CMS Announces New 6-Month Extension of Moratoria on Enrollment of HHAs, Ambulance Suppliers in Designated Areas

CMS is extending -- for another 6 months -- its current enrollment moratoria for new ground ambulance suppliers and home health agencies (HHAs) in designated metropolitan areas. The moratoria, which affect enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program, apply to new ground ambulances in the Houston and Philadelphia metropolitan areas and new HHAs in the metropolitan areas of Fort Lauderdale, Miami, Chicago, Detroit, Dallas, and Houston. CMS discusses its rationale for extending the enrollment moratoria, including the factors suggesting a high risk of fraud, waste, or abuse, in a notice to be published on February 2, 2015. The extension is effective January 29, 2015. CMS may lift the moratoria before the end of the 6-month period or announce additional extensions.

CMS Announces 3-State Medicare Prior Authorization Model for Repetitive Nonemergent Ambulance Transport

In light of government reports finding high utilization and potential improper Medicare payments associated with repetitive scheduled nonemergent ambulance transports, CMS will test a prior authorization model program for these services in New Jersey, Pennsylvania, and South Carolina. CMS defines repetitive ambulance service as medically necessary ambulance transportation that is furnished in 3 round trips or more times during a 10-day period, or at least once per week for at least 3 weeks. CMS notes that such repetitive ambulance services are often needed by beneficiaries receiving dialysis, wound care, or cancer treatment. The use of prior authorization will not create new clinical documentation requirements for suppliers; instead information that is already required to support Medicare payment will be furnished earlier in the process, prior to rendering services. The prior authorization program is scheduled to begin December 1, 2014 and last three years.

Medicare Ambulance Update Factor for CY 2015

CMS has announced that the 2015 Medicare ambulance update factor for determining the payment limit for Medicare ambulance services will be 1.4%. This update reflects the a 2.1% increase in the consumer price index for all urban consumers (CPI-U), which is partially offset by a 0.7% productivity adjustment in accordance with the ACA.

CMS Again Extends Moratoria on Enrollment of HHAs, Ambulance Suppliers in Designated Areas

CMS has announced that it is extending for an additional 6 months its current enrollment moratoria for new ground ambulance suppliers and home health agencies (HHAs)within designated metropolitan areas. The moratoria, which affect enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program, apply to new ground ambulances in the Houston and Philadelphia metropolitan areas and new HHAs in the metropolitan areas of Chicago, Fort Lauderdale, Detroit, Dallas, Houston, and Miami. CMS discusses its rationale for extending the enrollment moratoria, including the qualitative and quantitative factors suggesting a high risk of fraud, waste, or abuse, in an August 1, 2014 notice.  The extension is effective July 30, 2014.  CMS may lift the moratoria before the end of the 6-month period or announce extensions in the Federal Register notice. 

CMS Call on Medicare DMEPOS, Ambulance Prior Authorization Initiatives (June 17)

CMS is hosting a Special Open Door Forum on June 17, 2014 to provide an overview regarding new Medicare prior authorization initiatives impacting durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) suppliers and ambulance suppliers. Specifically, the call will cover the Medicare Expanded Prior Authorization Demonstration for Power Mobility Devices (PMDs) Demonstration, the Hyperbaric Oxygen and Repetitive Scheduled Non-Emergent Ambulance Transport prior authorization models, and a recent proposed rule to require prior authorization for certain DMEPOS

CMS Releases Physician-Specific Medicare Charge/Payment Data

CMS has released its highly-anticipated data files with Medicare payment data for individual Medicare physicians and certain other Part B suppliers as part of the Obama Administration’s initiative “to make our healthcare system more transparent, affordable, and accountable.” Specifically, the “Physician and Other Supplier Public Use File” contains information on utilization, payment (allowed amount and Medicare payment), and submitted charges organized by National Provider Identifier (NPI)/provider last name, Healthcare Common Procedure Coding System (HCPCS) code, and place of service for physician/supplier Part B non-institutional line items for the Medicare fee-for-service population for calendar year 2012. The files include data on services furnished by physicians, non-physician practitioners, laboratories, imaging, and ambulances, but not durable medical equipment (DME). To protect Medicare beneficiary privacy, any aggregated records derived from 10 or fewer beneficiaries are excluded from the dataset.

CMS cautions that the dataset has a number of limitations, including that the data may not be representative of a physician’s entire practice since it only includes information regarding Medicare fee-for-service beneficiaries. Moreover, CMS notes that the data are not intended to indicate the quality of care provided and are not risk-adjusted to reflect differences in the severity of disease of patient populations.  In an accompanying blog post, Jonathan Blum, Principal Deputy Administrator of CMS, notes that the agency hopes that “businesses and consumers alike can use these data to drive decision-making and reward quality, cost-effective care.”

CMS Extends and Expands Moratoria on Enrollment of Home Health Agency, Ambulance Suppliers in Designated Areas

Citing significant potential for fraud and abuse, CMS has announced that it is temporarily suspending new home health agency (HHA) and ground ambulance enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program in several geographic areas, and it is extending the current enrollment moratoria for these provider types in separate areas. Specifically, effective January 30, 2014, CMS is establishing a 6-month moratorium on HHA enrollment in the following metropolitan areas: Fort Lauderdale, Detroit, Dallas and Houston. CMS also is temporarily suspending enrollment of new ground ambulance suppliers in the Greater Philadelphia area. In addition, CMS is extending for six-months a current enrollment moratoria (announced in July 2013) impacting HHAs in Chicago and Miami and ground ambulance suppliers in Houston. Note that CMS may lift the moratoria earlier or extend them for another six months through issuance of a Federal Register notice.

While existing providers and suppliers can continue to deliver and bill for services in moratoria areas, no new applications for the designated provider types will be approved, unless the provider’s enrollment application has already been approved, but not yet entered into PECOS or the State Provider/Supplier Enrollment System at the time the moratorium is imposed. According to CMS, the initial moratoria that began in July 2013 resulted in the denial of the enrollment applications of 231 HHAs and 7 ambulance companies in the geographic areas affected by the moratoria. A CMS notice explains the rationale for the imposition and extension of the moratoria.

OIG Assesses Growth in Medicare Ambulance Transport Utilization

This post was written by Nancy Sheliga.

In September 2013, the OIG issued a report on changes in the use of Medicare Part B ambulance transports from 2002 through 2011, including an analysis of the characteristics of beneficiaries, suppliers, and transports. The report found that between 2002 and 2011, the number of ambulance transports increased by 69%, payments for ambulance transports increased by 130%, and the number of beneficiaries who received ambulance transports increased by 34%. All of these increases were greater than the rates for Medicare Part B increases in general. Moreover, beneficiaries with end stage renal disease received a growing and disproportionate amount of transports, with dialysis-related ambulance transports increasing by 269%. In addition, beneficiaries receiving ambulance transport to outpatient visits for partial hospitalization program services at community mental health centers increased significantly. Overall, the number of ambulance suppliers increased 26% between 2002 and 2011, with those primarily providing basic life support nonemergency transports nearly doubling. The OIG also reports that while all states experienced increases in transports from 2002 to 2011, utilization changes varied widely by state, with high utilization growth linked to dialysis-related transports, basic life support nonemergency transports, and inpatient hospital visits to treat renal failure. The OIG attributes spending increases in part to inflation and the transition to the national fee schedule for Medicare ambulance transports, as well as continued growth in the use of ambulance transports. The OIG did not determine whether the utilization changes it observed were appropriate. Given that prior OIG reports have indicated that ambulance transports are vulnerable to fraud and abuse, however, the OIG does plan to issue a future report focusing on ambulance transport suppliers that exhibit questionable billing characteristics and the geographic areas in which they are concentrated.

CMS Sets 1% Payment Update for Medicare Ambulance Rates in 2014

The Medicare ambulance fee schedule will be increased by a 1.0% inflation adjustment for 2014, CMS announced in a recent transmittal.  This update reflects a 1.8% increase in the consumer price index for all urban consumers (CPI-U), which is partially offset by a -0.8% multi-factor productivity adjustment mandated by the ACA. The 2014 ambulance fee schedule file is expected to be posted next month.

CMS Announces First Temporary Moratoria on HHA, Ambulance Supplier Enrollment in High-Risk Areas under ACA Authority

On July 26, 2013, CMS announced temporary moratoria on enrollment of new home health providers and ambulance suppliers under Medicare, Medicaid and the Children’s Health Insurance Program (CHIP) in three parts of the country identified as “fraud hot-spots.” This is the first time the agency is exercising its authority under the Affordable Care Act (ACA) to impose temporary moratoria on new provider enrollment to protect against a high risk of fraud. The temporary moratorium applies to: (1) the enrollment of home health agencies (HHAs) in Miami-Dade County (Florida) and Cook County (Illinois), as well as selected surrounding areas, and (2) the enrollment of new ambulance suppliers and providers in Harris County, Texas and surrounding counties. CMS selected these areas and services, in consultation with the Health and Human Services’ Office of Inspector General (OIG) and the Department of Justice, because of the high potential fraud risk indicated by such factors as a disproportionate number of providers and suppliers relative to beneficiaries, a rapid increase in enrollment applications from providers and suppliers, and extremely high utilization of services.

The temporary enrollment moratoria begin on July 30, 2013 and will remain in effect for 6 months. If CMS deems it necessary, the moratoria may be extended in 6-month increments (with notification in the Federal Register). During the moratoria, existing providers and suppliers can continue to provide and bill for services, but no new provider and supplier applications for these provider types will be approved in these geographic areas. Note that the temporary moratorium does not apply to changes in practice locations, changes to provider or supplier information such as phone number, address, or changes in ownership (except changes in ownership of HHAs that require initial enrollments), nor does it apply to an enrollment application that a CMS contractor has already approved, but has not yet entered into the Provider Enrollment Chain and Ownership System (PECOS) at the time the moratorium is imposed.

CMS observes the tendency of health care fraud to “migrate” -- as enforcement efforts target a particular activity, “criminals may redesign the scheme or relocate to a new geographic area.” CMS will therefore monitor the broad geographic areas for “indicia of activity designed to evade these moratoria” and to address the spread of fraud activities beyond the identified areas.

MedPAC Report to Congress on Delivery Reform

The Medicare Payment Advisory Commission (MedPAC) has released its June 2013 Report to the Congress on Medicare and the Health Care Delivery System. The report examines a number of potential ways to reform Medicare, including the following: 

  • Redesigning the Medicare benefit. MedPAC continues to discuss the concept of competitively determined plan contributions (CPC), under which Medicare beneficiaries could receive care through either a private plan or traditional fee-for-service, but the premium paid by the beneficiary could vary depending on the coverage option chosen. The federal government’s payment for a beneficiary’s care would be determined through a competitive process comparing the costs of available options for coverage. The report identifies key issues to be addressed if the Congress wishes to pursue a policy option like CPC, such as how benefits could be standardized for comparability, how to calculate the Medicare contribution, and the structure of subsidies for low-income beneficiaries.
  • Reducing Medicare payment differences across sites of care. MedPAC notes that Medicare payment rates often vary for similar services provided to similar patients, simply because they are provided in different sites of care (e.g., physician’s office vs. hospital outpatient department). The report identifies services that may be eligible for equalizing or narrowing payment differences across settings.
  • Bundling post-acute care services. MedPAC explores the implications for quality and program spending for different design features of post-acute care payment bundles, such as the services included, the length of time covered by the bundle, and the method of payment.
  • Reducing hospital readmissions. MedPAC suggests further refinements to improve incentives for hospitals and generate program savings through reduced readmissions, including proposals to address the effect of random variation on hospitals with small numbers of cases, the inability of the industry to reduce average penalties with improved performance, the correlation of patient income and readmission rates, and the inverse relationship between readmissions and mortality for cardiac patients.
  • Payments for hospice services. MedPAC presents information on the prevalence of long-stay patients and the use of hospice services among nursing home patients to inform future hospice payment reforms. MedPAC also provides additional information supporting its March 2009 recommendations to revise the hospice payment system.
  • Improving care for dual-eligible beneficiaries. MedPAC discusses the potential role that federally qualified health centers and community health centers can play in coordinating care for Medicare-Medicaid dual-eligible beneficiaries.

In addition to discussing these delivery reforms, the MedPAC report addresses Congressionally-mandated reviews of the following topics: Medicare ambulance add-on payments; geographic adjustment of fee schedule payments for the work effort of physicians and other health professionals; and Medicare payment for outpatient therapy services.

Proposed Rule Would Reward Medicare Fraud Tipsters up to $9.9 Million, Revise Medicare Provider Enrollment Regulations

This post was written by Scot T. Hasselman, Andrew C. Bernasconi, Susan A. Edwards and Debra A. McCurdy.

Yesterday the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would dramatically increase the potential reward to an individual who provides a tip leading to the recovery of Medicare funds from a current maximum of $1,000 to a maximum of $9.9 million under the Medicare Incentive Reward Program.  Since 1998, an individual providing information regarding potential Medicare fraud and abuse to the Department of Health & Human Services’ Office of  Inspector General or the Medicare contractor with jurisdiction over the suspected fraudulent provider or supplier may be eligible to receive 10 percent of the Medicare funds ultimately collected from the tip, or $1,000, whichever is less.  Pursuant to the proposed rule CMS issued yesterday, an individual furnishing information that otherwise satisfies the requirements set forth in 42 C.F.R. § 420.405 would be eligible to receive 15 percent of a recovery up to $66 million.  Therefore, a tipster could receive up to a $9.9 million reward for any information provided regarding suspected Medicare fraud and abuse.

In the proposed Medicare Incentive Reward Program rule, CMS explains that it “tentatively project[s] a net increase in recoveries of $24.5 million per year as a result of the proposed changes.”  In addition, CMS notes that it is modeling the proposed Incentive Reward Program changes on a “highly successful” Internal Revenue Services (IRS) reward program that returned “far greater sums than the existing Medicare [Incentive Reward Program].”  Notably, since the implementation of the current Medicare Incentive Reward Program in July 1998, CMS has collected only $3.5 million; in contrast, between 2007 and 2012, the IRS has collected almost $1.6 billion through its reward program.  CMS states in the preamble that it proposes to clarify that it will not pay an award if the same or substantially similar information was the basis for a relators share in a qui tam lawsuit under the federal False Claims Act or a state False Claims Act, or is the basis for a pending state or federal False Claims Act suit.  However, the proposed regulatory language that would codify this change, found at proposed 42 C.F.R. § 420.405(b)(3), does not specify that this provision would apply to state False Claims Acts.

The proposed rule also would pay the reward amount only to the first individual who makes a report.  In addition, among other proposed changes to the regulations found at 42 C.F.R. § 420.405, CMS proposes to emphasize that it has exclusive discretion in determining the amount of a reward and whether the reward criteria are met.  The existing regulation provides for numerous other exceptions and conditions and generally excludes federal and state law enforcement officials, federal government employees, and federal contractors, from eligibility.

CMS also proposes several revisions to Medicare’s provider enrollment regulations, such as:

  • Allowing CMS to deny the enrollment of providers, suppliers, and owners affiliated with an entity that has unpaid Medicare debt;
  • Expanding the instances under which a felony conviction can serve as a basis for denial or revocation of a provider or supplier's enrollment;
  • Enabling CMS to revoke Medicare billing privileges if it determines that the provider or supplier has a pattern or practice of submitting claims for services that fail to meet Medicare requirements; and
  • Limiting the ability of ambulance suppliers to “backbill” for services performed prior to enrollment.

The proposed rule will be published in the April 29, 2013 edition of the Federal Register, and comments will be accepted for 60 days thereafter (June 28, 2013).


MedPAC Meeting on Medicare Policy Issues (Nov. 1-2)

MedPAC is meeting on November 1 -2, 2012 to discuss a variety of Medicare policy issues, including: Medicare payment for ambulance services, reducing the hospitalization rate for Medicare beneficiaries receiving home health care, Medicare payment for outpatient therapy services, geographic adjustment of payments for the work of physicians and other health professional, the role of provider prices in determining private-plan Medicare costs relative to fee-for-service Medicare, Medicare Advantage special needs plans, and Medicare payment differences for ambulatory care services across settings.

GAO Highlights Increasing Medicare Ambulance Provider Costs

The GAO has released a report examining Medicare payments and provider costs for ground ambulance services, along with beneficiary utilization of ambulance services. The GAO found that in 2010, costs per transport varied widely among ambulance providers in the GAO’s sample, ranging from $224 to $2,204 per transport, with a median cost of $429.  The report discusses the factors impacting these costs, including volume of transports, the proportion of transports that were nonemergency, and the extent to which providers received government subsidies. The median Medicare margin for 2010, including add-on payments, was about 2% for the providers in GAO's sample, but it varied from about -2% to +9%, (without add-on payments, the margin ranged from about -8% to +5%). Medicare utilization levels also have been on the increase, with ground ambulance transports for all Medicare fee-for-service beneficiaries increasing 33% from 2004 to 2010, with the highest growth in super-rural areas. According to the GAO, ambulance provider organization representatives suggested the increase in transports may stem from increased billing by local governments, since some local governments that used to provide Medicare transports free of charge may now be billing Medicare because of budgetary pressures. On the other hand, the GAO notes that the OIG has cited improper payments as a potential cause for increases in Medicare ambulance utilization.

President Obama Signs Payroll Tax Bill with Medicare/Medicaid Provisions

On February 22, 2012, President Obama signed into law H.R. 3630, the Middle Class Tax Relief and Job Creation Act, which was approved by Congress on February 17. In addition to extending a payroll tax cut through the end of the year and extending unemployment benefits, the new law includes a number of Medicare and Medicaid provisions, including a provision temporarily averting a steep cut in Medicare physician payments. The following are highlights of the health policy provisions included in H.R. 3630 and accompanying conference report (House Report 112-399).

Medicare Extensions

  • Temporarily blocks a 27.4% cut in the Medicare physician fee schedule set to go into effect March 1, 2012 as a result of the statutory Sustainable Growth Rate (SGR) formula, and instead extends current Medicare payment rates through December 31, 2012. The conference report also requires the Secretary of the Department of Health and Human Services (HHS) to report on bundled or episode-based payments to cover physicians' services for one or more prevalent chronic conditions or major procedures, and it requires a Government Accountability Office (GAO) report examining private sector initiatives that tie physician payment rates to quality, efficiency, and care delivery improvement, such as adherence to evidence-based guidelines.
  • Extends Medicare Modernization Act (MMA) section 508 hospital geographic reclassifications through March 31, 2012.
  • Extends outpatient hold harmless payments through December 31, 2012 (except for sole community hospitals with more than 100 beds), and requires an HHS study on which types of hospitals should continue to receive hold harmless payments.
  • Extends the 1.0 floor used in the physician work geographic adjustment through December 31, 2012.
  • Extends the Medicare outpatient therapy cap exceptions process through December 31, 2012.  The provision also temporarily extends the therapy cap to services received in hospital outpatient departments through December 31, 2012. Effective with services provided on or after October 1, 2012, the Secretary must ensure that therapy claims for which an exemption is requested include appropriate modifiers indicating that such services are medically necessary. The National Provider Identifier (NPI) of the physician who reviews therapy plans also must be included on Medicare claims. In addition, the Secretary is directed to implement a manual medical review process for beneficiaries whose annual spending for therapy services furnished in calendar year 2012 reaches $3,700 for physical therapy and speech-language pathology, or $3,700 in occupational therapy (the GAO subsequently must issue a report regarding this manual review process). The law also directs the Medicare Payment Advisory Commission (MedPAC) to issue recommendations on how to improve the Medicare outpatient therapy benefit to reflect individual acuity, condition, and therapy needs of the patient. Finally, the Secretary is required to implement, beginning on January 1, 2013, a claims-based strategy to collect data on patient function during the course of therapy services in order to better understand patient condition and outcomes in order to assist in reforming the Medicare outpatient therapy payment system.
  • Extends authorization for independent laboratories to receive direct payments for the technical component for certain pathology services through June 30, 2012.
  • Extends the add-on payment for ground and air ambulance services, including in super rural areas, through December 31, 2012 and requires related MedPAC and GAO reports.

Health Offsets

  • Bad debt reimbursement for all Medicare providers is reduced gradually to 65%. Specifically, providers now paid at 100% will have a three-year transition of 88% in 2013, 76% in 2014, and 65% in 2015, while providers now paid at 70% will be reduced to 65% in 2013. (This provision saves $6.9 billion over 11 years).
  • ReducesMedicare clinical laboratory fee schedule rates by 2 percent in 2013, and the reduced fee schedules will serve as the base for 2014 and subsequent years (saving $2.7 billion over 11 years).
  • Extends Medicaid disproportionate share hospital (DSH) payment reductions under the Affordable Care Act (ACA) for an additional year (saving $4.1 billion over 11 years).
  • Makes technical corrections to the ACA “disaster recovery federal medical assistance percentage (FMAP) provision ($2.5 billion in savings over 11 years).
  • Reduces funding for the ACA Prevention and Public Health Trust Fund by $5 billion over 10 years.

Other Health Provisions

  • Extends through December 31, 2012 the Qualifying Individual (QI) program (which allows Medicaid to pay the Medicare Part B premiums for certain low-income Medicare beneficiaries) and the Transitional Medical Assistance (TMA) program (which allows low-income families to keep Medicaid coverage as they transition into employment).

New Law Provides Short-Term Medicare Physician Fee Schedule Fix and Extends Expiring Medicare Provisions for Two Months

On December 23, 2011, President Obama signed into law H.R. 3765, the Temporary Payroll Tax Cut Continuation Act of 2011 Among other things, the law freezes Medicare physician fee schedule (MPFS) rates at 2011 levels through February 2012, temporarily averting a scheduled 27.4% cut under the statutory Sustainable Growth Rate (SGR) formula. The measure also extends for two months certain Medicare policies set to expire December 31, 2011, including: the floor used in the physician work geographic adjustment; the Medicare outpatient therapy cap exceptions process; payment for the technical component of certain physician pathology services; certain ambulance add-on payments; physician fee schedule mental health add-on payment; the outpatient hold harmless provision; minimum payment for bone mass measurement; the Qualified Individual program that reimburses states for certain Part B premiums; and the Transitional Medical Assistance program. The bill also extends for two months the authority for Medicare Modernization Act section 508 hospital reclassifications, with special rules for October and November 2011.  A CMS summary of the law is available here.   Note that the final version of the legislation does not include provisions adopted earlier by the House of Representatives to pay for a 2-year SGR fix through a variety of Medicare, Medicaid, and Affordable Care Act (ACA) cuts.  When Congress reconvenes, Congressional leaders are expected to tackle legislation to address these Medicare policies at least through 2012, although the outcome of such efforts is speculative at this point. Note that given the uncertainties associated with MPFS rates for 2012, the Centers for Medicare & Medicaid Services (CMS) is extending the 2012 Annual Participation Enrollment Period for health professionals through February 14, 2012 (although the effective date for any participation status change remains January 1, 2012 and will be in force for the entire year). 

CMS Updates End-Stage Renal Disease (ESRD) PPS for 2012

On November 10, 2011, CMS published a final rule to update Medicare ESRD PPS rates and policies for CY 2012. The rule increases ESRD payment rates by 2.1% as a result of a 3% market basket increase that is reduced by 0.9% productivity adjustment (mandated by the ACA). The rule also impacts a variety of other ESRD payment policies, including outlier payments, the low-volume adjustment, drug add-on payments, and wage index values. In addition, the rule revises requirements for the ESRD quality incentive program (QIP), under which payments to dialysis facilities are tied to their performance on certain quality measures. CMS has adopted its proposal to retire one of QIP performance measures for payment year (PY) 2013 – hemoglobin level less than 10g/dL – and equally weight the two remaining measures (hemoglobin levels greater than 12g/dL and hemodialysis adequacy, as measured by Urea Reduction Ratio levels of at least 65%). According to CMS, this policy change stems from concerns regarding the safety of erythropoiesis-stimulating agents for treatment of anemia in dialysis patients; CMS notes that it is “continuing to work on ways to address the incentives for treating anemia in dialysis patients in various programs.” For the PY 2014 payment determination, CMS is retaining the two 2013 measures and adopting four new measures that expand the types of dialysis services measured under the QIP (compared to seven new measures in the proposed rule). The rule also revises the QIP scoring methodology, impacting payments in PYs 2013 and 2014.  In addition, the rule revises the ambulance fee schedule payments. CMS also has adopted revisions to the Medicare definition of DME and finalized certain DMEPOS competitive bidding rules as part of the ESRD rulemaking, as discussed in a separate posting.

CMS "Provider Compliance Group Outreach Calls" to Focus on Medicare Vulnerabilities (Aug. 23-25, 2011)

CMS has announced a series of calls on specific Medicare program vulnerabilities identified in HHS Office of Inspector General (OIG) reports. The topics of the calls are as follows: August 23: Inpatient Rehabilitation Facility Documentation, Power Wheelchairs/Power Mobility; August 24: Overview of Reviews, Hospice, and Electronic Submission of Medical Documentation (esMD); August 25: Diagnostic Radiology Services in Emergency Departments; Ambulatory Surgical Center Services and Ambulance Transportation Provided to Beneficiaries in Skilled Nursing Facility Stays. CMS Contractor Medical Directors, OIG representatives and CMS personnel will address compliance with Medicare policy, billing instructions, and medical review guidance related to reducing improper payments for these items and services. The calls will be broadcast over the internet. 

CMS Issues Proposed CY 2012 Physician Fee Schedule Rule

July 19, 2011, the Centers for Medicare & Medicaid Services (CMS) published its proposed update to the Medicare physician fee schedule (MPFS) for calendar year (CY) 2012. Most notably, the proposed rule calls for a negative 29.5% update for 2012 under the statutory sustainable growth rate (SGR) formula. For 2012, CMS projects a conversion factor of $23.9635, compared to the 2011 conversion factor of $33.9764. While Congress is expected to consider legislation to advert the upcoming cut, as it has in previous years, the scope, timing, and outcome of any such legislative “fix” is still speculative. The sweeping proposed rule includes numerous other policy proposals, which are summarized after the jump.

  • CMS has made a proposal that is very controversial in the industry to expand its multiple procedure payment reduction (MPPR) policy for advanced imaging services (computed tomography scans, magnetic resonance imaging, and ultrasound), which now applies to only the technical component of the service, to the professional component (physician interpretation) of the service. If finalized, Medicare would pay 100% of the technical and professional component for highest-paid procedure, while the payments for the technical and professional component of the second and each additional imaging service done on the same patient during the same session would be reduced by 50%. CMS also has requested comments on more expansive reduction policies in 2013 and beyond, which could include applying the MPPR to the all imaging services (not just advanced imaging studies) or to the technical component of all diagnostic tests (e.g., tests associated with radiology, cardiology, audiology, procedures furnished in the same encounter).
  • CMS proposes to updates certain payment policies for Part B drugs to specify that the average manufacturer price (AMP) substitution policy will apply only when the average sales price (ASP) exceeds the AMP by 5 percent in two consecutive quarters immediately prior to the current pricing quarter, or three of the previous four quarters immediately prior to the current quarter. CMS is also proposing a number of changes to the manufacturer ASP reporting template. 
  • CMS proposes to update a number of physician incentive programs, including the Physician Quality Reporting System, the ePrescribing Incentive Program, and the Electronic Health Records Incentive Program. CMS also proposes quality and cost measures for a new value-based modifier, mandated by the Affordable Care Act (ACA), that would reward physicians for providing higher quality and more efficient care. CMS is proposing to use CY 2013 as the initial performance year for purposes of adjusting payments in CY 2015. Payments under the value-based payment modifier provision will be risk-adjusted and budget-neutral. 
  • Among many other things, CMS identifies a variety of potentially misvalued code and proposes a new public nomination process under which the public could nominate potentially misvalued codes and submit documentation supporting the need for review. CMS also proposes changes in how it adjusts payment for geographic variation in the cost of practice; revisions to how it updates services available through telehealth; updates to the productivity adjustment for ambulatory surgical center (ASC), ambulance, clinical laboratory, and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedules; and clarification of the applicability of the “3-day payment window” policy to certain services furnished in a wholly owned or wholly operated physician practice. CMS also seeks comments on physician activities and the associated resources involved in physician provision of effective care coordination surrounding a hospital discharge.

Comments on the proposed rule will be accepted until August 30, 2011.  A variety of supporting files are posted at

CMS Proposes CY 2012 Changes to End-Stage Renal Disease (ESRD) PPS

On July 8, 2011, CMS published a proposed rule that would update the ESRD PPS for CY 2012.  CMS projects that payment rates would increase by 1.8% under the proposed rule as a result of a 3% market basket increase that is reduced by 1.2% productivity adjustment (mandated by the ACA). The rule also would impact a variety of other ESRD payment policies, including outlier payments, the low-volume adjustment, drug add-on payments, and wage index values. The rule also would revise requirements for the ESRD quality incentive program (QIP), under which payments to dialysis facilities are tied to their performance on certain quality measures. CMS proposes to retire one of QIP performance measures for payment year (PY) 2013 – hemoglobin level less than 10g/dL – and equally weight the two remaining measures (hemoglobin levels greater than 12g/dL and hemodialysis adequacy, as measured by Urea Reduction Ratio levels of at least 65). For the PY 2014 payment determination, CMS is proposing to retain the anemia management measure (hemoglobin level greater than 12g/dL) and to adopt seven new measures that expand the types of dialysis services measured under the QIP. The rule also would revise the QIP scoring methodology, applicable to payments to dialysis facilities in PYs 2013 and 2014.  In addition, the proposed rule would revise the ambulance fee schedule regulations and revise the Medicare definition of durable medical equipment (DME), as discussed below. CMS will accept comments on the proposed rule until August 30, 2011.