Medicare, Medicaid and Commercial Coverage & Reimbursement

On November 15, 2019, the Centers for Medicare & Medicaid Services ("CMS") finalized changes to the Open Payments Program as part of the CY 2020 Physician Fee Schedule Final Rule. Perhaps most importantly, CMS broadened the list of Covered Recipients. Starting for data collection for CY 2021, manufacturers will be required to track and report payments and transfers of value made to physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and certified nurse midwives. CMS also added three new nature of payment categories – debt forgiveness, long-term medical supply or device loan, and acquisitions. CMS also consolidated the two payment categories for continuing education programs – accredited/certified and unaccredited/non-certified – into one payment category for all continuing education programs. Lastly, in a move expected to impose a substantial burden on medical device manufacturers, CMS added a reporting requirement for the ‘device identifier’ component of the unique device identifier for devices and medical supplies.

The Centers for Medicare and Medicaid Services (CMS) recently published the 2020 Hospital Outpatient Prospective Payment System (OPPS) rule, which finalizes a proposed reduction in Medicare Part B reimbursement for certain drugs provided by hospitals to outpatient beneficiaries that are acquired through the 340B drug discount program. Through the final rule, CMS purports to continue Medicare reimbursement cuts for 340B drugs first implemented in 2018, despite the fact that those cuts (and the 2019 OPPS rule continuing those cuts) are the subject of ongoing litigation in which the cuts were determined to be unlawful. That ruling, and a Court-imposed stay of the cuts, are the subject of a just-argued appeal.  For a detailed walk-through of the litigation up to this point, please see our prior blog post.

GAO recently released a report analyzing the use of pharmacy benefit managers (“PBMs”) and efforts to manage drug spending and use in the Medicare Part D program. Importantly, the report found that use of PBMs reduced Part D spending in 2016 by 20%, from $145 billion to $116 billon, through drug price rebates.

The proposed 2020 Outpatient Prospective Payment (OPPS) rule was published on August 9, 2019.  Buried in the 819 pages of proposed changes and justifications, CMS took another swing at cutting Medicare Part B reimbursement rates for 340B drugs.   CMS opened its discussion of 340B provisions in the 2020 OPPS proposed rule by first stating it was keeping in effect the 340B reimbursement cut first implemented though the 2018 OPPS rule. The 2018 OPPS rule slashed most hospitals’ Part B reimbursement for 340B drugs from Average Sales Price (ASP) plus 6% down to ASP less 22.5%, a reduction of almost 30%.

Earlier this month, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) issued its 2019 “Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: Top Unimplemented Recommendations.” The OIG releases a version of this report each year outlining its top 25 unimplemented recommendations to reduce fraud, waste, and abuse (“FWA”) among HHS programs. This blog post focuses on those recommendations specific to Medicare Part C and Part D for 2019.

Senators Chuck Grassley (R-IA) and Ron Wyden (D-OR), Chairman and Ranking Member (respectively) of the Senate Finance Committee, have fired the latest shot in Congress’s ongoing battle against high drug prices. Last week, the Senators introduced their much-anticipated proposal to lower drug prices: a chairman’s mark called the Prescription Drug Pricing Reduction Act (PDPRA) of 2019.

Earlier this month, the Office of Inspector General for the U.S. Department of Health and Human Services (OIG) released two reports regarding its concerns and recommendations related to quality of care at hospice facilities. These reports follow a portfolio report that the OIG released last summer regarding significant vulnerabilities in the Medicare hospice benefit. In these reports, the OIG outlines several quality of care issues and recommends several ways that CMS should strengthen safeguards, all of which may further increase enforcement in an already heavily scrutinized area.

On July 11, 2019, the Centers for Medicare and Medicaid Services (CMS) issued its Home Health Prospective Payment System proposed rule for 2020. The proposed rule implements a previously finalized reimbursement methodology for Home Health Agencies (HHAs) called the Patient-Driven Groupings Model (PDGM). The proposal reflects CMS’s continued efforts to shift towards value-based payment models in the Medicare program.

In an unexpected turn of events, the Trump administration has apparently reversed course and has withdrawn the proposed rule that would have amended the discount safe harbor under the Anti-Kickback Statute to eliminate protections for certain drug rebates paid by pharmaceutical manufacturers. “Based on careful analysis and thorough consideration, the president has decided to withdraw the rebate rule. The Trump administration is encouraged by continuing bipartisan conversations about legislation to reduce outrageous drug costs imposed on the American people, and President Trump will consider using any and all tools to ensure that prescription drug costs will continue to decline," White House Deputy Press Secretary Judd Deere said in a statement.

On June 3, 2019, the U.S. Supreme Court issued a decision in Azar v. Allina Health Services. The case involved a challenge by hospitals over whether the Department of Health and Human Services (“HHS”) was required to proceed through notice-and-comment rulemaking before promulgating a retroactive Medicare rate calculation methodology for Disproportionate Share (DSH) payments to hospitals. In a 7-1 decision by Justice Gorsuch, the Court ruled in favor of the hospitals, holding that the new rate calculation established a substantive legal standard, and therefore notice-and-comment was required under the Medicare Act.

In recent months, we’ve highlighted several changes that CMS is implementing to combat opioid misuse. In this post, we focus on CMS’s new Medicare Part D Opioid Overutilization Policies.


Last year, CMS published a road map outlining the agency’s approach to addressing the nation’s opioid epidemic. CMS’s strategy has three prongs: (1) prevent new cases of opioid use disorder (OUD); (2) expand treatment for individuals with OUDs; and (3) leverage data to improve the agency’s prevention and treatment options.


In line with that strategy, the agency published an article detailing its Medicare Part D Opioid Overutilization Policies for 2019. The policies focus on improving communication between and among Part D plans (PDPs) and providers to better coordinate efforts to prevent opioid misuse. As CMS points out, “Providers are in the best position to identify and manage potential opioid overutilization in the Medicare Part D population. Medicare prescription drug plans can assist providers by alerting them about unusual utilization patterns in prescription claims.”

Last month, we highlighted a few of the changes CMS proposes in Parts I and II of the Advance Notice and Draft Call Letter. Here, we take a look at CMS’s next steps to combat opioid misuse. CMS is rolling out several new initiatives in this space this year and next.

As of January 30, 2019, CMS lifted its temporary provider enrollment moratoria for home health agencies in Florida, Illinois, Michigan and Texas. The Enrollment Moratorium had prevented new home health agencies in these states from enrolling in Medicare and Medicaid.

CMS recently proposed several important changes for the Medicare Advantage (MA) program that relate to payment, benefit design, and new actions to combat the opioid crisis. Here, we take a look at the proposed changes to risk adjustment payments, supplemental benefits, and a value-based insurance design model; all working toward CMS’s goal of maximizing coverage and competition. In a prior post we discussed CMS’s Part D Payment Modernization Model and stay tuned for our upcoming discussion of CMS’s next steps to combat opioid misuse.

On January 15, 2019, the Supreme Court heard oral arguments in Azar v. Allina Health Services, a prominent case involving a challenge by hospitals over when Medicare’s instructions to its contractors impact a “substantive legal standard” and thus must be issued through formal rulemaking. As discussed in our prior post, the Court is reviewing the U.S. Court of Appeals for the D.C. Circuit’s decision that threw out a Medicare rate calculation methodology for Disproportionate Share Payments (DSH) to hospitals adopted by the U.S. Department of Health and Human Services (HHS) for its failure to undergo notice and comment rulemaking. During oral arguments, the Court grappled with a broader question: what is the legal standard for when HHS must use formal rulemaking and not “interpretative” instructions to its contractors in the administration of the Medicare program?

On January 31, 2019, the U.S. Department of Health & Human Services (HHS) issued a proposed rule that would amend the discount safe harbor under the Anti-Kickback Statute (AKS) to eliminate protection for certain drug discounts paid by manufacturers to plan sponsors or their pharmacy benefit managers (PBMs) under Medicare Part D, and Medicaid managed care organizations (MCOs). Additionally, the proposed rule would create two new safe harbors to protect: (i) certain point-of-sale discounts on prescription pharmaceutical products; and (ii) certain fixed fee service arrangements between manufacturers and PBMs.

On January 18, 2019, CMS announced the Part D Payment Modernization Model, aimed at incentivizing Part D sponsors to reduce catastrophic phase federal reinsurance subsidy spending.  The model, which will begin January 2020, is a voluntary, five-year model open to eligible standalone Prescription Drug Plans (PDPs) and Medicare Advantage-Prescription Drug Plans (MA-PDs) that are approved to participate. 

In 2014, Arizona expanded Medicaid to the new adult group. Following the expansion, Arizona submitted, and CMS approved, an 1115 waiver extension to create the Choice, Accountability, Responsibility, Engagement (CARE) program. CARE adds premiums and cost sharing, healthy behavior incentive programs, and flexible spending accounts, called CARE Accounts, for certain adults in the expansion population. The program is approved to run through September 30, 2021.

In an Advisory Opinion posted earlier this week, the OIG gave the green light to a charitable pediatric clinic’s routine waiver of patient cost-sharing amounts on the basis.  The OIG’s analysis hinged on several factors that, taken together, led the OIG to refrain from exercising its enforcement discretion.

Over the last few weeks, we published a number of posts examining important developments and trends in 2018 as well as what we expect to see in 2019. Our posts cover a range of topics, including enforcement and litigation, HIPAA and the FDA. In case you missed one, below are links to all of our Year In Review posts.