Issue 7, Winter/Spring 2020
General OrthoForum Policy Issues
The OrthoForum 2020 Annual Conference
The OrthoForum invites members to participate in the upcoming OrthoForum annual meeting on February 27- 29, 2020, in Phoenix, Arizona. The theme of this year’s conference is “Building Partnerships: Can Private Orthopaedic Groups Produce Value and Meet Employers’ Needs?” The focus of the three day conference is to inform and educate independent orthopaedic practices about the various opportunities to demonstrate value-based care. Our sessions, speakers, and presentations will highlight industry trends and share high level strategies on how to accomplish this goal and build the necessary resources both within the OrthoForum and by developing partnerships with groups outside of the OrthoForum. Our keynote speakers include: Billy Beane, Executive Vice-President of Baseball Operations for the Oakland A’s (and the subject of the Hollywood movie, “Moneyball,” starring Brad Pitt) and also Amy Walter of the Cook Political Report, a frequent TV commentator who makes regular appearances on PBS, CNN, and Fox News.
To view the conference agenda, please click HERE.
OrthoForum Physicians to Be Nominated to Join the AAOS Nominating Committee
The OrthoForum Advocacy Committee Chair, Dr. Richard Bruch is pleased to announce that he will be nominating OrthoForum and AAOS member physicians Dr. Larry Halperin of Orlando Orthopaedic Center and Dr. Doug Lundy of Resurgens Orthopaedics to the AAOS Nominating Committee at the upcoming AAOS annual business meeting on Thursday, March 26, 2020 in Orlando, Florida.
OrthoForum Supports HHS Secretary Azar Regarding Court Challenge to CMS Site Neutral Policy
A lawsuit filed by hospitals challenged the decision of CMS (effective 2019) to reimburse evaluation and management services provided at hospital off-campus clinics at the same rate as under the Physician Fee Schedule. This CMS reimbursement position, known as the “site neutral” policy, results in a lower rate for hospital off-campus clinics. A federal district court decided in favor of the hospitals last September and HHS appealed that decision in December. The OrthoForum signed on to a brief to the U.S. court of appeals that supports Secretary Azar by arguing that the district court’s decision should be reversed. This is an “amicus curiae” brief (friend of the court brief). The amicus brief that the OrthoForum signed on to was filed by the Large Urology Group Practice Association (LUGPA) and the Digestive Health Physicians Association (DHPA).
Background: Hospital off-campus clinics are paid under the Outpatient Prospective Payment System (OPPS). These hospital clinics were paid a higher rate for evaluation and management services under the OPPS than those same services were paid under the Physician Fee Schedule when provided in physician offices. This led hospital systems to acquire independent physician practices. In response, Congress required site neutral payments for hospital off-campus clinics acquired on or after November 2, 2015. This lawsuit (American Hospital Association v. Azar) concerns hospital off-campus clinics acquired before that date.
CMMI and BPCI-A Updates
Brad Smith Announced as New CMMI Director
On January 6, 2020, HHS and CMS announced that Brad Smith is the new head of the Center for Medicare and Medicaid Innovation (CMMI) within the Centers for Medicare & Medicaid Services (CMS). He will also serve as the Senior Advisor to Secretary Azar for Value-Based Transformation. Smith is held in high regard by agency leaders and is anticipated to continue the work of his predecessor at CMMI, Adam Boehler, including overseeing Medicare payment experiments and driving payment models key to the Trump administration’s health care agenda. The Tennessee entrepreneur and former Rhodes Scholar previously served as COO of Anthem’s Diversified Business Group, and as CEO of Aspire Health, a palliative care provider that he co-founded with former Senate Majority Leader Bill Frist (R-TN)) (which was sold to Anthem last year for an estimated $440 million). Smith also served as a consultant with McKinsey & Company; as an economic development advisor under former Tennessee Gov. Bill Haslam (R); and as an advisor to former Senator Bob Corker (R-TN). To view the CMS announcement, please click HERE.
BPCI-A Issues
Orthopaedic practices participating in the Bundled Payments for Care Improvement-Advanced (BPCI-A) model have been facing two primary issues: revised target pricing and undefined quality component measures. Providers that were successful participants in the BPCI Classic model have found that the target pricing in BPCI-A differs significantly and is much lower than the preliminary target pricing released by CMMI and CMS. Given the previous issues encountered with calculating the National Trend Factor in BPCI Classic, CMMI and CMS used a different analytical company and completely revised its target price methodology in BPCI-A. As such, the application of case-mix adjustment parameters in BPCI-A is one of the biggest issues encountered among physician group practices (PGPs) participating in BPCI-A and has had an impact on the potential to achieve savings for episodes involving lower extremity joint replacements (LEJRs). While the case-mix adjustment process does well in properly adjusting for shifts in patient subsets between different diagnosis-related groups (DRGs), the current calculation methodology does not allow for the complete removal or proper adjustment of a defined subset of patients under the case-mix adjustment process.
The CY 2020 target pricing provided for the combined spinal fusion episode has also led to confusion and a lack of participation among PGPs. Because CMMI did not conduct a retrospective analysis on the impact of the coding changes involved in spinal fusion episodes, which moved a significant portion of cervical lumbar or non-cervical spinal fusion episodes into a much more expensive combined anterior-posterior spinal fusion episode, this resulted in extremely low target price adjustments. While CMMI is relying on the case mix-adjustment parameters at reconciliation to correct for this pricing discrepancy, given past experience with LEJRs, PGPs are reluctant to participate and lack the confidence that these case-mix adjustments will functionally work to correct the price discrepancy.
In addition, PGPs participating in BPCI-A have 10% of their reimbursement held back based on quality component measures. However, CMMI has yet to release the actual rating methodology and the quality measures that PGPs will be evaluated on and how this may impact a PGP’s potential reimbursement. The OrthoForum is also requesting and is awaiting further clarification from CMMI on this issue.
OrthoForum Meeting with CMMI
On December 4, 2019, a group representing the OrthoForum met with CMMI to discuss LEJR episode issues. This group included OrthoForum members Karen Simonton of OrthoVirginia and Chad Beste of Illinois Bone and Joint Institute, as well as OrthoForum consultant Jerry Rupp, Fusion5 Chief Innovation Officer. Senior representatives from the American Academy of Orthopaedic Surgeons (AAOS) also attended the meeting. The meeting focused on LEJR reimbursement issues, particularly the actual target price and reconciliation for outpatient TKA compared to the preliminary target price. The OrthoForum explained that the actual target price has been drastically underestimated by CMMI, since the removal of outpatient TKAs equates to the removal of a subset of the lowest cost, least acuity patients, leaving a set of higher acuity, more costly patients in the program. This is not reflected in adjustments to the target price.
Since the CY2020 target price for PGPs participating in BPCI-A included a review of the baseline period, projecting what outpatient fees would have been (even though such fees did not exist at the time), the OrthoForum argued it would be reasonable to do the same types of projections and adjustments for performance periods in CY2018 and CY2019. CMMI was receptive to this view and is currently working with Fusion5 to re-analyze past data using CMMI’s own parameters that would generate a target price in model year 3 or CY 2020.
OrthoForum Meeting with CMS
On November 12, 2019, Dr. Chip Hummer of Premier Orthopaedics represented the OrthoForum at a CMS meeting on the new proposed longitudinal care spine/hip/knee model being featured by the Duke University School of Medicine and Dell Medical School.
OrthoForum Meeting with Duke-Margolis Center for Health Policy Center
On January 31, 2020, OrthoForum CEO Glenn Sumner, Tony Shaia, MD from OrthoVirginia and CMMI Subcommittee Chair Joel James will attend a roundtable meeting at the Duke-Margolis Center for Health Policy Center with Dr. Jonathan O’Donnell and Dr. Kevin Bozic to discuss and provide technical input on a longitudinal condition-based bundle payment model. Dr. O’Donnell presented the concept of this new APM to the OrthoForum Advocacy Committee in a webinar last September.
New Chair for CMMI Subcommittee
The OrthoForum is pleased to announce its new Chair of the CMMI Subcommittee, Joel James of Signature Health. For more information on CMMI and BPCI-A issues, or to join the OrthoForum Advocacy Committee CMMI Subcommittee, please contact Joel James at: jjames@SignatureHealth.net.
Stark Law Update
HHS Proposed Rule
On October 17, 2019, HHS issued a proposed rule that would create Stark exceptions for value-based arrangements (VBAs). (Since the proposed rule only concerns “compensation arrangements,” it does not address restrictions on physician-owned hospitals, which concern ownership or investment interests.) This rule, together with the VBA-related proposed rule of the HHS Office of Inspector General (relating to the Anti-Kickback Statute), recognize the lessons learned from alternative payment models (APMs) created by the CMS Center for Medicare and Medicaid Innovation (CMMI). With respect to VBAs, these proposed rules move the Medicare program toward a nationwide approach by creating exceptions that are independent of waivers granted for CMMI models.
Three VBA exceptions would be created by the Stark proposed rule: one involving full financial risk; one involving meaningful downside financial risk; and one that does not involve financial risk. In addition, the proposed rule would change CMS regulations concerning profits that are generated for a physician group practice (PGP) when its physicians refer patients to the PGP. Specifically, when a physician in the PGP participates in a VBA and makes referrals to the PGP, the resulting profits for the PGP that are directly attributable to the referring physician could be paid directly to that physician.
On December 31, 2019, the OrthoForum submitted a comment letter to CMS on the proposed rule. (The letter was signed by Dr. Richard Bruch, the Chair of the Advocacy Committee.) The letter emphasizes that what PGPs need is simplicity regarding the VBA exceptions so that it is not necessary to have a large team of lawyers in order to create a VBA. The letter goes on to note that, since the new VBA exceptions call for a PGP to make its own decision on whether its plan for a VBA is within one of the new exceptions, it is critical for CMS to provide guidance to PGPs, including advisory opinions on fair market value issues (which relate in part to the volume or value of referrals). Also, since the proposed rule states that separate CMS waivers will no longer be needed for CMMI APMs, more guidance is needed on whether CMS will confirm for a participating PGP that the CMMI APM fits within one of the new VBA exceptions. In this context, the letter emphasizes that a PGP should be able to treat all its Medicare patients the same, whether or not they are part of the CMMI APM. Finally, the letter emphasizes that the VBA exceptions under the Stark proposed rule should be harmonized with the VBA exceptions under the Anti-Kickback Statute (AKS) proposed rule. The Stark proposed rule and the AKS proposed rule have similarities, but the latter has more requirements than the former, which creates a substantial risk that a PGP whose VBA complies with the Stark Law could still be criminally liable because that VBA does not comply with the AKS. The OrthoForum also sent an AKS-focused letter to the HHS Office of Inspector General emphasizing that the two proposed rules should be harmonized.
View the AKS letter and the OIG letter.
Congress
Congress continues to consider VBA issues, particularly the House. At this point, the action is more informal behind-the-scenes action than official actions such as bill introductions or committee hearings and markups. Momentum has shifted from the Senate to the House because the top Democrat on the Senate Finance Committee, Senator Ron Wyden (D-OR), is opposed to legislation that would create VBA exceptions. A House group, the Health Care Innovation Caucus, is developing legislation based on the proposal developed in the Senate by Senator Bill Cassidy (R-LA), and in November the Advocacy Committee sent the Innovation Caucus the comment letter the Committee sent to Senator Cassidy in February 2019. Finally, given the issuance of the Stark proposed rule, there is the question of whether advocacy efforts should focus more on HHS rather than Congress. These matters are being considered by the Advocacy Committee, which is working closely with AAOS.
Stark Law Subcommittee
For more information on Stark Law issues, or to join the Stark Law Subcommittee, please contact Dr. Chip Hummer at: chummer3@premierortho.com.
Ambulatory Surgery Center Update
CMS 2020 OPPS/ASC Final Payment Rule
On November 1, 2019, CMS released the 2020 final payment rule for hospital outpatient departments (HOPDs) and ASCs. Issues of interest to OrthoForum members include the following:
- The update to the conversion factor for ASC payments will continue to be based on the hospital market basket, which is the same approach used for HOPDs. This update approach began in 2019 and results in higher payments than the previous approach, which was based on the consumer price index for all urban consumers (CPI-U). CMS has indicated it will, through 2023, continue to base updates on the hospital market basket. With this update, the conversion factor for ASCs is about 59 percent of the conversion factor for HOPDs, consistent with past years.
- The average payment increase for ASC payments is 2.6 percent. In addition to the conversion factor, the payment rate for any particular ambulatory payment classification (APC) is affected by any change in the weight assigned to that APC. The payment rate is the APC weight multiplied by the conversion factor.
- Total knee arthroplasty (TKA) was added to the ASC payable list, along with seven other codes. TKA was removed from the inpatient-only (IPO) list in 2018.
- Total hip arthroplasty (THA) was removed from the IPO list, along with six spine codes.
- Effective 2024, there will be a new quality reporting measure, ASC-19: Facility-Level 7-Day Hospital Visits after General Surgery Procedures Performed at Ambulatory Surgical Centers. Note that another quality reporting measure is already scheduled to take effect in 2022, which is ASC-17: Hospital Visits After Orthopedic Ambulatory Surgical Center Procedures.
For more information on the final rule, please click HERE.
The Ambulatory Surgery Center Quality and Access Act of 2019 (H.R. 4350 and S.3085)
In both the House and the Senate there is bipartisan legislation to require that the annual update to the ASC conversion factor be equal to the annual update to the HOPD conversion factor. As a practical matter, this would codify the decision made by CMS, using its current statutory discretion, to use the hospital market basket to update the ASC conversion factor, which is the same update methodology used for the HOPD conversion factor. The House bill is H.R. 4350, introduced on September 17, 2019, by Representatives John Larson (D-CT) and Devin Nunes (R-CA). The Senate bill is S. 3085, introduced on December 18, 2019, by Senators Mike Crapo (R-ID) and Richard Blumenthal (D-CT). Each of these bills has the short title, the Ambulatory Surgery Center Quality and Access Act of 2019. This legislation is important because it would prevent CMS from returning to its former ASC update methodology (CPI-U), which resulted in lower updates. In addition, the legislation would require that, when CMS has applied the same quality measure both to ASCs and HOPDs, the agency must publish on its Internet site a side-by-side comparison, by geographic area, of the reported data for that quality measure. Finally, the legislation would require that, when a comment to an OPPS/ASC proposed rule requests CMS to add a procedure to the ASC payable list and the agency does not in the final rule propose to do so, the agency must specify in the final rule the particular criteria in the agency’s regulations that were the basis for the agency’s decision. The OrthoForum is working closely with AAOS and ASCA in support of this legislation.
ASC Subcommittee
For more information on ASC issues, or to join the OrthoForum Advocacy Committee ASC Subcommittee, please contact Teresa Copeland at: teresa.copeland@orthotennessee.com.
Balance Billing Update
Despite a last-ditch effort in December by supporters of a federal benchmark rate, Congress recently decided to delay action on resolving the issue of “surprise billing” until spring of this year when Medicare and other health program “extenders” expire. (These are mandatory-spending programs that, due to their high costs, do not have permanent authority to operate, but rather are funded for a year or two at a time and so must be periodically extended.) These current program extenders expire on May 22, 2020. Since balance-billing provisions will generate savings to the federal government, they are expected to be included, as a “pay for,” in legislation to further extend these programs.
During 2019, supporters of a federal benchmark rate appeared to have the momentum as balance-billing legislation moved through the House Energy & Commerce Committee and the Senate Health, Education, Labor, and Pensions (HELP) Committee. Supporters of the arbitration approach, however, fought back and began to gain ground. Ultimately, on December 8, the leaders of House Energy & Commerce and Senate HELP released a proposal that was a combined version of long-gestating proposals that would set out-of-network payments at the median in-network rate. That proposal, however, would allow Independent Dispute Resolution (IDR) for a claim if the median in-network rate for it is above $750. This proposal was announced after more than a year of advocacy and multiple grassroots efforts on the issue. For physicians, there are significant concerns with the specifics of this IDR proposal. The situation is further complicated by the development of an alternative proposal by the House Ways & Means Committee. It apparently does not use any benchmark rate. An announcement by that Committee on December 11, 2019, stated that disputes would be settled through a “structured process”. It is currently unclear as to what proposal or approach Congress will take when considering the issue this spring.
Dr. Doug Lundy, the Chair of the Balanced Billing Subcommittee, has been working with AAOS on this issue. AAOS supported the decision of Congress to delay action until spring 2000. More time is needed to ensure that a legislative solution protects patients from unexpected out-of-network medical bills while also avoiding the unintended consequences of an unfair negotiation process for providers and insurers. Dr. Lundy is working on this issue with the Advocacy Committee, AAOS, the Out of the Middle Coalition, and the larger physician community.
For more information on Balance Billing issues, or to join the OrthoForum Advocacy Committee Balance Billing Subcommittee, please contact Dr. Doug Lundy at: LundyDW@resurgens.com
Physician-Owned Hospital (POH) Update
HHS Rulemaking
With respect to the physician-owned hospital (POH) restrictions on capacity expansion that were created by the Affordable Care Act (ACA), the OrthoForum continues to focus on regulatory efforts over the past year with top officials at the Department of Health and Human Services (HHS).
As previously reported, the OrthoForum met with high-ranking HHS officials in February 2019, highlighting the authority of HHS under the Stark Law to administratively create exceptions for POHs and arguing that this authority extends to modifying or eliminating the Stark Law restrictions on POHs. While HHS seems favorably inclined toward removing the capacity-expansion restrictions on POHs and has been receptive to our argument, it has not yet taken any action. The Advocacy Committee contacted HHS in December 2019 to reiterate the need for action by the agency.
On October 17, 2019, HHS issued a proposed rule that would create Stark exceptions for value-based arrangements. That proposed rule, however, only concerns “compensation arrangements,” which is one of two types of financial relationships regulated by the Stark Law. The other type is ownership or investment interests. Since the POH restrictions concern ownership or investment interests, HHS took the position that those restrictions were beyond the scope of the October proposed rule. It may be that HHS is focused on finalizing the current Stark Law proposed rule before turning its attention to POH issues. The OrthoForum will continue to work with HHS on the POH issue.
Congress
Legislation has been introduced in the House and Senate to repeal the POH restrictions. The Senate bill is S. 2860, which was introduced on November 14, 2019, by Senator James Lankford (R-OK) and has 12 cosponsors (all Republican). The House bill is H.R. 3062, which was introduced on June 3, 2019, by Representative Michael Burgess (R-TX) and has 39 cosponsors (36 Republicans and three Democrats).
Proposed CMMI Model Under Consideration by CMS
The Advocacy Committee has coordinated with AAOS to stay informed on the work of the Physicians Hospitals of America (PHA) to develop a proposal for a CMMI demonstration model under which POHs would be permitted to expand their capacity. The proposal was submitted to CMMI in August 2019. It appears from comments from CMS in November that the agency is interested in this model. In May 2019, the OrthoForum joined approximately 60 other medical organizations, including AAOS and AAOE, in sending a letter to CMS supporting the principle that CMS should create a POH demonstration project.
Introducing New Physician-Owned Hospital (POH) Subcommittee
Given the interest in POH issues expressed during the OrthoForum’s first annual OrthoHospital meeting held September 25-26, 2019, in New Orleans, Louisiana, the OrthoForum Advocacy Committee is pleased to announce the creation of a new Physician-Owned Hospital (POH) Subcommittee. Dr. Blake Curd (R-SD) with the Orthopedic Institute of Sioux Falls, South Dakota and a South Dakota State Senator will serve as Chair of this Subcommittee. Given his past work as immediate past president of PHA, which included developing the POH demonstration model that was proposed to CMMI in August, the Advocacy Committee is pleased to welcome Dr. Curd as the head of this new POH Subcommittee. We invite all OrthoForum members concerned with POH issues to engage with this new subcommittee, as doing so is an effective way to inform the Subcommittee of the issues on which the Subcommittee should focus in its work with Congress and federal agencies.
POH Subcommittee
For more information on POH issues, or to join the OrthoForum Advocacy Committee POH Subcommittee, please contact Dr. Blake Curd, M.D. at: bcurd@oi.md.
Political Update
It may feel to you like the 2020 presidential race began in January of 2017 and has run on without a break since, but the part that counts begins in February.
The early part of the Democratic nominating process is tightly compressed. Four contests, one per week, in February, and then a huge cohort of primaries, Super Tuesday, on the first Tuesday in March. This means that Democrats will have selected nearly 40% of their pledged delegates in just the first month of the game, February 3rd to March 3rd.
Although national surveys get more press, political professionals are fixated on poll results in the early state. Polling indicates that the top four candidates, Joe Biden, Bernie Sanders, Elizabeth Warren, and Pete Buttigieg, are tightly packed together in the first two contests, the Iowa Caucuses (February 3rd) and the New Hampshire primary (February 11th). As of this writing, Biden leads in Iowa by 0.4 points and in New Hampshire by 1.0.
The third and fourth contests are the Nevada Caucuses (February 22nd) and the South Carolina primary (February 29th). Nevada’s changing population represents the only hint of the nation’s changing demographics in the first month. The biggest factors in the Nevada Democratic contest: the influence of former U.S. Senate Majority Leader Harry Reid, and the unionized casino and hotel workforce, led by the Culinary Workers’ Union. Biden leads in Nevada by approximately six points; that lead will certainly grow if he wins Iowa and New Hampshire.
A majority of Democratic voters in South Carolina are African-American, which gives Biden the advantage. As of today he holds a 17-point lead in the state.
These February events set the table for Super Tuesday, which comes just three days after South Carolina. Given Biden’s lead in the latter state, one might expect some Democratic candidates to abandon the state in favor of more appealing Super Tuesday venues. Several candidates have home-state primaries on Super Tuesday, providing an opportunity to put some points on the board (or get embarrassed): Amy Klobuchar (Minnesota), Bernie Sanders (Vermont), Tom Steyer (California), Elizabeth Warren and Deval Patrick (Massachusetts), and Michael Bennet (Colorado).
Super Tuesday was originally a cooperative venture of Southern states to hold their primaries on the same day in order to attract Democrats to visit and to familiarize themselves with local issues. But many other states, seeking to stave off irrelevance, inserted themselves into the date – most notably California, which previously held its primary in June, by which time the nomination race had been decided. With the profusion of states holding events on March 3rd, campaign budgets and candidates’ travel schedules will be strained to the breaking point, although billionaires Tom Steyer and Michael Bloomberg may have no meaningful spending restrictions.
What to watch for in the February contests other than the order of finish? The morning after each primary/caucus, political pros will scan the results to find out who finished with 15% or more of the vote. That’s the threshold in each primary that a candidate must reach in order to get pledged delegates. In each state, delegates are divided not among all the contestants, but among those who got 15% or more.
Does it matter how many candidates reached 15% in each primary if, say, Joe Biden keeps coming in first? Yes, it matters enormously. If multiple candidates finish in the money over and over, then the frontrunner might reach the Democratic Convention without a majority of pledged delegates. That’s where things get interesting.
Only pledged delegates vote on the first ballot, but superdelegates are eligible to vote on the second ballot. Superdelegates generally are party leaders and elected officials, and many of them will have benefitted from the astonishing largesse of…Mike Bloomberg. Bloomberg has spent massively on state and local races, and will continue to do so.
Does that mean that Bloomberg is counting on superdelegates to make him the nominee at the convention? Probably not. But he might be counting on superdelegates for something else. Stay tuned!
