Health Industry Washington Watch : Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

Other major provisions of the HOPPS final rule include the following: 

• CMS adopted its proposal to increase the threshold for separate payment for outpatient drugs to drugs with a cost per day that exceeds $65, up from $60 in 2009.  CMS will continue making payment for separately-payable drugs and biologicals at average sales price (ASP) plus 4%, representing a combined payment for both the acquisition and pharmacy overhead costs of separately payable drugs and biologicals. CMS uses a new methodology to arrive at this rate for CY 2010. In short, CMS is basing payments on estimated costs of separately-payable drugs and biologicals for 2010 (estimated to be ASP minus 3%), with an adjustment for pharmacy overhead cost. Through the pharmacy overhead adjustment, CMS is redistributing $200 million (rather than $150 million in the proposed rule) from the cost of packaged drugs and biologicals to separately payable drugs and biologicals.
• CMS is maintaining its policy of beginning the pass-through payment eligibility period for a new drug or nonimplantable biological on the date that the first HOPPS pass-through payment is made (rather than it the date of first U.S. sale of the product following FDA approval as the agency had proposed). CMS did adopt its proposal to establish a payment offset for pass-through contrast agents in accordance with its standard offset methodology, and the agency modified the payment methodology for pass-through implantable biologicals.
• CMS adopted its proposal to provide payment for separately-payable therapeutic radiopharmaceuticals and pass-through radiopharmaceuticals using ASP data, if data is submitted by manufacturers for a given calendar quarter (CMS has posted subregulatory guidance on submitting radiopharmaceutical ASP data).
• CMS adopted significant revisions and clarifications its rules regarding physician supervision of outpatient services. Among other things, CMS is requiring all hospital outpatient diagnostic services furnished directly or under arrangement -- in a hospital, provider-based department, or nonhospital location -- to follow the same physician supervision requirements for individual tests that apply under the Medicare physician fee schedule. Diagnostic tests can be supervised only by physicians. CMS will allow physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives, and licensed clinical social workers to directly supervise all hospital outpatient therapeutic services that they may personally perform under their state scope of practice rules and hospital-granted privileges. CMS also is clarifying that, for purposes of on-campus hospital outpatient services, “direct supervision” means that the physician (for diagnostic tests) or the physician or nonphysician practitioner (for therapeutic services) need not be in the department, but must be present anywhere on the hospital campus and immediately available to furnish assistance and direction throughout the performance of the procedure. For outpatient services furnished in an off-campus provider-based department, “direct supervision” would continue to require the physician (for diagnostic tests) or the physician or nonphysician practitioner (for therapeutic services) to be present in the off-campus provider-based department and immediately available to furnish assistance and direction throughout the performance of the procedure.

With regard to ASC services, the final rule provides a 1.2% inflation update to the conversion factor.  CMS also is adding 26 surgical procedures to the list of procedures covered when performed in an ASC. In addition, the rule: designates six procedures as office-based procedures (subject to payment at the lesser of the national office practice expense payment to the physician or the national standard ASC rate); temporarily designates an additional 16 procedures as office-based for 2010; and updates the list of device-intensive procedures and covered ancillary services. 

CMS is accepting comments on limited provisions of the rule until December 29, 2009. These provisions pertain to: payment classifications for certain HCPCS codes; treatment of plasma protein fraction for HOPPS payment purposes; alternative coding for hospital clinic visits for new and established patients; potentially extending the direct supervision requirements for hospital-based partial hospitalization program services to such services in community mental health centers; and potentially establishing direct physician supervision requirements for ASC services.

• By law, the HOPPS update is reduced by 2.0 percentage points for certain hospitals that do not meet requirements under the Hospital Outpatient Quality Data Reporting Program (HOP QDRP). For the proposed CY 2010 rule, CMS is seeking public comment on potential quality measures for consideration for future HOPPS updates, but it is not proposing additions to the quality measures for the CY 2011 update.  CMS is proposing, however, to implement a new HOP QDRP validation requirement to ensure that hospitals accurately report measures using chart-abstracted data.  CMS also proposes to make available to the public HOP QDRP quality data collected for quarters beginning with the third quarter of CY 2008.
• CMS proposes to increase the threshold for separate payment for outpatient drugs to drugs with a cost per day that exceeds $65, up from $60 in 2009. CMS proposes to continue making payment for separately payable drugs and biologicals at average sales price (ASP) plus 4%, representing a combined payment for both the acquisition and pharmacy overhead costs of separately payable drugs and biologicals. CMS uses a new methodology to reach this proposed rate. In short, based upon the cost of separately payable drugs and biologicals calculated from hospital claims and cost reports (ASP minus 2%), with an adjustment for pharmacy overhead cost that reflects the redistribution of $150 million of pharmacy overhead cost currently attributed to packaged drugs and biologicals to separately payable drugs and biologicals without pass-through status. CMS also proposes to reduce the cost of packaged drugs and biologicals included in the payment for procedural ambulatory payment classifications to offset the $150 million adjustment. CMS is further proposing that claims data for 340B hospitals be included in the calculation of payment for drugs and biologicals.
• CMS is proposing to begin the two to three year pass-through payment eligibility period for a new drug or nonimplantable biological on the date of first sale of the drug or nonimplantable biological in the United States following approval by the Food and Drug Administration (FDA), rather than on the date that the first pass-through payment is made under the HOPPS. CMS also proposes establishing a payment offset for pass-through contrast agents in accordance with its standard offset methodology. CMS also proposes a new payment methodology for pass-through implantable biologicals.
• For CY 2010, CMS is proposing to continue paying for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite payment methodology established in CY 2009, without modification. 
• CMS is proposing changes and clarifications to its policies regarding physician supervision of hospital outpatient services.  CMS would allow physician assistants, nurse practitioners, certified nurse specialists, and certified nurse-midwives to directly supervise all hospital outpatient therapeutic services that they may personally perform within their state scope of practice and hospital-granted privileges. CMS also would define “direct supervision” for on-campus hospital outpatient services, and require all hospital outpatient diagnostic services furnished directly or under arrangement to follow the specific MPFS physician supervision level (i.e., general direct or personal) for various individual tests.

With regard to ASC services, the proposed rule would provide a 0.6% inflation update to the conversion factor. CMS also proposes to add 28 surgical procedures to the list of procedures covered when performed in an ASC (including two new codes and 26 procedures that previously were excluded).   In addition, the rule would newly designate six procedures as office-based procedures (subject to payment at the lesser of the national office practice expense payment to the physician or the national standard ASC rate), and it would update the list of device-intensive procedures and covered ancillary services. The official version of the rule is scheduled to be published in the Federal Register on July 20, 2009. Comments on the proposed rule are due August 31, 2009. 

Hospitals

• The Congress should increase payment rates for the acute inpatient and outpatient prospective payment systems in 2010 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program.
• The Congress should reduce the indirect medical education adjustment (IME) in 2010 by 1 percentage point to 4.5 percent per 10 percent increment in the resident-to-bed ratio. The funds obtained by reducing the IME adjustment should be used to fund a quality incentive payment program.

Physicians and Ambulatory Surgical Centers

• The Congress should update payments for physician services in 2010 by 1.1 percent.
• The Congress should establish a budget-neutral payment adjustment for primary care services billed under the physician fee schedule and furnished by primary-care-focused practitioners. Primary-care-focused practitioners are those whose specialty designation is defined as primary care and/or those whose pattern of claims meets a minimum threshold of furnishing primary care services. The Secretary would use rulemaking to establish criteria for determining a primary-care-focused practitioner.
• The Congress should direct the Secretary to increase the equipment use standard for expensive imaging machines from 25 to 45 hours per week. This change should redistribute RVUs from expensive imaging to other physician services.
• The Congress should increase payments for ambulatory surgical centers (ASC) services in calendar year 2010 by 0.6 percent. In addition, the Congress should require ASCs to submit to the Secretary cost data and quality data that will allow for an effective evaluation of the adequacy of ASC payment rates.

Dialysis Services

• The Congress should maintain current law and update the composite rate in calendar year 2010 by 1 percent.

Skilled Nursing Facility Services

• The Congress should eliminate the update to payment rates for skilled nursing facility services for fiscal year 2010.
• The Congress should require the Secretary to revise the skilled nursing facility (SNF) prospective payment system by: adding a separate nontherapy ancillary (NTA) component, replacing the therapy component with one that establishes payments based on predicted patient care needs, and adopting an outlier policy.
• The Secretary should direct SNFs to report more accurate diagnostic and service-use information by requiring that: claims include detailed diagnosis information and dates of service, services furnished since admission to the SNF be recorded separately in the patient assessment, and SNFs report their nursing costs in the Medicare cost report.
• The Congress should establish a quality incentive payment policy for SNFs in Medicare and to improve quality measurement for SNFs, the Secretary should: add the risk-adjusted rates of potentially avoidable rehospitalizations and community discharge to its publicly reported post-acute care quality measures; revise the pain, pressure ulcer, and delirium measures currently reported on CMS’s Nursing Home Compare website; and require SNFs to conduct patient assessments at admission and discharge.

Home Health Services

• The Congress should eliminate the market basket increase for 2010 and advance the planned reductions for coding adjustments in 2011 to 2010, so that payments in 2010 are reduced by 5.5 percent from 2009 levels.
• The Congress should direct the Secretary to re-base rates for home health care services in 2011 to reflect the average cost of providing care.
• The Congress should direct the Secretary to assess payment measures that protect the quality of care and ensure incentives for the efficient delivery of home health care. The study should include alternative payment strategies such as blended payments and risk corridors and outcome-based quality incentives.

Inpatient Rehabilitation Facilities

• The update to the payment rates for inpatient rehabilitation services should be eliminated for fiscal year 2010.

Long-Term Care Hospitals

• The Secretary should update payment rates for long-term care hospitals for fiscal year 2010 by the projected rate of increase in the rehabilitation, psychiatric and long-term care hospital (RPL) market basket index less the Commission’s adjustment for productivity growth.

Recommendations on Medicare Advantage Payments

• The Congress should: Eliminate the stabilization fund for regional PPOs. Remove the effect of payments for indirect medical education from the MA plan benchmarks. Set the benchmarks that CMS uses to evaluate MA plan bids at 100 percent of FFS costs. Pay-for-performance should apply in MA to reward plans that provide higher quality care. Clarify that regional plans should submit bids that are standardized for the region’s MA-eligible population.
• The Secretary should calculate clinical measures for the FFS program that would permit CMS to compare the FFS program with MA plans.

Recommendations on Public Reporting of Physician Financial Relationships

• The Congress should require all manufacturers and distributors of drugs, biologicals, medical devices, and medical supplies (and their subsidiaries) to report to the Secretary their financial relationships with: physicians, physician groups, and other prescribers; pharmacies and pharmacists; health plans, pharmacy benefit managers, and their employees; hospitals and medical schools; organizations that sponsor continuing medical education; patient organizations; and professional organizations.
• The Congress should direct the Secretary to post the information submitted by manufacturers on a public website in a format that is searchable by: manufacturer; recipient’s name, location, and specialty (if applicable); type of payment; name of the related drug or device (if applicable); and year.
• The Congress should require manufacturers and distributors of drugs to report to the Secretary the following information about drug samples: each recipient’s name and business address; the name, dosage, and number of units of each sample; and the date of distribution. The Secretary should make this information available through data use agreements.
• The Congress should require all hospitals and other entities that bill Medicare for services to annually report the ownership share of each physician who directly or indirectly owns an interest in the entity (excluding publicly traded corporations). The Secretary should post this information on a searchable public website.
• The Congress should require the Secretary to submit a report, based on the Disclosure of Financial Relationships Report, of the types and prevalence of financial arrangements between hospitals and physicians.

Recommendations on Reforming the Hospice Benefit

• The Congress should direct the Secretary to change the Medicare payment system for hospice to: have relatively higher payments per day at the beginning of the episode and relatively lower payments per day as the length of the episode increases; include a relatively higher payment for the costs associated with patient death at the end of the episode; and implement the payment system changes in 2013, with a brief transitional period. These payment system changes should be implemented in a budget neutral manner in the first year.
• The Congress should direct the Secretary to: require that a hospice physician or advanced practice nurse visit the patient to determine continued eligibility prior to the 180th-day recertification and each subsequent recertification and attest that such visits took place, require that certifications and recertifications include a brief narrative describing the clinical basis for the patient’s prognosis, and require that all stays in excess of 180 days be medically reviewed for hospices for which stays exceeding 180 days make up 40 percent or more of their total cases.
• The Secretary should direct the Office of Inspector General to investigate: the prevalence of financial relationships between hospices and long-term care facilities such as nursing facilities and assisted living facilities that may represent a conflict of interest and influence admissions to hospice, differences in patterns of nursing home referrals to hospice, the appropriateness of enrollment practices for hospices with unusual utilization patterns (e.g., high frequency of very long stays, very short stays, or enrollment of patients discharged from other hospices), and the appropriateness of hospice marketing materials and other admissions practices and potential correlations between length of stay and deficiencies in marketing or admissions practices.
• The Secretary should collect additional data on hospice care and improve the quality of all data collected to facilitate the management of the hospice benefit. Additional data could be collected from claims as a condition of payment and from hospice cost reports.