Issue 12, Spring 2021

Medicare Sequestration Cut Suspension Extended

HHS Secretary Xavier Becerra recently assured House appropriators he would seek input from stakeholders before implementing a balance billing fix, but he did not explicitly say HHS would use the normal rulemaking process in implementing the law. In addition, Chiquita Brooks-LaSure—President Biden’s nominee to be the CMS Administrator—testified before the Senate Finance Committee on April 15 and told lawmakers that, if confirmed, she would work hard to get regulations out on the No Surprises Act as soon as possible, noting the tight timeline.

The July 1 deadline is for regulations to provide details on the methodology that health plans will use to determine the “qualifying payment amount”, which (for the item or service involved) is the median in-network contracted rate in the geographic area involved for the applicable insurance market (large group market, small group market, or individual market) as adjusted for inflation occurring after January 31, 2019. The qualifying payment amount is one of the factors considered in the process for an independent dispute resolution (IDR). It is also part of the methodology for determining the amount of the patient’s cost-sharing payment.

The qualifying payment amount is used for IDR purposes and patient cost-sharing purposes unless there is a State law that governs the amount of payments to out-of-network providers, or unless the State is participating in the CMMI All-Payer Model. If there is such a State law, or if the State is participating in that Model, the IDR process is not available.

In the 2021 final rule concerning ASCs that was published on December 29, 2020, CMS stated that “we have structured the Medicare Fee-For-Service prior authorization processes to effectively account for concerns associated with processing timeframes, patient care, and other administrative concerns.”

Presumably, this means that no changes to the prior authorization requirements of CMS will be made unless Congress takes action. Thus far in 2021, no bills have been introduced that would affect the agency’s prior authorization requirements in Medicare. One bill has been introduced that would require CMS to annually notify Medicare beneficiaries of prior authorization requirements and also other utilization management techniques. This is H.R. 2410, a bipartisan bill from Representatives Mike Kelly (R-PA) and Tom O’Halleran (D-AZ). Kelly is on the Ways & Means Committee and O’Halleran is on the Energy & Commerce Committee.

Additional Information

For more information on any of the topics discussed in this section, please contact the chair of the OrthoForum Advocacy Committee, Dr. Richard Bruch, at rich.bruch@gmail.com.

House Telehealth Hearings

On March 2, the health subcommittee of the House Energy and Commerce Committee held a hearing titled, “The Future of Telehealth: How COVID-19 Is Changing the Delivery of Virtual Care.” Testimony from public health experts and health care executives discussed the effectiveness of telehealth services during the COVID-19 pandemic and the implications of telehealth for the future of medicine. Members on both sides of the aisle praised the expanded telehealth policies during the pandemic and there was broad consensus that some telehealth services should be made permanent. Members, however, expressed concern that the ease of using telehealth services could lead to an increase in fraud, overutilization, and abuse. Witnesses countered that point of view, noting that the little existing research on utilization and cost-effectiveness of telehealth services indicates patients are no more likely to overuse telehealth than traditional healthcare services.

On April 28, the health subcommittee of the House Ways and Means Committee held a hearing titled, “Charting the Path Forward for Telehealth.” During the hearing, lawmakers and witnesses explored issues related to expanding telehealth services and ensuring telehealth does not exacerbate or lead to new inequities, among other issues. Chair Lloyd Doggett (D-TX) applauded the work of CMS in allowing waivers to cover 144 telehealth services during the pandemic. He warned members, however, to be cautious about supporting a two-tiered telehealth system, with those in rural areas not having the same access as others. Chair Doggett said he intends to hold a markup on telehealth legislation and announced he would be introducing a bill to extend the telehealth waivers after the conclusion of the COVID-19 PHE. He asked for advice on what Congress should know before moving forward with telehealth legislation, and Ateev Mehrotra, a Harvard Associate Professor of Health Care Policy, noted the importance of understanding the impact of telemedicine on total utilization since usage rates during the pandemic may have skewed the data. Rep. Mike Thompson (D-CA) said Congress must do three things: maintain the stability of the Medicare Trust Fund, expand telehealth equally, and monitor quality of care.

• The Telehealth Modernization Act (S. 368), a bipartisan bill introduced on February 23 by Senators Tim Scott (R-SC) and Brian Schatz (D-HI) that has 7 cosponsors, including several senators who are sponsors of the separate CONNECT Act (such as Schatz, the lead sponsor of that Act). S. 368 would authorize (but not require) CMS to expand the list of telehealth providers to include any health care professional who is eligible to bill Medicare. This presumably would include PTs and OTs once a physician has certified the plan of care, but it would not include their assistants. The bill would eliminate telehealth geographic limitations, as well as restrictions on the site at which the patient may receive telehealth services, including allowing the patient’s home to be a site of service. In addition, CMS would have the authority to keep in place the telehealth waivers it has issued for the COVID-19 PHE even after the PHE is over. This authority could serve as a transition period as CMS considers whether and how to expand the list of telehealth providers.

• The CONNECT for Health Act of 2021 (S. 1512), a bipartisan bill introduced on April 29 by Senators Brian Schatz (D-HI) and Roger Wicker (R-MS) that has 49 cosponsors, including Tim Scott (R-SC) (the lead sponsor of S. 368, discussed above). S. 1512 would authorize (but not require) CMS to expand the list of telehealth “practitioners,” to eliminate telehealth geographic limitations, and to eliminate restrictions on the site at which the patient receives telehealth services, including allowing the patient’s home to be a site of service. The definition in current law of “practitioner” would not be changed or supplemented, however; therefore, PTs and OTs could not become telehealth providers under the bill. The bill would authorize (but not require) CMMI to create a demonstration model to test expanding the types of health professionals who can provide telehealth services, and CMMI would have authority for the model to include PTs, OTs, and their assistants.

• The Telehealth Modernization Act (H.R. 1332), a bipartisan bill introduced on February 25 by Representatives Buddy Carter (R-GA) and Lisa Blunt Rochester (D-DE) that has 28 cosponsors. This bipartisan bill is a companion to S. 368 (discussed above).

• The Expanded Telehealth Access Act (H.R. 2168), a bipartisan bill introduced on March 23 by Representatives Mikie Sherrill (D-NJ) and David McKinley (R-WV) that has 26 cosponsors. This bipartisan bill would upon enactment (without CMS having to take any action) permanently authorize PTs, OTs, their assistants, and certain other health professionals to be telehealth providers. The bill, however, does not include any provisions to eliminate the telehealth geographic limitations or to eliminate restrictions on the site at which the patient receives telehealth services.

• The CONNECT for Health Act of 2021 (H.R. 2903), a bipartisan bill introduced on April 28 by Representatives Mike Thompson (D-CA) and David Schweikert (R-AZ) that has 4 cosponsors. This bipartisan bill is a companion to S. 1512 (discussed above).

Therapy Services Subcommittee

For more information on therapy services issues, or to join the OrthoForum Advocacy Committee Therapy Services Subcommittee, please contact Renee Duncan at: renee.duncan@orthotennessee.com.

Group Practice Provisions of Stark Law Final Rule

The federal Stark Law concerns referrals and profits related to “designated health services” (DHS), such as clinical lab services, diagnostic imaging, and physical and occupational therapy services. It does not apply to clinic activities such as evaluation and management (EM) visits and performing orthopedic procedures. (State laws governing referrals and profits may be broader than the Stark Law.)

The Stark final rule published in December 2020 has two basic categories of changes—those that apply within the context of a “value-based arrangement” (VBA) and those that apply regardless of whether there is a VBA (i.e., changes to long-standing Stark regulations that do not concern VBAs).

Although the Advocacy Committee continues to study the VBA provisions of the Stark final rule, our primary focus over the last several months has been on changes made by the final rule to the regulations governing how group practices divide overall profits. These changes will take effect on January 1, 2022.

On April 15, the Committee had a video presentation for OrthoForum members in order to provide an introduction to these group-practice changes. Pursuant to discussions of the Committee that took place after that presentation, the Committee has submitted questions to the Centers for Medicare & Medicaid Services (CMS) to seek clarification on several issues, and we are waiting for the agency’s responses.

After consideration of the new regulations, and also the preamble to the final rule (the explanation of CMS on its changes to the regulations), there are several takeaways:

• It is a violation of the group-practice regulations to have an overall-profits distribution formula under which compensation goes up or down on the basis of the volume or value of referrals.

• It is a violation to make “service-by-service” distributions of overall profits, such as having one division of physicians receive clinical-lab profits and a different division receive diagnostic-imaging profits.

• Otherwise, it appears that approaches used in the past will continue to be acceptable.

Any distribution method made in “a reasonable and verifiable manner” is allowed. Divisions (referred to in the regulations as “components”) of at least five physicians can be created on the basis of similar practice patterns; practicing in the same location; similar years of experience; similar tenure with the group practice; or other criteria determined by the group practice. The profits of a division can be pooled and distributed within the division. Each division can use a different distribution formula; however, the formula for a division must apply to everyone in the division.

As to value-based arrangements, there is a new provision on this in the group practice regulations, which will take effect on January 1, 2022. The Advocacy Committee intends to have a video presentation on VBAs in June.

Stark Law Subcommittee

For more information on Stark Law issues, or to join the OrthoForum Advocacy Committee Stark Law Subcommittee, please contact the chair of the Subcommittee, Dr. Chip Hummer, at chummer3@premierortho.com.

Representative Michael Burgess (R-TX), a physician and a high-ranking member of the House Energy & Commerce Committee, introduced a bill on February 25 to repeal the Stark Law restrictions on physician-owned hospitals (POHs) that were enacted in 2010 as part of the Affordable Care Act (H.R. 1330). The lead cosponsor is Representative Vicente Gonzalez (D-TX). The bill has 24 cosponsors, of which three are Democrats. There is no companion bill in the Senate.

It is unlikely that H.R. 1330 will be seriously considered because many in Congress, particularly senior Democrats, oppose the bill. Apparently, this is because they continue to believe that POHs avoid low-income patients and sicker patients (i.e., cherry pick). They also may fail to take into consideration that POHs can be part of the answer to addressing the negative effects of hospital consolidation. A reasonable request to federal policymakers would be to ask for an explanation of why it is considered permissible for private-equity firms to own entire multi-state hospital systems but not for physicians to own individual hospitals.

The question is whether Congress can be persuaded to modify its views. It may be that the best way to educate Congress is through informing it about the results of studies by researchers with respected credentials.

Published in the British Medical Journal, September 2015. Conducted by researchers from Harvard, University of California, and Massachusetts General Hospital.

Conclusion: “Using a comprehensive list of POHs across the United States and contemporary data, we found no evidence that POHs systematically avoid poorer patients or those from ethnic and racial minority groups. POHs also performed equally to non-POHs on a wide array of measures of quality of care, costs, and payments for care. These findings indicate a need to re-examine existing public policies that target all hospitals with physician owners.” (Emphasis added.)

Published in Health Affairs, April 2021. Analysis by board members of the AMA, AAOS, and the American College of Cardiology.

Conclusion: “A problem acknowledged by both Democrats and Republicans, hospital consolidation, regardless of its causes, presents a vexing stumbling block to better care for Americans . . . With a pandemic underscoring the need for flexible, dynamic hospital capacity, now is the time for congressional correction of Section 6001, a provision contrary to the ACA’s goals of expanding access to care, improving quality, and promoting innovation.” (Emphasis added.)

Published in Health Affairs, May 2021. Conducted by researchers from the Rand Corporation, Boston University, and Baylor University.

Conclusion: “In recent years direct ownership of physician practices by hospitals and health systems (that is, vertical integration) has become a prominent feature of the US health care system . . . This study highlights how the growing trend of vertical integration, combined with differences in Medicare payment between hospitals and nonhospital providers, leads to higher Medicare spending . . . We found that during the 2013–16 period, vertical integration between physician group practices and hospitals or health systems was associated with increases both in hospital sites of care for common diagnostic imaging and laboratory tests and in Medicare reimbursement rates . . . Hospitals and health systems have a strong financial interest in capturing the referral patterns of physicians, especially those they employ. These incentives and downstream outcomes can sometimes be at odds with patients’ best interests, however.” (Emphasis added.)

Published in Health Affairs, May 2021. Conducted by researchers from Northeastern University, Boston University, and Stonehill College.

Conclusion: “The transition among many US physicians from independent practice to hospital employment has raised concerns about whether employed physicians will be more inclined to refer patients for hospital-based services that are unnecessary or inappropriate . . . Study findings indicate that the odds of a patient receiving an inappropriate MRI referral increased by more than 20 percent after a physician transitioned to hospital employment. Most patients who received an MRI referral by an employed physician obtained the procedure at the hospital where the referring physician was employed. These results point to hospital-physician integration as a potential driver of low-value care.” (Emphasis added.)

Published in Health Affairs, August 2020. Conducted by researchers from the HHS Agency for Healthcare Research and Quality (AHRQ) and from Mathematica. Study funded by AHRQ.

Conclusion: “Provider consolidation into vertically integrated health systems increased from 2016 to 2018. More than half of US physicians and 72 percent of hospitals were affiliated with one of 637 health systems in 2018. For-profit and church-operated systems had the largest increases in system size, driven in part by a large number of system mergers and acquisitions . . . Provider consolidation into integrated systems may lead to highly concentrated markets along both horizontal and vertical dimensions. Future research should examine the drivers of consolidation and variation in performance by ownership type; geographic variation in the extent of health system penetration across local health care markets; and the ramifications of increased consolidation on cost, access, and quality of care.” (Emphasis added.)

Published in the New England Journal of Medicine, January 2020. Conducted by researchers from Harvard, Beth Israel Deaconess Medical Center, and Brigham and Women’s Hospital. Study funded by AHRQ.

Conclusion: “Hospital mergers and acquisitions were associated with modest deterioration in patient experiences, small and nonsignificant changes in readmission and mortality rates, and inconclusive effects on performance on clinical-process measures. These findings challenge arguments that hospital consolidation, which is known to increase prices, also improves quality.” (Emphasis added.)

Analysis by the nonprofit Health Care Cost Institute, 2021.

Conclusion: “One frequently cited factor for the continued rise in health care prices is that health care provider markets have become increasingly concentrated over time, and therefore less competitive . . . While metro areas varied in their levels of concentration, by 2017, the majority of metros would be categorized as highly concentrated markets. This reflects the fact that most metros became increasingly concentrated over time . . . A common way to measure concentration within a market is to calculate a Herfindahl-Hirschman Index (HHI) . . . In 2017, 87 metros of the 124 studied (70%) had hospital markets with HHI values that could qualify as a highly concentrated per the Department of Justice (DOJ).” (Emphasis added.)

Published by the Robert Wood Johnson Foundation, June 2012. Conducted by researchers from Carnegie Mellon University and the Wharton School, University of Pennsylvania.

Conclusion: “Hospital consolidation generally results in higher prices. This is true across geographic markets and different data sources. When hospitals merge in already concentrated markets, the price increase can be dramatic, often exceeding 20 percent. Hospital competition improves quality of care. This is true under both administered price systems, such as Medicare and the English National Health Service, and market determined pricing such as the private health insurance market. The evidence is more mixed from studies of market determined systems, however. Physician-hospital consolidation has not led to either improved quality or reduced costs. Studies find that consolidation was primarily for the purpose of enhanced bargaining power with payers, and hence did not lead to true integration. Consolidation without integration does not lead to enhanced performance.” (Emphasis added.)

Physician-Owned Hospital Subcommittee

For more information on POH issues, or to join the OrthoForum Advocacy Committee POH Subcommittee, please contact the chair of the Subcommittee, Dr. Blake Curd, at bcurd@oi.md.