadership roles. These should identify the key functions and responsibilities of each position;
Identify physicians within the practice with leadership potential. Practice leaders should ideally demonstrate leadership skills and business acumen (or an ability to develop it) and should also be interested in and willing to participate in leadership;

–Develop opportunities to involve future leaders in practice management on a limited basis. For example, future leaders may be charged with exploring new practice initiatives or other “special projects” and reporting back to practice leadership;

–Finally, senior practice leaders should look for opportunities to actively teach leadership skills and practice management to potential future leaders. This can be done through regular meetings to discuss practice finances, human resources issues, new business opportunities and the like.

There are big changes coming to the Medicare incentive programs as we know them.  Beginning on January 1, 2017, the new Quality Payment Program (the “Program”) will replace all existing Medicare incentive programs with a comprehensive incentive model.  The Program will involve a modified set of EHR Meaningful Use requirements, new quality of care metrics, new cost efficiency goals and “clinical practice improvement activities” (for which physicians will be rewarded for care coordination, beneficiary engagement and patient safety).  The Program will also have a separate track for incentive payments associated with participation in Advanced Alternative Payment Models (such as Accountable Care Organizations) (“APMs“).

Congress provided for the development of the Program in the 2015 Medicare Access and CHIP Reauthorization Act (the “MACRA”).  Under the MACRA, the Program must be “budget-neutral” each year.  In other words, the rewards paid by Medicare to well-performing physicians and practices must be equally offset by the penalties levied against poor-performing providers.  The rewards will continue to take the form of payment adjustments to the Medicare Physician Fee Schedule.  The first year of payment adjustments will be 2019, based on data from the 2017 reporting year.  For 2019, the reward paid to (or penalty levied against) any provider may not exceed a 4% adjustment to the Medicare Physician Fee Schedule.  However, in subsequent years, the limits are set to increase, reaching a maximum of 9% in 2022.

The potential for substantial penalties under the Program has led to concerns that the Program will make it difficult for smaller practices with higher numbers of Medicare patients to be financially viable.  Foreseeing these economic issues, Congress earmarked $100 million over five years to help small practices successfully participate in the Program.

In June, the U.S. Department of Health and Human Services (“HHS”) announced that the first $20 million of these earmarked funds will be awarded by the end of 2016.  The recipients of the funding will be organizations that provide education, training and consultation on the Program to small practices.  In particular, these organizations will assist small practices in understanding what quality measures, EHR options and clinical practice improvement activities are most appropriate for their practices.  The organizations will also help small practices evaluate their options for joining an APM.  HHS has not announced when the organizations will begin training and educating small practices.

While the intention behind such training and education is laudable, it does not lay to rest the concern that small practices serving substantial Medicare populations will be under greater pressure and financial strain to continue to operate independently.  After all, the Program itself must remain budget-neutral.  If practices improve their compliance and quality of care metrics, payment adjustments will have to be reduced or compliance standards raised.  In the long-term, this may lead to small practices being forced to join an APM in order to continue to serve Medicare patients.

Stay tuned for updates on the Program from CMS, including details on the final regulations for the Program.  If you have specific questions about how the Program may affect your practice, be sure to contact a knowledgeable healthcare attorney.

Long gone are the days when drug reps enticed physicians with extravagant meals at five-star restaurants and box seats to the Phillies’ playoffs (and sadly, gone are the days when the Phillies actually made the playoffs).

According to a recent study published in the journal, JAMA Internal Medicine, physicians who are provided a meal for less than $20 from drug reps are more inclined to prescribe that rep’s name-brand drug, which is not always covered by insurance, over the less pricy bioequivalent generic.

Researchers from the University of California, San Francisco, the University of Hawaii, and the Pacific Health Research and Education Institute examined data from 280,000 physicians in Medicare’s prescription drug program from August through December 2013.  Four top-selling name-brand drugs were considered: Benicar and Bystolic, both of which are used to treat high blood pressure, Pristiq, used to treat depression, and Crestor, used to treat high cholesterol.

The study revealed that doctors who received a meal linked to Benicar and Bystolic promotion were 70% and 52%, respectively, more likely to choose the name-brand than those doctors who did not receive a free meal.  Those who received a meal linked to Pristiq were 118% more likely to prescribe Pristiq, and Crestor was linked to an 18% prescribing increase over the bioequivalent generic Lipitor.

Further, an alarming $73 billion per year is spent on name-brand drugs for which there is an equally effective generic, with patients themselves spending $24 billion of that amount.

Dr. Adams Dudley, the study’s lead author, remarked, “Doctors are human, and humans respond to gifts.”

Forgive me for being a skeptic, but isn’t it also quite possible that the sales pitch given during the meal was what actually influenced physicians’ prescribing habits? Call it naiveté, but let’s hope it takes more than a measly slice of pizza to buy our healthcare providers’ loyalties.

–Alexandra L. Sobol, Esq.

(Click here to view Ms. Sobol’s biography)

The deadline for providers to file a hardship exception application to the electronic health record (EHR) meaningful use requirements for the 2015 reporting period is July 1, 2016.

If you have any concern that your practice or certain eligible professionals in your practice may have been unable to meet the meaningful use requirements for the 2015 reporting period, it may be appropriate for the applicable provider to file a hardship exception application with CMS to avoid future payment adjustments.  Note also that certain provider types may automatically qualify for a hardship exception for the 2015 reporting period without the need to file an application.

For more information, please see the Health Law Practice Alert recently published by Fox Rothschild LLP on this topic, accessible at this link:  Fox Rothschild LLP Health Law Practice Alert – Hardship Exception (June 17, 2016).