I. NEW REPORT ON MEDICARE ADVANTAGE OVERPAYMENTS
On October 4, 2023, Physicians for a National Health Program (PNHP) released a report titled “Our Payments Their Profits”, showing that insurance companies offering Medicare Advantage (MA) plans are overpaid by up to $140 billion a year by Medicare.
According to an article posted by Common Dreams, titled “Medicare Advantage Overbills Taxpayers by $140 Billion a Year—Enough to Wipe Out Medicare Premiums” by Jake Johnson (Oct. 4, 2023), the report notes that the amount of wasteful overpayments to MA plans “could be used to completely eliminate Medicare Part B premiums or fully fund Medicare’s prescription drug program” among other uses.
Similarly, an article posted by The Lever titled “Insurers Are Gaming Medicare — To The Tune Of $140 Billion” by Matthew Cunningham-Cook and Lucy Dean Stockton (Oct. 4, 2023) notes that:
The researchers additionally found that seniors could save over $1,800 in annual fees taken from their Social Security checks if the government redirected what it spends subsidizing Medicare Advantage plans to instead reduce premium costs. Under the current arrangement, “traditional” Medicare pays about $12,000 a year to private Medicare Advantage insurers for every patient whose care they “manage.”
Dr. Ed Weisbart, National Secretary of PNHP, will be discussing the report during the Alliance webinar (his bio is available on PNHP’s website).
II. UPDATES re: MEDICARE’S ANNUAL ENROLLMENT PERIOD INCLUDING MEDICARE ADVANTAGE MARKETING
As Medicare’s annual enrollment period proceeds through December 7th, during which beneficiaries can make changes to their Medicare Advantage (MA) and/or Part D coverage, Medicare beneficiaries continue to be bombarded with advertisements and sales pitches, which aim to steer people towards MA plans.
As discussed in a recent CMA Alert (Nov. 2, 2023), there continues to be a notable and welcome shift in media coverage of MA plans, providing a more balanced assessment that explores both the drawbacks as well as the benefits of enrollment in MA plans. This includes articles published by major media outlets such as the Wall Street Journal, New York Times, Washington Postand NPR, among others.
In addition to providing information to their readers about Medicare coverage options, more journalists appear to be focusing on many of the challenges with accessing care in MA plans, including prior authorization and network adequacy, and the growing number of providers, including doctors’ groups and hospitals, that are leaving MA due to frustrations with prior authorization and lower pay. This includes an NBC News article profiling the impact that MA denials have on rural hospitals and their patients, as well as a USA Today article chronicling a number of health systems that are no longer taking Medicare Advantage plans.
Earlier this year, the Centers for Medicare & Medicaid Services (CMS) issued a final rule for 2024 regarding Medicare Advantage (MA) and Part D plans, which, among other things, improved consumer protections concerning the MA prior authorization process and marketing of MA and Part D plans (see, e.g., the Center’s Special Report summarizing these rules (May 2023)). Despite these improved consumer protections, there continues to be warranted concern among policymakers about these issues.
For example, as discussed in a previous CMA Alert (Oct 19, 2023), the Senate Finance Committee recently held a hearing entitled “Medicare Advantage Annual Enrollment: Cracking Down on Deceptive Practices and Improving Senior Experiences” on October 18, 2023.
More recently, in the House of Representatives, Reps. Judy Chu and Jerrold Nadler led 30 of their colleagues in sending a letter to CMS urging increased oversight of artificial intelligence (AI) and algorithmic software tools used to guide Medicare Advantage plan coverage decisions (see press release and letter here, Nov. 3, 2023).
III. PROPOSED RULE re: NURSE STAFFING STANDARDS FOR NURSING HOMES
On September 6, 2023, CMS published a proposed rule to mandate nurse staffing ratios for nursing facilities. The proposed rule is here and the Center’s initial Alert is here. The comment period closed November 6, 2023. More than 40,000 comments were submitted.
The proposed rule (1) requires specific staffing standards for registered nurses (RNs) (0.55 hours per resident day (HPRD)) and nurse aides (2.45 HPRD), totaling 3.0 HPRD; (2) requires RNs to be available on-site 24/7 to provide care; (3) authorizes unlimited numbers of annual hardship exemptions for rural facilities unable to meet staffing ratios; (4) delays implementation for 3 years (non-rural facilities) and 5 years (rural facilities); (5) asks whether it should require a 3.48 HPRD total nurse staffing standard.
The Center’s comment letter calls for stronger staffing standards:
CMS staffing report (2001) found 4.1 HPRD were necessary to prevent avoidable harm to residents; 3.0 HPRD is a step backwards. The 3.0 standard was based on quality measures and health inspections at the 50th percentile, not on residents’ clinical needs.
3.0 HPRD is a lower standard than facilities met during the pandemic, 3.76 HPRD. During the pandemic, non-profits provided 4.28 HPRD and even for-profit facilities, the lowest-staffed part of the nursing home industry, staffed at 3.57 HPRD.
CMS should include licensed practical nurses/licensed vocational nurses in its staffing ratios.
Exemptions are impermissible and not appropriate for rural facilities, whose staffing levels are similar to non-rural facilities; bigger discrepancies in staffing levels reflect ownership (for-profit vs. non-profit ownership); size (small vs. large facilities); freestanding vs. hospital-based facilities; and proportion of Medicaid residents.
The timeline for implementation is too long.
Responses to the proposed rule are extremely partisan.
Republicans oppose any mandatory staffing ratios, arguing (1) there’s a nursing shortage and no one to hire; (2) the staffing mandate is unfunded; and (3) if a staffing mandate is implemented, facilities will close, displacing residents.
Energy & Commerce Committee’s Subcommittee on Health, Oct. 25 hearing entitled “Supporting Access to Long-Term Services and Supports: An Examination of the Impacts of Proposed Regulations on Workforce and Access to Care” and video
Bipartisan Senate letter (Sep. 29, 2023), led by Senator Jon Tester
Democrats generally support staffing ratios and call for strengthening the proposed rule. House and Senate letters are still gathering additional co-signers.
IV. MISCELLANEOUS UPDATES
A. Proposed Rule re: Section 504
In September, HHS OCR released its proposed rule on § 504 of the Rehabilitation Act (NPRM). Section 504 prohibits disability discrimination by any recipient of federal funds. The proposed rule aims to strengthen protections against discrimination on the basis of disability in HHS programs or activities.
- Proposed rule: Federal Register :: Discrimination on the Basis of Disability in Health and Human Service Programs or Activities
- Comments due: 11/13/23
B. Final Physician Fee Schedule, Including Medically Necessary Oral Health
Last week the Centers for Medicare & Medicaid Services (CMS) issued a final rule that announced finalized policy changes for Medicare payments under the Physician Fee Schedule (PFS), and other Medicare Part B issues, effective on or after January 1, 2024. The rule included clarification to reimburse for dental services necessary to the clinical success of certain cancer treatments:
- A codification of the previously finalized payment policy for dental services for head and neck cancer treatments, whether primary or metastatic.
- The codification to permit Medicare Part A and Part B payment for dental or oral examination performed as part of a comprehensive workup prior to medically necessary diagnostic and treatment services, to eliminate an oral or dental infection prior to, or contemporaneously with, those treatment services, and to address dental or oral complications after radiation, chemotherapy, and/or surgery when used in the treatment of head and neck cancer.
- CMS proposal to permit payment for certain dental services inextricably linked to other covered services used to treat cancer prior to, or during:
- Chemotherapy services.
- Chimeric Antigen Receptor T- (CAR-T) Cell therapy.
- The use of high-dose bone modifying agents (antiresorptive therapy).
CMS Fact Sheet on Final Rule: Calendar Year (CY) 2024 Medicare Physician Fee Schedule Final Rule | CMS
LV. LITIGATION UPDATE
Beitzel v. Becerra, No. 2:23-cv-01932 (E.D. Cal.) (Self-Administered Drug List).
The Center for Medicare Advocacy and Community Legal Services at the McGeorge School of Law filed this class action on September 8, 2023, on behalf of beneficiaries who have lost coverage for medically necessary, very expensive drugs with no warning. The lead named plaintiff requires an injectable drug that – for years – was administered to him in a clinic by a health care professional to treat symptoms of Crohn’s disease. He also has Parkinson’s disease and cannot administer the drug himself due to his disability. The drug was covered under a provision that allows Medicare Part B to pay for drugs that are furnished “incident to the services of a physician.” Then, unbeknownst to the plaintiff, Medicare deemed the drug to be “usually self-administered by the patient,” meaning it would no longer be covered for him as it had been, under Part B.
Medicare provided no notice of this change in coverage and does not require medical practitioners to provide notice. Only after the plaintiff received multiple additional injections from the clinic did he learn that the drug was no longer covered by Part B and that Medicare held him responsible for its full cost, which was over $40,000 per injection. The plaintiffs challenge Medicare’s policy of providing no notice when a drug that was excluded by Part B is added to the “self-administered drug list” (SAD List) and thus excluded from such coverage. They raise due process and statutory claims to ensure that beneficiaries can make informed decisions about whether and how to receive these medications when there has been a change in Medicare’s coverage terms. The plaintiffs also seek to ensure that beneficiaries who cannot self-administer do not face greater barriers to accessing these drugs because of their disabilities.
Johnson v. Becerra, No. 1:22-cv-03024 (D.D.C.) (Challenge to Deprivation of Home Health Aide Services by Disabled Medicare Beneficiaries).
The Center filed this proposed class action on October 6, 2022, on behalf of two individuals and two organizations. The named plaintiffs seek to represent a nationwide class of Medicare beneficiaries who rely on home health aide services to live safely in their homes and communities. They challenge the Secretary’s policies and practices that impede and restrict the availability, accessibility, and coverage of home health aide services for individuals with chronic, disabling conditions who qualify for such services under Medicare law. These practices include the failure to properly oversee and enforce Conditions of Participation for Medicare-certified home health agencies. They also include auditing and reviewing systems and quality rating systems that discourage the provision of aide services for plaintiffs and proposed class members. The case cites violations of the Medicare statute and regulations, as well as Section 504 of the Rehabilitation Act, which prohibits discrimination on the basis of disability. Section 504 imposes a duty on federal agencies to administer programs in the most integrated setting appropriate to the needs of people with disabilities and to avoid unjustified institutionalization of disabled people. The named plaintiffs and class members they seek to represent are at risk of institutionalization for necessary care without the Medicare-covered home health aide services they require. The plaintiffs seek declaratory and injunctive relief that would remove barriers to Medicare-covered home health aide services.
On April 5, 2023, the court granted the government’s motion to dismiss and denied plaintiffs’ class certification motion as moot. Johnson v. Becerra, — F. Supp. 3d –, 2023 WL 2784874 (D.D.C. Apr. 5, 2023). The court found that all plaintiffs had adequately presented their claims to the Secretary, and it waived the requirement of exhaustion of administrative remedies. However, the court held that the plaintiffs lack standing to challenge the Secretary’s policies because they failed to plausibly allege redressability. Assuming that plaintiffs’ injuries were caused by the Secretary, the court found that it is “purely speculative” that their injuries would be redressed by a favorable court decision. It emphasized that Medicare-certified home health agencies are “third parties,” and doubted that the requested policy changes would alter the home health agencies’ behavior with regard to provision of aide services. The plaintiffs appealed the district court’s dismissal of the case to the U.S. Court of Appeals for the D.C. Circuit in June 2023.
UPDATE: Plaintiffs filed their opening brief on September 22, 2023. The government’s opposition is due November 22, 2023.
Barrows v. Becerra, 24 F.4th 116 (2d Cir. 2022) (Beneficiary Appeals of Observation Status).
In November 2011, the Center for Medicare Advocacy and Justice in Aging filed a 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 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.
After a dismissal by the district court, a remand by the Second Circuit, substantial motion practice and discovery, a bench trial on the merits of the due process claim was held in August 2019. In March 2020, the trial court issued a decision. Alexander v. Azar, 613 F. Supp. 3d 559 (D. Conn. 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. 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. The court modified the existing class definition accordingly.
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. Certain patients 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. On January 25, 2022 the Second Circuit affirmed the trial court’s decision in full. Barrows v. Becerra, 24 F.4th 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 standing to sue. 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 and agreed with the trial court that the Secretary violates Due Process by offering no procedural protections for beneficiaries whose status is reclassified from inpatient to observation through the hospital utilization review process.
In October 2022, the parties jointly requested a clarification of the judgment in the interest of facilitating and streamlining certain retrospective appeals and reducing administrative burden. The parties asked the court to clarify that if a class member who was enrolled in Part B at the time of their hospitalization prevails in appealing a retrospective claim, Medicare is not required to “unwind” and readjust the hospital claim, but may make Part A payment for the covered nursing home services without adjusting the underlying claim. On December 9, 2022, after a class notification process, the court issued an order clarifying the judgment as the parties had requested. Information about the clarification can be found here.
The government is implementing the court’s injunction via a Notice of Proposed Rulemaking. After substantial delays, class counsel requested a status conference with the court, which was held on August 9, 2023. In light of the significant delays in implementation and ongoing harm to class members, the judge ordered the government to take the next step in the rulemaking process (submission of a draft rule to the Office of Management and Budget (“OMB”)) by October 1, 2023. It also ordered the government to submit monthly status reports on the progress of the implementation process.
UPDATE: In the government’s monthly status report of September 28, 2023, it stated that it had submitted the draft proposed rule to the Office of Information and Regulatory Affairs (“OIRA”) in OMB for review and comment, and that is had submitted the draft for a second round of HHS clearance concurrent with OMB review. In its report of October 31, 2023 it stated that it had received comments from OMB and from components within HHS. A revised draft has been submitted to a unit within CMS for review. It will be submitted to OMB for another round of review there in November. The government states it is “on track to publish [the proposed rule] in December 2023.”
For answers to frequently asked questions from people who think they may be class members, please see the Center’s website here.
Chinatown Service Center v. U.S. Dep’t of Health & Human Servs., 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.
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 Section 1557 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. On July 25, 2022, HHS publicly released a proposed rule implementing Section 1557 of the Affordable Care Act. The proposed regulation was published in the Federal Register on August 4, 2022. On November 20, 2022, the government filed a status report noting that the public comment period on the proposed regulation closed on October 3, 2022, and that HHS had received more than 85,000 comments.
During a status conference held in June 2023, the government clarified that it expects the new Section 1557 rule to issue not later than “this winter.” The court ordered the government to continue filing monthly status reports, and in the filing from July 31, 2023, indicates that the government “aspires to the submit the rule to the Office of Information and Regulatory Affairs for final clearance before the end of this calendar year.”
 Disclaimer: the views expressed in this Issue Brief and during the Alliance call are solely those of the Center for Medicare Advocacy.