January 4, 2019

TO: Chief Executive Officers and Chief Financial Officers, Member Institutions

FROM: Ronnie Cook, Finance and Managed Care Consultant [email protected], 919-677-4225 Jeff Weegar, Vice President of Financial Policy [email protected], 919-677-4231

Court Rules HHS’s Payment Cut for 340B Hospitals Unlawful US District Judge Rudolph Contreras ruled that Health and Human Services (HHS) Secretary Alex Azar exceeded his statutory authority by issuing a policy that would alter the hospital reimbursement formula for certain covered outpatient drugs paid under the 340B Drug Pricing Program. The policy from the final 2018 Hospital Outpatient Prospective Payment System (OPPS) rule changed the formula for certain covered outpatient drugs from the average sales price (ASP) of the drug plus six percent to the ASP minus 22.5 percent starting on Jan. 1, 2018.

In its ruling, the court held that “the Secretary’s rate adjustment at issue here does not affect a single drug or even a handful of drugs, but rather potentially thousands of pharmaceutical products found in the 340B Program when viewed together, the rate reduction’s magnitude and its wide applicability inexorably lead to the conclusion that the Secretary fundamentally altered the statutory scheme established by Congress for determining reimbursement rates, thereby exceeding the Secretary’s authority.”

The judge granted the plaintiff’s motion for a permanent injunction and ordered supplemental briefing on the question of proper remedy. The ruling can be found at: https://bit.ly/2BITWoC.

For more details, please refer to this week’s Financial Feature found in our NCHA Newsline Weekly publication.

CMS Releases Medicare Shared Savings Program Final Rule The Centers for Medicare & Medicaid Services (CMS) released a rule finalizing changes to the Medicare Shared Savings Program. CMS states this rule is intended to drive Accountable Care Organizations (“ACOs”) towards greater savings while providing new flexibilities. The summary key policies in the final rule is provided below:

• Redesign the MSSP to include only two tracks – Basic and Enhanced. • Move ACOs to two-sided risk more quickly by allowing a maximum of two or three years of participation in upside-only risk. • Reduce shared savings rates for upside-only models from 50 to 40 percent. • Differentiate between “low-” and “high-revenue” ACOs and require high-revenue ACOs to take on more risk more quickly. • Increase the length of agreement periods to at least five years. • Allow all ACOs to elect prospective beneficiary assignment or preliminary prospective assignment with retrospective reconciliation. • Expand the use of regional factors in the benchmarking methodology. • Allow ACOs’ risk scores to decrease by an unlimited amount, without the proposed 3 percent cap. • Increase access to waivers of telehealth and other Medicare payment requirements.

For more details, please refer to this week’s Financial Feature found in our NCHA Newsline publication.

2015 DSH Audit Update As of Dec. 31, 2018, and in light of four recent appellate court decisions, the Center for Medicare and Medicaid Services (CMS) is withdrawing questions 33 & 34 from the Medicaid Disproportionate Share Hospital (DSH) guidance that was issued in January 2010 titled “Additional Information on the DSH Reporting and Audit Requirements.” This guidance can be found at: https://bit.ly/2CPx9Jo.

As a result, questions 33 & 34 are no longer operative, and CMS will accept revised DSH audits that cover hospitals services furnished before June 2, 2017. This translates to the removal of 3rd Party Payments from the recently completed 2015 DSH Audit. The Division of Health Benefits has indicated that it expects the revised 2015 audit results to be completed by the end of January 2019.

CMS contends that its 2017 rule is valid. Thus, the 2016 audit will exclude 3rd Party Payments but the 2017 audit (conducted in 2020) will include these payments. The North Carolina Healthcare Association (NCHA) is working with legal counsel to evaluate next steps.

Reminder - NCHA Offering Medicaid Managed Care Overview on Jan. 23, 2019 The North Carolina Healthcare Association (NCHA) will host DHHS Secretary Mandy Cohen and members of her team on Jan. 23, 2019, for an overview of what to expect under Medicaid Managed Care. This is the first of a series of educational conferences and webinars throughout the year to prepare members for the transition to Medicaid Managed Care. The conference is scheduled from 1:00 - 4:00 pm at the Sheraton Imperial Hotel and is open to all NCHA member health systems. There is no charge for this meeting but pre-registration is required. Registration instructions can be found at: https://www.ncha.org/event/medicaid-managed-care-overview/.

VA Awards Contract for CCN Regions 1-3 to Optum Public Sector Solutions, Inc. The Department of Veterans Affairs (VA) announced that it has awarded a contract to Optum Public Sector Solutions, Inc., part of UnitedHealth Group, Inc., for management of Regions 1-3 of VA’s new Community Care Network (CCN). North Carolina is assigned to Region 1. CCN is VA’s direct link with community providers to ensure VA provides Veterans with timely, high-quality care.

During the transition to CCN, VA requests that providers continue to partner with TriWest Healthcare Alliance (TriWest) as they expand their national network of community providers. TriWest’s community care network serves as a bridge between now and when CCN is deployed nationwide to ensure Veterans continue to receive the care they need. Optum will reach out to you for enrollment in their regional networks based on a deployment plan. The VA’s Press Release can be found at: https://www.va.gov/opa/pressrel/pressrelease.cfm?id=5175.

BCBSNC Provides Notification of Policy Revisions Effective April 1, 2019 Blue Cross and Blue Shield of North Carolina (BCBSNC) has provided notification of policy revisions that will go into effect on April 1, 2019. These policies revisions can be reviewed at: https://bit.ly/2LSZ4ec.

Updated policies can be found at https://bit.ly/2QkXRNr.

United Healthcare (UHC) Delays Effective Date for Site of Care Review for Outpatient Imaging Procedures The October 2018 Network Bulletin announced that effective Jan. 1, 2019, UHC would begin conducting site of care medical necessity reviews for certain Magnetic Resonance/Computed Tomography (MR/CT) imaging procedures. UHC has announced that it will delay these site of service reviews by 30 days to allow time for additional communication and optimal rollout. The new launch date will now be Feb. 1, 2019. 2 Please refer to pages 32 and 33 in the January 2019 Network Bulletin, which can be found at: https://bit.ly/2TtdZOR.

United Healthcare Issues January 2019 Network Bulletin The January 2019 United Healthcare Bulletin is now available on the United Healthcare website. The Bulletin includes medical policy, drug policy, coverage determination guidelines, utilization review guidelines, reimbursement policies, and quality of care guideline updates. View the bulletin online at: https://bit.ly/2TtdZOR.

United Healthcare Issues January 2019 Medical Policy Update Bulletin This Bulletin provides complete details on United Healthcare Medical Policy, Drug Policy, and Coverage Determination Guideline updates and is available at: https://bit.ly/2LQxeQ1.

DHB Issues December 2018 Medicaid Pharmacy Newsletter The latest Medicaid Pharmacy Newsletter, dated December 2018, is now available on the NC Medicaid Division of Health Benefits (DHB) website. In addition to the January 2019 checkwrite schedule, this edition of the newsletter includes articles such as:

• Generic Miralax (Polyethylene Glycol 3350) Moves To OTC Only • NADAC Rate Update Process • Opioid Dependence Maximum Daily Dosage Edit • List of Providers Due for Re-verification Jan - June 2019

The December 2018 Medicaid Pharmacy Newsletter can be found by clicking on the Pharm Newsletter Dec-2018 link at: https://medicaid.ncdhhs.gov/documents/2018-pharmacy-newsletters.

Please contact Ronnie Cook ([email protected] or 919-677-4225) or Jeff Weegar ([email protected] or 919-677-4231) with any questions.

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