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APPLIED POLICY INSIGHT
Competitive Bidding in DMEPOS
For suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS, herein referred to as DME, except when referenced by a federal authority) included in Medicare’s competitive bidding program (CBP), the first quarter of 2024 has been defined by continuing regulatory and economic uncertainty. 

Following the expiration of its contracts for off-the-shelf (OTS) back and knee braces on December 31, 2023, the Centers for Medicare & Medicaid Services (CMS) currently has no contracts in place for any of the 16 DME product categories nominally covered under CBP. Instead, the agency has instituted a temporary gap period as it works to “complete the formal public notice and comment rulemaking process” and implements changes to improve the program.

This current pause is the latest undertaken in a complex program which has been characterized by phased and uneven implementation. Beyond presenting unknowns for suppliers, it also has broader implications for Medicare beneficiaries.
Applied Policy Health Policy Director
Recognized for Expertise
As the healthcare-specific provisions of the Inflation Reduction Act (IRA) are phased in, Applied Policy’s Alison Falb has become a trusted resource for interpreting the implications of its drug pricing reforms.

A health policy director who leads Applied Policy’s pharmaceutical team, Falb will be among the panelists discussing Out of Pocket Cap and Medicare Prescription Payment Plan Provisions of the Inflation Reduction Act at the Pharmacy Quality Alliance’s annual meeting in Baltimore on May 15.
Falb’s policy analysis is informed by her previous work at CMS and as a regulatory counsel at the Food and Drug Administration. She is also quick to acknowledge the support of her team. “I am fortunate to work with individuals who really want to understand complex policy questions,” she said. “Getting to the ‘heart of the issue’ and fully appreciating the potential impacts of legislation or regulation requires a great deal of research. And Applied Policy makes space for that.”

Falb has recently been quoted in two articles in First Report Managed Care, including Who Will Benefit Under the Medicare Part D Out-of-Pocket Spending Cap? Commenting on the KFF finding that relatively few seniors are aware that the IRA established a cap on Part D out-of-pocket drug costs, she noted that “Older adults are likely less aware of this provision because of [its] complexity. Details about the rollout, which looks different in 2024 than in 2025, and explaining how cap can lead to savings makes messaging more complicated.” 
Applied Policy's Latest Summaries
On February 20, 2024, CMS released the final “Medicaid Program: Disproportionate Share Hospital Third-Party Payer Rule” to address legislative provisions in the Consolidated Appropriations Act, 2021 (CAA 2021), which makes changes to the hospital-specific limit on Medicaid DSH payments. The rule aims to provide more clarity to states and hospitals on how the limit will be calculated and make technical changes and clarifications to the DSH program.
On February 8, 2024, CMS issued the proposed rule, Strengthening Oversight of Accrediting Organizations and Preventing Accrediting Organization Conflict of Interest, and Related Provisions.

Accrediting Organizations (AOs) are responsible for determining compliance for over 9,000 Medicare and Medicaid providers and suppliers. Recently, CMS has become concerned with the performance of AOs, who, among other issues, have missed instances of noncompliance in surveys of facilities that were later identified in surveys by State Agencies (SAs) and often provide fee-based consulting services to the providers and suppliers that they accredit, creating potential conflicts of interest.

To address these concerns, CMS proposes a number of provisions to strengthen oversight over AOs and prevent potential conflicts of interest including:

  • Limiting AOs ability to provide fee-based consulting services to providers and suppliers they accredit,
  • Obtaining declarations of relationships with provider and suppliers that could represent conflicts of interest from all AO employees,
  • Preventing AO employees with relationships with a provider or supplier from being involved in their accreditation process,
  • Requiring that AOs use Medicare conditions as minimum accreditation standards,
  • Requiring that AOs align their survey processes more closely with SAs,
  • Requiring AOs to promptly rescind accreditation of providers and suppliers who are involuntarily terminated from Medicare and strengthening the thresholds for these providers to reenter the program, and
  • Requiring AOs that fail to meet certain thresholds to submit a plan of correction to CMS.
Artificial Intelligence: Insights and Innovations in Tomorrow’s Healthcare
Artificial intelligence (AI) is revolutionizing healthcare. Hospitals and health systems are already seeing the benefits of deploying AI in the clinical setting, including operating as a second set of eyes for radiologists, mitigating the risk of human error, and enabling early detection of adverse events in remote patient monitoring. However, questions remain regarding how to regulate AI while ensuring that it is deployed in a safe, unbiased manner.

At Houston Methodist, a core team of health and technology professionals, self-described as “Digital Innovation Obsessed People,” lead the hospital’s Center for Innovation. Their mandate: drive new pilots and programs that will facilitate success across the healthcare spectrum. Roberta Schwartz, PhD, MHS, is the Executive Vice President and Chief Innovation Officer at the Houston Methodist healthcare system. She will join the Northern Virginia Health Policy Forum on March 20 from noon to 1 PM ET to share her front-line view of the future of AI in healthcare as well as the existing innovations shaping our present-day healthcare system.
Highlights from NVHPF's February Event:
Medicare Advantage Plans – 
Exploring Their Growth, Future, and Pitfalls
On February 28, 2024, the Northern Virginia Health Policy Forum hosted Meredith Freed, Senior Policy Manager at the KFF Program on Medicare Policy, and Gregory Berger, Principal Policy Advisor for Government
Relations at Kaiser Permanente. The distinguished panel delved into the expansion of Medicare Advantage programs and their implications for the healthcare system. Jim Scott, President and CEO of Applied Policy, introduced the speakers, emphasizing the independent nature of KFF and Kaiser Permanente.

Driving Factors Behind Medicare Advantage Growth

The discussion highlighted the factors propelling the growth of Medicare Advantage plans. Ms. Freed emphasized the appeal of additional benefits like vision and dental coverage alongside cost-saving measures such as out-of-pocket cost limits. The convenience of “one-stop shopping” attracts consumers, while insurers benefit from the market’s profitability. Mr. Berger noted that insurers can lower costs compared to traditional Medicare, using savings for profit and enhanced benefits.

Balancing Costs And Benefits In Medicare Programs

The panelists provided insight into the payment structures of traditional Medicare and Medicare Advantage plans. Government payments to private insurers for Medicare Advantage plans differ from traditional Medicare. The government covers traditional Medicare through a fee-for-service structure, and it pays private insurers administering Medicare Advantage plans a set rate per person per month. These insurers bid against benchmark costs, and plans that bid below the benchmark receive a portion of the difference between the bid and the benchmark as a rebate. Ms. Freed stressed the importance of rebates in reducing costs for beneficiaries, subsidizing premiums, and enhancing benefits. Mr. Berger highlighted the quality incentives in the Medicare Advantage and Part D Star Ratings System, promoting performance excellence incentivized through bonus payments.
Teflon and Bioethics:
The Anniversary of the Scribner Shunt
This week marks 64 years since Clyde Shields, a machinist at the Boeing plant in Seattle, Washington, became the first patient to undergo long-term dialysis for chronic kidney disease (CKD). The success of Shields's treatment regimen—he lived an additional 11 years—represented a turning point in the development of modern dialysis. By demonstrating the viability of dialysis as a life-sustaining treatment, the medical team at Seattle’s Swedish Hospital paved the way for the procedure’s widespread adoption. Today, approximately half a million patients with CKD rely on dialysis, with the Centers for Disease Control and Prevention reporting that an additional 360 Americans start dialysis daily.

John Jacob Abel, Leonard Rowntree, and Benjamin Turner introduced the process for what became dialysis at Johns Hopkins University in 1913. The three men constructed a rudimentary dialysis machine and coined the term ‘hemodialysis.’ Their work was halted by World War I before it could be applied to human patients. Yet, it laid the foundational principles that inspired later researchers, including Germans Heinrich Necheles and Georg Haas. Building on the Hopkins team’s principles, Haas performed the first human hemodialysis in 1924. The New York Times described this groundbreaking procedure as well calculated to "arouse amazement" by proposing "to take all of the blood out of one's body and submit it to an overhauling in order to remove undesirable substances."

During World War II, Dutch physician Willem Kolff achieved a significant breakthrough in dialysis with the development of the rotating drum kidney, which enabled the exchange of waste products by diffusion. Kolff successfully treated his first patient in 1945, marking the beginning of hemodialysis as a clinical procedure.

Kolff's decision to administer dialysis to a woman imprisoned as a Nazi collaborator, despite his own political views and over the objections of his neighbors, presaged future ethical debates surrounding the allocation of dialysis treatment. Many years later, he later reflected, “But of course, the moral is that we have to treat patients when they need help, even if we don't like them.”

Dialysis emerged as a critical treatment for acute episodes of kidney disease, yet it remained impractical for long-term management of CKD due to the lack of a sustainable method for vascular access. Repeated needle insertions led to rapid deterioration of blood vessels, while infections and clotting from frequent venous access further compounded the challenges of long-term dialysis treatment.

Dr. Belding Scribner of the University of Washington School of Medicine addressed this obstacle by designing a device that connected a patient's artery to a vein via external tubing. This Scribner shunt, crafted from Teflon by Scribner’s colleague, Wayne Quinton, established a reusable access point for repeated dialysis treatments, effectively overcoming the barriers to long-term care. Not only did this innovation make long-term dialysis feasible for Clyde Shields, but it also heralded a new era of treatment possibilities for millions of Americans with CKD.

However, widespread adoption of dialysis was hindered by skepticism within the medical community, the limited availability of dialysis machines, and the high costs associated with treatment.

Compounding these challenges was the ethical dilemma of patient selection. At the Seattle program, patients seeking dialysis treatment underwent a rigorous application process, which included both a medical review and a psychological evaluation. Additionally, they were required to pay $30,000—equivalent to about $300,000 in today's dollars—upfront for the first three years of treatment.

The final decision on patient admission to the program rested with The Admissions and Policy Committee of the Seattle Artificial Kidney Center. This committee, composed of uncompensated laypeople, served as a de facto jury of the patients' peers, tasked with evaluating the 'value' of each patient. Their assessment encompassed a variety of factors, such as the patient’s age, health status, family responsibilities, and contributions to society.

This anonymous group of volunteers was the subject of a 1962 story in Life magazine and featured in a 1965 NBC documentary titled 'Who Shall Live'. Such media coverage alerted the American public to both the promise of dialysis and the challenge of resource allocation.  

The promise has been realized for hundreds of thousands. The challenge continues to shape healthcare policy.
On the Docket
Applied Policy is following these rules under review at the Office of Management and Budget:

  • Occupational Exposure to COVID-19 in Healthcare Settings 
  • Alternative Payment Model Updates; Increasing Organ Transplant Access (IOTA) Model 
  • Medicaid and Children's Health Insurance Program (CHIP) Managed Care Access, Finance, and Quality 
  • Nondiscrimination in Health Programs and Activities
  • Health Data, Technology, and Interoperability: Patient Engagement, Information Sharing, and Public Health Interoperability
  •  Ensuring Access to Medicaid Services 
  • Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals; the Long-Term Care Hospital Prospective Payment System; and FY 2025 Rates 
  • HHS Notice of Benefit and Payment Parameters for 2025 
  • FY 2025 Hospice Wage Index, Payment Rate Update, and Quality Reporting Requirements 
  • Contract Year 2025 Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, and Medicare Cost Plan Programs, and PACE (CMS-4205)
  • FY 2025 Inpatient Psychiatric Facilities Prospective Payment System Rate and Quality Reporting Updates 
  • Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting 
  • Medical Devices; Laboratory Developed Tests Final Rule 
  • FY 2025 Inpatient Rehabilitation Facility (IRF) Prospective Payment System Rate Update and Quality Reporting Program 
  • Rulemaking on Discrimination on the Basis of Disability in Health and Human Services Programs or Activities
  • FY 2025 Skilled Nursing Facility (SNFs) Prospective Payment System and Consolidated Billing and Updates to the Value-Based Purchasing and Quality Reporting Programs 

See all rules under OMB review here.
On Our Calendars
News of Note
Daylight Saving Time and Healthcare
As most of the United States transitions to Daylight Saving Time (DST) this weekend, many readers are aware that there is an increased risk of heart attacks and strokes in the days immediately following the time shift.

What is less recognized, however, is the effect that the transition to DST can have on the quality of care rendered by healthcare providers. Growing evidence indicates an association between DST time shifts and an increase in patient safety-related incidents (SRIs) within healthcare environments. Not surprisingly, the greatest increases have been observed in the spring transition, in which an hour is lost.

The impact a disrupted sleep cycle or changes in work schedules can have on patient safety harken to previous research that eventually led to restrictions on the number of hours medical interns and residents are allowed to work.

But for some patients, the increased risk of SRIs is not an issue: The spring time shift is also associated with a greater number of missed medical appointments.
Insight Joke of the Month for March
Why does the Easter Bunny go to the doctor every year?
On our Reading List:
It's All in Her Head:
The Truth and Lies Early Medicine Taught Us About Women's Bodies and Why They Matter Today
In It's All in Her Head: The Truth and Lies Early Medicine Taught Us About Women's Bodies and Why It Matters Today, Elizabeth Comen, MD, examines the history of women’s healthcare on a system by system basis, considering everything from skin to breath, guts to hormones.

A medical oncologist specializing in breast cancer at Memorial Sloan Kettering Cancer Center and a professor of medicine at Weill Cornell Medical College, Comen successfully interweaves her professional experience with stories shared by her patients, historical vignettes, and medical science. The result is what Siddartha Mukherjee, author of The Emperor of All Maladies, has described as “a must-read, compelling, and important book."

Of interest from a policy perspective is Comen's repeated observation that American medicine continues to lack diagnostic codes for several medical concerns exclusive to women, an oversight that bespeaks and perpetuates a disinterest in their treatment.

More sensitive readers may find Comen's descriptions of certain medical conditions and her use of colloquialisms in the description of body parts off-putting. For others, Comen's unfiltered style makes her writing especially engaging. In a starred-review, Publisher’s Weekly called It's All in Her Head “meticulously researched and conveyed in lucid prose [which] fascinates and outrages in equal measure.”
Applied Policy, L.L.C., is a health policy and reimbursement consulting firm strategically located minutes from Washington, D.C.