Thursday, October 19, 2017

A Visual View of The Weird Intersection of BRCA Coding and PAMA Pricing

In an earlier blog we presented lab-specific CMS payment data for BRCA testing (here) and how to explain CMS's topsy-turvy BRCA pricing to a sixth-grader (here).

PAMA and the various combinations of 8 BRCA-related codes makes it even weirder than it used to be. 

I've assembled the BRCA services and coding options in the picture below, along with PAMA data for utilization and newly released PAMA median prices.  (Note, I've doubled the PAMA utilization to extrapolate from the sixth-month survey to a 12-month year.)  Click to enlarge, review, then continue.
click to enlarge
As observers have noted, under PAMA, the price of the most common BRCA billing code, 81211, actually rises somewhat (up by $200 to $2395) while the price of BRCA uncommon Dup Del analysis stays about the same, code 81213.   The consolidated or comprehensive BRCA billing code 81162 falls from $2503 to $1615, so it may be a less popular option than it was before. 

But wait, there's a whole 'nother level of weirdness, as the pricing for single-gene BRCA1 sequencing plummets to $75 and single-gene BRCA2 sequencing plummets to $185.   (Note that these codes got only a couple dozen uses in the PAMA year, whereas BRCA1-2 sequencing was about 200,000 uses.) 

This means there are several ways to build up coding for exactly the same major BRCA services: "Full sequencing of BRCA1 and BRCA2 and analysis of both common and uncommon deletions."

The most code-efficient way (which seems like correct coding to my eye) is 81162, paying $1615.   However, look harder and you'll find the highest sum comes from billing as BRCA 1-2 sequencing (81211, $2395) and uncommon deletion analysis (81213, +$553), totaling an impressive $2948, almost double the value we get for using the parent code 81162. 

But look closely and there's a third option, to order BRCA1 sequencing alone, with its common dup-del analysis, 81214, a frugal $75, and then order BRCA2 sequencing, 81216, for a still budget-friendly $185.  You're almost done: just order 81213 to wrap up those uncommon DupDels ($553).   Your shopping cart gives you all those BRCA services, soup to nuts, and costs you only $813, half the price of 81162, and only about a quarter of the most costly coding option for the same sequencing reports.  It's like those sales that get you one-way to Europe for $250.

To my eye, the simple coding is 81162.  I've said that.   But if you're going to break up 81162 into 81211+81213 (if you're gonna say that is kosher coding), why not do it again, and break up the 81211 into its component codes of 81214+81216?

HHS Posts 17 Internally Generated Innovation Projects

In the last few weeks, the head of CMS has written a WSJ op ed calling for a reboot of the CMS Innovation Center (here).  And the new head of AHRQ has promised a vision for a new "AHRQ 2.0" - here.

Here's another approach to innovation at HHS.   See a set of 14 innovation programs approved by HHS for the coming year.   This is an initiative of the HHS IDEA Lab (here).   The IDEA Lab fielded 79 proposes from across HHS - CDC, NIH, FDA, CMS, etc.   The proposals were rigorously reviewed and scored, and 14 were chosen.

See the list of proposals here.   One directly involves CMS, and happens to be in the laboratory field, headed by Katherine Szarama PhD of the Coverage Group, Eunice Lee of FDA, Brandi Kattman, NIH.   The project promises to reduce wait time between NIH, FDA, and CMS decision points (see full abstract at link). 

Another CMS project looks at the issue of hospital readmissions in sickle cell disease.

Very Brief Blog: New Leader Promises New Direction at AHRQ

On October 17, 2017, the new leader of the Agency for Healthcare Research and Quality (AHRQ) published a detailed blog on his plans for innovating and rebooting the agency.

The blog is here.   Open access coverage at Fierce Healthcare is here.  The new director, Gopal Khanna MBA,  headed a project called "FRAMEWORK" at Illinois HHS, part of an innovation incubator. 

Khanna has a lengthy Wikipedia page (here; cloud here; LinkedIn here).   He took the leadership role at AHRQ in May, 2017.

Khanna's four talking points are:
  1. More development and integration of data platforms - Digital Health meets AHRQ.
  2. Catalyze "Learning Healthcare Systems."
  3. Engage operational leaders; convert innovation into practice & operations.
  4. Patient-centered care.  Integrate federal, state, community, and other levels.
At CMS, CMMI is also seeking a reboot, a sort of vision for CMMI 2.0 (here).


AHRQ also supports the US Preventive Services Task Force (USPSTF), whose recommendations affect required health insurance preventive services (here).   

USPSTF released updated cervical cancer screening guidelines in draft form recently, and is expected to release new guidelines for BRCA screening in the coming weeks.  To date, USPSTF has not dealt (a) with BRCA screening in women not at elevated risk or (b) breast cancer related gene panel screening, which has become common.

Tuesday, October 17, 2017

Very Brief Blog: The Expedited Process for NCD Removal (2013 forward)

I was on a CMS call recently discussing the process for removal of an obsolete NCD. 

CMS published an updated NCD application process in August 2013, which includes a process for  deletion of obsolete NCDs after a short public comment period.   The August 2013 policymaking is online here (78 FR 48164, 8/7/2013).   NCDs can be removed because they are generally acknowledged as obsolete, because a product is no longer marketed, or because local contractor discretion would better serve the needs of the Medicare program.

CMS has thereafter used the obsolete NCD removal process at twice (home page for NCD removal, here).
  • In November 2013, they published a list of NCDs for expedited removal, and allowed a 30 day public comment period.  See the document online here.  (The process generated 7 public comments, here.)  They deleted 5 of the NCDs shown below, keeping the ones on L-DOPA, Laser procedures, and Carotid function (here).   
  • In November 2015, they proposed to delete the apheresis NCD and part of one other NCD (here), but they kept the apheresis NCD in place pending a fuller consideration than the expedited deletion process (here). 

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The expedited deletion process is administratively simple for CMS, as it allows CMS to propose NCDs for deletion with no further explanation of rationale than the implication that the NCDs meet at least one of the deletion criteria such as obsolescence.

Does FMI Abstract Give Insight to Pending FDA Approved "Foundation One?"

The International Association for the Study of Lung Cancer is holding its 18th World Conference this week in Japan.   Foundation Medicine has an abstract, available open access online, for a "universal combination diagnostic platform developed and performed in compliance with FDA 21 CFR 820" that interrogates 324 genes.   The authors write, the test "is anticipated initially to have 8 CDx indications."

Whether this matches exactly what comes out of the FDA's approval up to the FDA.  As of September 2017, CMS has said that the FMI test is in parallel review for FDA approval and a CMS national coverage decision and that the results will be public soon (here). 

The FMI abstract is online here.  (At the conference link, click "plus signs" to see the full text.)

click to enlarge

Friday, October 13, 2017

What's Up with Use or Mis-Use of CMS's Edit Against Code-Stacking of 81211-81213: BRCA Testing?

For the last several quarters, I've been tracking a Correct Coding Edit on the CMS website that appears to date back several years and would normally operate to block use of the BRCA sequencing and BRCA duplication-deletion codes together (codes 81211-81213).

Updated through the current October 2017 instructions, note that there is a block against using 81211 and 81213 together:

click to enlarge
The edit against co-payment of 81211 and 81213 together can be overcome by using a -59 modifier, but according to CMS instructions, the -59 modifier isn't supposed to be used routinely.  (CMS article here and here; OIG report here.)[*] 

I went back to the transcript of the August 26, 2015, meeting, where these codes were discussed by Dr. Phurrough of CMS (see archive here, here).  Dr. Phurrough stated:
"If they [a lab] were to do one of the individual tests, 81211 or 81213, not on the same day, then they would be paid separately. 
If they were to do both of these codes, then correct coding, non-fraudulent coding would be the new code 81162. And to code both 81211 and 81213, when you did both of them, on the same patient, the same sample, would be incorrect coding."
It looks like Dr. Phurrough and the CCI edit author were on the same page.  Both are public record and easily found online at the links above.

Based on PAMA rates 2018-2020, converting the existing above CCI edit to a non-overridable edit would save CMS $54 million. 

For data on use of codes 81211 and 81213 by various labs in CY2015, see an earlier analysis, here.

[*]  The 20130401 number indicates the edit dates from April 2013, and the * indicates it has no termination date.  The next column "1" means that a Mod 59 will flag for payment of both codes due to a special circumstance.  A "0" in that column means that payment for both codes is never allowed.

CMS's 2017 report to Congress report that edits save CMS about $700M per year, and about $400M of the "P2P" type of edits shown above; here.

AMA CPT Revises BRCA Panel Code for 2018

AMA CPT handbooks for CY2018 are out, and one change in molecular coding is a revision of the code for BRCA gene panel testing (hereditary cancer gene panels). 

The new code reflects a shortening of the required-genes list.   This revision was classed as an editorial change and therefore did not trigger any action in the CMS crosswalk/gapfill process this fall.

The new code will be

Hereditary breast cancer-related disorders
(E.g. hereditary breast cancer, hereditary ovarian cancer, hereditary endometrial cancer)
Must including sequencing of at least 10 genes.

Prior to January 2018, the gene list used to include:

CMS Requires MACs to Gather Data About Lab Tests with Unlisted Codes

On October 13, 2017, CMS released CR10232/Transmittal 3881, updating the Claims Processing Manual to require submission of data for lab tests processed with "unlisted codes."

The Transmittal is online here.  A cloud archive copy is here.  The relevant new text is:

Instructions for Not Otherwise Classified (NOC) Codes – Any unlisted services or procedure code. Note:  When reporting NOC codes, this field must be populated as specified below. 

When billing for unlisted laboratory tests using a NOC code, this field MUST include the specific name of the laboratory test(s) and/or a short descriptor of the test(s). Claims for unlisted laboratory tests that are received without this information shall be treated according to the requirements found in Pub. 100-04, Medicare Claims Processing Manual, Chapter 1, Section 80.3.2 and “returned as unprocessable.” Section 216(a) of the Protecting Access to Medicare Act of 2014 (PAMA) requires reporting entities to report private payor payment rates for laboratory tests and the corresponding volumes of tests. In compliance with PAMA, CMS must collect private payor data on unique tests currently being paid as a NOC code, Not Otherwise Specified (NOS) code, or unlisted service or procedure code. 

Note the language the instruction is couched in:  Labs are required to report private payer rates...CMS must collect private payer data on unique tests paid with a NOC code.

This is a change in interpretation, as CMS did not previously require this reporting in the interval since PAMA was passed in 2014.  In June 2016, CMS wrote, "Data on tests that are billed using unlisted CPT codes or NOC codes would not be considered applicable information and would not be reported."  (81 FR 41053, 6/23/2016).

Almost All CMS Unlisted Code Payments Fall Under MOLDX

In CY2015, CMS paid $165M under molecular unlisted code 81479 (here).  However, nearly all of this was paid under the MolDX program (here).  Thus, as a practical matter, the CMS transmittal will have little impact outside of MolDX states.

MolDX has a special coding rule that 1-4 genes should be reporting with an unlisted code (here) rather than CPT stack coding. For example, we've previously noted that Ambry Genetics bills 80% of its Medicare services as MolDX NOC codes (here).   In addition, MolDX requires at least six tests to be submitted with -22 modifiers (e.g. Qiagen KRAS 81275-22; here.)

Foreseeable Problems

Parallel instructions (in the same claims manual) require reporting of drug name with each unlisted code use of a drug.  On the other hand, drugs have fixed precise names, whereas lab tests often do not, although they might have generic names (EGFR sequencing) or in some cases trademarked brand names.
  • Labs may repeatedly update versions of their test (e.g. a tumor gene panel test may be frequently updated, with 30 genes, 31 genes, 32 genes...) so there will be some questions about what CMS intends a "unique" test to be.  
  • In addition, CPT instructions require all additional tests performed, that don't have individual codes, are to be billed with ONE NOC code (or NOC code, unit of 1) so many individual tests may fall under one NOC code on one claim.  CMS seems to recognize that, asking for collection of data on the "test or tests" billed with the NOC code.
    • The MolDX program is sometimes exuberant in its required use of NOC codes even when services could be otherwise described by CPT gene stacking or CPT panel codes. 
  • CMS might use the data to retrospectively enforce whether gene panel tests are correctly coded, e.g. BRCA or Lynch gene panels.

This is the template that MACs should use to report 81479 and other unlisted lab payments.  As noted above, nearly all unlisted lab tests are paid by MolDX MACs.  And MolDX MACs already require comment field specificity, e.g. Z codes.

Very Brief Blog: AMA Posts Summary of September 2017 Code Decisions

On schedule, about a month after each CPT meeting, AMA has posted results of the AMA CPT September 2017 editorial panel.   Results are here (8 page PDF).

In overview, of about 58 agenda items, about 17 were withdrawn, 9 rejected, and 2 postponed.  Typically, while a code application may be submitted on a 25-page form by any stakeholder, if the corresponding clinical association does not support the code proposal, it is withdrawn rather than brought to discussion for rejection. 

In diagnostics, one proposal was tabled, one withdrawn, while new codes will be created for TGFB1 (in corneal dystrophy), MYD88 (lymphoma), a breast cancer Cat I MAAA, and a prostate cancer Administrative MAAA.  No non-genomic codes were  up.

Separately, in the Proprietary Lab Analyses coding process (PLA),  23 test codes have been created, about 15 of which have already entered this year's CMS crosswalk pricing process.

The next PLA submissions will be January 12 and April 11.  The next CPT submission is November 9, after that March 1.

Very Brief Blog: Precision Medicine and Big Data (Washington DC, Oct 31-Nov 1)

Interested in the intersection of Big Data and Precision Medicine?  There's a conference for you, to be held in Washington on October 31-November 1.   See full website here:

Very Brief Blog: Health Affairs' Rapid Coverage of Executive Branch Obamacare Changes

Numerous news outlets cover the Executive Branch's changes in Obamacare policy in real time.  However, it can be difficult to find the original sources, such as the actual text of the Executive Orders.  ( recently gave an example in this blog that links to the executive orders, past executive orders, rulemaking, regulation, etc, on the Contraceptive Religious Exemption issue, here.)

For several years, Timothy Jost, emeritus professor at Washington & Lee Law School, has provided rapidly updates on federal health policy at the Health Affairs blog (here).   Lately, his lengthy analyses have been appearing in record time, often less than 24 hours.  He provides links to original documents that are often missing in journalists' articles.
  • Jost's October 12 analysis of the executive order asking for creation of lighter less expensive health plans is here.   (Linking to the actual executive order, here.)
  • Jost's October 13 analysis of the Executive Branch decision to immediately end cost-supporting payments for low income persons in Exchanges is here.
    • The issue has been progressing through federal court ligitation with differing opinions as to whether the cost-supporting payments are properly authorized and appropriated under current law.
    • Jost also links to the current Attorney General opinion that payments should stop, here (J. Sessions, 5p).
    • May 2016 38-page ruling that payments were unauthorized, here (Judge Collyer, DC, 38p).
    • Article on the Collyer ruling, here.
    • The price supports for low income persons apparently tally only $7B a year, a tiny part of our $3T healthcare system or the circa $3T federal budget.
  • Jost's October 14 summary analysis and outlook is here.

Footnote - 

Often lost in the excitement about Executive Orders is that they can differ greatly in their actual content and effect.   For example, if there was an Executive Order to immediately close the border with Mexico to all traffic, due to emergency conditions, that would have a huge immediate effect.  Other policy measures are couched as Executive Orders (with pomp and circumstance) but need not be in that format.  The E.O. regarding lighter health plans, for example, directs the HHS to "consider proposing regulations, or revising guidance" on the topic.  This could be conveyed equally effectively by a press conference remark, internal instructions, an action item delegated at a Cabinet meeting, a paragraph in a speech, or even a tweet.  It gets higher visibility by being couched in the format of an executive order.

Footnote -

As discussed in the citations to Sessions and Collyer above, the ACA issue is that the ACA created tax credits for individuals (S. 1401) and funding for low income persons directly paid to insurers (S. 1402; also called CSR's, cost-sharing reduction), but the ACA provided a clear appropriation of funds only for S. 1401. 

Til now, payments have nonetheless been issued as due under both S. 1401 and S.1402.  In layman's terms, the issue involves what to do when there is an apparent error in law.  On the one hand, we want laws to be enforced as written; on the other hand, we don't want national processes to grind to a halt every time there is a typo.  (Sessions directly discusses the Supreme Court decision in King in this regard; link above).  Alternatively, the law could be correct as written; S.1402 could be quite deliberately dependent on annual appropriations from the House -- appropriations which the House isn't making.  (Another topic in the court action is whether the House had standing to sue the executive branch in this way.)

With a Republican House not wanting to make the fiscal appropriation and a Republican President not wanting to make the payment, and a Federal Court injunction that the payments shouldn't be made, the outcome this week was pretty foreseeable.

Thursday, October 12, 2017

Legislation and Medicare LCD's: From 21CC to New Legislative Proposals

In brief:
  • The 21st Century Cures Law, signed in December 2016, put into law some legal obligations for clarity in LCDs, many of which were already being practiced.    LCDs must be posted in advance, follow comment periods, post responses to comments, provide rationales, and provide links to the draft LCD along with the final LCD.   Final LCDs must be posted for an interval before they are effective.   
  • College of American Pathologists and others are supporting a new proposed law, the LCD Clarification Act,  which overlaps some with topics in 21CC, but also expands requirements for LCD clarity and process, including open CAC meetings and more eyes on the reconsideration process, along with definitions of "evidence" that includes consensus opinion.

21st Century Cures and LCDs

The 21CC (HR 34) became law on December 13, 2016.  The full text is here.  Section 4009 is titled, "Improving Local Coverage Determinations."    It's only 197 words long (LCD full text here).    It's codified at SSA 1862(1)(5) [el 5].

CMS must require that before an LCD is finally effective, the MAC must post the LCD in advance in its entirety, along with a copy of its original LCD proposal and date, links to that proposed LCD and to public comments and response to comments, provide a "summary of the evidence considered" and "a rationale for the determination."   These requirements became effective in July 2017 for all LCDs that are either "proposed or revised."   

Analysis.  MACs already posted LCDs in advance, and there was already a 45 day public notification period before a final LCD becomes effective.  MACs already cited literature and rationale in the LCDs (per CMS manual instructions), and for at least a couple years a Q&A on public comments has been posted.    I've heard a MAC medical director refer to 21CC as a big change they were still figuring out, but it seems to require very little.   Before this, rationales could have been scanty or confusing, and I suspect that under 21CC a "rationale" can still be scanty and confusing.   The legislation does seem to target LCDs that simply provide laundry lists of non-covered services with no rationale or literature cited.    The current LCD instruction manual is online here, and as of October 2017, hadn't been revised to account for 21CC yet.  21CC Section 4009 is already codified at SSA 1862(l) where it adds to the existing section defining NCDs and LCDs (here).
  • A newly issued LCD by the NGS MAC (NY, New England, and several midwestern states) is 21CC-compliant and shows that the contractor takes the "evaluation of the evidence" and "rationale" mandate seriously and diligently.   I've put a PDF copy in the cloud here and a web cut/paste here.  At the links just given, scroll down the LCD to see the detailed article-by-article evaluation and analysis.

The Local Coverage Determination Clarification Act of 2017

The LCD Clarification Act was announced in a press release in March 2017 (here).   Senate sponsors include Isakson (R-GA), Carper (D-DE), Stabenow (D-MI), and Boozman (R-AR).   The College  of American Pathologists (CAP) describes "the LCD process [as] broken" and "lacks transparency, accountability, and stakeholder input."

CAP Infographic.   CAP has an elaborate PDF Infographic on the law which calls out for criticism a Palmetto LCD on special stains (here).

Under the proposed law,
  • MAC Contractor Advisory Meetings must be open to the public and on the record.
  • MACs must provide evidence relied on, in the proposed LCD.  If facts are withheld til the final LCD, it would impair the ability of the public to comment.
  • LCDs must be reviewable by a "qualified disinterested party."   
  • Carbon copy adoption of LCDs from MAC to MAC overrides the ability of stakeholders to have meaningful and independent comments and creates "de facto NCDs."
  • Supporters are cited as CAP, ASCO, American Society of Radiation Oncology, and others.
As of October 2017, the bill is tracked as S. 794 and as H.R. 3635.  Text also archived here.   As of October 2017, there were 10 current Senate sponsors and 12 current House sponsors.  The bills are about 2300 words long.  Tidbit: Although introduced later (8/2017), the HR3635 bill includes dated "carrier, fiscal intermediary" language whereas the S794 bill is for MACs.  

Analysis.   The LCDCA defines "qualifying evidence" as including both peer reviewed scientific publications AND a general consensus of the applicable medical community.[*]   While MACs are requirered to "reconsider" LCDs now, the law provides a more detailed process and provides guardrails such as "Agency Evaluation of a Reconsideration Decision" and creation of a CMS "Ombudsman" for LCD issues.   Currently, CMS coverage staff will often state they do not have authority to evaluate an LCD or a reconsideration decision (other than creating a new and over-riding NCD.)   

CAP infographic (in part):

click to enlarge

[*] For a 2015 book on the development of consensus bodies and guidelines, see Miriam Solomon, "Making Medical Knowledge," Oxford.

Monday, October 9, 2017

Very Brief Blog: The 122-page Transition Overview of HHS from November 2016

The outgoing administration's November 2016 overview of HHS - weighing in at 122 pages - is still online at HHS.

  • Online at HHS here; cloud archive also here.

It's a handy overview of the whole department, from the roster of presidential appointees (Surgeon General, Head of NIH) to the healthcare spending and the "discretionary" spending (e.g. NIH, FDA).

HHS expected to have 76,342 employees in 2017.  An Org Chart of HHS is here.  Dr. Don Wright was the Acting Secretary briefly in early October; replaced by Eric Hargan on October 10 (here). Jeffrey Davis is Acting General Counsel, hereRandy Pate heads CCIIO, which oversees many aspects of the Exchanges.

The current surgeon general, Vice Admiral Jerome Adams, took office on September 5, 2017 (here).

Very Brief Blog: JAMA Publishes Favorable RCT on Warfarin Genetics

In a multi-center study involving Washington University, Intermountain, New York Presbyterian, and other centers, the GIFT trial, genotype-guided warfarin dosing was found to have clinical benefits.

GIFT randomized over 1600 patients undergoing either hip or knee arthroplasty.  Composite adverse events fell from 15% to 11%. 

Studying the value of genetic guidance in RCTs is problematic, because hospital based RCTs always insure that standard of care is optimally applied in the non-genetic arm.  Genetic dose guidance might have more impact in the real world where standard of care is less monitored and controlled in typical patients.  Some prior RCTs have been inconsistent; for one entry point, here.

The study by Gage et al. is online here; see also an Op Ed by Emery, here.  Open access coverage at Genomeweb, here.


For a 2013 review at Genomeweb [subscription], here.

CHRONIC CARE Act (S.870) And Flexible Digital Benefits in Medicare Advantage

The CHRONIC Care Act (S.870) is a major piece of Medicare legislation that has now passed the Senate.   It passed the Senate Finance Committee last spring, and has a budget-neutral score from the Congressional Budget Office.   It provides improved benefits in traditional Medicare for home-based chronic care management and telemedicine, and provides pathways for broader elective benefits for Medicare Advantage plans.

CHRONIC raises a larger issue, though. 

Financially, Medicare Advantage plans and services are divided in two for budget and contracting.  There is one set of financing rules for benefits that match Traditional Medicare parts A&B; and a separate set of rules that provide\ carved-out "enhanced benefits" such as dental or vision.   The fact that individual pieces of "one-off" legislation are required to allow M.A. plans to provide telemedicine benefits points to a cumbersome problem that reflects an outdated framework.

Here, I argue that M.A. plans should be able to provide additional benefits such as digital health delivery within their regular M.A. funding without interference from CongressM.A. plans would continue to be required to provide all the Part A, Part B benefits of traditional Medicare and of course, to meet all M.A. quality metrics.

The CHRONIC Care Ac of 2017

For an up-to-date summary by Billy Wynne at Health Affairs, see his October 5, 2017 post here.  See a June 2017 article by former senators Daschle and Frist here, and a deep dive analysis by the Bipartisan Policy Committee, here.  The budget neutral CBO analysis is here, and the full bill can be found here.

Medicare's Excessive Controls on Telemedicine Delay Innovation - By Handcuffing the Payment System

Medicare has a number of delivery methods that are designed to enhance innovation, such as Accountable Care Organizations and Medicare Advantage.  However, telemedicine can't improve quality and reduce costs in these systems unless the law makes it feasible.

  • For example, ACO's get small rebates from CMS for saving costs.  
  • If the ACO can save Medicare $10 and get a $3 bonus by converting a $100 office visit to a $90 telemedicine visit, the ACO loses a ton of money if it gets no reimbursement at all for the $90 telemedicine visit.  Similarly for Medicare Advantage. 
Section 303 of the CHRONIC Care Act Will Allow Telemedicine in M.A. Base Bids

Section 303 of CHRONIC would be effective in Plan Year 2020, and would allow M.A. plans to include the costs of telemedicine in their base budget, which is funded in a risk-adjusted and capitated way, pegged at a level similar to the regional costs of traditional Part A, Part B. 

Under Section 303, base bids will be able to include "additional telehealth benefits" which would be outside the telehealth benefits in traditional Medicare as enumerated at SSA 1834(m), that is, outside an A/B benefit.  At Section 303, additional telehealth benefits are defined as "clinically appropriate [services furnished by] electronic information and telecommunications technology when a physician or practitioner is not at the same location as the enrollee."   Further definition would be undertaken through notice and comment regulation. 


Medicare Advantage plans were set up with concerns that providing capitated payments to health plans would incentivize the short-changing of medical services to raise the profitability of the M.A. plan.

Therefore, M.A. plans are required to provide all available Part A and Part B services to Medicare patients.  Budgets are closely monitored (including loss ratios) and plans aren't allowed to keep profits by restricting services.  Rather, unspent money is given back to Medicare or distributed as "extra benefits" to members (such as dental or vision benefits) or distributed as lower copays.   The mechanisms to control and budget the base spending (the A and B equivalent spending) and to control any excess profits and define "extra benefits" are a lot of red tape. 

When the issue is ensuring that M.A. patients get "enough" healthcare, the rules make sense.

When health systems and plans can innovate better ways to deliver similar or higher quality care, regardless of convoluted A/B rules, the system doesn't make sense.   Medicare Advantage plans should be able to deliver care through the best and most modern available channels.   Today, where Part B carve-outs and carve-ins and extra benefits are onerously defined by bits of legislation and by extra layers of contracting, innovation is impeded.   For example, the CHRONIC Care Act is a big step forward, but it defines telemedicine as practitioner-based, when it should include other kinds of benefits like preventive medicine and behavioral medicine (for example, diabetes and cardiac prevention programs.)   If a health plan has, say, $100M for physician visits, it should be able to flexibly adapt between telemedicine and in person visits depending on the location, patient mix, clinical circumstances, etc.   No government purpose is served by making the combinations as difficult and over-regulated as possible.   CHRONIC Section 303 is a step in the right direction, but M.A. plans should be given more freedom, within their fixed budgets and existing quality rules.  Section 303 is scored by the highly conservative Congressional Budget Office to save $80M - we should let M.A. plans save money through new technologies whenever they want. 

Legacy Rules Depended on Legacy Bookkeeping

Whatever the intention of the original rules, they depended on legacy fee-for-service bookkeeping, which is increasingly out of step with modern bundled and capitated payments. It may be increasingly impossible to enforce the rules under modern health systems medicine.
Let's say an M.A. plan in San Diego gets $10,000 from CMS per patient.  It passes on $3000 per patient to San Diego Physicians Associates to manage office and outpatient care.    
San Diego Physicians Associates seamlessly provides a range of telemedicine, concierge-like, and preventive services for its $3000 per year per patient capitation.   But these aren't called out separately in its contract with the M.A. plan.  
Thus, it's impossible for the M.A. plan to try and allocate costs among covered and "non covered" telemed and preventive services, because they're capitated somewhere downstream in a modern risk-sharing and bundled system.  
CMS Could Still Track to A/B Finances, But With Less Red Tape and Legal Paperwork

To the extent necessary (and possible)... CMS could still track benefits that fall outside of traditional Part A and B, but this could be kept to the financial reporting level and not the contracting level.  And after M.A. plans provide all A/B services, just like to day when they want extra money that is above their capitation it would require extra contracting.  Just like today.

But let's modernize.  When M.A. plans can provide some selective, cost-saving services within their capitated budget, then they would be free to do so, without additional contracting. 


Several blogs appeared in Health Affairs a few days after this October 9 essay and touch on related themes.  On October 17, John O'Shea of Heritage Foundation argues for more flexibility in Medicare Advantage, which will help achieve the goals MACRA is lumbering towards (here).    On October 12, Huilgol et al. make yet another plea for more flexibility in telemedicine benefits, including in urban areas (here).  On October 17, Chernew and Barbey argue we need a better framework for "understanding savings" in value based environments like ACOs (here).