March 2016

March 2016

Proposed Rule: Notice of Medicare, Medicaid, and Children's Health Insurance Programs; Program Integrity Enhancements to the Provider Enrollment Process

On March 1, 2016, the Centers for Medicare & Medicaid Services (CMS) released a proposed rule that would implement a provision of the Affordable Care Act requiring Medicare, Medicaid and Children's Health Insurance Program (CHIP) providers and suppliers to disclose any current or previous direct or indirect affiliation with a provider or supplier that - (1) has uncollected debt; (2) has been or is subject to a payment suspension under a federal health care program; (3) has been excluded from Medicare, Medicaid or CHIP; or (4) has had its Medicare, Medicaid or CHIP billing privileges denied or revoked. This provision permits the Secretary to deny enrollment based on affiliations that the Secretary determines pose an undue risk of fraud, waste or abuse. CMS also proposes to increase the maximum reenrollment bar from three to 10 years, with exceptions. Comments are due to CMS no later than 5:00 p.m. on April 25, 2016. 

Medicaid Covered Outpatient Drug Final Rule

On February 1, 2016, CMS published a final rule implementing new coverage and payment rules for outpatient drugs under Medicaid. This final rule, which takes effect April 1, 2016, revises provisions on the outpatient drugs covered by the Medicaid Drug Rebate (MDR) program, including changes to the calculation of Average Manufacturer Price and the federal upper limit (FUL) for multiple source drugs. The Medicaid Drug Rebate program is a partnership between CMS, State Medicaid Agencies and participating drug manufacturers who aim to offset the federal and state cost of most outpatient prescription drugs dispensed to Medicaid beneficiaries. The rebate amounts are determined as a percentage of the Average Manufacturing Price (AMP). This final rule proposed a new definition of AMP where AMP is the average price paid to the manufacturer by wholesalers distributed to retail community pharmacies that purchase directly to the manufacturer where the actual acquisition cost (AAC) versus the estimated acquisition cost (EAC) of drug is aggregated to determine AMP. Within the drug rebate program there also exists a federal upper limit (FUL) for drug payments. This final rule proposes to calculate the FUL at 175 percent of the weighted average (determined on basis of utilization) of the most recently reported monthly AMPs for multiple source drugs. Importantly for rural independent pharmacies, this final rule specifically states that in cases where the FUL is less than the acquisition cost of the drug, a higher multiplier will be established such that the FUL will be equal to the most current average acquisition cost.  

Final Rule: Notice of Benefit and Payment Parameters for 2017 Health Insurance Marketplaces

On February 29, 2016, CMS published for display the final Department of Health and Human Services (HHS) Notice of Benefit and Payment Parameters for 2017, which sets standards for issuers and Health Insurance Marketplaces for plan years beginning on or after January 1, 2017. It includes payment parameters that will apply to the 2017 benefit year, finalizes dates for future open enrollment periods, establishes new standards to improve consumers’ Marketplace experience, finalizes provisions related to cost sharing, and amends requirements for Qualified Health Plans (QHPs).  

Key provisions include, but are not limited to:

  • For 2017 and 2018, the open enrollment period will be November 1 of the year preceding the benefit year through January 31 of the benefit year.  For 2019 and later, open enrollment will be November 1 through December 15 of the year preceding the benefit year
  • The 2017 maximum annual limitation on cost sharing will be $7,150 for individual coverage and $14,300 for family coverage
  • While optional for issuers, CMS will designate plans with certain standardized cost-sharing structures as “standardized options”, and the final rule describes 6 specific recommended designs (1 silver, which would be coupled with 3 silver cost-sharing reduction variations, 1 bronze, and 1 gold). Consumer testing will determine how such plans will be displayed on
  • With the goal of starting in 2017, will include a rating of each QHP’s relative network coverage. This summary measure will compare the breadth of the QHP network at the plan level to the breadth of the other plan networks for plans available in the same geographic area
  • To give States time to enact the new NAIC Network Adequacy Model Act, CMS did not finalize the proposal to implement a Federal default network adequacy standard for time and distance to a provider. CMS will monitor States' progress in implementing network adequacy standards and revisit the issue in future rulemaking
  • QHPs offering coverage through the Marketplaces may only contract with a hospital with more than 50 beds if the hospital: (a) participates with a Patient Safety Organization; or (b) meets the reasonable exception standard by implementing an evidence-based initiative to improve health care quality
  • For Navigator grants awarded in 2018, the required duties of Navigators will include specific post-enrollment and other assistance activities, targeting assistance to vulnerable or underserved populations in the Marketplace service area, and completion of training prior to performing outreach and education activities as well as prior to providing application or enrollment assistance

2017 Letter to Issuers in the Federally-facilitated Marketplaces

In addition to the final Notice of Benefit and Payment Parameters for 2017, CMS released its final Annual Letter to Issuers. This Letter provides issuers interested in offering coverage in states with a Federally-facilitated Marketplace information on key dates for the Qualified Health Plan (QHP) certification process; standards that will be used to evaluate QHPs for certification; and oversight procedures, consumer support policies and programs. It also describes in detail provisions related to standardized plans, network adequacy, coverage of Essential Community Providers (ECPs), consumer support and meaningful access. Because CMS did not finalize a Federal default for time and distance network adequacy standards, the Letter only provides the time and distance standards that CMS will use to evaluate applications. 

Recent Publications for Rural Health Clinics (RHCs)

CMS has updated Chapter 13 of the Medicare Benefit Manual and provided guidance and frequently asked questions (FAQs) for Chronic Care Management Services. Effective April 1, 2016, RHCs are required to report the appropriate HCPCS code for each service line along with the revenue code and other required billing codes and guidance related to this process is available. CMS has also provided billing examples for Advance Care Planning Services. For more information and updates on RHCs visit

New Guidance on the Physician Quality Reporting System (PQRS) 

CMS has released new FAQs on PQRS 2014 Reporting Year and 2016 Payment Adjustment for rural health clinics (RHCs), federally qualified health centers (FQHCs) and critical access hospitals (CAHs). While RHCs and FQHCs are exempt from reporting to PQRS, eligible professionals who bill under Part B of the Medicare Physician Fee Schedule are subject to PQRS analysis.

This project is/was supported by the Health Resources and Services Administration (HRSA) of the U.S. Department of Health and Human Services (HHS) under grant number UB1RH24206, Information Services to Rural Hospital Flexibility Program Grantees, $1,100,000 (0% financed with nongovernmental sources). This information or content and conclusions are those of the author and should not be construed as the official position or policy of, nor should any endorsements be inferred by HRSA, HHS or the U.S. Government.