Wednesday, May 22, 2013

CMS - Care Improvement Model 1 Open Period

Centers for Medicare & Medicaid Services [CMS–5504–N3]

Medicare Program; Bundled Payments for Care Improvement Model 1 Open Period

AGENCY: Centers for Medicare &Medicaid Services (CMS), HHS.

ACTION: Notice.

SUMMARY: This notice announces an open period for additional organizations to be considered for participation in Model 1 of the Bundled Payments for Care Improvement initiative.

DATES: Model 1 of the Bundled Payments for Care Improvement

Deadline: Interested organizations must submit a Model 1 Open Period Information Intake form by July 31,

FOR FURTHER INFORMATION CONTACT:  for questions regarding Model 1 of the Bundled Payments for Care Improvement initiative.

For additional information onthis initiative go to the CMS Center for Medicare and Medicaid Innovation Website at:

• Improve care coordination, beneficiary experience, and accountability in a person-centered manner.

• Support and encourage providers that are interested in continuously re-engineering care to deliver better care and better health at lower costs through continuous improvement.

• Create a cycle that leads to continually decreasing the cost of an acute or chronic episode of care while fostering quality improvement.

• Develop and test payment models that create extended accountability for better care, better health at lower costs for the full range of health care services.

• Shorten the cycle time for adoption of evidence-based care.

• Create environments that stimulate rapid development of new evidence based knowledge.

We are announcing an open period for additional organizations to be considered for participation in Model 1
of the Bundled Payments for Care Improvement initiative. Acute care hospitals paid under the inpatient
prospective payment systems (IPPS) and organizations that wish to convene acute care hospitals in a facilitator convener role are eligible to be considered for participation in Model 1.

Interested organizations must submit a Model 1 Open Period Information Intake form for a copy of the form go to the CMS Web site.

Humana CEO Sticks With Medicare Focus Amid Funding Pressure

Published May 21, 2013
Dow Jones Newswires

As the federal government squeezes payments for private Medicare plans, Humana Inc. (HUM), the big health insurer most tethered to the government health program, has no plans to shift gears.
Instead, the Louisville, Ky., company is pressing ahead with efforts to grow Medicare membership, while making its plans work more efficiently through methods such as providing more intense care upfront for sicker patients. Like other companies running Medicare Advantage plans, which cover more than 14 million Americans, Humana has to find ways to make a good business by doing more with less.
"Frankly if we're not doing that, we shouldn't be in business," Chief Executive Bruce Broussard said in a recent interview. "That's the responsibility we have."
He officially took over Jan. 1, long after predecessor and Chairman Michael McCallister greatly expanded Humana's Medicare footprint over a 13-year tenure. Much of that growth overlapped with a long stretch when Medicare Advantage plans were paid more than the equivalent, standard Medicare coverage. The private plans--which the government funds--often combine basic Medicare coverage for the elderly and disabled with extra perks, such as gym memberships.
The private market grew rapidly through these well-funded salad days, which stretched from about 2003 through 2009 and helped encourage alternatives to government-provided coverage. But under President Barack Obama's health-care overhaul law, Medicare Advantage payments are headed toward rough parity with payments within the traditional, fee-for-service Medicare program by 2017, analysts say.
Funding can vary for different plans, but the broad trend is unmistakable: A Humana investor presentation highlights declining Medicare Advantage funding every year since 2010. And while the health-insurance industry successfully lobbied away some cuts proposed next year, Humana and other companies like UnitedHealth Group Inc. (UNH) and Aetna Inc. (AET) have still warned they face tough reductions.
Those challenges are particularly acute for Humana, where about two-thirds of earnings are pegged to Medicare Advantage, Goldman Sachs analyst Matthew Borsch estimated. This high exposure has put some volatility in Humana's shares, which are up nearly 16% this year, but have lurched around amid worries about federal funding.
Analysts have mixed views as Humana weathers the storm. Mr. Borsch has a "sell" rating on the insurer amid concern about pressure on incoming government dollars in 2014 and 2015, though he expects strong growth in later years. Meantime, JPMorgan's Justin Lake raised Humana to an "overweight" rating shortly after the insurer posted strong first-quarter results and said it still expects to grow Medicare membership next year.
"The future of Medicare Advantage has become the biggest debate in the sector," Mr. Lake said in a research note earlier this month. This debate caused shares of both Humana and UnitedHealth, which also has a big Medicare business, to underperform large-cap peers, he said.
A key question is what kind of profit Humana can turn on those members going forward. Humana left that question hanging on its first-quarter call, when management backed away from a long-held goal of 5% Medicare pretax profit margins. Instead, the company set its sites on long-term earnings growth and return on invested capital.
According to Mr. Broussard, Humana's chronic-care program will help the company manage the latest funding reductions. This plan involves identifying and assessing members with chronic conditions like heart failure and diabetes early, because carefully managing these illnesses at home can help ward off expensive hospital trips later.
Several insurers are investing in programs like this as they chase an emerging market for so-called dual-eligible patients, those who qualify for both Medicare and Medicaid--the program for the poor--and who often have costly medical problems.
Meantime, Humana also continues to invest in deals with health providers, sometimes buying doctor practices outright. These deals give the company new leverage to encourage more cost-effective care. "You're buying part of your biggest expense," Stifel analyst Thomas Carroll said.
Health insurers also have warned that they may have to reduce benefits or raise member costs as they digest Medicare payment cuts. But the industry has "cried wolf before," said Joe Baker, president of the Medicare Rights Center, a nonprofit patient advocacy group.
"I think we do need to hold the companies' feet to the fire on their promise they can do this more efficiently," Mr. Baker said.
That is what Mr. Broussard expects. Meantime, the CEO, who first joined Humana in late 2011 from drug wholesaler McKesson Corp. (MCK), believes the skills Humana builds in the Medicare market-such as dealing with budget constraints and marketing insurance directly to people--will prove useful as Humana looks to bulk up in other markets, such as dual patients and individual policyholders.
"I really think that Medicare Advantage will be a large part" of the business going forward, Mr. Broussard said.
Write to Jon Kamp at

Read more:

The Bargaining Chip We've Been Looking For

There is a David-versus-Goliath perception that makes many primary care physicians dealing with giant hospitals and health care systems feel disadvantaged during payment negotiations, but the truth is that every health system needs a strong primary care base.
Now, more than ever, we can prove it.
Merritt Hawkins, the national physician search firm, periodically surveys hospital chief financial officers about how much revenue physicians in 18 different specialties generate for their affiliated hospitals each year. For the first time since the survey started in 2002, the CFOs indicated in a report released this month that primary care physicians generate more revenue, on average, than subspecialists. 
Specifically, the report says primary care physicians (family medicine, general internal medicine and pediatrics) generated a combined average of $1.6 million for their affiliated hospitals in 2012, compared to $1.4 million for physicians in 15 other specialties.
In fact, family medicine's average in the overall list ranked third at $2.1 million, trailing only orthopedic surgery ($2.7 million) and invasive cardiology ($2.2 million). It's also worth noting that family medicine's revenue average increased more than 20 percent from the previous report while the overall average for subspecialists declined.
Merritt Hawkins president Mark Smith called it a "seismic shift" away from subspecialists and toward primary care physicians, who are "taking a greater role in driving both the delivery of care and the flow of health care dollars."
What the report also tells hospitals and other employers is that they should be spending more money on our salaries. Family medicine ranks third in generating money for hospitals, but we rank last (tied with pediatrics) in average salaries at $189,000.
To look at it another way, physicians in nine specialties make an average of at least $100,000  more than the average family physician while generating anywhere from $207,000 (general surgeon) to $1.2 million (otolaryngology) less revenue for their hospitals.
Family physicians negotiating contracts should be aware of this report, be empowered by it and make sure that the people on the other side of the table are informed, as well.
The report validates what I've experienced here in Indiana, where I am chief medical officer of Community Health Network, a system with eight hospitals.
In the mid-1990s there was a national trend of hiring primary care physicians, but hospitals tended to know a lot more about inpatient care than outpatient care. And after being disappointed with the financial results, many health systems divested from primary care.
Fortunately, we saw the value of our primary care practices, and today, roughly 200 of Community Health Network's 600 employed physicians are primary care physicians. We have such a strong primary care base that subspecialists have sought employment here based, in part, on the fact that they want to be associated with that primary care base, have the opportunity to prove themselves to our primary care physicians and earn their referrals.
Now the trend toward hiring primary care physicians is back. More than 60 percent of AAFP members are employed, and that figure is expected to top 70 percent within five years.
Merritt Hawkins speculates that the surge in employed physicians is one of the reasons for the increase in revenue generated by primary care physicians. Simply put, employed physicians are more likely to keep tests, referrals and other services in house.
But there could be more to it than that. The report also theorizes that the patient-centered medical home is a factor, and as more primary care physicians become directors of medical teams, they gain "more control of how patients access the system and how revenue streams are directed."
In our current fee-for-service world, where volume trumps value in the eyes of many, this is important information to know. But the system is transitioning, albeit slowly, to one that will be value based. So we should continue to strive to provide the right care at the right time while also knowing and being empowered by the value of the services we provide.
Clif Knight, a member of the AAFP Board of Directors.

U.S. Renal Care to Pay $7.3 Million to Resolve False Claims Act Allegations

Allegedly Submitted False Medicare Claims for Drug Provided to Dialysis Patients

Washington, DC--(ENEWSPF)--May 21, 2013.  U.S. Renal Care, headquartered in Plano, Texas, has agreed to pay $7.3 million to resolve allegations that Dialysis Corporation of America (DCA) violated the False Claims Act by submitting false claims to the Medicare program for more Epogen than was actually administered to dialysis patients at DCA facilities, the Justice Department announced today.  U.S. Renal Care, which acquired DCA in June 2010, owns and operates more than 100 freestanding outpatient dialysis facilities throughout the United States.

Epogen is an intravenous medication that is used to treat anemia, a common condition afflicting patients with end-stage renal disease.  Epogen vials contain a small amount of medication in excess of the labeled amount, known as “overfill,” to compensate for medication that may remain in the vial after extraction and in the syringe upon administration.  The United States contends that from January 2004 through May 2011, DCA billed for 10-11% overfill whenever it administered Epogen.  However, because of the types of syringes DCA used, the United States alleges that DCA was not able to withdraw and administer 10-11% overfill every time it administered Epogen to patients, and thus submitted false claims to Medicare that overstated the amount of Epogen that it was actually providing.
“Today’s settlement shows that the Justice Department will aggressively pursue those health care providers who cut corners at the expense of the American taxpayers, such as by billing for items and services that were not provided,” said Stuart F. Delery, Acting Assistant Attorney General for the Justice Department’s Civil Division.  “We will continue to protect scarce Medicare dollars.”
“Medical care providers who submit false claims for services and products that were not actually delivered threaten the financial viability of the Medicare Trust Fund,” said Rod J. Rosenstein, U.S. Attorney for the District of Maryland.
“Health providers billing for phantom services cheat taxpayers, cheat programs straining to pay for vitally needed care, and cheat patients who pay inflated copayments,” said Nick DiGiulio, Special Agent in Charge, Office of Inspector General, U.S. Department of Health and Human Services for the region including Maryland.  “We will continue to work with the Department of Justice to ensure health professionals get reimbursed only for services they actually provide”
This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in that effort is the False Claims Act, which the Justice Department has used to recover $10.2 billion since January 2009 in cases involving fraud against federal health care programs. The Justice Department’s total recoveries in False Claims Act cases since January 2009 are over $14.2 billion.
The allegations settled today arose from a lawsuit filed by Laura Davis against DCA under the qui tam, or whistleblower, provisions of the False Claims Act. The Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the United States and share in any recovery.  Ms. Davis will receive $1,314,000 as part of today’s settlement.
This case was handled by the Civil Division of the Department of Justice and the U.S. Attorney’s Office for the District of Maryland with assistance from the Office of Inspector General for the Department of Health and Human Services.  The claims settled by this agreement are allegations only, and there has been no determination of liability.  The whistleblower suit is captioned United States ex rel. Laura Davis v. Dialysis Corporation of America, No. 1:08-cv-2829 (D. Md.).

NY Digital Health Accelerator Is a Model to Emulate: Startup's Perspective

Zina Moukheiber said the New York Digital Health Accelerator Is a Model to Emulate at the beginning of the program. With the proliferation of accelerators, I thought I’d share an insider’s perspective on what it was like to be in the program now that it is complete. I’ll also share some ideas on how can take it to the next level building off of their already-strong foundation.

Zina described the program as follows:

One of the toughest hurdles for health IT start-ups is getting in front of customers. Doctors are reluctant to pay, and sales cycles at hospitals can take months. Entrepreneurs often inspired by a negative personal experience, and moved to fix the problem, find later that their product doesn’t fit the hospital’s “workflow,” or offers no incentive for doctors to adopt it.

The New York Digital Health Accelerator’s (NYDHA) program was unique in that over 50 CIOs and CMIOs from 23 leading providers were the selection committee — in other words, prospective customers, not investors, made the call. These same executives agreed to mentor the startups during the program. Consequently, despite announcing that 12 companies would be selected, the program only selected 8 out of the 250+ companies that applied. With the executives making that level of commitment, they were only able to find 8 companies that met their high bar.
A major focus of the program was to get us connected to providers. A key responsibility for the provider mentor was convening meetings with their organization’s leadership. Even though they didn’t all become customers, the feedback and perspective was invaluable for our focus going forward. A few of the companies (including mine), were able to close major opportunities that are game-changers. As these were extremely competitive bids, being a part of the NYDHA program was a big help. Why? It took a lot of the perceived risk out of the equation because the providers knew that we’d cleared a high bar (i.e,., 50+ senior executives and investors had agreed that the selected companies were worth investing their time and money).
With the support of investors such as Milestone Venture Partners, Janssen Healthcare Innovation (Johnson & Johnson), United Health Group, Aetna and others, the investment was managed by the Partnership Fund for New York City (PFNYC) led by Maria Gotsch. The investors recognize Healthcare’s Trillion Dollar Disruption provides a great opportunity. The program was co-managed by the New York eHealth Collaborative (NYeC) led by ex Intel veteran Dave Whitlinger. Much of our day-to-day program interactions were conducted by Maria and Dave’s lieutenants — Jahan Ali at the PFNYC and Anuj Desai at NYeC. They teed up many opportunities such as being featured at the Digital Health Conference and getting access to federal healthcare leaders.
One of the distinguishing facets of the NYDHA is providing the most funding per company of any accelerator ($300,000 or more) — roughly 5-15x more than other accelerators while taking significantly less equity. This ensures that the NYDHA will be the most competitive program to enter as the value proposition is strongest for healthtech startups. New York leaders are striving to ensure that New York is the epicenter of healthcare’s reinvention. Increasingly, other communities are organizing themselves with similar ideas such as Tampa Bay. Like New York, they strive to be where healthcare gets revolutionized and understand what was written in Jim Clifton’s The Coming Jobs War – i.e., it’s not just about maximizing short-term equity returns. Todd Park, our nation’s Chief Technology Officer, has said that the NYDHA program is one that other locales should seek to emulate.
As Zina outlined at the outset, the NYDHA has specific focus areas:

The accelerator’s mission is very focused, answering the needs of the state and health care providers. Start-ups need to have a product that addresses care coordination, patient engagement, analytics, or message alerts. New York is moving away from a fee-for-service system for Medicaid patients suffering from chronic illnesses, to one based on patient outcome. That involves coordinating care among different health care providers to prevent the likelihood of hospitalization. NYEC also oversees the state’s health information exchange which allows hospitals and doctors to electronically transmit patient records; it is looking to build applications on top of its network.
At the kick-off of the NYDHA program, Dr. Nirav Shah, the New York State Commissioner of Health, explained how the NY Health Home program is a key plank of how they are shifting from a hospital-centric view of healthcare to one that extends beyond the hospital walls. A reason why providers need modern cloud-based vendors is captured in the needs of the Health Home. They require systems that can scale from a two-person clinic with no IT infrastructure (other than an Internet connection) to a large urban hospital and everything in between. Not only would it be cost-prohibitive to deploy a traditional client-server model, it’s a highly dynamic time when providers don’t want to be burdened with nightmarish version upgrades typical in a client-server model. It was refreshing during the program to find providers who fully understood this and how it was imperative to move to a cloud-based model. These smart providers recognize how other health systems are spending billions to prepare for the “last battle” rather than looking forward.
NYDHA Recognized for its Results
Since the launch of the program in September 2012, the inaugural class of companies made tremendous strides in a marketplace (healthcare) noted for its slow pace of change and long decision cycles. The following are some of the accomplishments of the program shared by the NYDHA:
  • In aggregate, the companies raised approximately $5 million in funding in order to drive growth while significantly expanding their customer base.
  • This growth has led to the creation of jobs in New York, with the companies hiring 40 new employees since the program’s inception, with plans to add 41 additional staff by the end of 2013.
  • In addition to providing product feedback, the participating healthcare providers facilitated 17 pilots at their organizations. Mount Sinai has adopted Cureatr’s enterprise-grade mobile care-coordination mobile app. Mount Sinai has signed a multi-year contract to roll out the app to Mount Sinai clinicians. The Brooklyn Health Home (an organization of 50+ independent provider organizations) and Maimonides Medical Center (large hospital in Brooklyn) selected Avado as their enterprise-wide standard for a patient portal and engagement platform for multiple years. [Disclosure: Avado is the company where I'm the co-founder, CEO]  By the end of the summer, Aidan will be helping 30,000 patients choose their post-acute care.
The NYDHA has received broad national recognition including the following:
  • The California Healthcare Foundation has called the NYDHA one of the most successful accelerator models in the country. In particular, the report noted the financial and strategic ties that have already been forged in the market. These strong market ties are critical because they will determine which accelerators survive and thrive in the long term.
  • The Rotman School of Management has ranked the NYDHA the number one Health IT Accelerator in the world, compared to 21 similar accelerators. The ranking was based on 10 different criteria including access to customers, investors, government, and support for innovation.
Raising the Bar on HealthTech Accelerators
There are some terrific healthtech accelerators such as Blueprint Health, Healthbox and Rock Health. They continue to raise the bar as Rock Health has brought in significant new funding and I’ve heard great things about Blueprint’s latest class while Healthbox is expanding their footprint with an accelerator in Florida. The great thing for healthtech entrepreneurs is as each one raises the bar, it gets better for the entrepreneur. In turn, that helps the health ecosystem. The best accelerators will separate themselves from the pack. Until the new accelerators establish a track record, I’m dubious of their value given meager funding (e.g., $20,000 per company) and aggressive asks on the equity front (e.g., 6-8%). I have a hard time imagining how they will get high quality companies with unfriendly terms such as this.
As part of the exit from the NYDHA, they asked for feedback so they can continue to improve. The NYDHA is in the planning stages of the next class. Along with others, I suggested broadening to additional health organizations. I was pleased when the NYDHA indicated they are looking to bring on sponsors and additional mentors from payers, pharma, and tech companies. This is a smart move, particularly as the lines are blurring between various industry segments. Large multi-specialty groups, tech companies, pharma, etc. tend to make decisions faster than traditional hospitals. I’m certain the first class would welcome the opportunity to get in front of these organizations as well. It will be interesting, over time, to see which accelerator programs foster their “alumni” to ensure their long-term success. That would be logical given the equity interest as well as to promote the cache of their alumni companies.
I’ve personally seen payers and pharma, in particular, making major bets (largely behind the scenes today) versus most health systems that are just dipping their toe in the water. My most read piece on Forbes has been IBM’s Reinvention Should Inspire Flat Pharma Businesses which speaks to the imperative pharma has to avoid the fate of the railroad industry. Future NYDHA classes should benefit from the aggressive moves by pharma and payers. I would expect Anuj Desai (NYeC’s VP of Business Development) is going to be busy striking deals with these organizations.
Ultimately, the litmus test for accelerators is how well they fix the market inefficiency of innovative healthcare organizations not being aware of innovative technology companies that could accelerate their market success. With the longest program (9 months) and best funding, the NYDHA has grabbed the pole position. As nimble startups themselves, I’m certain that other accelerators are going to respond and try to leapfrog the NYDHA. Everyone, including the NYDHA, benefits by this healthy competition. It’s never been a better time to be a healthtech startup.

Feds OK Va plan for Medicaid-Medicare eligibility

 — RICHMOND, Va. (AP) - Federal officials approved a four-year Virginia cost-saving experiment intended to simplify and consolidate health care coverage for about 78,000 Virginians who are eligible for both Medicaid and Medicare, a major change Gov. Bob McDonnell set as a condition for expanding Medicaid.
Virginia got the go-ahead Tuesday for McDonnell's new Commonwealth Coordinated Care program, which is estimated to save the state $11 million in its first six months after it begins on Jan. 1. In fiscal year 2015, beginning July 1, 2014, officials estimate it will cut state costs by $22.6 million.
The program is designed to cut costs by developing a single program to serve people who now must navigate two different programs: Medicaid, the federal-state program that helps pay for health care for the poor, elderly, blind and disabled and low-income families with children, and; Medicare, the federally funded health insurance program for the disabled or people 65 or older, generally the same eligibility standards as Social Security.
"(S)ome of Virginia's most vulnerable adults will now benefit from a program where their health care and long-term services and supports are better coordinated," McDonnell said in a statement announcing the program's approval. Not only will it eliminate hassles for beneficiaries, increased managed care will save state and federal governments money, he said.
The initiative for consolidating services for "dual-eligibles" was among several pending federal approval as a condition the governor set and the General Assembly approved for expanding Medicaid to about 400,000 Virginia working poor.
Others generally call for broader flexibility in administering Medicaid, including benefits that are tighter and commensurate with those in most private insurance coverage, demanding co-payments or cost-sharing of new recipients and greater use of managed care.
A special 12-member commission of five state senators, five House of Delegates members and two members of McDonnell's cabinet has been formed to certify that the reforms McDonnell requires for Medicaid expansion have been achieved.
Virginia Secretary of Health and Human Services Bill Hazel, who did the heavy lifting in putting together the tricky pilot pact among two levels of government and the private insurance industry, said the agreement "has the potential to be one of the most significant to date."
"For many years, the commonwealth has been working toward this significant reform opportunity. We view this achievement as a testament to the willingness of Virginia's Medicaid providers and interested health plans to work collaboratively with the department to implement innovative models of care," he said in a press statement.
With an agreement-in-principle in place between the state Department of Medical Assistance Services and the Centers for Medicare and Medicaid Services - the federal agency that administers the two huge entitlement programs and the State Children's Health Insurance Program - the two sides will contract with health plans to provide services for enrollees across the state.
The program's demonstration period runs through December 2017, but Congress would have to approve making it permanent beyond that.

Read more:

CMS sets Medicare Advantage and drug plan MLR rules

MAY 20, 2013

The Centers for Medicare & Medicaid Services (CMS) has released the final version of regulations that will affect how insurers manage and price private Medicare plans.
The final rule, Medical Loss Ratio Requirements for the Medicare Advantage and the Medicare Prescription Drug Benefit Programs (CMS-4173-F), explains how CMS wants insurers to apply new minimum medical loss ratio (MLR) rules to Medicare Advantage plans and Medicare Part D drug plans.
The regulations are set to appear in the Federal Register Thursday.
PPACA and her sister, HCERA
The Affordable Care Act package has two parts: The well-known Patient Protection and Affordable Care Act of 2010 (PPACA), and another, less publicized act, the Health Care and Education Reconciliation Act of 2010 (HCERA).
A new law created by HCERA -- Section 1857(e) of the Social Security Act (SSA) -- requires Medicare Advantage plans and Medicare Part D prescription drug plans to spend at least 85 percent of their revenue on health care and quality improvement efforts starting in 2014.
A Medicare plan that misses the minimum MLR goal is supposed to send rebates to enrollees. Officials at CMS -- an arm of the U.S. Department of Health and Human Services (HHS) -- are estimating that insurers could end up paying about $858 million in rebates, or $30 to $40 per private plan enrollee, if 2014 revenue and benefit totals are comparable to 2013 revenue and benefit totals.
PPACA already requires commercial health insurers to spend at least 85 percent of large-group revenue and 80 percent of individual and small-group revenue on health care or quality improvement efforts or else pay rebates.
CMS posted a draft version of the Medicare MLR regulations in February and received 51 comments.
Much of the debate about the commercial plan minimum MLR regulations focused on what a plan should and should not be able to count when calculating the amount it has spent on health care and on "quality improvement activities" (QIAs).
Health plans have argued, for example, that the quality improvement activity total should include the cost of efforts to control soaring health care costs by fighting fraud. Some have argued that many of the costs involved with managing a provider network, such as verifying the credentials of providers, also have a direct bearing on quality.
In the final rule, CMS officials decided to let plans include cash recouped through fraud-prevention efforts to be included in the incurred claims total, but to exclude fraud prevention and network management costs from the QIA cost total.
"Even though fraud prevention is not a QIA, we believe this provides an incentive for [Medicare Advantage] organizations and Part D sponsors to engage in fraud reduction activities," officials said in a preamble to the final rule.
Elsewhere, CMS decided to let plans count the cost of setting up the electronic health record (EHR) systems required by PPACA as a quality improvement activity, but not the cost of converting to the new ICD-10 claim coding system. 
Some commenters wrote to CMS to make sure that officials would include the fees paid to agents and brokers in the term "marketing expenses."
"We consider agents and brokers fees as non-claims costs and therefore impermissible as being considered included as incurred claims," officials said. "We also exclude marketing as a quality improving activity."
Officials also took pains to note that, although they want health plans to find ways to use wellness programs to improve the quality of care, they have concerns about plans using wellness programs to attract unusually healthy enrollees or to penalize older or sicker people.
"Our longstanding policy is that a plan benefit design cannot offer differential benefits to its enrollees, and that [Medicare Advantage (MA)] organization or Part D sponsor may not deny, limit, or condition enrollment to individuals eligible to enroll in an MA plan offered by the organization on the basis of any factor that is related to health status, including medical history, disability, race, or age," officials said.
"Moreover, MA organizations and Part D sponsors must have procedures in place to ensure that members are not discriminated against in the delivery of health care services, consistent with the benefits covered in their policy, based on race, ethnicity, national origin, religion, gender, age, mental or physical disability, genetic information, or source of payment," officials said.
The Medicare Advantage managed care manual discusses the kinds of evidence, such as studies from government agencies or independent technology assessment groups, that plans need to support use of wellness programs, officials said.