Tag Archives: medigap

New York Times Article on Noninvasive Alternative to Dental Fillings

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The New York Times reported on July 11, 2016 that a noninvasive alternative to dental fillings that could save money, while preventing future decay, has gained increased traction among dentists.

The liquid – Silver Diamine Fluoride, or S.D.F. – can be brushed on certain types of cavities, removing the need for a drill or injection.  The article focuses on the benefits for young children, but also highlights that this method could be ideal for nursing home residents.

According to the New York Times, it has been used for decades in Japan, and has been available in the United States, under the brand name Advantage Arrest, for about a year. The Food and Drug Administration cleared the liquid for use as a tooth desensitizer for adults 21 and older. Studies indicate that it can halt the progression of cavities and prevent them, so dentists are increasingly using it off-label for cavities.

The article cited aesthetics as the biggest concern, because S.D.F. blackens the brownish decay on a tooth, so this process may be preferable for teeth that are not visible, such as a back molar. The article stated that though most insurers currently do not cover it, it is still much less expensive than a filling at $25 compared to $151.

The full article is available at: http://www.nytimes.com/2016/07/12/health/silver-diamine-fluoride-dentist-cavities.html?_r=1

President Calls On Congress to Add a Public Option to the Affordable Care Act

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As reported this week in The Hill, President Obama is calling on Congress to add a “public option” to the Affordable Care Act (ACA) to improve his signature health law.

 “Public programs like Medicare often deliver care more cost-effectively by curtailing administrative overhead and securing better prices from providers,” Obama writes in the Journal of the American Medical Association.

“The public plan did not make it into the final legislation. Now, based on experience with the ACA, I think Congress should revisit a public plan to compete alongside private insurers in areas of the country where competition is limited,” writes the President.

The new embrace from the President also comes amid what appears to be a concerted push by the Democratic Party to rally around the public option.

Center for Medicare Advocacy Receives Generous Grant from The John A. Hartford Foundation with Focus on Hospital Observation Status

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For Immediate Release
Contact: Matthew Shepard, Communications Director
MShepard@MedicareAdvocacy.org, (860) 456-7790

July 14, 2016 – The Center for Medicare Advocacy (CMA) is thrilled to be partnering with The John A. Hartford Foundation to improve care for older adults with long-term and chronic conditions. With the Foundation’s generous two-year grant, CMA will be able to focus on solutions for older adults caught in the web of hospital “outpatient” Observation Status, which reduces access to key health and therapeutic care.

Over the two-year grant period, CMA, will gather existing resources and collect stories from beneficiaries, produce and update advocacy materials, and conduct extensive outreach and education that will improve observation status policy through regulatory change, improved federal guidance, and increased awareness by legislators. The grant funding for this project will also strengthen CMA’s advocacy on other important issues, including increasing access to oral health care for older adults.

“Outpatient” Observation Status is a policy created by the Centers for Medicare Medicaid Services to classify certain very short hospital stays for billing purposes. The intent was to identify, and pay less for, these stays.

Medicare hospital patients are increasingly classified as “outpatients” on Observation Status, rather than admitted inpatients. This is true even for patients who are in the hospital for many days, for diagnosis, tests, nursing, physician care and treatment. Unfortunately, Observation Status results in myriad unintended consequences. For example, Medicare coverage for post-hospital nursing home care is often entirely unavailable for Observation patients since it requires a 3-day prior inpatient hospital stay. Thus, Observation Status “outpatients” are ineligible for Medicare nursing home coverage even if they were in the hospital for many days or weeks.

Hospital Observation Status has profound consequences for the quality and cost of care available for older, vulnerable Medicare patients. It also harms hospitals and nursing homes, the Medicare appeals process, the integrity of the Medicare program – and shifts costs to State Medicaid budgets. With support from The John A. Hartford Foundation, CMA will be able to enhance efforts to reduce the harm caused by Observation Status and to advocate for better care for older adults.

“We are very pleased to support the passionately driven and highly expert staff at CMA, led by the indomitable Judith Stein,” said Terry Fulmer, PhD, RN, FAAN, president of The John A. Hartford Foundation.  “As our Foundation works to create age-friendly hospitals and health systems, CMA’s important policy work will raise visibility and diminish the negative impact of the Observation Status classification of older hospitalized adults through outreach and education.”


About The Center for Medicare Advocacy

Established in 1986, The Center for Medicare Advocacy, Inc. is a national nonprofit, nonpartisan law organization that provides education, advocacy and legal assistance to help older people and people with disabilities obtain access to Medicare and quality health care. CMA focuses on the needs of Medicare beneficiaries, people with chronic conditions, and those in need of long-term care. The organization is involved in writing, education, and advocacy activities of importance to Medicare beneficiaries nationwide.

About The John A. Hartford Foundation

Founded in 1929 by John and George Hartford of the Great Atlantic Pacific Tea Company (AP), The John A. Hartford Foundation, based in New York City, is a private, nonpartisan philanthropy dedicated to improving the care of older adults. Every eight seconds, someone in America turns 65. The largest-ever generation of older adults is living and working longer, redefining later life, and enriching our communities and society. Comprehensive, coordinated, and continuous care that keeps older adults as healthy as possible is essential to sustaining these valuable contributions. The John A. Hartford Foundation believes that investments in aging experts and innovations can transform how care is delivered, lowering costs and dramatically improving the health of older adults. Additional information about the Foundation and its programs is available at www.jhartfound.org.

Proper Use of Electronic Health Records Could Enhance Patient Care

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If properly utilized, Electronic Health Records (EHR) could increase the quality of care for Medicare’s beneficiaries and lower program costs. EHRs provide the possibility of easy transfer of information between providers, and better patient access to important information. This can mean that clinicians are apprised of changes in health status, with access to information regarding hospital, Intensive Care Unit (ICU), and Skilled Nursing Facility admissions.

EHR also have the potential to highlight and prioritize patient needs and preferences. For example, the goals expressed by a patient through a Physician Order for Life-Sustaining Treatment (POLST), or in an Advanced Directive, that are accessible in her EHR, can inform an emergency first responder as well as an ICU physician. Further, a well-designed EHR has the potential to assist a care team as it coordinates treatments and plans to meet the patient’s goals.

Each year, hospitals, primary care physicians and specialists are more likely to have Certified Electronic Health Records Technology (CERHT).  The extent to which these systems are accessed, however, is unclear.[1] Although providers are increasingly likely to record the results of an annual wellness exam, for instance, on a patient’s online portal, many patients are either unaware of these electronic records or do not know how to access them.

Additionally, the EHR goals of providing accurate, accessible information are only effective if the technology is properly used. The Centers for Medicare Medicaid Services (CMS) recently proposed rules that define the extent to which clinicians must engage with their CERHT in order to keep Medicare payments in the future. The Center for Medicare Advocacy commented on the proposed regulation, expressing concern that CMS set such a low bar for the utilization of EHRs that physicians could do the bare minimum to satisfy CMS’s standards.[2]

While some clinicians and patients are understandably concerned about the security and accuracy of EHRs, available data should allay some of these concerns. Although CMS is proposing a very low bar for utilization, the possible benefits outlined above, and the discussion below regarding the accuracy and security of EHRs may influence more patients and providers to utilize these systems. While EHR systems are still relatively new, greater adoption of Electronic Health Records has the promise of enhancing health outcomes.

Electronic Health Record Security

Given the number of data breaches in recent years, more needs to be done to secure Medicare patients’ Electronic Health Records.[3] There are a few areas of concern and optimism:


  • In a survey that included respondents from hospitals, clinics and ambulatory health centers, IT leadership, and health care executives, Health IT Outcomes found that addressing health IT security was the top priority of those surveyed (42% percent of those surveyed).[4]

Cautious Optimism:

  • It is unclear how recent data breaches are affecting the public’s perception of health IT privacy and security. The Department of Health and Human Services’ Office of the National Coordinator for Health Information Technology (ONC) released data that showed the public’s confidence in the security of health IT grew from 2012 to 2014. The number of surveyed persons who said they were very or somewhat concerned with the privacy of medical records dropped from 77% in 2012 to 58% in 2014. The number of persons who said they were concerned with the security of medical records dropped from 72% in 2012 to 52% in 2014.[5]

Electronic Health Record Accuracy

Medicare beneficiaries may also have concerns that their electronic health records may not be accurate or up to date.  There is evidence, however, that EHR can create an accurate record in even the most fast-paced and stressful environments. Many of the problems regarding record accuracy could be significantly addressed if providers were required to do more than the bare minimum to participate in the upcoming MIPS program, and if patients themselves took greater initiative to check and, when appropriate, update their medication records.


  • In April 2016, Leapfrog Group, an organization that rates hospitals on patient safety, surveyed 1,800 hospitals and found that 40% of potentially harmful drug orders were not flagged by electronic health systems. These included medication orders for the wrong dosage or for the wrong condition. Moreover, Leapfrog discovered that EHRs missed 13% of particular kinds of errors that could have resulted in patient deaths.[6]
  • A 2013 American College of Emergency Physicians report highlighted mistakes in the emergency room such as the ordering of the wrong medications in patients’ EHR. The study surmised that these mistakes were likely a result of a poorly designed record.[7]
  • A 2010 Medical Care Research and Review literature review of 35 studies concerning EHR accuracy found “significant errors of omissions” in medication lists. Errors in retention of previously discontinued mediations were present anywhere between 13 and 29% of the time. In two studies, a high proportion of patients (81 and 95%) reported errors in their mediation lists.[8]
  • A 2008 International Journal of Medical Informatics study highlighted that 54% of users of an EHR lacked up-to-date information in their health records concerning their over-the-counter medications. Around three times more over-the-counter drugs than prescription drugs were missing from patient records. The study further found that a patient’s emailing a provider in an effort to try to update his or her records rarely resulted in the updating of this information by providers.[9]

Cautious Optimism:

  • A 2015 Journal of Biomedical Informatics article discussed an emergency department simulation that involved comparing the accuracy of entering records by hand to those entered electronically. A “comparison of diagnostic accuracy with and without access showed that accessing the EHR led to an increase in the quality of the clinical decisions.”[10] In the case of esophageal spasms, muscle pain, and diverticulitis, for instance, the preliminary diagnosis matched the final diagnosis when an EHR was used, but the preliminary and final diagnosis varied significantly when an electronic health record was not used.[11] The variation present when an EHR was not used may have something to do with the fast-paced environment of an ER in which ER providers take notes on papers that can be easily lost. A Modern Healthcare article had this to say about the drawbacks of not using electronic health records in an ER: “A triage nurse who is attending to multiple patients at once might scribble each individual’s details on the back of a piece of paper—ducking away later to enter the information into the computer system. That can make it easier to confuse patient records.”[12]
  • A study conducted in the first half of 2012 by the National Opinion Research Center at the University of Chicago gave the roughly 200,000 patients enrolled in the MyGeisinger Health System that served central and northeastern Pennsylvania the option of indicating which medications they were no longer taking. The information was then presented to a pharmacist via the EHR and the pharmacist then reviewed the new data and had the option to contact the patient and the patient’s physician. In 89% of these cases in which forms were completed, patients requested changes to their medication record regarding such things as the frequency of their medication dosage. Out of a sample of 107 patient forms, pharmacists made updates to patients’ medication records reflecting the new information patients provided 68% of the time. Additionally, patients who were contacted by pharmacists found this follow up discussion reassuring.[13] The MyGeisinger pilot demonstration showed that increased patient-pharmacist communication can lead to a more accurate patient electronic health record when this communication occurs within a built-in communication tool.


Electronic Health Records are a work in progress.  Better patient and provider utilization of EHRs is the best means of ensuring that patient records are accurate and helpful. With CMS’s push for interoperability of patient records, providers have strong incentives to fix many of the growing pains that have caused concern. Given the benefits outlined above and the reported progress toward more secure and accurate EHRs, these systems hold promise for enhancing patient care.

July 13, 2016 – M. Hubbard.

[1] The Federal Meaningful Use Program required a high-rate of hospital utilization of electronic health records. See: CMS. “Medicare and Medicaid Programs; Electronic Health Record Incentive Program—Stage 3 and Modifications to Meaningful Use in 2015 through 2017; Final Rule.” 16 October 2015. 80:200. https://www.gpo.gov/fdsys/pkg/FR-2015-10-16/pdf/2015-25595.pdf (site visited February 22, 2016). There are some studies that captured the rates of adoption of EHR systems, but not the extent to which these systems were used in previous years. See: Chun-Ju Hsiao, Ashish K. Jha, Jennifer King, Vaishali Patel, et. al. “Office-Based Physicians Are Responding To Incentives and Assistance By Adopting and Using Electronic Health Records.” Health Affairs. August 2013. 32:8. http://content.healthaffairs.org/content/32/8/1470.full.pdf+html (site visited July 12, 2016). Catherine M. DesRoches, Dustin Charles, Michael F. Furukawa, Maulik S. Joshi, et. al. “Adoption Of Electronic Health Records Grows Rapidly, But Fewer Than Half Of US Hospitals Had At Least A Basic System In 2012.” Health Affairs. August 2013. 32:8. http://content.healthaffairs.org/content/32/8/1478.full.pdf+html (site visited July 12, 2016).
[2] See: Center for Medicare Advocacy. “Center Comments on Proposed Changes to Physician Payments.” 27 June 2016. http://www.medicareadvocacy.org/center-comments-on-proposed-changes-to-physican-payments/ (site visited July 12, 2016).
[3] Dan Munro. “Data Breaches In Healthcare Totaled Over 112 Million Records In 2015.” Forbes. 31 December 2015. http://www.forbes.com/sites/danmunro/2015/12/31/data-breaches-in-healthcare-total-over-112-million-records-in-2015/#572a33b47fd5 (site visited July 12, 2016). Jessica Davis. “7 Largest Data Breaches of 2015.” Healthcare IT News. 11 December 2015. http://www.healthcareitnews.com/news/7-largest-data-breaches-2015 (site visited July 12, 2016).
[4] John Oncea. “Top 10 Health IT Trends of 2016.” Health IT Outcomes. 24 November 2015. http://www.healthitoutcomes.com/doc/top-health-it-trends-for-0002 (site visited March 10, 2016). P. 4.
[5] Vaishali Patel, Penelope Hughes, Wesley Barker, and Lisa Moon. “Trends in Individuals’ Perceptions regarding Privacy and Security of Medical Records and Exchange of Health Information: 2012-2014.” ONC Data Brief 33. February 2016. http://dashboard.healthit.gov/evaluations/data-briefs/trends-individual-perceptions-privacy-security-ehrs-hie.php (site visited March 10, 2016). P. 2.
[6] Shefali Luthra. “Hospital Software Often Doesn’t Flag Unsafe Drug Prescriptions, Report Finds.” Kaiser Health News. 07 April 2016. http://khn.org/news/hospital-software-often-doesnt-flag-unsafe-drug-prescriptions-report-finds/ (site visited April 8, 2016).
[7] Shefali Luthra. “Electronic Health Records in the ER: A Breeding Ground for Error.” Modern Healthcare. 27 February 2016.
[8] Kitty S. Chan, Jinnet B. Fowles, and Jonathan P. Weiner. “Electronic Health Records and the Reliability and Validity of Quality Measures: A Review of the Literature.” Medical Care Research and Review. 2010. 67:5. P. 517, 520.
[9] Maria Staroselsky, Lynn A. Volk, Ruslana Tsurikova, Lisa P. Newmark, et. al. “An Effort to Improve Electronic Health Record Medication List Accuracy between Visits: Patients’ and Physicians’ Response.” International Journal of Medical Informatics. 01 March 2008. 77:3. P. 153-160.
[10] Ofir Ben-Assuli, Doron Sagi, Moshe Leshno, Avinoah Ironi, and Amitai Ziv. “Improving Diagnostic Accuracy using EHR in Emergency Departments: A Simulation-Based Study.” Journal of Biomedical Informatics. 2015. 55. P. 31.
[11] Ibid. P. 35.
[12] Shefali Luthra. “Electronic Health Records in the ER: A Breeding Ground for Error.”
[13] Prashila Dullabh, Norman Sondheimer, Ethan Katsch, Jean-Ezra Young, et. al. “Executive Summary: Demonstrating the Effectiveness of Patient Feedback in Improving the Accuracy of Medical Records.” NORC at the University of Chicago. June 2014. https://www.healthit.gov/sites/default/files/20120831_odrexecutivesummary508.pdf (site visited March 10, 2016). P. 3-5. 


Democratic and Republican Party Platforms: Side-by-Side Comparison of Issues Important to Medicare Beneficiaries

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The two major American political parties have released their 2016 party platforms in anticipation of their respective party conventions and the upcoming general election. Given the importance of health care in this upcoming election, the Center for Medicare Advocacy has done an initial analysis of the health-related positions of the two parties. Below we present a comparison of Medicare and health care related policies the two parties may pursue according to their platform statements, as well as links to those statements so those interested in more detail can read them in their entirety.


Democratic Party Platform Positions (Draft)

Republican Party Platform Positions (Final)

Medicare Structural Reform

No Statement

“Impose no changes for persons [currently] 55 or older. Give others the option of traditional Medicare or  transition to a premium-support model  designed to strengthen patient choice.” [1]

Give every person eligible for Medicare in the future who is also under 55 years of age an income-adjusted stipend (with catastrophic protection) to put towards health expenses.[2]

Medicare Eligibility

Optional Medicare buy-in for persons 55 or older[3]

“Set a more realistic age for eligibility in light of today’s longer life span.”[4] (The Center interprets this to mean raising the age of Medicare eligibility.)

Puerto Rican Medicare Access

Equal access to Medicare for Puerto Ricans[5]

No Statement

Access to Health Care

End goal is universal health coverage. Americans should be able to access comprehensive health coverage through either Medicare or a public health option.[6]

No Statement

Medical Costs

Keep premiums more affordable reduce out-of-pocket expenses[7]

No Statement

End “surprise billing.” Consumers should be aware of health costs prior to a visit to a physician.[8]

Rx Costs and Access

Cap the amount Americans have to pay every month in out-of-pocket expenses[9]

No Statement

Medicare should be able to negotiate Rx prices with drug manufacturers[10]

Prohibit “pay-for-delay” tactics that keep cheaper generic drugs from entering the market[11]

Allow American consumers to import less-expensive drugs from abroad with appropriate safety protections[12]

The Affordable Care Act

Push for the expansion of Medicaid eligibility in states that have not taken this step.[13]

The Affordable Care Act “must be removed and replaced with an approach based on genuine competition, patient choice, excellent care, wellness, and timely access to treatment.  To that end, a Republican president, on the first day in office, will use legitimate waiver authority under the law to halt its advance and then, with the unanimous support of Congressional Republicans, will sign its repeal.”[14]

Community Health Centers

The Democratic platform calls for “a push for a comprehensive system of primary medical, dental, and mental health care and low-cost prescription drugs through a major expansion of community health centers” with the goal of providing valuable preventive care, education, and treatment of chronic conditions for many low-income Americans.[15]

No Statement

Meeting the Health Needs of a Diverse Population

Health materials should be culturally and linguistically appropriate and easy to read.[16]

No Statement


Health data should be separated into its component parts for Asian Americans and Pacific Islanders. This will help in developing and understanding the health needs and preferences of these two disparate groups.[17]

End-of-Life Rights

No Statement

“America’s healthcare professionals should not be forced to choose between following their faith and practicing their profession. We respect the rights of conscience of healthcare professionals… Providers should not be permitted to unilaterally withhold services because a patient’s life is deemed not worth living.”[18]

Advancing Americans with Disabilities

No Statement

Support the Steve Gleason Act of 2015, which provided access to speech-generating devices to ALS-diagnosed Medicare beneficiaries. [19]

A Model to Waive the Three-Day Inpatient Hospital Stay Requirement for Care in a Skilled Nursing Facility

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In order for Medicare Part A to pay for a patient’s stay in a skilled nursing facility (SNF), the patient must first have spent at least three consecutive days as an inpatient in an acute care hospital.[1]  For many Medicare beneficiaries, Part A SNF coverage is denied because the hospital classifies the stay as Outpatient or Observation Status.  Although the care provided by the hospital to patients with stays classified as Outpatient or Observation Status may be indistinguishable to the care provided to inpatients,[2] the Outpatient classification, by itself, prevents Part A coverage of the SNF stay.  Observation Status is a persistent problem nationwide, affecting tens of thousands of beneficiaries, or more, each year.[3]  While the Centers for Medicare Medicaid Services (CMS) has become more insistent on the use of Observation Status,[4] the agency is simultaneously conducting multiple demonstrations that would waive the three-day inpatient hospital stay requirement entirely.  The most recent example is included in proposed rules, published July 15, 2016, that address the three-day waiver for certain Accountable Care Organizations.

Proposed Regulations

The Affordable Care Act created Medicare Shared Savings Programs for groups of health care providers and suppliers to work together providing care to beneficiaries who receive original (or traditional) Medicare.[5]  These groups of providers are called Accountable Care Organizations (ACOs).  One type of ACO, Track 3 ACOs, are ACOs to which Medicare beneficiaries are assigned in advance for an entire performance year. 

In final rules published in June 2015[6] and effective January 1, 2017, CMS authorized waiver of the three-day inpatient hospital stay requirement for beneficiaries assigned to Track 3 ACOs so long as the SNF had an “affiliate agreement” with the ACO and maintained at least three stars on the CMS Nursing Home Quality Rating System.  Beneficiaries could receive Medicare-covered care in a SNF if they were admitted either directly from the community or from a less-than-three-day inpatient hospital stay, or as under Original Medicare, if they had a three-day inpatient hospital stay.

In proposed rules published July 15, 2016,[7] CMS included additional protections for beneficiaries receiving care in a SNF under such a waiver.

First, CMS proposes protection for the very limited situation when a beneficiary whose Part B coverage is terminated (making the person ineligible for assignment to a Track 3 ACO) but is admitted to a SNF without a prior three-day inpatient stay before appearing on the quarterly exclusion list.  CMS proposes a 90-day grace period “that functionally acts as an extension of beneficiary eligibility for the SNF 3-day rule waiver.”[8]  Neither the beneficiary nor the SNF would be liable in these limited cases.

Second, in a more common situation, CMS describes an affiliate SNF that admits a beneficiary without a three-day hospital stay although the beneficiary, for some reason, does not qualify for waiver of the three-day inpatient requirement.  In these situations, the beneficiary would be protected from financial liability, but the SNF would not. 

Missing from the new proposed beneficiary protections is any discussion of SNFs whose star ratings decline from three stars to two or one star during the course of the year.

In comments on the original proposed rules for ACOs, the Center for Medicare Advocacy recommended two revisions addressing the eligibility of SNFs to admit beneficiaries without a three-day inpatient hospital requirement.  The Center suggested that eligibility be limited to SNFs (1) with at least three stars in the health survey component of the star rating system and (2) meeting the nurse staffing ratio used in Nursing Home Compare for four and five stars in the staffing measure.[9]  The Center cautioned CMS to consider the gaming in the star rating system, documented by The New York Times[10] and The Center for Public Integrity.[11]  CMS did not accept these recommendations.


As CMS tests waiving the three-day hospital requirement entirely, it needs to ensure that its current application of the three-day rule does not prevent Medicare beneficiaries from getting post-hospital care they need in SNFs.

The Center for Medicare Advocacy believes that CMS has authority under existing law to count all the time in the hospital, whether inpatient or outpatient, for purposes of determining patients’ eligibility for Part A coverage of care in a SNF.[12]  Alternatively, CMS could support bipartisan legislation now pending in Congress to count all time in the hospital, the Improving Access to Medicare Coverage Act of 2015.[13]

July 19, 2016 – T. Edelman

[1] 42 U.S.C. §1395x(i).
[2] Most recently, in proposed rules creating exceptions to the two-midnight rule, CMS confirmed that physicians can order whatever care their patients need, regardless of their status, and that determinations of inpatient/outpatient status are Medicare billing rules. (“We noted that we have been clear that this billing instruction does not override the clinical judgment of the physician to keep the beneficiary at the hospital, to order specific services, or to determine appropriate levels of nursing care or physical locations within the hospital,” 80 Fed .Reg. 39199, 39348 (July 8, 2015), https://www.gpo.gov/fdsys/pkg/FR-2015-07-08/pdf/2015-16577.pdf.  
[3] See Center for Medicare Advocacy’s materials on observation status, at http://www.medicareadvocacy.org/?s=observationop.x=0op.y=0.
[4] In proposed rules implementing the Notice of Observation Treatment and Implications for Care Eligibility Act (NOTICE Act), 81 Fed. Reg. 24945 (April 27, 2016), CMS proposed to amend the federal regulations to make clear beyond doubt that observation status is not appealable.  Proposed 42 C.F.R. §405.926(u).  See Center, “Observation Status and the NOTICE Act: Advocates Not Over the Moon” (Alert, April 27, 2016), http://www.medicareadvocacy.org/observation-status-and-the-notice-act-advocates-not-over-the-moon/.
[5] 42 U.S.C. §1395jjj (§3022 of the ACA); see CMS, Shared Savings Programs, https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/index.html?redirect=/sharedsavingsprogram
[6] 80 Fed. Reg. 32691, 32802-32807 (June 9, 2015), https://www.gpo.gov/fdsys/pkg/FR-2015-06-09/pdf/2015-14005.pdf; 42 C.F.R. §425.612(a)(1).
[7] 81 Fed. Reg. 46436, 46437-46441 (July 15, 2016), https://www.gpo.gov/fdsys/pkg/FR-2016-07-15/pdf/2016-16097.pdf.
[8] 81 Fed. Reg., at 6439.
[9] http://www.medicareadvocacy.org/center-comments-on-proposed-rules-for-snfs-acos/

[10] Katie Thomas, “Medicare Star Ratings Allow Nursing Homes to Game the System,” The New York Times (Aug. 24, 2014), http://www.nytimes.com/2014/08/25/business/medicare-star-ratings-allow-nursing-homes-to-game-the-system.html (showing high composite ratings for facilities with low survey results, based on facilities’ gaming their self-reported staffing and quality measures).
[11] Jeff Kelly Lowenstein, “Analysis shows widespread discrepancies in staffing levels reported by nursing homes; Data compiled for Medicare shows lower levels of care than website for consumers,” The Center for Public Integrity,  http://www.publicintegrity.org/2014/11/12/16246/analysis-shows-widespread-discrepancies-staffing-levels-reported-nursing-homes. (reporting that more than 80% of the 10,000 nursing facilities analyzed by The Center for Public Integrity reported higher registered nurse staffing levels on Nursing Home Compare than the investigative report calculated from the facilities’ Medicare cost reports).
[12] At the request of CMS, the Center for Medicare Advocacy prepared a legal analysis of CMS’s current authority to count all time in the hospital.  See memorandum , July 16, 2014, at http://www.medicareadvocacy.org/cms-has-authority-under-existing-law-to-define-inpatient-care/  
[13] H.R. 1571, S. 843.


Center Comments on Proposed Changes to Physician Payments

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June 27, 2016

Centers for Medicare Medicaid Services
Department of Health Human Services
Attention: CMS–5571–P
P.O. Box 8013

Baltimore, MD 21244–8013

Submitted electronically to: www.regulations.gov            

Re:  CMS–5517–P

To Whom It May Concern:

The Center for Medicare Advocacy (the Center) is pleased to provide the Centers for Medicare Medicaid Services (CMS) comments on the proposed rule on the Medicare Program Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule (CMS–5571–P).

The Center, founded in 1986, is a national, non-partisan law organization that works to ensure fair access to Medicare and to quality health care. We draw upon our direct experience with thousands of individuals to educate policy makers about how decisions affect the lives of real people. Additionally, we provide legal representation to ensure that people receive the Medicare coverage for which they qualify, and the quality health care they need.

Overall, we appreciate that the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) moves the Medicare program away from the flawed Sustainable Growth Rate (SGR) physician payment formula, and provides an opportunity to change provider incentives through payment mechanisms.  Although we generally support the proposed rule’s MIPS and APM Incentive, we have some reservations regarding key aspects of the proposed rule. These concerns are addressed in the comments below.

I. Overarching Comments

While our comments below are separated between those applicable to Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APM), we offer the following overarching comments applicable to both topics.

A. Appropriate Outcome Measures

The Center echoes some of the comments to this proposed rule offered by the Medicare Payment Advisory Commission (MedPAC) in their June 2016 report to Congress. Specifically, incentive payments to physicians under MACRA’s new reimbursement system should be linked to the actual quality of care provided.[1] Throughout our comments, we discuss how outcome measures might be better incorporated into this new system. 

A focus on outcome measures, however, should not result in incentives to provide care only to individuals whose condition is expected to improve. Despite the Settlement in the Jimmo v. Sebelius case, which states that therapy and skilled nursing services are appropriate for Medicare beneficiaries in order to maintain an individual’s condition or slow deterioration, the Center continues to hear from beneficiaries who are denied such services because their conditions do not improve.[2]  Sometimes an individual’s condition cannot and will not improve; yet skilled nursing and/or therapy are necessary to maintain the individual’s vulnerable condition. Thus, any outcome measures implemented under MACRA must be based on meeting progress toward individually assessed needs, not improvements in the patient’s condition.

B. Socioeconomic Status

The Center applauds CMS for examining the HHS’ Office of the Assistant Secretary for Planning and Evaluation (ASPE) study regarding the issue of risk adjustment for socioeconomic status in quality measures, as required by the IMPACT Act, prior to making any changes to quality measures.

We reiterate our on-going concerns regarding risk adjustment for quality reporting and pay-for-performance programs based on socioeconomic/sociodemographic status (SES/SDS). We believe that adjusting for SES factors could lead to several harmful unintended consequences for disadvantaged patients.  First, risk adjustment has the potential to mask existing disparities in care that low income patients receive, rather than expose and address these disparities.  Attempting to adjust for, and over-simplify, the complexity of chronic conditions only perpetuates the inequities.

Also, risk adjustment could create two divergent standards of care for healthcare units based on the wealth or poverty of the populations they serve.  Adjusting scores for healthcare units with significant proportions of disadvantaged patient populations would in effect lower the bar for healthcare units that treat these populations.  This type of adjustment would allow distinct and unequal quality standards for poor patients and wealthy patients. Also, the root of the disparities in care is not likely to be addressed if the differences are concealed through the automatic and inaccurate inflation of performance scores. 

We acknowledge that disparities exist between the quality of care delivered to low income populations and that delivered to higher income populations.  We also recognize that there are social and economic reasons that require alternative interventions or approaches by healthcare units in order to limit disparities in care for different populations.  It is critical to identify those factors, and develop systems to address and seek to overcome the obstacles to high quality care for these populations.  Addressing the root causes is foundational in developing and employing changes that target these causes in order to improve care equitably. 

We therefore welcome the results of the ASPE study, and look forward to future CMS proposals. We are confident that the proposals CMS will develop based on this ASPE data collection will be aimed at supporting high need patients by addressing health disparities. We therefore applaud CMS for the commitment to ground any possible future changes to the quality system in the data collected by the ASPE study.

We support CMS’ measured approach to incorporating socioeconomic status into quality measures. We look forward to reviewing any future measures and having the opportunity to comment on those measures when proposed.

II. Merit-Based Incentive Program System (MIPS)

A. Background

The Merit-Based Incentive Program System (MIPS) is the consolidation of

three existing Medicare programs: (1) the Physician Quality Reporting System, (2) the Value-Based Payment Modifier, and (3) the Medicare Electronic Health Record (EHR) Incentive Program.[3] In combining these three pre-existing programs under the MIPS umbrella, CMS is proposing to score eligible physicians,[4] for the purposes of payment, through the use of four weighted performance categories: (1) Quality, (2) Resource Use, (3) Clinical Practice Improvement Activities, and (4) Meaningful Use of Certified EHR Technology.[5] Based on the composite performance score of these four categories, eligible physicians will be subject to a payment increase or decrease of four % in 2019, five % in 2020, seven % in 2021, and nine % in 2022.[6]

Through this framework, CMS envisions that MIPS will incentivize physicians to “engage in improvement measures and activities that have a proven impact on patient health and safety and are relevant to their patient population.”[7]  As discussed below, however, the Center is concerned that actual improvements in performance might be jeopardized by the proposal to offer physicians too much latitude in their selection of how they will be measured.

B. Quality Category

The Quality section of the proposed rule would afford physicians “the flexibility to determine the most meaningful measures and reporting mechanisms for their practice.”[8] As a result, physicians will be given the authority to self-select just six measures out of all potential MIPS measures in a given year.  In comparison to the current model, the Physician Quality Reporting System already requires physicians to report on at least nine measures.[9] By allowing physicians to self-select so few measures, certain critical measures could be ignored while clinicians emphasize their self-determined strengths. CMS risks rewarding physicians for spotlighting only the positive qualitative aspects of their practices to the detriment of the Medicare program and its beneficiaries.[10] As CMS acknowledges in the proposed rule, physicians could game the system by “report[ing] only on measures for which they have a sufficient sample size.”[11]

Although we acknowledge that not all physician practices are alike and that physicians need a modicum of flexibility in reporting to CMS, we strongly urge CMS to maintain greater control of the reporting under MIPS and to provide more thoroughly defined measurements. Further, we strongly urge CMS to incorporate more reporting requirements that would assess the actual and overall quality of care being provided to beneficiaries.

C. Resource Use Category

While the Center recognizes there may be value in measuring the costs per episode of care or per particular conditions under the MIPS program, any analysis of costs must be coupled with an analysis of patient outcomes and patient needs prior to any determination of what constitutes appropriate funding. Such a holistic weighing of considerations could serve to offset clinician incentives to lower costs at the detriment of patient needs.

The Center welcomes CMS’s recognition that some clinicians have a larger concentration of disadvantaged patients and that resource use measures—derived from administrative claims data—should be adjusted accordingly. Additionally, CMS lists the right kind of risk factors that should be taken into account: a combination of chronic conditions, current health status, recent care utilization, geography, ethnicity, health status, and certain demographic and socio-economic characteristics. [12] We request, however, clarification on the definitions CMS uses for “socioeconomic and demographic characteristics,” as they are currently undefined.[13] Furthermore, we welcome that MIPS clinicians and their patient pool will be measured relative to their peers.[14] Nevertheless, given that four of the measures applied to administrative claims data measure coronary diseases and diabetes—ailments that especially affect less advantaged groups—it is particularly important that well-designed risk adjustment methods be in place that do not penalize or dis-incentivize clinicians from treating disadvantaged groups.  As previously outlined, we support CMS in examining the ASPE study regarding the issue of risk adjustment for socioeconomic status in quality measures, as required by the IMPACT Act, prior to making any changes to quality measures.[15]

D. Clinical Practice Improvement Activities Category

Clinical Practice Improvement Activities (CPIA) have the potential to promote care coordination, meet the health and safety needs of patients, and create greater communication between providers and patients. The CPIA category should lead to sustained transformation and improvement of clinical practice over time. The Center recognizes the potential this category has in future years to improve the quality of care that patients receive. In order for this to come to fruition, the great potential of the CPIA category should be tweaked in future years to better guarantee that the category’s goals can be realistically met.

i. CPIA Measures

The Center seeks clarification from CMS on how clinicians can meet specific measures. The proposed rule should provide specificity to adequately guide clinicians to properly complete the measures and meet goals established by the CPIA category. The following clinician measure demonstrates the current lack of specificity: “Participation in research that identifies interventions, tools or processes that can improve a targeted patient population.”[16] Additionally, what is to stop a clinician from not understanding the following measure and interpreting as he or she sees fit: “Engage patients and families to guide improvement in the system of care”?[17] The Center welcomes the attention CPIA places on health disparities, but the measures relating to this subject are so vague that they could be better served by more specificity. One measure reads as follows: “Take steps to improve healthcare disparities, such as Population Healthcare Toolkit or other resources identified by CMS…Refer to the local Quality Improvement Organization (QIO) for additional steps to take for improving health status of communities.”[18]

In order for clinicians to better understand and reduce health disparities, there should be measures that specifically incentivize the reporting of data that is disaggregated by race/ethnicity, sexual orientation, and gender identity. As in other places throughout the list of CPIA measures, specific examples of clinician mitigation of health disparities would better guarantee that the goal of this measure is achievable.

Another impediment towards the kind of meaningful transformation of patient health that CPIA sets out are the points that clinicians can receive for these many process measures. While a clinician can receive points for conducting a mental health screening, he or she is not judged on how well he or she completes a measure.[19] One solution to this problem might be for measures to be more outcome based and less process based. CMS could also better guarantee how well a clinician performs on a measure by conducting audits that monitor clinician practices.

The lack of effective measures and minimal participation providers may use to satisfy CPIA measures also acts as a barrier to achievement of the program’s goals. Some high-level activities receive 30 points of the required 60 CPIA points and medium activities are worth 20 points. It is possible to do two 30-point activities and meet the CPIA requirement. Moreover, activities only have to be performed for at least 90 days out of 365.[20] Conducting mental health evaluations for only three months of the year, for instance, would not likely meet the needs of patients who get their yearly checkup during the other nine months of the year the clinician chooses not to satisfy CPIA’s measures. With this limitation in mind, the Center recommends that CMS extend this requirement.

The Center appreciates that CMS is open to recommendations every year for possible new measures and new language designed to help clinicians and CMS meaningfully transform patient care.[21] As written, however, clinicians can marginally complete the Clinical Practice Improvement Activity category’s measures. The Center hopes that in future years CMS will continuously improve the CPIA category to be more meaningful, more evidence-based, and better positioned to promote better patient health outcomes.

E. Advancing Care Information Category

The Center strongly supports measures within the Advancing Care Information portion of MIPS that lead to greater openness and communication between providers and patients, patient engagement in their health care, care coordination, and interoperability.

i. Measures

The measures that providers may complete to be in compliance are not sufficient enough, however, to meaningfully achieve the above-cited goals. In future years, the Center recommends more stringent measures and scoring in order to better ensure that there is a meaningful transformation that leads to better outcomes for patients.

One of the primary impediments to such interoperability and outcomes is the so called “one-patient” threshold for satisfying many of the measures within ACI. This low threshold, and the ease at which clinicians may complete ACI requirements, does not encourage substantial advances for Medicare patients. A clinician can score, for instance, both base score and performance score points by electronically transmitting one prescription a year—doing this gives a clinician 1/5th of their required ACI score.[22] The Center recognizes that it may be important for providers who never had to previously participate in the Meaningful Use program to catch up to those providers who already have experience with Electronic Health Records and the measures associated with them. We therefore encourage CMS to make the ACI measures more difficult, more meaningful, and more likely to improve patient health outcomes after FY 2017. If FY 2017 is a time for newly-participating physician assistants and nurse practitioners to acquire and learn EHR technology, all participating clinicians might be able to satisfy more meaningful measures in future years.

In successive years, measures should not merely be process measures such as those that award 10 points (10% of the ACI score) if a patient “views, downloads, or transmits information.”[23] This example can become a meaningful outcome measure if it instead measured patient needs met as a result of patients viewing and downloading information concerning, for instance, at-home physical therapy exercises a clinician has recommended. CMS could also, for example, measure outcomes resulting from patient-clinician information exchanges to complete prescription medication changes.

Another way to better meet patient needs in future years is to adjust the clinician’s possible base score. After FY 2017, it will no longer be necessary to allow a base score—created as a way for newly-participating clinicians to learn EHR technology and satisfy some basic ACI requirements—to make up 50 % of the total ACI score because clinicians will have become more familiar with certified electronic health record technology during FY 2017. Furthermore, in FY 2017 physicians who previously participated in the meaningful use program and have an existing familiarity with EHR and CERHT can easily satisfy ACI requirements; the kinds of measures they can satisfy in FY 2017 are partly less stringent than the measures satisfied under the Meaningful Use program. In future years, the Center recommends lowering the total number of possible base measure points designated for EHR technology and basic ACI requirements so that clinicians will satisfy more meaningful performance score measures.

ii. “Meaningful User” Threshold

The Secretary can at any time certify that 75% of participating clinicians become “meaningful users” of Certified Electronic Health Records Technology and can then lower the weight of the ACI category from 25% of the total MIPS score to 15%. The definition of what a “meaningful user” is undefined in the proposed regulation.[24] The Center recommends that “meaningful user” be specifically defined, to better achieve substantive improvements in interoperability and better patient health outcomes in the ACI subset of MIPS. Given the low bar with which clinicians may complete certain ACI measures, even if 75% of all participating MIPS clinicians achieve a 100% score on ACI in FY 2017, patient health outcomes would not likely change that much as a result.

The Center recommends that, following the development of more meaningful ACI measures in future years, CMS define a meaningful use threshold as one in which at least 90% of participating clinicians receive 100% of their ACI points. It is important to clearly define expectations and set a higher standard in order to achieve interoperability and EHR-aided, improved health outcomes for Medicare beneficiaries. For similar reasons, the Center also opposes any move to lower the meaningful use threshold below the current 75% amount.

iii. Attempts to Prevent Information Blocking

The Center supports CMS’s proposed requirement that clinicians certify they have not prevented interoperability and they have shared patient information with other clinicians.[25] The Center requests this self-reported measure be validated by audits of clinician EHR systems in order to certify whether clinicians engage in information blocking.

III. Alternative Payment Models (APMs)

A. Assessments in Advanced APMs

The proposed rule provides that Advanced APMs must do the following: (1) require participants to use certified EHR technology, (2) require APMs to base payments on “quality measures comparable to those in the quality performance category of MIPS,” and (3) require APM entities to “bear more than a nominal amount of risk for monetary losses.”[26] By adhering to these Advanced APM participation requirements, Qualified Participants (QPs) could receive in FY 2017 a lump sum bonus of five % of the estimated aggregate payments from the Medicare Part B services they provided in the preceding year.[27] Nevertheless, the proposed rule provides few requirements that ensure that APM incentives are truly rewarding physicians for delivering quality care.

The Center is concerned about how meaningful an Advanced APM assessment will actually be when the proposed rule emphasizes that “[w]hether an APM is an Advanced APM depends solely upon how the APM is designed, rather than on assessments of participant performance within the APM.”[28] The proposed rule attempts to reconcile the assessment gap between an Advanced APM and the participant’s actual performance by arguing that “[p]erformance assessments are already part of APMs, and [CMS] believe[s] it is important and consistent with the statutory framework to continue to foster flexibility in structuring the specific rewards and consequences of performance within each APM.”[29]

Unfortunately, it is unclear how the design of an Advanced APM necessarily equates to proper performance assessments, especially when flexibility is a factor. For instance, the proposed rule highlights that “an APM that ties payments to performance on quality measures comparable to those under MIPS may be an Advanced APM regardless of an Advanced APM Entity’s actual performance on those quality measures.”[30] However, as illustrated above, quality measures such as those under MIPS already provide physicians the opportunity to self-select only the qualities that they want to have measured.[31] We do not believe that multiple layers of self-selected quality measures assist in incentivizing physicians to improve the delivery of care. Given the increased rewards inherent in the Advanced APM model over time, we strongly urge CMS to undertake additional, more meaningful, performance assessments.

B. Outcome Measures

The proposed rule argues that outcome measures are “a priority measure type”

and that CMS wants to encourage that outcome measures be factored in when quality performance assessments are being completed.[32] In this aim, the proposed rule states that an “Advanced APM must include at least one outcome measure if an appropriate measure . . . is available on the MIPS list . . . at the time when the APM is first established.”[33] Unfortunately, the proposed rule continues by adding that, if no outcome measures were actually on the MIPS list at the moment the APM was established, “CMS would not require an outcome measure be included after APM implementation.”[34] Again, the proposed rule’s limited timing and subsequent failure to require any meaningful outcome measure might undermine CMS’ stated objectives. Ensuring that well-defined outcome measures are necessarily included in performance assessments will ensure that beneficiaries are receiving better care. Medicare value-based payments must ensure that physicians have an incentive to secure better health outcomes.

C. Clinical Care Model

The Center urges CMS to require that Advanced APMs use a clinical care model that results in improved delivery of care and reinforces a strong foundation of primary care (for example, greater care coordination and communication; use of shared care planning and partnership with patients at all levels of care; timely access to care; and demonstration of improved patient care experience).

With the exception of models considered to be Medical Home Models, there are no requirements for the Advanced APM program addressing the clinical care delivered by the underlying APM.  Meaningful transformation to value based payment requires that the transition to APMs also result in improved delivery of care.

We strongly recommend that as entities take on financial accountability for quality performance and value, assume financial risk, and move towards capitation-like payment models, these entities must likewise be able to demonstrate they promote and support a sustainable, patient-centered model that is accessible, effective, and evidence-based.

We therefore recommend that CMS add an additional criterion for Advanced APMs that requires them to demonstrate their payment approach will reinforce the delivery of coordinated patient-and family-centered care with a strong primary care foundation.

We strongly encourage CMS to consider requiring all models qualifying as Advanced APMs meet care delivery requirements similar to those for Advanced APM Medical Home Models.  Further, we urge CMS to require Medical Home Models seeking to qualify as an Advanced APM to meet all seven requirements laid out in the rule’s definition of a Medical Home Model.

The special consideration given to Medical Home Models as Advanced APMs acknowledges the critically important role of primary care. We strongly support the separate financial standards for Medical Home Models and appreciate CMS’s attention to place a high-value on the provision of primary care.

However, with regards to the requirements around Medical Home Models, we urge CMS to go further and require Medical Home Models seeking to qualify as Advanced APM to meet all seven of the domains listed in the proposed rule’s definition of a Medical Home Model: (1) planned coordination of chronic and preventive care; (2) patient access and continuity of care; (3) risk-stratified care management; (4) coordination of care across the medical neighborhood; (5) patient and caregiver engagement; (6) shared decision making; and (7) payment arrangements in addition to, or substituting for, fee-for-service. All seven domains are key elements of a true Medical Home Model. Particularly with respect to first six criteria, we can identify no criterion that could acceptably be missing from a high-quality medical home.

The requirements for Medical Home Models also need much greater definition and specificity, particularly with respect to patient and caregiver engagement and to shared decision-making.

D. Transparency, Consumer Protections, and Stakeholder Engagement in Advanced APMs

Encouraging transparency, the proposed rule states that CMS will develop a method to identify and notify the public of specific APMs that CMS considers are Advanced APMs.[35] The proposed rule clarifies that “making this information available in an accessible format is important for stakeholders to understand how CMS applies the Advanced APM criteria to existing APMs, and to be informed as early as possible about whether an APM they are considering joining is an Advanced APM.”[36] We agree; however, we believe accessibility alone is not sufficient to ensure that the voices of beneficiaries are heard. Although the process may be transparent after the fact, we strongly encourage CMS to develop additional processes to allow stakeholder engagement during the period of determination. Patients, advocates, and physicians should be included in the entire process as co-creators, and not only informed at the end of the process.

The Center urges CMS to thoughtfully develop and properly measure enhanced consumer protections as more clinicians move into Advanced APMs.  Greater transparency in Advanced APM measurements would provide helpful information for patient advocates to assist CMS, improve future Advanced APMs, and help ensure they are not encouraged to select only the healthiest patients.

New models should better protect disadvantaged and at-risk patient populations from the get-go. When new Advanced APMs are considered, CMS should provide their quality and resource-use data to the public for comment. Further, given the complexity of certain Advanced APMs, we encourage CMS to require them to provide linguistically and culturally appropriate materials for patients. We ask CMS to provide prototypes of these materials to patient advocates to review before they are finalized.


The Center for Medicare Advocacy greatly appreciates the opportunity to provide comments on the proposed rule on the Medicare Program Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive under the Physician Fee Schedule.

For additional information, please contact our Senior Policy Attorney, David Lipschutz at 202-293-5760 or Dlipschutz@MedicareAdvocacy.org.  Thank you.


Judith Stein
Executive Director/Attorney

Kathleen Holt

David Lipschutz

Kata Kertesz

Matthew Hubbard

Dara Valanejad

[1] MedPac. “Medicare and the Healthcare Delivery System.” June 2016. http://medpac.gov/documents/reports/june-2016-report-to-the-congress-medicare-and-the-health-care-delivery-system.pdf (site visited June 22, 2016). P. 49.
[2] Center for Medicare Advocacy. “Why the Jimmo v. Sebelius Case Matters: Improvement Standard Stories.” http://www.medicareadvocacy.org/why-the-jimmo-v-sebelius-case-matters-improvement-standard-stories/ (site visited June 22, 2016).
[3] Id. at 28162.
[4] See id. at 28163 (“MIPS eligible clinicians will include physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and groups that include such clinicians.”).
[5] Id. at 28247
[6] Id. at 28247.
[7] 81 Fed. Reg. at 28185.
[8] Id.
[9] See id. at 28187 (arguing that the reduction “decreases the MIPS eligible clinician’s reporting burden while focusing on more meaningful types of measures”).
[10] Although CMS notes that it plans to increase reporting requirements over the next few years through notice and comment rulemaking, the requirements currently proposed will have a negative impact on beneficiaries in the meantime by not making physicians accountable for the total quality of the care they provide. Id.at 28187.
[11] Id.
[12] Id. at 28196-7.
[13] Id. at 28197.
[14] Id.
[15] Id. at 28196.
[16] Id. at 28573.
[17] Id. at 28580.
[18] Id. at 28573.
[19] Id. at 28585.
[20] Id. at 28211.
[21] Id. at 28215.
[22] CMS. “Merit-Based Incentive Payment System (MIPS) and Alternative Payment Model (APM) Incentive Under the Physician Fee Schedule, and Criteria for Physician-Focused Payment Models.” Proposed Rule. https://www.federalregister.gov/articles/2016/05/09/2016-10032/medicare-program-merit-based-incentive-payment-system-mips-and-alternative-payment-model-apm (site visited May 23, 2016). P. 28228.
[23] Id.
[24] Id. at 28226.
[25] Id. at 28386.
[26] Id. at 28165.
[27] Id. at 28294.
[28] Id. at 28298.
[29] Id. at 28299.
[30] Id.
[31] See supra notes 12-7 and accompanying text.
[32] 81 Fed. Reg. at 28302.
[33] Id.
[34] Id.
[35] Id. at 28298.
[36] Id.


Medicare’s Value-Based Purchasing Program for Hospitals: Paying More to Low-Cost Hospitals That Provide Low Quality Care

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In 2012, the Centers for Medicare Medicaid Services (CMS) announced expansion of Medicare’s Value-Based Purchasing (VBP) Program for acute care hospitals.  Beginning in Fiscal Year 2015, and as mandated by Congress in the Affordable Care Act,[1] CMS would incorporate a new measure for “Medicare Spending Per Beneficiary.”  CMS suggested this efficiency measure would reward low-cost hospitals and enable “the public to recognize hospitals involved in providing high-quality care at a lower cost to Medicare.”[2]

Unfortunately, under the VBP Program that CMS implemented, low-cost hospitals were financially rewarded for simply being low-cost, regardless of the quality of care they provided.  Researchers analyzing VBP payments to hospitals in 2015 found that low-cost hospitals that provided poor quality of care nevertheless received bonus payments under the hospital VBP Program.[3] 

The issue of rewarding efficiency, regardless of quality, has assumed even greater significance in light of Congress’s expansion of efficiency incentives to post-acute providers in the Improving Medicare Post-Acute Care Transformation Act of 2014.

Medicare Spending Per Beneficiary Measure

On April 19, 2012, CMS added data to its Hospital Compare website to reflect hospitals’ Medicare Spending Per Beneficiary.[4]  CMS proposed to add this measure to the VBP Program as an Efficiency Measure in proposed rules[5] and incorporated the measure into final rules.[6] 

The measure is a claims-based measure based on Medicare Part A and B payments made for services provided to a beneficiary during a stay in an acute care hospital and the 30 days after discharge.[7]  CMS explains that the measure “provides an incentive for hospitals to build stronger relationships with and better understand the providers and suppliers that furnish care for their patients before and after an acute care hospitalization.”[8]

For FY 2015, payments to hospitals under the VBP Program were based on four domains, which were separately weighted:

  • Clinical processes of care, 20%
  • Patient experience of care (HCAHPS), 30%
  • Outcomes of care, 30%
  • Efficiency (Medicare Spending Per Beneficiary), 20%[9]

CMS explained the amount of weight it was giving to the efficiency domain in the first year of its use:

We believe that attributing significant weight to this domain is critical to ensuring that hospitals make efforts to provide effective care on an inpatient basis and build stronger relationships with the providers and suppliers who care for their patients before and after the hospitalization.[10]

Analysis of the Results

Researchers analyzing the VBP Program payments to hospitals in Fiscal Year 2015 found significant differences in the hospitals that received bonuses.  “With the addition of the spending measure and the corresponding decrease in the overall weight of quality measures, hospital quality became a less uniform predictor of bonuses and penalties.”[11]

Reviewing a sample of 2679 hospitals that were eligible to participate in the VBP Program in Fiscal Years 2014 and 2015, for which data were available,[12] the researchers found:

  • 17% of 1339 low-quality hospitals received bonus payments in 2015, compared to 0% of low-quality hospitals in 2014.[13] 
  • “The low-quality hospitals that received bonuses performed significantly worse on almost all measures of quality, compared to the medium- and high-quality hospitals that received bonuses.”[14]
  • There was “a weakly positive relationship between episode spending and overall quality performance.”[15]
  • “High-spending hospitals had significantly higher rates of adherence to clinical processes for seven out of twelve measures.  Outcomes were slightly better at high-spending hospitals compared to low-spending hospitals.”[16]
  • “[T]he best performers in the VBP program (low-spending or high-quality) had the largest bonuses (0.75 percent and 0.94 percent, respectively).”[17]

The researchers expressed concern with the program’s paying bonuses to low-quality hospitals and looked at other CMS VBP Programs.  The physician VBP program makes low-quality physicians ineligible for bonuses, regardless of how low their spending is, and makes high-cost physicians similarly ineligible for bonuses, regardless of how high their quality is.[18]  The Medicare Shared Savings Program provides financial rewards only to Accountable Care Organizations that meet “both quality performance standards and expenditure benchmarks.”[19]

The researchers suggest that either of these approaches “would eliminate rewards to low-quality hospitals and limit the incentives hospitals currently have to trade reductions in spending for improvements in quality.”[20]  Alternatively, CMS could require minimum performance thresholds, separately, for each domain.

The researchers conclude, “CMS should consider adding a minimum quality threshold to avoid

rewarding low-quality hospitals that are also low spending.”[21]

IMPACT Act Expands Use of Measure on Medicare Spending Per Beneficiary

The Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act of 2014)[22] requires the Secretary to develop measures for post-acute providers, including skilled nursing facilities, inpatient rehabilitation hospitals, long-term care hospitals, and home health agencies, and explicitly includes as one measure “Resource use measures, including total estimated Medicare spending per beneficiary.”[23] 

Implementing this statutory directive, the Centers for Medicare Medicaid Services’ annual updates to Medicare reimbursement for Fiscal Year 2017 for the post-acute providers include proposed measures for Medicare spending per beneficiary.[24]


Value-Based Purchasing Programs have been promoted as ways to improve care in the health care system.  The hospital VBP Program added an independent goal – reducing spending. 

Advocates and policy-makers need to assure that the measures defining “value” in a VBP Program are worth promoting.  Paying more to hospitals that spend less on their patients but have poor outcomes makes little sense.

In light of the research findings with respect to hospitals, Congress and CMS need to reconsider expanding use of this measure to post-acute providers.  As recommended by the hospital researchers, they need, at least, to assure that quality is incorporated into any efficiency measures that are implemented.

July 6, 2016 – T. Edelman

[1] Section 3001 of the ACA, amending Social Security Act §1886(o)(2)(B)(ii), 42 U.S.C. §1395ww(o).
[2] 77 Fed. Reg. 53257, 53588 (Aug. 31, 2012), https://www.gpo.gov/fdsys/pkg/FR-2012-08-31/pdf/2012-19079.pdf
[3] Anup Das, Edward C. Norton, David C. Miller, Andrew M. Ryan, John D. Birkmeyer, Lena M. Chen, “Adding A Spending Metric To Medicare’s Value-Based Purchasing Program Rewarded Low-Quality Hospitals,” Health Affairs 35, No. 5 (2016): 898-906 [hereafter “Adding A Spending Metric To Medicare’s Value-Based Purchasing Program Rewarded Low-Quality Hospitals].  An Abstract of the article is available at http://content.healthaffairs.org/content/35/5/898.abstract.
[4] 77 Fed. Reg. 53257, 53588.
[5] 76 Fed. Reg. 25787, 23896-23897 (May 5, 2011),
[6] 77 Fed. Reg. 53257, 53583-535
[7] 76 Fed. Reg. 25,787, 25896.
[8] 77 red. Reg. 53257, 53585.
[9] 77 Fed. Reg. 53257, 53605.
[10] 77 Fed. Reg. 53257, 53606.
[11] “Adding A Spending Metric To Medicare’s Value-Based Purchasing Program Rewarded Low-Quality Hospitals,”supra note 2, at 902.
[12] Id. 899.
[13] “Adding A Spending Metric To Medicare’s Value-Based Purchasing Program Rewarded Low-Quality Hospitals,”supra note 2, at 898, 902.
[14] Id. 902.
[15] Id. 900.
[16] Id. 901.
[17] Id. 903.
[18] Id. 904.
[19] Id. 904.
[20] Id. 904.
[21] Id. 905.
[22] Pub. L. 113-185 (Oct. 6, 2014), 42 U.S.C. §1395lll.
[23] 42 U.S.C. §1395lll(d)(1)(A).
[24] The skilled nursing facility proposed rules are at 81 Fed. Reg.24229, 24258-24262 (Apr. 25, 2016), https://www.gpo.gov/fdsys/pkg/FR-2016-04-25/pdf/2016-09399.pdf; inpatient rehabilitation hospitals, 81 Fed. Reg. 24177, 24197-24201 (Apr. 25, 2016), https://www.gpo.gov/fdsys/pkg/FR-2016-04-25/pdf/2016-09397.pdf; long-term care hospitals, 81 Fed. Reg. 24945, 25216-25220 (Apr. 27, 2016), https://www.gpo.gov/fdsys/pkg/FR-2016-04-27/pdf/2016-09120.pdf.

Proposed Rule: Access to DME for Dually Eligible People

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On June 30, 2016 the Centers for Medicare Medicaid Services (CMS) published a proposed rule about the difficulties of dually eligible people (individuals eligible for both Medicare and Medicaid) to obtain Durable Medical Equipment (DME). The proposed rule seeks information about the problem, as well as potential solutions. The proposed rule is primarily focused on End Stage Renal Disease (ESRD). The DME request for information is separate from the ESRD-specific content.

The Center for Medicare Advocacy (the Center) will respond to the request for information regarding access to DME for dually eligible people. We encourage other beneficiary advocates to do so as well, and to contact us if we can help. CMS seeks specific examples of problems, as well as specific solutions. The Center’s response will include a discussion of:

  • The misalignment of coverage and payment procedures in Medicare and Medicaid that lead to denials and delays of important equipment for this vulnerable population. Generally Medicare provides approval or denial only after delivery of the DME. Without the delivery of the DME to trigger a Medicare coverage decision, suppliers are usually unable to bill Medicaid, because State Medicaid agencies generally require that a bill be submitted first to Medicare. Only after Medicare has rejected the claim or paid its share will Medicaid process a payment. Thus, suppliers do not have assurance that the DME will be covered by Medicare, yet they do not have the ability to bill Medicaid until they have a Medicare decision. This often results in suppliers refusing delivery of DME because they worry they will not be paid by either program.
  • The mismatch between Medicaid and Medicare suppliers, and beneficiary access difficulties; problems with repairs for equipment; delays; and how the competitive bidding process may be affecting availability of suppliers. 
  • The challenges created by the intersection of the two programs. We often hear about problems that begin during the transition from having only Medicaid to also having Medicare coverage.
  • Some promising practices that have worked well to align the two programs. These include a Medicaid prior authorization system in Connecticut that provides suppliers with Medicaid prior authorization – and dually eligible beneficiaries with better access to DME. With assurance that the DME will be covered by Medicaid if Medicare is denied, suppliers are more willing to deliver the necessary DME.

For more information see 81 FR 42801 (June 30, 2016)

Request for information (Section IX. Access to Care Issues for DME, page 42864-5.): https://www.federalregister.gov/articles/2016/06/30/2016-15188/medicare-program-end-stage-renal-disease-prospective-payment-system-coverage-and-payment-for-renal

Comments are due August 23, 2016.

July 6, 2016 – K. Kertesz

Further Center Comments on the NOTICE Act – June 2016

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June 16, 2016

Andrew M. Slavitt
Acting Administrator
Centers for Medicare Medicaid Services
Department of Health and Human Services
Room 445-G, Hubert H. Humphrey Building
200 Independence Ave., S.W.
Washington, D.C.  20201

Re: CMS-1655-P, Medicare Program; Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals and the Long-Term Care Hospital Prospective Payment System and Proposed Policy Changes and Fiscal Year 2017 Rates; Quality Reporting Requirements for Specific Providers; Graduate Medical Education; Hospital Notification Procedures Applicable to Beneficiaries Receiving Observation Services; and Technical Changes Relating to Costs to Organizations and Medicare Cost Reports

Submitted electronically: http://www.regulations.gov

Dear Mr. Slavitt and CMS Colleagues:

The Center for Medicare Advocacy (Center) is a national, private, non-profit law organization, founded in 1986, that provides education, analysis, advocacy, and legal assistance to assist people nationwide, primarily the elderly and people with disabilities, to obtain necessary health care, therapy, and Medicare.  The Center focuses on the needs of Medicare beneficiaries, people with chronic conditions, and those in need of long-term care and provides training regarding Medicare and health care rights throughout the country.  It advocates on behalf of beneficiaries in administrative and legislative forums, and serves as legal counsel in litigation of importance to Medicare beneficiaries and others seeking health coverage.  These comments are based on our experiences talking with and representing hundreds of Medicare beneficiaries and their families who have been caught in observation status.


In proposed rules updating Medicare reimbursement to acute care hospitals,[1] the Centers for Medicare Medicaid Services (CMS) announces how it will implement the Notice of Observation Treatment and Implication for Care Eligibility Act (NOTICE Act).[2]  Effective August 6, 2016, the NOTICE Act requires that hospitals provide written and oral notice, within 36 hours, to patients who are in observation or other outpatient status for more than 24 hours.  The notice must explain the reason that the patient is an outpatient, not an inpatient, and describe the implications of that status both for cost-sharing in the hospital and for “subsequent eligibility for coverage” in a skilled nursing facility (SNF).[3] 

Observation Status

CMS describes the issue as “outpatients” receiving “observation services.” In reality, however, observation status is about patients in the hospital who receive medical and nursing care, tests, medications, food, and stay overnight, but are called outpatients. The Center refers to this issue as “outpatient observation status” because there are no hospital services that are distinctly “observation” and because these so-called outpatients generally receive care that is identical to the care received by an inpatient. 

As CMS has expressly acknowledged in prior notices in the Federal Register, a physician can order whatever medical care, tests, medications, and services a hospitalized patient needs, whether the patient is classified as an inpatient or an outpatient.  For example, in proposed revisions to its “two midnight rule,” CMS confirmed that the two-midnight rule “does not prevent the physician from ordering or providing any service at any hospital, regardless of the expected duration of the service” and “does not override the clinical judgment of the physician regarding the need to keep the beneficiary at the hospital, to order specific services, or to determine appropriate levels of nursing care or physical locations within the facility.”[4] 

When the care received by hospital inpatients and outpatients is indistinguishable, patients should have identical Part A coverage for their post-hospital care in a skilled nursing facility (SNF).  Time spent in a hospital, whether called inpatient or outpatient (including observation status) should satisfy the three-day hospital stay that is required for Medicare Part A coverage of a stay in a SNF.

Proposed Rules

In the proposed rules implementing the NOTICE Act, CMS announces that it will require hospitals to use a new standardized notice, the Medicare Outpatient Observation Notice (MOON), which it has submitted to the Office of Management and Budget for approval.  With respect to the statutory requirement that the notice explain the reason for the outpatient status, CMS says, “by definition,” the reason “will always be the result of a physician’s decision that the individual does not currently require inpatient services and observation services are needed for the physician to make a decision regarding whether the individual needs further treatment as a hospital inpatient or if the individual is able to be discharged from the hospital.”[5] 

CMS describes how observation status comes about: “Typically, observation services are ordered for individuals who present to the emergency department (ED) and who then require a significant period of treatment and monitoring to determine whether or not their condition warrants inpatient admission or discharge.”[6]  CMS insists that “in the majority of cases,” the decision about admission or discharge “can be made in less than 48 hours, usually in less than 24 hours.”[7]  It suggests that only “in rare circumstances” is a patient’s inpatient status changed to outpatient, under Condition Code 44.[8]

The MOON will not be required for all outpatients.  CMS proposes to require hospitals to give the MOON only to patients entitled to Medicare for whom they are billing Medicare for observation hours.[9]  Patients who do not have Medicare Part B will receive the MOON, even though their observation status stay or other outpatient stay in the hospital will not be covered by Medicare Part B because they do not have Part B.[10]  Patients in Medicare Advantage plans that do not require a three-day inpatient stay will also receive the MOON, even though the information in the MOON may not actually be applicable to them.  Medicare Advantage plans are permitted to waive the three-day requirement, and many do.

CMS states explicitly, in both the preamble[11] and in the proposed regulatory language,[12] that the NOTICE Act does not give patients any appeal rights. 

When it implemented the two-midnight rule, CMS cut Medicare reimbursement to hospitals by 0.2%, reflecting its expectation that there would be more inpatient stays as a result of the new rule.  The hospitals sued and challenged the cut in reimbursement.  In the proposed rules at issue here, CMS reports that “in light of recent review and the unique circumstances surrounding this adjustment,” it prospectively removes this reduction and retroactively restores full reimbursement to hospitals.[13]  This decision by CMS is an implicit acknowledgement that hospitals are continuing to classify patients as outpatients and that the two-midnight rule has not increased the number of hospitalized patients classified as inpatients.

Center for Medicare Advocacy Comments

  1. The Center opposes the proposed rule’s refusal to require the hospital to explain in the MOON the specific reason the patient is being classified as an outpatient.  This decision is contrary to all other Medicare notices. 

In both traditional Medicare and Medicare Advantage, CMS requires health care providers and managed care plans to explain in detail the specific reasons why they believe Medicare coverage is not available.[14]  For example, in traditional Medicare, independent laboratories, home health agencies, hospices, physicians, practitioners, and suppliers must use the Advance Beneficiary Notice (ABN);[15] skilled nursing facilities must use the SNF ABN or one of several mandated denial notices;[16] and hospitals must use the Hospital-Issued Notice of Noncoverage.[17]  Medicare Advantage plans must issue a Notice of Denial of Medical Coverage (or Payment).[18]  Each of the forms includes a section in which the provider is required to explain the basis of the denial of coverage.  The proposed MOON is unique in its mandated use of a blanket statement, not specifically tailored to the individual patient, that fails to require an explanation of the basis for its decision that Medicare coverage is unavailable.

Moreover, CMS’s proposal not to require hospitals to provide information about the specific reason a patient is in observation status is contrary to the NOTICE Act and its legislative history.  The Act directs hospitals to explain “the status of the individual as an outpatient receiving observation services and not as an inpatient of the hospital or critical access hospital and the reasons for such status of such individual.”[19]  The legislation history confirms that hospitals must give patients “meaningful disclosure” of their status in the hospital.[20]  Requiring hospitals to use standardized language about the “reason” for a patient’s being placed on observation status, which CMS has declared by fiat, thwarts the purpose of delivering “meaningful” information to patients.

  1. Only the MOON defines the coverage issue as non-appealable. 

Under federal regulations, “issues having a present or potential effect on the amount of benefits to be paid under Part A or Part B of Medicare”[21] are initial determinations that give rise to beneficiary appeal rights.[22]  Whether a patient is an inpatient or an outpatient is undeniably an issue “having a present or potential effect on the amount of benefits to be paid under Part A or Part B of Medicare.”  Nevertheless, CMS proposes to define the MOON as a notice that is not an initial determination,[23] carving out patient status in the hospital from actions that generate appeal rights.  CMS’s explanation for this decision is not persuasive; CMS simply declares that the NOTICE Act “does not afford appeal rights to beneficiaries regarding the notice provided pursuant to that statutory provision.”[24]

Just as Medicare beneficiaries can challenge a premature discharge from a hospital or contest other coverage determinations in the Medicare program, hospitalized patients who are called outpatients should be able to appeal to Medicare their placement on observation or other outpatient status.

  1. The Center opposes the under-inclusive category of patients who will be given the MOON. 

CMS proposes that the MOON will be required only for patients whose hospitals code their “outpatient” Medicare bills as Observation Status. This decision affects many hundreds of thousands of people. The HHS Inspector General reported in 2013 that in 2012, 1.5 million patients had hospital stays that were classified as observation (because the hospital billed Medicare for observation hours) and another 1.4 million patients had long outpatient stays that were not coded as observation (because the hospital did not bill Medicare for observation hours).[25]  In other words, about half of all long-stay outpatients were not considered to be patients in observation status, but solely because the hospital chose not to bill Medicare for observation hours.  However, the consequences for patients remained the same. Whether or not the hospital billed Medicare for observation hours, the patient’s post-hospital care in the SNF was not covered because the patient was classified as an outpatient by the hospital.

CMS’s decision not to require the MOON for all outpatients is also contrary to the legislative history of the NOTICE Act, which requires hospitals to provide information to patients about whether they are inpatients or outpatients.[26]  CMS’s proposed decision simply exacerbates the arbitrariness of observation status.  Not only does it remain arbitrary whether patients are called outpatients or inpatients; it is now also arbitrary whether hospitals are required to give the MOON to outpatients.

  1. CMS must assure that the MOON is only given to a patient who is able to understand it or to a person with legal authority to accept the notice on the patient’s behalf.

If a hospital gives the MOON to a patient who is in immense pain or otherwise not in a position to understand the notice, the notice is defective. The Medicare Claims Processing Manual, Ch. 30, sec. 40.3, explains that notices are valid only if given to patients who can understand them.[27] – Capable Recipient

The contractor will not consider delivery of a notice to be properly done unless the beneficiary, or authorized representative, was able to comprehend the notice (i.e., they were capable of receiving notice). A comatose person, a confused person (e.g., someone who is experiencing confusion due to senility, dementia, Alzheimer’s disease), a legally incompetent person, a person under great duress (for example, in a medical emergency) is not able to understand and act on his/her rights, therefore necessitating the presence of an authorized representative for purposes of notice. A person who does not read the language in which the notice is written, a person who is not able to read at all or who is functionally illiterate to read any notice, a blind person or otherwise visually impaired person who cannot see the words on the printed page, or a deaf person who cannot hear an oral notice being given by phone, or could not ask questions about the printed word without aid of a translator, is a person for whom receipt of the usual written notice in English may not constitute having received notice at all (this is not an exclusive list). This may be remedied when an authorized representative has no such barrier to receiving notice. However, in the absence of an authorized representative, the notifier must take other steps to overcome the difficulty of notification. These may include providing notice in the language of the beneficiary (or authorized representative), in Braille, in extra large print, or by getting an interpreter to translate the notice, in accordance with the needs of the beneficiary or authorized representative to act in an informed manner. If the beneficiary was not capable of receiving the notice, the contractor will hold that the beneficiary did not receive proper notice, hold that the beneficiary is not liable, and will hold the notifier liable.

A notice not meeting these standards is defective, as the Manual explains, at p. 34, section, Defective Notice: – Defective Notice

(Rev. 1, 10-01-03)

An ABN is not acceptable evidence if:

The notice is unreadable, illegible, or otherwise incomprehensible, or the individual beneficiary (or authorized representative) is incapable of understanding the notice due to the particular circumstances (even if others may understand);

The notice is given during any emergency, or the beneficiary is under great duress, or the beneficiary (or authorized representative) is, in any way, coerced or misled by the notifier, by the contents of the notice, and/or by the manner of delivery of the notice. (See §40.3.7);

  1. Fifth, CMS significantly misstates when and how observation status is used. 

CMS repeats in the preamble its belief that use of Condition Code 44 (which allows hospitals to change a patient’s status from inpatient to outpatient) is rare[28] and that the decision to admit to inpatient status is usually made within 48 hours, and usually less than 24 hours.[29]  The Center’s experience is to the contrary.  

Testifying on behalf of the Society of Hospital Medicine before the House Ways and Means Committee, Subcommittee on Health, in May 2014, Ann M. Sheehy, MD, MS, University of Wisconsin School of Medicine and Public Health described hospitals’ increasing use of observation status and testified that hospitalists reported that they are asked to change the status of their patients “for 16% of the cases they see in an average day of clinical services.”[30]  Dr. Sheehy’s research documented that the time of day a patient presents to the hospital is a key determinant of the patient’s inpatient/outpatient status.[31] 

CMS reports in the preamble to these proposed rules that in 2014, 6142 hospitals and critical access hospitals submitted 977,000 claims for outpatient observation exceeding 24 hours.[32] 

The Center hears regularly from people all over the country whose status was changed from inpatient to outpatient or who remained in the hospital for multiple days (five and six days and more), all classified as outpatient, even after the “Two-Midnight Rule” was promulgated.[33]  For example, on May 17, 2016, I spoke with a nursing home administrator in Massachusetts who described a resident at her facility who had been in the hospital for six midnights in May 2016 – four midnights in the community hospital, coded as observation, and two midnights, coded as inpatient, in another acute care hospital to which the community hospital had him transferred.  Although hospitalized for six midnights, the resident did not have a three-midnight inpatient stay and, accordingly, he did not qualify for Medicare coverage of his stay at the SNF.

Concerns Regarding the MOON Notice Format

The draft MOON Notice[34] is a form notice that is likely to be unintelligible to all but the most sophisticated Medicare advocate.  It is not a “plain language written notice,”[35] as CMS recognizes is required by law.  The MOON is too long and it fails to give meaningful, comprehensible information to a patient about the consequences of being classified as an outpatient. 

The MOON is written at a 12.1 Grade level, according to the Felesch-Kincaid Readability test, although “the average American’s reading level proficiency is generally to be considered to be 5th to 7th.”[36] 

The form needs to inform a patient that

  • He or she is currently classified as an outpatient and that this classification means that the patient (1) will have to pay out-of-pocket for medications received in the hospital, (2) will have to pay Part B co-payments for services provided by the hospital and Medicare will not pay if the patient goes to a skilled nursing facility after the hospital.
  • The hospital may change the patient’s classification to inpatient, but if it does, the change becomes effective only at the time of the physician’s order.  If the patient then has three midnights in the hospital as an inpatient, Medicare Part A may pay for a stay in a skilled nursing facility.
  • If the patient is in a Medicare Advantage plan, the plan may pay for a stay in a skilled nursing facility whether or not the patient was called an inpatient in the hospital.

Center for Medicare Advocacy Recommendations

  1. CMS must assure that the MOON:
  • Is written in plain language;
  • Is given only to a patient (or his or her surrogate who has legal authority to receive notice on the patient’s behalf) who can understand it, given the patient’s medical condition;
  • Explains the specific reason that the patient is in observation or other outpatient status (as opposed to inpatient status); and
  • Gives the patient the right to appeal to Medicare for an official CMS determination of his or her status.
  1.  CMS must not promulgate as a final rule subsection (u) under §405.926.  This is the proposed regulatory language saying that observation status is not an appealable issue.  The Center urges CMS to allow patients to appeal their classification as outpatients to Medicare. 
  2. CMS has authority under existing law to define inpatient hospital care and to count all the time a patient spends in the hospital towards the prior hospital stay required for Medicare SNF coverage. We urge CMS to do so.

The Center also urges CMS to revise its Manuals so that all the time a patient spends in the hospital counts towards the three-day prior hospital stay required to cover subsequent skilled nursing facility care. At his request, the Center sent CMS Medicare Director, Sean Cavanaugh, a memorandum documenting the agency’s legal authority in 2014. We submitted similar information in 2015 in comments on proposed rules.  We reiterate these points below.

If CMS believes that it lacks authority to count all time in the hospital, however, the Center encourages CMS to support bipartisan bills now pending in Congress, H.R.1571 and S.843, the Improving Access to Medicare Coverage Act of 2015.[37]  The legislation, which counts all time spent by a patient in the hospital, is supported by a coalition of 29 national organizations representing physicians, nurses, other health care professionals, and advocates. 

While fully supporting the legislation, the Center notes that CMS has authority under existing law to count all time spent by a patient in the hospital for purposes of qualifying for Part A coverage in a SNF.  CMS policy created observation status and CMS action could adjust or rescind it.

Under a 2008 decision of the Second Circuit Court of Appeals, the Secretary of HHS has authority under the Medicare statute to include a hospital patient’s time in observation as part of inpatient time in the hospital for purposes of determining whether the patient qualifies for Part A coverage of a subsequent stay in a SNF.  Estate of Landers v. Leavitt, 545 F.3d 98 (2nd Cir. 2008).  The Court recognized that neither the statute nor regulations define the word “inpatient” and that the Secretary defined inpatient in the Medicare Benefit Policy Manual as occurring after a formal physician order for admission.  Although the Court upheld the Secretary’s position in litigation – that only time in formal inpatient status may be counted toward satisfying the qualifying three-day inpatient requirement – it acknowledged that the Secretary had authority to change his interpretation of inpatient to include time spent in observation.  The Court wrote:

[W]e note that the Medicare statute does not unambiguously require the construction we have adopted.  If CMS were to promulgate a different definition of inpatient in the exercise of its authority to make rules carrying the force of law, that definition would be eligible for Chevron deference notwithstanding our holding today.

Landers, 545 F.3d at 112. 

In fact, CMS has recognized its authority to change the definition of inpatient.  In May 2005, CMS asked for public comment on whether time in observation should be counted towards satisfying the three-day inpatient requirement for Medicare Part A SNF coverage.[38]  In August 2005, CMS acknowledged that most commenters “expressed support for the idea that hospital time spent in observation status immediately preceding a formal inpatient admission should count toward satisfying the SNF benefit’s statutory qualifying three-day hospital stay requirement.”[39]    CMS reported that “some advocated eliminating the statutory requirement altogether.”[40] 

CMS analyzed the two recommendations separately.  With respect to repealing the three-day requirement entirely, CMS wrote, “we note that such an action would require legislation by the Congress to amend the law itself and, thus, is beyond the scope of this final rule.”[41]  Id.   With respect to counting time in observation towards the qualifying inpatient stay, CMS wrote, “we note that we are continuing to review this issue, but are not yet ready to make a final determination at this time.”[42] 

CMS correctly understood that it could not repeal the three-day statutory requirement by regulation but that it could count the time in outpatient status, if it chose.  It’s only stated reason for not counting observation time, despite widespread support of such a change from commenters, was that it wanted to continue reviewing the issue.  That review has now continued for eight [now almost 11] additional years.

Finally, CMS allows certain hospital stays to count in qualifying a patient for Part A-covered SNF care even when the hospital care is different from Part A-covered hospital care.

In the context of hospice services, CMS has recognized that “general inpatient care” in a hospital, although “not equivalent to a hospital level of care under the Medicare hospital benefit,” nevertheless qualifies a hospice beneficiary for Part A-covered SNF services.[43]

Similarly, a three-day stay in a foreign hospital may qualify a beneficiary for Part A SNF coverage if the foreign hospital is qualified as an “emergency hospital.”[44] 

The argument for counting observation or outpatient time for purposes of calculating eligibility for the Part A SNF benefit is, of course, far stronger than either of the prior examples since, as CMS acknowledges in the proposed rules, care in the hospital is indistinguishable whether the patient is formally admitted as an inpatient or called an outpatient.

Recently, in describing why a beneficiary continues to be eligible for Part A SNF coverage after the hospital withdraws its Part A claim and submits Part B claims for the patient’s care instead (the hospital rebilling option), CMS wrote, “the 3-day inpatient hospital stay which qualifies a beneficiary for ‘posthospital’ SNF benefits need not actually be Medicare-covered, as long as it is medically necessary.”[45]  CMS confirmed that a hospital’s decision to withdraw its claim for Part A reimbursement and to seek Part B reimbursement instead for a patient’s hospital stay does not negate the fact that the patient received medically necessary inpatient care, for purposes of Part A SNF coverage.  CMS continued:

In addition, the status of the beneficiaries themselves does not change from inpatient to outpatient under the Part B inpatient billing policy.  Therefore, even if the admission itself is determined to be not medically necessary under this policy, the beneficiary would still be considered a hospital inpatient for the duration of the stay – which, if it occurs for the appropriate duration, would comprise a “qualifying” hospital stay for SNF benefit purposes so long as the care provided during the stay meets the broad definition of medical necessity described above.[46]

A patient’s actually receiving “medically necessary” care in the hospital, not the classification of the care as “inpatient,” is the key factor for determining the patient’s eligibility for subsequent Part A SNF coverage.

As the Court in Landers held and CMS itself recognized in 2005, CMS has authority under the Medicare statute to redefine inpatient status to count all time in the hospital.  In Manual provisions, CMS recognizes that care in a hospital that is not covered by Medicare can nevertheless count for purposes of Part A SNF coverage.  In its hospital rebilling option, CMS recognizes that receiving medically necessary care in the hospital is the key factor in determining Part A SNF coverage.  CMS should confirm that time spent in observation or outpatient status qualifies a patient for Medicare Part A SNF coverage so long as the care in the hospital was medically necessary.


Thank you for the opportunity to submit comments on the proposed NOTICE Act and the MOON.


Toby S. Edelman
Senior Policy Attorney

Judith Stein
Executive Director/Attorney

Center for Medicare Advocacy
1025 Connecticut Avenue, NW, Suite 709
Washington, DC  20036
(202) 293-5760



[1] 81 Fed. Reg. 24945 (Apr. 27, 2016), https://www.gpo.gov/fdsys/pkg/FR-2016-04-27/pdf/2016-09120.pdf.
[2] Pub. L. 114-42.  The NOTICE Act was signed by President Obama on August 6, 2015.  See Center for Medicare Advocacy, “Observation Status: The NOTICE Act Will Soon Be Law,” (CMA Alert, Aug. 6, 2015), http://www.medicareadvocacy.org/observation-status-the-notice-act-will-soon-be-law/.
[3] The “subsequent eligibility” is actually non-eligibility.  Medicare Part A pays for a resident’s stay in a SNF only if the resident spent at least three days as an inpatient in the hospital.
[4] 80 Fed. Reg. 39199, 39349, 39350 (July 8, 2015), https://www.gpo.gov/fdsys/pkg/FR-2015-07-08/pdf/2015-16577.pdfSee Center for Medicare Advocacy, “Proposed Revisions to ‘Two-Midnight’ Rule Provide Little, If Any, Relief for Medicare Beneficiaries Stuck in the Hospital in Observation Status” (Alert, July 9, 2015), http://www.medicareadvocacy.org/proposed-revisions-to-two-midnight-rule-provide-little-if-any-relief-for-medicare-beneficiaries-stuck-in-the-hospital-in-observation-status/.
[5] Preamble, p. 772.
[6] Id. 773.
[7] Id. 773, 774.
[8] Id. 770.
[9] Id.769.
[10] Id. 767-768.
[11] Id. 778.
[12] Id. 1269, adding a new subsection (u) to 42 C.F.R. §405.926(u), “Actions that are not initial determinations.”
[13] CMS, “Hospital Inpatient Prospective Payment System (IPPS) and Long Term Acute Care Hospital (LTCH) Proposed Rule Issues for Fiscal Year (FY) 2017” (Fact Sheet, April 18, 2016), https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-04-18-2.html.
[14] https://www.cms.gov/Medicare/Medicare-General-Information/BNI/index.html.
[15] Form CMS-R-131, https://www.cms.gov/Medicare/Medicare-General-Information/BNI/ABN.html.
[16] Form CMS-10055, https://www.cms.gov/Medicare/Medicare-General-Information/BNI/FFSSNFABNandSNFDenialLetters.html.
[17] CMS-HINN, https://www.cms.gov/Medicare/Medicare-General-Information/BNI/HINNs.html.
[18] CMS-10003-NDMCP, https://www.cms.gov/Medicare/Medicare-General-Information/BNI/MADenialNotices.html.
[19] 42 U.S.C. §1395cc(a)(1)(Y)(ii)(I).
[20] Congressman Lloyd Doggett on the House Floor during passage of the NOTICE Act, March 16, 2015, described the need for “meaningful disclosure” to give patients the knowledge they need, https://www.youtube.com/watch?v=V_wqe1CP-yIfeature=youtu.be.
[21] 42 C.F.R. §405.924(b)(11).
[22] See CMS forms cited at footnotes 14-18, supra.
[23] Proposed 42 C.F.R. §405.926(u).
[24] 81 Fed. Reg., 25134.
[25] Office of Inspector General, Hospitals’ Use of Observation Stays and Short Inpatient Stays for Medicare Beneficiaries,” OEI-02-12-00040 (July 29, 2013). See Center for Medicare Advocacy, “Observation Status: OIG Provides an Analysis and CMS Issues Final Regulations” (Alert, Aug. 8, 2013), http://www.medicareadvocacy.org/observation-status-oig-provides-an-analysis-and-cms-issues-final-regulations/.
[26] H. Rept. 114-39 (114th Cong. 1st Sess.), https://www.cms.gov/Medicare/Medicare-General-Information/BNI/Downloads/2016-NOTICE-Act-Listening-Session-Transcript-v508.pdf.
[27] https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c30.pdf  (scroll down to pages 36-37)
[28] 81 Fed Reg. 24945, 21532.
[29] Id. 25133.
[30] Ways and Means Committee, Subcommittee on Health, “Current Hospital Issues in the Medicare Program” (Hearing, May 20, 2014), testimony of Ann Sheehy, page 9. http://waysandmeans.house.gov/UploadedFiles/052014_Sheehy_Testimony_Final_HL.pdf/
[31] Id. 5-6.
[32] 81 Fed. Reg., 25308.
[33] See Michelle Stein, “Cavanaugh: Some Hospitals Continue Long Observation Stays Despite CMS Policy Shift,” Inside Health Policy (April 8, 2016).
[34] https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing-Items/CMS-10611.html?DLPage=1DLEntries=10DLSort=1DLSortDir=descending
[35] 81 Fed. Reg., 25308.
[36] Kirsten Barron and Lynn Greiner, “The New and Improved (and Plain Language) Mandatory Family Law Forms,” NWLawyer 9 (Apr/May 2016).
[37] The coalition’s Fact Sheet is available at
[38] 70 Fed. Reg. 29069, 29098-29100 (May 19, 2005).
[39] 70 Fed. Reg. 45025, 45050 (Aug. 4, 2005).
[40] Id.
[41] Id.
[42] Id.
[43] Medicare Benefit Policy Manual, Chapter 9, §40.1.5, http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c09.pdf.
[44] Medicare Benefit Policy Manual, Chapter 8, §20.1.1, http://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c08.pdf.
[45] 78 Fed. Reg. 50495, 50921 (Aug. 19, 2013). 
[46] Id.