Issue Brief #75- June 2022 – Medicare & Telehealth Report and Other Issues

1. TELEHEALTH UPDATE   

Special Report: Telehealth and the Medicare Population: Building a Foundation for the Virtual Health Care Revolution

As the United States slowly emerges from the COVID-19 pandemic, this exponential expansion of telehealth and virtual care options are poised to change our nation’s health care landscape, with the enticing potential of improving access to care. With significant change also comes significant challenges, however, and when considering how to grow telehealth in a way that benefits all equally, it will be essential to examine and address the racial, social, and economic disparities that are already beginning to drive a “digital divide” in this country that could impact the quality of care that people receive.

The Center for Medicare Advocacy (the Center) has recently released an examination of these issues through a report entitled Telehealth and the Medicare Population: Building a Foundation for the Virtual Health Care Revolution. Authored by Chiplin Medicare and Health Policy Fellow Cinnamon St. John, the Center’s report explores current gaps in accessibility and infrastructure, discusses how these gaps could stand in the way of ensuring that all Medicare beneficiaries have equal access to the advantages that telehealth can provide, and highlights key policy priorities that should inform the design of future regulation and legislation.

While grounded in research, the report’s findings were additionally informed by interviews with experts from around the nation about the experiences (both challenges and conveniences) that older adults and people with disabilities have had when utilizing virtual care. We examined these issues through the lens of what we call “T.A.P. Challenges: Technology, Accessibility, and Peopleware.” Throughout the report, we describe driving factors and key considerations behind each of these three categories of T.A.P. challenges, illustrated by examples from the field.

While the Center recognizes the value of telehealth services and is heartened by the potential to increase access to the country’s health care system, we are also committed to ensuring that no beneficiaries are caught in the chasm created by the digital divide – created through disparities between those who can afford access and are able to utilize technology, and those who cannot. Furthermore, telehealth must supplement, not replace, in-person care options.

In the early days of the pandemic as the critical role of virtual care solutions became clear, the Center published guiding principles to aid in making decisions about whether and how to expand Medicare coverage for telehealth. In addition to the findings and recommendations included in our most recent report, these guiding principles still hold true today.

Those guiding principles are:

1. Ensure any covered telehealth services are clinically appropriate;
2. Ensure that telehealth options supplement, rather than replace, in-person-care – and ensure that payment incentives align with this goal;
3. Promote behavioral health parity to help address the unmet needs of current and future beneficiaries in both urban and rural settings;
4. Ensure that any expansion of telehealth does not exacerbate health, racial, or income disparities, and that actions and expenditures are authorized to meaningfully address the digital divide that many Medicare beneficiaries face – including lack of limited access to digital literacy training, reliable broadband, and remote technologies;
5. Ensure equitable access to telehealth for underserved communities, including Black Americans and people of color, individuals with disabilities, and people with limited English proficiency; purposefully collect data on such access; and ensure compliance with all existing civil rights laws, including rules requiring the use of interpreters and the provision of materials in alternative formats and non-English languages;
6. Require providers to accurately disclose beneficiary cost-sharing obligations prior to service, and to fully document such disclosures; connect beneficiaries and providers with resources they need to understand their financial responsibilities; and carefully monitor to ensure that any waivers of cost-sharing are not happening in a discriminatory or otherwise problematic way;
7. Ensure that any expansion of telehealth protects patient privacy and data security for personal health information. HIPAA privacy protections must apply to telehealth interactions between the patient and provider and personal health data must also be kept secure;
8. Ensure any expansion of telehealth is identical in traditional Medicare and private Medicare Advantage, and that the services and necessary equipment to access telehealth are equally available to all beneficiaries, regardless of the coverage pathway they choose;
9. Ensure that telehealth does not weaken Medicare Advantage network adequacy standards, including by prohibiting telehealth providers from satisfying network adequacy requirements;
10. Require public release of data concerning Medicare-covered telehealth, including the types of services provided, beneficiary experience and preferences, programmatic and beneficiary spending, health outcomes, and quality measurements; ensuring monitoring, oversight, data collection, and evaluation continues ongoingly so as to best inform future telehealth policymaking; and
11. Provide an extended phase-out period for the temporary COVID telehealth waivers and rules in order to minimize interruptions in care and prevent rushed policy development.

The Centers for Medicare & Medicaid Services (CMS) has professed a commitment to addressing health disparities as a foundation of all its work “in every program and across every community.” In recognizing “systemic racism, persistent poverty and other disparities,” the Biden Administration, too, pledged a commitment to pursuing a comprehensive approach to advancing equity for all. This special telehealth report is aimed at advocates, lawmakers, and policy makers to aid in the creation of holistic policies that, as much as possible, do not create an unintended consequence of widening the digital divide.

Let us build upon the lessons learned from pandemic experiences to help create a future where better health, quality care, and equality are realized.

Read or download the full report here: https://medicareadvocacy.org/wp-content/uploads/2022/05/Telehealth-Report_CMA_final.pdf

President Biden’s Nursing Home Reform Agenda

Last month, we discussed “Protecting Seniors and People with Disabilities by Improving Safety and Quality of Care in the Nation’s Nursing Homes,” a broad and comprehensive nursing home reform agenda set out in a White House Fact Sheet (Feb. 28, 2022), https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/ (and mentioned by the President in the State of the Union Address on March 1, 2022).

Five key themes in the agenda:

1. Ensuring Taxpayer Dollars Support Nursing Homes that Provide Safe, Adequate, and Dignified Care (minimum nurse staffing requirements, antipsychotic drugs)
2. Enhancing Accountability and Oversight (funding for surveys, Special Focus Facility program, increase penalties and other enforcement sanctions, accountability for chain owners)
3. Increasing Transparency (facility ownership and finances)
4. Creating Pathways to Good-paying Jobs with the Free and Fair Choice to Join a Union (improving staffing and workforce sustainability)
5. Ensuring Pandemic and Emergency Preparedness in Nursing Homes (COVID-19 testing, vaccinations, on-site infection preventionists)

Request for Information on Nurse Staffing (Critical now; Comments due to CMS by June 10)

As part of its annual update to Medicare Part A payments to skilled nursing facilities, 87 Fed. Reg. 22720 (Apr. 15, 2022), https://www.govinfo.gov/content/pkg/FR-2022-04-15/pdf/2022-07906.pdf, the Centers for Medicare & Medicaid Services (CMS) includes a Request for Information, “Revising the Requirements for Long-Term Care (LTC) Facilities To Establish Mandatory Minimum Staffing Levels,” at pp. 22789-22795.  CMS poses 17 questions, many, with multiple questions.

“Comments On Mandatory Staffing Ratios for Nursing Homes Due to CMS by June 10” (CMA Alert, May 26, 2022), https://medicareadvocacy.org/comments-on-mandatory-staffing-ratios-for-nursing-homes-due-to-cms-by-june-10/, includes a link to draft model comments for the 17 questions drafted by the Consumer Voice for Quality Long-Term Care, California Advocates for Nursing Home Reform, Justice in Aging, Long Term Care Community Coalition, and the Center for Medicare Advocacy, https://theconsumervoice.org/uploads/files/actions-and-news-updates/RFI_Comment_Outline.pdf

Feel free to use any, all, or none of the model comments.  Answer some, none, or all of the questions.  What’s important is to let CMS know why nurse staffing is important and the poor outcomes for residents when there are not enough (well-trained, well-compensated, well-treated) staff.

Additional information from Consumer Voice about submitting comments, available at https://theconsumervoice.org/issues/issue_details/staffing

Additional points:

First, the Nursing Home Reform Law (1987) gives the Secretary full authority to enact and enforce mandatory minimum staffing requirements, defining the “duty and responsibility” of the Secretary

to assure that requirements which govern the provision of care in skilled nursing facilities under this subchapter, and the enforcement of such requirements, are adequate to protect the health, safety, welfare, and rights of residents and to promote the effective and efficient use of public moneys.

42 U.S.C. §1395i-3(f)(1).  The Medicaid provisions of the Reform Law are identical.  42 U.S.C. §1396r(f)(1).  Decades of research document better care outcomes for residents when staffing levels are higher.  There is substantial diversion of public reimbursement to owners’ related parties, management fees, and profits. 

Lawsuit filed by New York state nursing facilities, challenging a state budget law requiring 70% of revenue to be spent on resident care (with 40% on resident-facing care) and limiting profits to 5%, illustrates how much money is diverted.  Plaintiffs claim they would have had to remit $824 million  to the state, using 2019 data. “How Do Nursing Homes Spend the Reimbursement They Receive for Care?” (CMA Report, Jan. 26, 2022), https://medicareadvocacy.org/how-nursing-homes-spend-public-money/ (looked at eight Special Focus Facilities and candidates and five defendants sued by U.S. Attorney for overbilling Medicare, plaintiffs in the lawsuit, and how much they claim they would have had to remit to the state); “New York Nursing Homes Suing the State Received Federal Provider Relief Funds” (CMA Alert, Feb. 3, 2022), https://medicareadvocacy.org/new-york-nursing-homes-suing-the-state-received-federal-provider-relief-funds/  (finding that the same 13 facilities received $19,529,428 in Provider Relief Funds)

Second, the fact that additional actions are necessary to solve the decades-long problem of inadequate staffing does not mean that CMS should not act now to enact mandatory minimum staffing standards, which are key to getting sufficient staff.  Federal staffing standards have not been sufficient.

1. MEDICARE ADVANTAGE OVERSIGHT

Office of Inspector General (OIG) Report re: Medicare Advantage Denials of Prior Authorization

Recently the OIG issued a report focusing on Medicare Advantage plan denials titled “Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care” (April 2022, OEI-09-18-00260). OIG reviewed a sample of denials of prior authorization requests and payment denials issued by 15 of the largest MA plans during one week in June 2019.  From this review, which included the services of health care coding experts and physician reviewers, OIG estimated the rates at which MA plans denied prior authorization and payment requests that it determined met Medicare coverage and MA billing rules.  It also examined the reasons for these denials and the types of services associated with the denials.

Among the prior authorization requests denied by MA plans, OIG found that 13 percent met Medicare coverage rules – “in other words, these services likely would have been approved for these beneficiaries under original Medicare.” With respect to payment requests denied, OIG found that 18 percent met Medicare coverage rules and MA billing rules.

• CMA Alert: Office of Inspector General (OIG) Issues Another Report Highlighting Inappropriate Medicare Advantage Denials – Center for Medicare Advocacy
• OIG Report: Some Medicare Advantage Organization Denials of Prior Authorization Requests Raise Concerns About Beneficiary Access to Medically Necessary Care” (OEI-09-18-00260) (hhs.gov)

Federal Rules

Final Part C & D Rule for 2023 (May 9, 2022)

On January 6, 2022, CMS released CY 2023 Medicare Advantage and Part D Proposed Rule (CMS-4192-P) and an accompanying Press Release describing the overall rule, and a separate Press Release focusing on Part D prescription drug costs.  Comments to the proposed rule, available here, were due March 7, 2022; the Center for Medicare Advocacy submitted comments, posted here.  

On May 9, 2022, CMS issued the final rule: Medicare Program; Contract Year 2023 Policy and Technical Changes to the Medicare Advantage and Medicare Prescription Drug Benefit Programs; Policy and Regulatory

Revisions in Response to the COVID–19 Public Health Emergency; Additional Policy and

Regulatory Revisions in Response to the COVID–19 Public Health Emergency, 87 Fed. Reg. 27704 (May 9, 2022) available here.  CMS also issued an accompanying Press Release and Fact Sheet.

As discussed further in a CMA Alert (Jan. 13, 2022) about the proposed rule, most provisions of which were included in the Final Rule, on the one hand, CMS demonstrated a renewed dedication to providing needed oversight of Medicare Advantage (MA) and Part D plans, and included provisions that will help Medicare beneficiaries.  On the other hand, however, in other ways the rule falls short of providing needed consumer protections. 

The following is a brief summary of some of the provisions in the Final Rule (most provisions are effective the 2023 plan year):

• Strengthening oversight of marketing and communications, including of third-party marketing organizations (TPMOs), requirements new disclaimers by TPMOs re: limitations of plans offered, and reinstating inclusion of multi-language insert in specified materials re: availability of translation services;
  • Note: CMS did not roll back other recent revisions to marketing guidelines that, among other things, weaken the distinction between education and marketing events.  
• Network adequacy requirements for new or expanding plans;
  • Note: CMS did not reverse recent policy changes that have generally weakened MA network adequacy requirements.
• Restrictions on plan expansion based on past performance;
• Greater transparency and reporting requirements surrounding the medical loss ratio (MLR, or the percentage of plan revenue spent on patient care and quality improvement activities);
• Dual-Eligible Special Needs Plans (D-SNPs) – proposals include establishment of enrollee advisory committees, simplify plan materials for enrollees, further streamline grievance and appeal systems, solicitation of information concerning social determinants of health, and changes in cost-sharing rules that will lead to more equitable payments to providers and state expenditures; and
• Part D Price Concessions at the Point of Sale – According to a Fact Sheet accompanying the Final Rule, “CMS is finalizing a policy that requires Part D plans to apply all price concessions they receive from network pharmacies to the negotiated price at the point of sale, so that the beneficiary can also share in the savings. Specifically, CMS is redefining the negotiated price as the baseline, or lowest possible, payment to a pharmacy, effective January 1, 2024. CMS is applying the finalized policy across all phases of the Part D benefit. This policy reduces beneficiary out-of-pocket costs and improves price transparency and market competition in the Part D program.”   

Final Rule: Medicare Advantage Maximum Out-of-Pocket (MOOP) Limits and Service Category Cost Sharing Standards

On April 14, 2022, CMS issued a Final Rule: Medicare Program; Maximum Out-of-Pocket (MOOP) Limits and Service Category Cost Sharing Standards, 87 Fed. Reg. 22290 (April 14, 2022), available here. The rule finalizes the last provisions of a February 2020 proposed Part C & D rule – specifically, the maximum out-of-pocket (MOOP) limits for Medicare Parts A and B services and cost sharing limits for Medicare Parts A and B services, including service category cost sharing limits and per member per month actuarial equivalence cost sharing.  Rules apply to coverage beginning in January 2023.  (For an analysis of previously finalized provisions of the February 2020 proposed rule, see this CMA Alert (Feb. 4, 2021).)

Existing Requirements

In general, CMS affords greater flexibility in establishing Parts A and B cost sharing to MA plans that adopt a lower, voluntary MOOP amount (including PPO plans with a combined MOOP limit in the voluntary range) than is available to plans that adopt the higher, mandatory MOOP amount. In 2022, the MA MOOP amounts are as follows:

2022 MOOP Amounts

Note that according to the Kaiser Family Foundation in a June 2021 report, in 2021, “The average out-of-pocket limit for Medicare Advantage enrollees is $5,091 for in-network services and $9,208 for both in-network and out-of-network services (PPOs)”

Further, the Affordable Care Act (ACA) included a provision that prohibits MA plans from charging more cost-sharing than allowed under traditional Medicare for dialysis, chemotherapy drugs covered under Part B, and skilled nursing facility stays (now codified in the Social Security Act §1852). The statute authorizes CMS to add to the list of items and services for which MA cost sharing may not exceed the cost sharing levels in original Medicare.

New Requirements Starting in 2023

The Final Rule establishes 3 different MOOP limits – lower, intermediate and mandatory. The following table is reproduced from the Final Rule at 87 Fed Reg. 22318:

TABLE 5: FINAL CONTRACT YEAR 2023 MOOP LIMITS BY PLAN TYPE

Inside Health Policy reporter Bridget Early summarized some of the changes in an April 7, 2022 article: “For cost-sharing limits, CMS finalized a slew of policies they say will help promote anti-discriminatory behavior and ensure that MA and FFS beneficiaries are paying comparable amounts. CMS’s rule codifies a longstanding policy on discriminatory cost-sharing, which prevents enrollee cost sharing from being greater than 50% of any given MA plan’s financial liability. The rule also sets cost sharing limits for inpatient lengths of stay.”

According to the final rule (see 87 Fed. Reg. 22294), CMS is finalizing policies to, among other things:

• Limit cost-sharing for several professional services to be no greater than 50% of the plan’s financial liability regardless of the type of MOOP limit by updating the standard to: 50% coinsurance for lower MOOP limit, 40% coinsurance for intermediate MOOP limit, and 30% for mandatory MOOP limit [to be phased in by 2025]
• “Adopt a requirement that MA plans must use cost sharing that does not exceed cost sharing in original Medicare for home health services, durable medical equipment for plans with a mandatory MOOP amount, and Part B drugs other than chemotherapy, in addition to the current limit for chemotherapy administration services, skilled nursing care (that is, SNF), and renal dialysis services.”

Note re: BENES Act Proposed Rule

On April 27, 2022, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule in the Federal Register titled “Medicare Program; Implementing Certain Provisions of the Consolidated Appropriations Act, 2021 and Other Revisions to Medicare Enrollment and Eligibility Rules”, 87 Fed Reg 25090 (April 27, 2022), available here.  CMS also published a press release and separate fact sheet about the proposed rule on April 22, 2022.

The proposal would implement certain provisions of the Consolidated Appropriations Act of 2021 (CAA), including: 1) key provisions of the Beneficiary Enrollment Notification and Eligibility Simplification (BENES) Act which simplifies and accelerates Medicare enrollment by mandating that Part B insurance begin the first of the month following an individual’s enrollment during both the later months of the beneficiary’s Initial Enrollment Period (IEP) and during the General Enrollment Period (GEP); 2) establish new special enrollment periods (SEPs) for certain exceptional conditions; and 3) extend immunosuppressive drug coverage under Part B for certain ESRD beneficiaries.  The rule also proposes several provisions relating to dual eligibles and would make technical changes to how enrollment forms are referenced in regulations.

As discussed in this CMA Alert (January 2021), the BENES Act provisions, effective January 2023, will help close some of the coverage gaps that people face surrounding enrollment in Part A and B of Medicare.  Medicare rules currently allow for an array of special enrollment periods (SEPs) surrounding Part C (Medicare Advantage) and Part D plan enrollments. In this proposed rule, CMS uses its discretion to propose new Part A and B Special Enrollment Periods (SEPs) for certain exceptional conditions, including relating to:

• Individuals Impacted by an Emergency or Disaster that would allow CMS to provide relief to those beneficiaries who missed an enrollment opportunity because they were impacted by a disaster or other emergency as declared by a Federal, state, or local government entity.
• Health Plan or Employer Error that would provide relief in instances where an individual can demonstrate that their employer or health plan materially misrepresented information related to enrolling in Medicare timely.
• Formerly Incarcerated Individuals that would allow individuals to enroll following their release from correctional facilities.
• Coordinate with Termination of Medicaid Coverage that would allow individuals to enroll after termination of Medicaid eligibility.
• Other Exceptional Conditions that would, on a case-by-case basis, grant an enrollment period to an individual when circumstances beyond the individual’s control prevented them from enrolling during the IEP, GEP or other SEPs.

As noted in the CMS fact sheet discussing this proposed rule, “[t]hese proposals would expand Medicare enrollment opportunities and reduce multi-month coverage gaps in Medicare.” We couldn’t agree more, and we applaud CMS for proposing SEPs that would address many of the barriers to timely Medicare enrollment, including reliance on erroneous information from an employer or plan sponsor.  In addition, the proposed SEP that would apply when someone loses Medicaid coverage would assist individuals who lose Medicaid eligibility following the end of the COVID-19 Public Health Emergency (PHE) and who did not enroll in Medicare in a timely manner.

The proposed rule includes several provisions relating to individuals dually eligible for Medicare and Medicaid, including proposals to: 1) extend the Medicare Savings Programs (MSPs) to cover premiums and cost sharing for individuals enrolling in the new Part B immunosuppressive drug benefit, 2) specify that state buy-in agreements reside entirely within the Medicaid state plan (which, among other things, would enhance accountability for state payment of Medicare premiums on behalf of low-income individuals)  and 3) limit retroactive Medicare Part B premium liability for states to 36 months. The proposed regulations also make a number of technical updates that affect dually eligible beneficiaries, including proposals to: 1) clarify buy-in coverage groups in 50 states and the District of Columbia, 2) codify the requirement that states buy in for all eligible individuals, 3) clarify populations for whom states can obtain federal financial participation, and 4) codify MSP eligibility groups in Medicaid regulations. 

Comments on the proposed rule are due June 27, 2022. We strongly encourage Medicare advocates and other stakeholders to submit comments in support of this proposed rule.

Artificial Intelligence (AI) Driven Decision-Making Software

Based upon the Center’s experience assisting Medicare Advantage (MA) enrollees, over the last few years we have witnessed a dramatic growth in MA plans’ use of artificial intelligence (AI)-driven decision-making tools through naviHealth, MyNexus and other third-party entities that plans contract with to make coverage decisions in certain care settings, including skilled nursing facilities. These decisions may be more restrictive than Medicare coverage guidelines, potentially leading to premature terminations of coverage or continuation of care for beneficiaries.  The required assessment of each individual patient’s needs appears to have been replaced by “artificial” general rules of thumb. 

The use of these post-acute care management companies and their AI-driven decision-making tools, in our experience, has led to frequent and repeated denials of Medicare-covered care – sometimes every few days, necessitating multiple appeals for ongoing services that the facilities often agree should continue. 

The Center published a report, The Role of AI-Powered Decision-Making Technology in Medicare Coverage Determinations (January 2022), which outlined areas of growing concerns. Issues around the use of AI have also been highlighted by the Commonwealth Fund as part of a series of blogs focusing on different aspects of the MA program. A recent blog post noted, “A related concern is that plans are using proprietary, algorithm-driven systems to make decisions (including those requiring prior authorization) about approving coverage for services.”

In a recent CMA Alert (April 21, 2022), we provided a case study of 80-year-old Ms. M. who was hospitalized after she underwent a hip replacement and then transferred to a skilled nursing facility (SNF) for short-term rehab. Ms. M’s UnitedHealthcare Medicare Advantage plan touts that it offers coverage of “unlimited days” in a SNF. Despite the fact that she was still benefitting from her skilled therapy regimen, and therefore, continued to meet Medicare coverage criteria, Ms. M had been forced to battle UnitedHealthcare for continued coverage of her three-month stay at the facility. While trying to regain mobility after her hip operation, Ms. M filed ten appeals on UnitedHealthcare’s repeated decisions to terminate her coverage before reaching out to the Center.

Note that in a separate CMA Alert (May 5, 2022), the Center asserts that the OIG report referenced above concerning Medicare Advantage and prior authorization denials likely understates how widespread such denials are, in part, because the OIG review was conducted using claims from June 2019.  Based upon the Center’s experience assisting MA enrollees, including those receiving SNF care – particularly in the state of Connecticut, since that time we have witnessed a dramatic growth in MA plans’ use of artificial intelligence (AI)-driven decision-making tools through naviHealth, MyNexus and other third-party entities that plans contract with to make coverage decisions in certain care settings, including skilled nursing facilities.

1. 2022 MEDICARE TRUSTEES REPORT

Every year, the Social Security and Medicare Boards of Trustees releases reports on the fiscal health of the Medicare and Social Security programs.  On June 2, 2022, the Trustees released their 2022 annual reports: the Medicare Trustees report is available here, and a fact sheet summarizing the reports is available here.  As noted in the fact sheet:

• The Hospital Insurance (HI) Trust Fund, or Medicare Part A, which helps pay for services such as inpatient hospital care, will be able to pay scheduled benefits until 2028, two years later than reported last year. At that time, the fund’s reserves will become depleted and continuing total program income will be sufficient to pay 90 percent of total scheduled benefits. [emphasis added]
• The Supplementary Medical Insurance (SMI) Trust Fund [which funds Parts B and D of Medicare] is adequately financed into the indefinite future because current law provides financing from general revenues and beneficiary premiums each year to meet the next year’s expected costs. Due to these funding provisions and the rapid growth of its costs, SMI will place steadily increasing demands on both taxpayers and beneficiaries.

As noted by reporter Michelle Stein at Inside Health Policy (6/2/22), “Medicare trustees […]  projected the Part A trust fund would be insolvent in 2028 — two years later than they predicted in the previous report but two years earlier than the Congressional Budget Office’s recent 2030 projection — and attributed a better-than-expected economic recovery, COVID-related deaths among seniors and deferral of other health care visits during the pandemic as partially responsible for their new projection.”

In the Committee for a Responsible Federal Budget’s (CRFB) analysis of report, they conclude that: “Action is needed soon to constrain the rising costs of Medicare.”

It is particularly imperative that lawmakers act sooner rather than later to secure the Medicare HI trust fund by increasing revenues, reducing costs, or some combination. If they do not act, Medicare payments from the trust fund would be abruptly and indiscriminately reduced or delayed, leading to a potential loss of access to care for enrollees.

As the Center for Medicare Advocacy routinely notes, there are various ways to address Medicare’s solvency, by raising revenues, reducing spending, or both.  For example, a May 2021 issue brief written by Center for Medicare Advocacy Visiting Scholar Marilyn Moon examines how Medicare has operated over time, how well it is doing at present, and what changes have been used in the past to keep the program financially strong.  The brief outlines potential short-term and long-term funding solutions through raising additional revenues. (Also see, e.g., this CMA Alert (Feb. 11, 2021).) 

One large and obvious option, which escapes the attention of most policymakers, is to look at the Medicare Advantage (MA) program. There is consistent, and growing evidence that the Medicare Advantage program is paid more than traditional Medicare would spend on the same beneficiary, and such spending is growing per person, with significant implications for the Medicare programmatic spending (see, e.g., this CMA Alert (March 31, 2022); also see this CMA Alert (March 18, 2021).  

As the Center noted in a recent CMA Alert (March 3, 2022), when it comes to Medicare policy discussions on Capitol Hill, two things are commonly raised:

1. Active support for Medicare Advantage (MA), and
2. The looming insolvency of the Part A Trust Fund.

Despite the painfully obvious connection between these two, however, they are rarely discussed together. In fact, policymakers in both parties continue to ignore their obligation to address inflated Medicare Advantage payments.

As highlighted in another recent CMA Alert (May 5, 2022), while there is an apparent lack of appetite on either side of the aisle to address MA overpayments, a change in control of Congress could lead to further efforts to bolster the MA program by, among other things, expanding enrollment opportunities into MA and making the MA program the default selection for new enrollees.  

• LITIGATION UPDATE  

Center for Medicare Advocacy Cases

• (Beneficiary Appeals of Observation Status). In November 2011, the Center for Medicare Advocacy and Justice in Aging filed a proposed class action lawsuit on behalf of individuals who have been denied Medicare Part A coverage of hospital and nursing home stays because their care in the hospital was considered “outpatient observation” rather than an inpatient admission. When hospital patients are placed on observation status, they are labeled “outpatients,” even though they are often on a regular hospital floor for many days, receiving the same care as inpatients.  Because patients must be hospitalized as inpatients for three consecutive days to receive Medicare Part A coverage of post-hospital nursing home care, people on observation status do not have access to nursing home coverage.  They must either privately pay the high cost of nursing care or forgo that skilled care.  The number of people placed on observation status has greatly increased in recent years, as CMS has strictly enforced its definition of which services hospitals should bill as inpatient/Part A and which services they should bill as observation/Part B. However, CMS has not allowed beneficiaries to appeal the issue of whether their hospitalizations should be classified as observation or as inpatient for Medicare coverage purposes.

In September 2013, a federal judge in Connecticut granted the government’s motion to dismiss the lawsuit. Bagnall v. Sebelius, No. 3:11cv1703 (MPS),2013 WL 4356659 (D. Conn. Sept. 23, 2013). Plaintiffs appealed, limited to the issue of the right to an effective notice and review procedure for beneficiaries placed on observation status. In January 2015, the U.S. Court of Appeals for the Second Circuit decided that Medicare patients who are placed on observation status in hospitals may have an interest, protected by the Constitution, in challenging that classification.  The panel held that the district court erred when it dismissed the plaintiffs’ due process claims, and it sent the case back to that court for further proceedings.  Barrows v. Burwell, 777 F.3d 106 (2d Cir. 2015).

Substantial motion practice and more discovery occurred (for details see previous issue briefs). The law firm of Wilson Sonsini Goodrich & Rosati joined as representatives of the plaintiffs during this phase and has provide extraordinary and invaluable pro bono assistance. A bench trial on the merits of the due process issue was then held in August 2019.  The plaintiffs presented several witness who were affected by observation status, an expert witness, and also several witnesses from the government. The government also examined several witnesses from CMS as well as their own expert. The parties then submitted post-trial briefing.

In March 2020, the trial court issued a decision. Alexander v. Azar, — F. Supp. 3d –, 2020 WL 1430089 (D. Conn. Mar. 24, 2020). It held that the Secretary of Health and Human Services violates the Fifth Amendment Due Process Clause by not allowing certain patients to appeal their placement on observation status. Thus, as matter of constitutional due process, patients who are admitted as inpatients by a physician, but whose status is changed to observation by their hospital, have the right to appeal to Medicare and argue for coverage as hospital inpatients. In this ruling, the court held that there is a protected property interest in Medicare Part A coverage, meaning that an individual cannot be deprived of that coverage without procedural safeguards. The court did not, however, find a due process violation for patients whose doctors never order inpatient status, or whose status is switched only from observation to inpatient. It drew a distinction between the actions of doctors and the actions of hospital utilization review staff.  It decided that doctors’ decisions to admit patients as inpatients are not attributable to the government and thus not “state action,” a required component of a due process claim. But it held that then when a hospital’s utilization review staff finds that patient should be in observation status rather than an inpatient, that is due to Medicare’s billing rules and therefore does constitute state action.

The court modified the existing class definition accordingly. It is now:

All Medicare beneficiaries who, on or after January 1, 2009: (1) have been or will
have been formally admitted as a hospital inpatient, (2) have been or will have
been subsequently reclassified as an outpatient receiving “observation services”;
(3) have received or will have received an initial determination or Medicare
Outpatient Observation Notice (MOON) indicating that the observation services
are not covered under Medicare Part A; and (4) either (a) were not enrolled in Part
B coverage at the time of their hospitalization; or (b) stayed at the hospital for
three or more consecutive days but were designated as inpatients for fewer than
three days, unless more than 30 days has passed after the hospital stay without the
beneficiary’s having been admitted to a skilled nursing facility. Medicare
beneficiaries who meet the requirements of the foregoing sentence but who
pursued an administrative appeal and received a final decision of the Secretary
before September 4, 2011, are excluded from this definition.

The court ordered that the agency establish an appeals process for class members, under which they can argue that their inpatient admission satisfied the relevant criteria for Part A coverage—for example, that the medical record supported a reasonable expectation of a medically necessary two-midnight stay at the time of the physician’s inpatient order. Patients in the “three-day” portion of the class will be able to pursue these appeals in an expedited manner while still hospitalized. The court also ordered the agency to provide notice of these procedural rights.

In May 2020, the government appealed the district court’s trial decision to the Second Circuit. At plaintiffs’ request, a status conference was held with the district court in October 2020 regarding implementation of the court’s order. The court ordered submissions on proposed measures the agency could take while the case is on appeal.

The government’s opening appellate brief in the Second Circuit was filed in October 2020. It challenged the district court’s decisions regarding standing, class certification, and the merits of the due process claim. Plaintiffs’ response was filed in February 2021. Three amicus briefs in support of plaintiffs were filed in March: one from AARP and Disability Rights Connecticut, one from the American Medical Association and the Connecticut State Medical Society, and one from the American Health Care Association. The government’s reply brief was filed in April 2021. 

At the district court, the government filed a motion for a stay of the judgment on January 11, 2021, stating that it would be irreparably harmed by implementing the court’s order, and that there are serious questions about the district court’s decision, indicating likelihood of success on appeal. Because of the pending stay motion, the district court did not address the proposed implementation measures, as it indicated that it wished to rule on the stay motion first. By June 2021 the district court had still not acted on the motion, and the government moved for a stay in the Second Circuit. On July 16, a single judge of the Second Circuit granted a temporary stay of implementation while it referred the government’s motion to be considered by the panel of judges that retained consideration of the case. Oral argument was held in October 2021.

On January 25, 2022 the Second Circuit affirmed the trial court’s decision and grant of injunctive relief in full and denied the government’s pending stay motion as moot. Barrows v. Becerra, 24 F.4^th 116 (2d Cir. 2022). The court found that one of the named plaintiffs who paid over $10,000 for nursing home care after an observation stay had demonstrated Article III standing.  The court also found no abuse of discretion in the trial court’s certification of the class, holding that the class meets the commonality and typicality requirements. It found that it was not an abuse of discretion for the district court to characterize plaintiffs’ protected property interest as the entitlement to Medicare Part A coverage, as opposed to entitlement to admission as inpatients. It found that decisions by hospital personnel to reclassify a patient from inpatient to an outpatient receiving observation services constituted state action. Finally, it conducted an analysis under Mathews v. Eldridge to agree with the trial court that the Secretary violates Due Process by offering no procedural protections for beneficiaries whose status is changed from inpatient to observation through the hospital utilization review process.

UPDATE: The government requested and received two 30-day extensions for its decision on whether to seek a writ of certiorari from the U.S. Supreme Court. Currently its deadline is June 24, 2022. Meanwhile the district court ordered the parties to submit a joint status report regarding implementation of its injunction and it held a status conference on May 3, 2022. During the conference the district judge encouraged the government to implement relief as promptly as possible and to work with plaintiffs’ counsel on implementation. The also judge also ordered a subsequent status report and conference for August 2022.

For answers to frequently asked questions from people who think they may be class members, please see the Center’s website here.

• Dobson v. Secretary of Health and Human Services, No. 20-11996, 2022 WL 424813 (11^th Cir. Feb. 11, 2022) (per curiam) (Part D Off-Label Drug). On April 6, 2018, the Center for Medicare Advocacy and Florida Health Justice Project filed a lawsuit in the United States District Court for the Southern District of Florida on behalf of a Medicare beneficiary seeking Part D coverage for the “off-label” (non-FDA-approved) use of a critically needed medication. The plaintiff, Mr. Dobson, is disabled from a traumatic workplace injury that damaged his spinal cord. As a result of severe pain and multiple surgeries, he suffers daily from debilitating nausea and vomiting. After numerous medications failed to provide relief, his doctor prescribed dronabinol (brand-name Marinol), which significantly relieved his nausea and vomiting and allowed him to resume many activities of a normal life.

When Mr. Dobson became eligible for Medicare Part D, his plan denied coverage because his particular use of dronabinol is not FDA-approved.  However, the Part D plan should cover the medication because Mr. Dobson’s use of the drug is “supported by” one of the compendia of medically-accepted indications listed in the Medicare law (specifically by DRUGDEX). Medicare looks to the compendia for acceptable off-label uses of medications, and dronabinol has a listing for intractable, disease-related nausea and vomiting. The plaintiff’s position is also supported by a federal court decision granting Part D coverage of the same medication for a beneficiary with very similar symptoms (Tangney v. Burwell, 186 F. Supp. 3d 45 (D. Mass. 2016)).  In spite of this, Mr. Dobson was denied coverage at each level of administrative review.  In appealing his claim to federal court, Mr. Dobson contested the agency’s use of an inappropriately restrictive reading of “supported by citation” to claim that coverage cannot be granted.

A magistrate judge issued a decision on March 31, 2020, finding that Mr. Dobson’s medication cannot be covered by Medicare Part D. Dobson v. Azar, 451 F. Supp.3d 1346 (S.D. Fla. 2020). She deferred to the government’s argument that Mr. Dobson’s use was not a “medically accepted indication,” “supported by citation” in DRUGDEX. The judge accepted the Medicare Appeals Council’s reasoning that because Mr. Dobson does not have the identical diagnosis as the patient in the study contained within the citation for disease-related, treatment-refractory nausea and vomiting, his use cannot be supported. The plaintiff appealed the district court’s decision.

In the appellate briefing, Mr. Dobson argued that the Medicare statute mandates coverage of his medication because his use is “supported by” the DRUGDEX citation in question and that the Secretary’s interpretation is erroneous under any standard. The American Medical Association and Greater Boston Legal Services (which litigated the Tangney case) filed amicus briefs in support of Mr. Dobson.

On February 11, 2022, the 11^th Circuit issued a decision vacating the entry of summary judgment for the Secretary and remanding the case with instructions to enter summary judgment for Mr. Dobson. Dobson v. Sec’y of Health & Human Servs., 2022 WL 424813 (11^th Cir. Feb. 11, 2022) (per curiam). The court found that the meaning of “supported by” presents a question of law, i.e., the construction of the phrase in the governing statute. It therefore performed a careful analysis of the statute with an eye toward Congressional intent. It found that the meaning of the statute is not ambiguous and therefore the government’s interpretation was not owed deference. Starting with the text of the statute, it found that the ordinary meaning of the word “support” requires the conclusion that a compendium citation must tend to show or help prove the efficacy and safety of the prescribed off-label use. “Nothing about the common meaning of ‘support’ means that a compendium citation must hyperspecifically identify a prescribed off-label use to tend to show or help prove its efficacy and safety.” It also reviewed the particular citation in question, how it was phrased compared to other citations for the same medication, and the evidence cited within the citation. The court concluded that the citation read as a whole tends to show or help prove the efficacy and safety of the prescribed off-label use of dronabinol for Mr. Dobson. It stated that the common meaning of “support”  does not “as the Medicare Appeals Council concluded, demand that every aspect of the DRUGDEX citation must match the prescribed off-label use precisely.” It also found the legislative history of the statute to support this plain-text reading.

UPDATE: After remand, the district court entered judgment in favor of Mr. Dobson, in accordance with the 11^th Circuit’s decision.

The Center is grateful for the pro bono assistance of Akin Gump Strauss Hauer & Feld at the appellate stage of this case.

• Chinatown Service Center v. Cochran, No. 1:21-cv-00331 (D.D.C.) (LEP Protections under Section 1557 of the ACA).  Justice in Aging and the Center for Medicare Advocacy, along with pro bono firm Stinson LLP, filed this case on February 5, 2021 on behalf of two community-based organizations that provide social services to Limited English Proficient (LEP) older adults. In the waning days of the Trump Administration, the federal government eliminated protections for LEP individuals in health care by rolling back regulations that were put in place as part of Section 1557 of the Affordable Care Act. The protections were intended to target health disparities by requiring health plans and other entities to inform patients both of their right to interpretation, and their right to legally challenge discrimination based on language ability. But, in 2020, the Trump Administration issued a rule that eliminated these language access protections (as well as many others affecting LGBTQ people, immigrants, and women). The plaintiffs are asking the court to vacate the 2020 rule and enjoin its implementation.

The parties agreed to stay all proceedings in the matter until July 16, 2021, at which point they filed a joint status report. The court then requested briefing on whether the case should be remanded voluntarily or further stayed based on the administration’s representation that it will be revisiting the Section 1557 regulations and expects to commence a rulemaking proceeding to revise or replace the 2020 rule that eliminated the relevant language access provisions. On August 18, 2021, the government moved for voluntary remand or in the alternative a stay of proceedings. Plaintiffs filed an opposition requesting that if the case is going to be remanded, the rule should be vacated in the meantime to avoid further harm to plaintiffs and others, and that if the case is stayed in the alternative it should be time-limited with reporting requirements. The government’s motion was fully briefed as of October 8.

On October 13, 2021, the court issued an order staying the case until further notice while the Department of Health and Human Services revises the current rule. The court decided to follow the same approach it had followed in a related case, Whitman-Walker Clinic, Inc. v. HHS, No. 20-1630, 2021 WL 4033072 (D.D.C. Sept. 3, 2021), which challenges several aspects of the 2020 rule, and in which the court had found that a stay was appropriate. The court also ordered HHS to provide bi-monthly updates on its proposed rulemaking, starting in November.

The government’s filed status reports on November 30, 2021, January 31, 2022, and March 31, 2022 stating that in continued to expect to issue a Notice of Proposed Rulemaking no later than April 2022.

UPDATE: The government’s filed a status report filed on May 31, 2022 stating that it had submitted a draft proposed rule to the Office of Management and Budget.