Centers for Medicare and Medicaid Services-CMS



Senate to Vote When It Returns – CMS Issues Payment Advisory

The House of Representatives took what the House of Medicine rightfully can call a historic vote late in the evening of March 26 to really, truly repeal the SGR and to provide the nation’s physicians with minimal but predictable 0.5% Medicare physician payment increases beginning July 1, 2015, and continuing for each year through calendar year 2019.

H.R. 2, the Medicare Access and CHIP Reauthorization Act (MACRA), passed the House on a strong bipartisan vote of 392-37. Iowa’s congressional delegation split. Representatives David Loebsack and David Young voted in favor of the bill, Representatives Rod Blum and Steve King voted against it.

H.R.2 moved to the Senate on the heels of the congressional April recess. The Senate took no action but Senate leadership indicated the likelihood of passage of SGR repeal upon the Senate’s April 13 return. It is not clear whether the Senate will support all other provisions now in H.R. 2 or seek to amend the bill. The President has indicated his support for permanent SGR repeal.

The 21% SGR payment reduction will go into effect on April 1. CMS issued a payment advisory on March 24 in light of the looming April 1 date, clarifying that all claims for services rendered on or before March 31 would not be affected if the SGR went into effect on April 1; those claims would be paid under the physician fee schedule now in effect. Under current payment processes, CMS would not pay claims for services rendered on or after April 1 until 14 calendar days after electronic receipt or 29 calendar days after paper receipt of such claims. In light of the Senate’s decision to not take a vote on H.R. 2 prior to recess, CMS has advised Medicare carriers to hold claims for services provided on or after April 1 for 10 days to avoid any need to make payment adjustments in this interim time period. The Iowa Medical Society’s website ( provides billing guidance to its physician members for services provided on April 1 and onward until repeal legislation is finally approved.

H.R. 2, the MACRA bill, is a “bill within a bill,” incorporating Medicare physician payment reform provisions set forth in H.R. 1470, a bipartisan, bicameral committee bill, and including provisions of its own addressing Medicare extenders and payment offsets. Key provisions of H.R. 1470/H.R. 2 include the following –

• Immediate and permanent SGR repeal.

• A positive 0.5% annual physician Medicare payment update, with the first update to occur on July 1, 2015, and then in each of calendar years 2016-2019. MedPAC must submit reports to Congress in 2019 evaluating the impact of the 2015-19 updates on beneficiary access and quality care and making recommendations on further updates. Medicare rates in effect in 2019 would be maintained through 2025, shifting focus to payment increases through incentives for achieving identified quality program goals.

• Consolidation of three current Medicare quality reporting programs – the Physician Quality Reporting System (PQRS), the Value-Based Modifier (VBM), and Meaningful Use for EHRs (EHR MU) – into a simplified, merit-based incentive payment system (MIPS), effective in calendar year 2019. Eligible professionals, including physicians and several other health professionals, will be measured on four areas of performance: quality; resource use; EHR meaningful use; and clinical practice improvement. Public reporting of results is addressed.

• A 5% incentive payment to those physicians who participate in alternative payment models and meet certain performance thresholds.

• The 1.0 Work GPCI floor is extended through December 2017, a provision of benefit to Medicare Part B payment localities like Iowa with labor costs set by CMS at lower than the national average.

• The therapy cap exceptions process is extended through December 2017, allowing patients who exceed Medicare’s annual per-patient therapy expenditure limit to ask for an exception based on medical necessity.

• Funding for Community Health Centers (CHC) and National Health Service Corps Fund (NHSC) and Teaching Health Centers is extended through fiscal year 2017.

• The Children’s Health Insurance Program (CHIP) program and funding for it is extended through fiscal year 2017. While CHIP has been authorized through 2019, current funding for CHIP is slated to end at the close of the 2015 fiscal year. H.R. 2 also extends funding support for several CHIP-related programs.

• Guidelines or standards developed and/or implemented under any Federal health care provision, including Medicare, cannot be construed on their own as standards or duties of care owed by a health care professional to a patient in any medical malpractice action or claim. This provision is not meant to preempt any state or common law governing medical malpractice actions or claims.

• Electronic health records must be interoperable by 2018.

• The Government Accounting Office (GAO) shall issue a report on barriers to expanded use of telemedicine and remote patient monitoring.

• Funding offsets to meet the $140 billion estimated costs of this legislation require, among other things, that effective with new plans sold in 2020, beneficiaries new to Medicare must have the same deductible under their private Medigap insurance policies as they have under Medicare Part B; currently that amount is $147 per year. In addition, beginning in 2018, bump-up Part B and Part D premium amounts that Medicare beneficiaries with higher annual incomes now must pay would be increased. Too, a scheduled one-time 3.2% hospital payment increase in fiscal year 2018 would instead be phased in over 6 years beginning in fiscal year 2018.

H.R. 2 does not extend the October 1, 2015 effective date for implementation of ICD-10. The ICD-10 Coalition, with membership including the American Hospital Association (AHA), American’s Health Insurance Plans (AHIP), the American Health Information Management Association (AHIMA), and the BlueCross and Blue Shield Association (BCBSA) – hailed the lack of extension, claiming that ICD-10 coding will assure the availability of data needed to accurately assess quality and value.

Further details about H.R. 2 and incorporated provisions of H.R. 1470 can be found in summaries prepared by staff of the House Committees on Energy and Commerce and Ways and Means.

The text of the bill is available at

Update – Insurance Commissioner requests CoOportunity liquidation – district court to decide in late February

Concluding that insufficient funds currently exist to meet its obligations to pay medical claims, Iowa Insurance Commissioner, Nick Gerhart, filed a petition in Polk County District Court on January 29, 2015, concluding that further efforts toward rehabilitation of CoOportunity would be futile and asking for court-ordered liquidation of this non-nonprofit insurer. The Commissioner’s petition cites several factors affecting CoOportunity’s asset position, including congressional action placing an estimated $81 million in risk funding CoOportunity was slated to receive at risk; CMS’s decision in December to not advance additional 2014 funds to CoOportunity; and the unavailability of 2015 federal loan funds until late in 2015. The petition concludes that “further transaction of business by CoOportunity would be financially hazardous to policyholders, creditors, and the public.”

A hearing on liquidation is expected to occur in late February, with court-ordered liquidation expected to take effect as of February 28. Upon liquidation, the Insurance Division will take possession of CoOportunity’s assets and will administer those assets under court supervision. State guaranty funds in Iowa and Nebraska will be utilized to meet payment obligations for claims submitted by CoOportunity insureds up to limits set in law.

Commissioner Gerhart continues to advise Iowans with CoOportunity coverage to find other coverage. “Individuals and employer groups are strongly encouraged to find coverage with another insurance company and then cancel their policy with CoOportunity Health as soon as possible.” The Commissioner particularly advises individuals who purchased CoOportunity coverage through Iowa’s marketplace exchange and who are receiving advance premium tax credits and cost sharing reductions to find alternative coverage through the marketplace exchange by March 1, with open enrollment ending on February 15; while there will be a special enrollment period from March 1-April 29, 2015, to avoid having a gap in financial assistance, those individuals must meet March 1 coverage requirements. Individuals are encouraged to call the marketplace center at 1-800-706-7893 or work with an agent, broker, navigator, or consumer assistance counselor.

The Insurance Division has several informational postings, including CoOportunity alerts for persons insured by CoOportunity and for providers, on its website at The Division also has posted the following frequently asked questions (FAQs) and guidance documents.

  • FAQs for individuals.
  • FAQs for small groups.
  • Guidance on tax credits for certain small employers that cannot offer a qualified health plan (QHP) through the Small Business Health Options Program (SHOP) Exchange because  the employer’s principal business address is in a county in Iowa in which a QHP through the SHOP Exchange is not available for all or part of 2015.

CoOportunity Health

In what came as a surprise to many, Iowa’s Insurance Commissioner, Nick Gerhart, filed a petition in Polk County District Court on December 23, seeking court authorization under state insurance laws to assume management authority over CoOportunity Health, Inc., toward the end of rehabilitating the company’s substantially declining financial stability. The district court granted the order on that same day, transferring the company’s assets to the commissioner for administration and control. CoOportunity’s board of directors elected not to oppose the petition. The Nebraska Insurance Commissioner has suspended CoOportunity’s authority to do business in that state in light of the Iowa action.

Iowa insurance laws permit insurance division rehabilitation efforts when an insurer no longer evidences sufficient financial strength to meet its ongoing financial obligations to policyholders. The commissioner’s petition noted that CoOportunity at this time is solvent, but its current lack of needed additional revenues places it in a “financially hazardous” condition. The goal of the commissioner is rehabilitation but if not feasible, the company’s assets will be liquidated. Purchase by another insurer is a possibility.

In its first year of operations, CoOportunity–a non-profit insurer domiciled in Iowa and operating both in Iowa and Nebraska under both states’ laws and rules of the newly established federal health insurance CO-OP (Consumer Operated and Oriented Plan) program, had experienced early program success by enrolling an unanticipated 120,000 Iowans and Nebraskans through individual and small group policies. At the same time, however, the company experienced high unanticipated losses, leading to a drop in assets from $121.5 million to $17 million at the time of the petition’s filing. A $45.7 million net loss experienced by the company in the first 10 months of 2014 operations equated, the commissioner said, to “a 66% loss to remaining surpluses.” From November through December 12, the company’s assets continued to decline, dropping from $47.1 million to $17.2 million, a level and operational trend that threatened the ability of the company to meet its future health claim obligations to its policyholders.

Immediate sources of needed monies could not be identified. The federal Centers for Medicare & Medicaid Services (CMS), which provided start-up loan funding for CO-OPs, recently informed CoOportunity that it would not receive additional loans in this last round of funding. CoOportunity has received $130.6 million in solvency loan funds and $15.4 million in operational loan funds from CMS, including loan funds of $32.7 million awarded to the company at the end of September. The company is slated to receive an additional $125.6 million from other CMS program sources, but not until the second half of 2015 and $60 million of that amount is currently threatened by potential congressional budget action.

The Insurance Division cites “extremely high health care utilization” as a major factor affecting CoOportunity’s deteriorating asset position.

The Insurance Division, in frequently asked questions (FAQs) posted on its website (, helps policyholders to understand what this step toward regulatory rehabilitation means to them. To have continued coverage, policyholders must pay their premiums. Claims may continue to be submitted through CoOportunity as usual. The Division “will control the company and ensure that claims are paid according to contract provisions.” Even if rehabilitation is not successful and the company is liquidated, state insurance laws protect policyholders and their claims up to $500,000 per insured person.

The FAQs further clarify that coverage with CoOportunity during rehabilitation “should not impact your provider’s standing with CoOportunity.” The Division, however, notes that providers currently in the CoOportunity network may opt to leave that network and advises policyholders to contact their providers to make sure they remain in network.

The Division further advises: “Most policyholders may find it in their best interests to find other coverage before the end of open enrollment” which closes February 15, 2015. The Nebraska Insurance Department has similarly advised policyholders in that state.


On December 21, the federal Centers for Medicare & Medicaid Services (CMS) began issuing letters to physicians and other health professionals eligible to participate in the Medicare EHR Incentive Program notifying them of a 1% Medicare payment penalty they will incur in 2015 for failing to meet Stage 1 meaningful use (MU) benchmarks for use of electronic health records (EHRs). More than 257,000 eligible professionals (EPs) are slated to receive penalty notification letters, a number the American Medical Association (AMA) says is “worse than we anticipated.” Physicians facing the 1% penalty in 2015 will experience an additional 1% payment reduction in each subsequent year they fail to meet EHR MU objectives, up to a maximum of 5%. A physician who also fails to meet MU e-prescribing objectives set through the Electronic Prescribing Incentive Program will experience an additional 1% penalty reduction in Medicare payment. Of the 257,000 EPs scheduled to be penalized under the EHR meaningful use program in 2015, approximately 28,000 also face the 1% e-prescribing penalty.

Data has not yet been made available to show how many Iowa physicians and other health professionals eligible to participate in these two Medicare incentive programs are facing the 2015 Medicare payment penalties. CMS data does show, however, that from January 2011-October 2014, EPs in Iowa received total incentive payments of $350,896,401 for meeting Stage 1 EHR MU objectives either through Medicare ($244,634,629) or Medicaid ($106,261). National data also indicates that Iowa providers have made substantial progress in implementing and using e-prescribing.

The AMA issued a statement saying that it was “appalled” that more than 50% of all EPs will face MU penalties in 2015. “The penalties physicians are facing under the Meaningful Use program are part of a regulatory tsunami facing physicians,” including potential payment reductions from the Physician Quality Reporting System (PQRS) and the Value-based Modifier Program (VBM) as well as ongoing application of budget sequester cuts. Effective April 1, 2015, physicians also face a 21.2% Medicare payment reduction absent corrective congressional action on the SGR.

Not all physicians are eligible to participate in these Medicare MU incentive programs and many eligible physicians applied for and received hardship exemptions making the 2015 penalties inapplicable to them. Of those who are eligible, many elect not to participate, believing the payment penalties they would incur are far less than the costs, burdens, and problems they would face in purchasing and implementing electronic health record systems at this time. An AMA-RAND study released in October 2013 showed that EHR implementation was a significant factor in growing physician dissatisfaction with medical practice. Physicians say that EHR systems interfere with face-to-face physician-patient interactions; are more cumbersome and expensive to implement than projected; often are not interoperable; and are fraught with operational failings.

The AMA continues to advocate for suspension of EHR MU penalties while promoting EHR MU program improvements to better reflect the current state of EHR system functionality, interoperability, workability, and costs. (Link to October 13, 2014 letter:

Physicians receiving letters will have until the end of February to challenge CMS’ determination.

CMS announced in November the formation of a new Office of Enterprise Data Analytics (OEDA) and named Niall Brennan as the OEDA’s chief data officer. The OEDA’s overarching goal is to harness CMS’ vast data resources for internal and external use as CMS continues to move away from volume-based to value-based care.

Brennan, who has served in various data analytic roles with CMS, will oversee the OEDA’s collection and dissemination of information in several areas of CMS activity, including the ACA’s marketplace exchanges and Medicare’s Shared Savings and quality incentive programs. CMS’ Principal Deputy Administrator, Andy Slavitt, said this new office “signals to the industry that there is no turning back from the health care data agenda.”


On December 1, 2014, CMS released a rule proposing several significant changes to the Medicare Shared Savings Program (MSSP) and calling for input on options under consideration to encourage greater participation in two-sided risk sharing models. The proposed rule was published in the Federal Register, December 8, 2014, pp. 72759-72872 Comments on the rule are due by 5:00 pm on February 6, 2015.

CMS proposes these changes as program refinements based on its experiences and stakeholder suggestions. The proposed changes also formalize guidance CMS has issued previously regarding the program, and the proposed changes further seek to reduce administrative burdens in MSSP operations. The proposed rule changes address the following areas:

  • Data sharing requirements;
  • Requirements for ACO participant agreements, the ACO application process, and CMS review of applications;
  • Identification and reporting of ACO participants and ACO providers/suppliers and managing changes to these lists;
  • Eligibility requirements related to the ACO’s number of beneficiaries, required processes, the ACO’s legal structure and governing body, and the ACO’s leadership and management structure;
  • Modification to assignment methodology;
  • Repayment mechanisms for ACO’s in two-sided performance-based risk tracks;
  • Alternatives to encourage participants in risk-based models;
  • ACO public reporting and transparency;
  • ACO termination process; and
  • The reconsideration review process.

The rule proposes new or changed definitions; adds a process for ACO renewal of participation agreements; clarifies and revises the beneficiary assignment algorithm; expands on beneficiary reporting data CMS would provide to ACOs; and simplifies the claims data sharing opt-out process to provide more timely access to claims data.

CMS believes greater efficiencies and savings remain to be realized by encouraging ACOs to move from Track 1 (shared savings) to Track 2 (shared savings/shared losses) models of operation. CMS proposes mechanisms to ease an ACO’s transition from Track 1 to Track 2, to reduce an ACO’s risk under Track 2, and to establish an alternative Track 3 risk-based model. Much early criticism has focused on CMS’ proposal to allow Track 1 ACOs to remain in Track 1 for an additional 3-year period rather than transitioning to Track 2 as now required; however, those ACOs remaining in Track 1 for a second 3-year period would experience annual reductions in their percentage share of earned savings (i.e., from 50% shared savings to 40% in year 4, to 30% in year 5, to 20% in year 6). Initial stakeholder reaction notes that to-date, most Track 1 ACOs have not met minimum savings thresholds and have not shared in savings; reducing the potential of shared savings in years 4-6 likely means that many Track 1 ACOs simply will not sign up for a second round of MSSP participation. CMS and stakeholders continue to assess long-term, sustainable MSSP operational ACO models.

The MSSP now includes more than 330 ACOs functioning in 47 states, Puerto Rico and the District of Columbia, with 125,000 Medicare enrolled practitioners providing services and impacting roughly 4.5 million Medicare beneficiaries. On November 7, 2014, CMS issued its first financial reconciliation and quality performance results for 220 ACOs with start dates in 2012 and 2013; in that report, CMS identified more than $460 million in qualified shared savings payments to these 220 ACOs as well as 23 Pioneer ACOs. Of the 220 MSSP ACOs, 58 kept spending below their benchmarks and earned shared savings of more than $315 million while 60 ACOs reduced their costs in comparison to their benchmarks but did not meet minimum savings thresholds needed to qualify for shared savings.

Five ACOs serving Iowa beneficiaries were included in the November 7 report. Two of those ACOs generated shared savings.

Accountable Care Clinical Services, PC: Iowa (Heartland Rural Physician Alliance), California, Connecticut, Massachusetts, Pennsylvania; start date 1/1/13; Track 1; earned shared savings of $5,157,823.

Genesis Accountable Care Organization: Iowa, Illinois; start date 7/1/12; Track 1; no earned shared savings.

Mercy ACO, LLC: Iowa; start date 7/1/12; Track 1; earned shared savings of $4,426,331.

Mercy Cedar Rapids/University of Iowa Health Care Accountable Care Organization: Iowa; start date 7/1/12; Track 1; no earned shared savings.

Unity Point Health Partners: Iowa, Illinois, Missouri; start date 7/1/12; Track 1; no earned shared savings.

A separate report issued by CMS in October of 2014 on Pioneer ACOs showed that Iowa’s Trinity Pioneer ACO experienced earned shared savings of $1,218,812 in its second year of performance.