21st Century Cures Act Modifies Medicare Payments for Services

In December, Congress passed the 21st Century Cures Act. The act’s major provisions will reform the current standards and appropriations for biomedical research, provide $1.75 billion annually for the National Institutes of Health (NIH) and $110 million for the U.S. Food and Drug Administration (FDA) — funding that will end after five years. Along with an increase in NIH and FDA funding, the bill will reduce regulations on access to medical research and expedite the testing processes of new drugs.

There are several minor provisions in the act, however, that will change how Medicare reimburses providers for services. A National Law Review article outlines several key highlights of the provisions:

• Site-neutral payment methodologies. This requires Medicare to reimburse providers or suppliers for services, supplies or drugs without regard to whether services were provided in an inpatient or outpatient facility or in a physician’s office. However, hospital outpatient departments may be exempt in some instances.
• Long-term care hospitals (LTCHs). The act amends Medicare policies related to certified LTCHs. Specifically, it modifies the standard federal payment rate for LTCH high-cost outlier payments beginning Oct. 1, 2017; extends the prohibition on the Centers for Medicare and Medicaid’s (CMS) enforcement of the LTCH 25-percent rule through Sept. 30, 2017; extends the carve-out for Medicare Advantage and site-neutral discharges from the calculation of the 25-day average length-of-stay requirement to LTCHs taking advantage of the moratorium exception; temporarily excepts LTCH site neutral criteria for certain hospitals that treat patients with brain and spinal cord injuries in 2018 and 2019; and grandfathers LTCHs by temporarily excepting LTCH site-neutral criteria for hospitalizations for severe wounds in 2018.
• Durable medical equipment (DME). The act requires CMS to consider average travel time, the cost associated with furnishing items, the average volume of items and services furnished in the area, and the number of suppliers in the area when determining adjustments in the use of competitively bid prices for DME items and services furnished on or after Jan. 1, 2019. It also moves up the implementation date of the provision limiting federal Medicaid reimbursement to states for DME, prosthetics, orthotics and supplies to Medicare reimbursement rates by one year from Jan. 1, 2019, to Jan. 1, 2018.
• Home infusion therapy. Effective Jan. 1, payments for infusion drugs furnished by DME suppliers are modified from 95 percent of the average wholesale price to the average sales price plus a 6 percent add-on. It is estimated that this change will reduce payments to suppliers by $660 million over a 10-year period. It will not be until Jan. 1, 2021, that the act will reimburse “qualified home infusion therapy suppliers” for providing infusion therapy services in a beneficiary’s home. This provision, however, will come with a broad list of new requirements and standards for suppliers of home infusion, and it will require Medicare to reimburse home infusion therapy suppliers based on a single, all-inclusive payment.
• Medicare Advantage (MA). Starting in 2019, during the first three months of any year, individuals eligible for MA may change a previous election to receive benefits through original Medicare or an MA plan and elect coverage under Part D. Starting in 2021, individuals with endstage renal disease (ESRD) may enroll in any MA plan. And it adjusts the ESRD risk adjustment model by directing CMS to take into account the total number of diseases, multiple years of data and dual eligibility status. It also partially limits CMS’s ability to terminate MA plans based solely on minimum quality ratings.

In addition to changes in reimbursement, the act reauthorized the Creating Hope Act pediatric priority review voucher program, which will provide researchers and biotechs with financial incentives to develop better treatments for kids with cancer and other serious illnesses until Sept. 20, 2020. In addition, drugs that receive rare pediatric designations by that date will qualify for vouchers as long as they are approved by Sept. 20, 2023. Since 2012, this act has created almost $1 billion in research and development initiatives for pediatric drug development.