CMS has published a proposed rule that would formally adopt a previously-announced change to the EHR meaningful use stage timeline. Specifically, the rule would extend Stage 2 through 2016 and begin Stage 3 in 2017 (instead of 2016). The proposed rule also would allow providers to use 2011 Edition Certified Electronic Health Record Technology (CEHRT) or a combination of 2011 and 2014 Edition CEHRT for the EHR reporting period in 2014; beginning in 2015, all eligible hospitals and professionals would be required to report using 2014 Edition CEHRT. CMS will accept comments on the proposed rule until July 21, 2014.
This post was written by Susan Edwards.
The Centers for Medicare & Medicaid Services (CMS) published the fiscal year (FY) 2015 proposed skilled nursing facility (SNF) prospective payment system (PPS) rule on May 6, 2014 (Proposed Rule). CMS estimates that the Proposed Rule’s implementation would result in a $750 million increase in aggregate payments to SNFs during FY 2015 as compared to FY 2014. The Proposed Rule anticipates a market basket update of 2%, resulting from a market basket increase of 2.4 percentage points, reduced by the Multifactor Productivity Adjustment of 0.4 percentage points, as required by the Affordable Care Act (ACA). We discuss highlights of the Proposed Rule below, including: (1) the proposed wage index update; (2) a proposed policy change to the change of therapy (COT) Other Medicare Required Assessment (OMRA); (3) proposed revisions to the Civil Money Penalties (CMP) regulations; (4) CMS’s request for public comment on services excluded from consolidated billing; (5) CMS’s observations on therapy trends; and (6) CMS’s discussion regarding electronic health record (EHR) use in SNFs. CMS will accept public comments regarding the Proposed Rule until June 30, 2014.
Proposed Wage Index Update
CMS is required by statute to adjust federal rates using a wage index that reflects geographic differences in wage levels. CMS proposes modifying the SNF PPS wage index to conform with a February 28, 2013 Office of Management and Budget (OMB) bulletin (OMB Bulletin No. 13-01) that made changes to the delineation of Metropolitan Statistical Areas, Micropolitian Statistical Areas, Combined Statistical Areas, and the guidance on uses of these delineations.
CMS proposes to implement OMB Bulletin No. 13-01 through a one-year transition that would use a blended SNF PPS wage index for FY 2015. Under this policy, 50% of the wage index would use prior OMB delineations (the Core-Based Statistical Area geographic designations adopted in FY 2006) and 50% of the wage index would use the 2013 OMB delineations. CMS also proposes using OMB delineations to identify whether a SNF is urban or rural for rate purposes. CMS estimates that 15% of providers would have a higher wage index under the proposed new labor market area delineations, while 22% would have a lower wage index.
COT OMRA Policy Update
CMS also proposes revisions to the COT OMRA policy, which is used to classify a resident into a new resource utilization group (RUG) due to changes in therapy use, to address industry-wide confusion regarding CMS’s current policy. While CMS has addressed this policy during industry calls, until the proposed rule, CMS had not formalized what the agency says is its current standard that “the resident must be classified into a RUG-IV therapy category or into a nursing RUG because of index maximization (while receiving a level of therapy sufficient for classification into a RUG-IV therapy category) in order for the COT OMRA requirements to apply.” In the Proposed Rule, CMS proposes that a COT OMRA would be permitted for patients classified into non-therapy RUGs, but only in certain circumstances. Specifically, if a SNF patient were previously classified into a therapy-RUG and had no discontinuation of therapy services between Day 1 of the COT observation period for the COT OMRA that classified the resident into his/her current non-therapy RUG and the assessment reference date of the COT OMRA that reclassified the patient into a therapy RUG, a SNF could complete a COT OMRA even though the patient was in a non-therapy RUG.
The Proposed Rule would modify 42 C.F.R. § 488.433 to clarify certain statutory provisions established by Section 6111 of the ACA regarding how states may use CMPs and how states must obtain approval for CMP use from CMS. While the current regulations specify that CMS must approve states’ use of CMP funds and that CMPs “must be used entirely for activities that protect or improve the quality of care for residents,” CMS contends that states have used CMP funds without CMS approval, have used CMP funds even though CMS disapproved the state’s intended use, and/or have not used CMP funds at all. As a consequence, CMS proposes modifications to § 488.433 to strengthen the regulations, provide more guidance to states regarding the approval process and the permissible uses of CMPs, and increase state accountability with respect to CMP funds.
CMS Request for Additional Services to Be Excluded from Consolidated Billing
The Proposed Rule also discusses the statutory consolidated billing provisions applicable to SNFs, which require that, with the exception of certain delineated services, SNFs submit consolidated bills to Medicare Administrative Contractors for all of the services SNF patients receive during a Medicare Part A-covered stay. SNF consolidated billing excludes a number of services, such as those furnished by physicians and other practitioners, and certain “high-cost, low probability” services within certain specific categories. In the Proposed Rule, CMS invites comments on whether the agency should exclude any additional services from consolidated billing within the four service categories excluded under the statute: (1) chemotherapy items; (2) chemotherapy administrative services; (3) radioisotope services; and (4) customized prosthetic devices. The current list of excluded services, listed by HCPCS codes, is available here.
Agency’s Observations on Therapy Utilization Trends
In the Proposed Rule, CMS observes that the percentage of SNF residents classified into an Ultra-High Rehabilitation groups has increased “rather steadily” (according the agency, from 44.8% in FY 2011 to over 50% in FY 2013). CMS also notes that many patients are receiving the minimum minutes of therapy to qualify for a given therapy RUG. CMS states that it will continue to follow and analyze these trends and requests comments regarding such “observations.”
Accelerating Health Information Exchange in SNFs
In the Proposed Rule, CMS emphasizes the government’s favorable view of health information exchange through the SNFs’ use of EHR, while acknowledging that SNFs are not eligible for EHR incentive payments. The comment period affords industry an opportunity to suggest to CMS how the government could accelerate the adoption of EHR among SNFs.
Medicare eligible professionals and eligible hospitals that are not “meaningful users” of certified electronic health record (EHR) technology will be subject to payment adjustments under the Medicare EHR Incentive Programs beginning on October 1, 2014 for hospitals and on January 1, 2015 for eligible professionals. Eligible professionals and hospitals may be exempt from payment adjustment, however, if demonstrating meaningful use would result in a significant hardship. CMS recently released the hardship exception applications, which outline the specific circumstances that CMS has determined pose a significant barrier to achieving meaningful use. Of particular interest, CMS has added an exception category for “2014 EHR Vendor Issues,” to cover circumstances under which the professional’s or hospital’s EHR vendor was unable to obtain 2014 certification, or the eligible professional or hospital was unable to implement meaningful use due to 2014 EHR certification delays. The hardship application is due by April 1, 2014 for eligible hospitals, and by July 1, 2014 for eligible professionals. Important to certain specialists, the application for eligible professionals states that physicians classified in the Medicare Provider Enrollment, Chain and Ownership System (PECOS) with a primary area of practice of Diagnostic Radiology (30), Nuclear Medicine (36), Interventional Radiology (94), Anesthesiology(05), or Pathology (22) are automatically exempt from the 2015 payment adjustment and are not required to complete the exception application.
The Office of the National Coordinator for Health Information Technology (ONC) is seeking comments on revisions to health information technology certification regulations for 2015. CMS is updating these criteria more frequently to provide more incremental regulatory changes, give stakeholders earlier information and greater opportunity for input, and respond more quickly to newer industry standards to enhance interoperability. ONC observes that its previous two to three-year regulatory cycle was “sub-optimal” because it “created cycles of significant peaks and valleys from a health IT development standpoint; resulted in missed opportunities to improve interoperability and programmatic alignment because of mismatched regulatory and standards balloting cycle timelines; and adversely affected EHR technology developers’ ability to strategically plan their development and product rollout processes due to uncertain regulatory timelines.” The proposed rule provides that the 2015 Edition EHR certification criteria would be voluntary; providers would not need to adopt this edition, and no EHR technology developer who has certified its EHR technology to the 2014 Edition would need to recertify to the 2015 Edition for users to participate in the Medicare and Medicaid EHR Incentive Programs. The proposed rule also includes revisions to the ONC HIT Certification Program intended to improve regulatory clarity, simplify certification of EHR Modules not used for achieving meaningful use; and discontinue the use of the “Complete EHR” certification concept. ONC will accept comments on proposed rule until April 28, 2014.
The Federal Trade Commission (FTC) has scheduled a workshop on March 20-21, 2014 to examine developments in the U.S. health care industry, including those related to implementation of health care reform legislation and other trends related to cost, quality, access, and care coordination. Specifically, the workshop will address the following five topics:
- Professional Regulation of Health Care Providers -- how accreditation, credentialing, licensure, and scope of practice rules may affect competition and consumers.
- Innovations in Health Care Delivery -- including retail clinics and telemedicine that may offer significant cost savings while maintaining or improving quality of care and expanding consumer access to care.
- Advancements in Health Care Technology – implications of technology such as electronic health care records, health data exchanges, technology platforms for health care payers and providers, and certain other consumer-oriented technological advances.
- Measuring and Assessing Quality of Health Care – how developments in measuring and assessing health quality may impact competition and health care choices.
- Price Transparency of Health Care Services – how improved price transparency impacts costs to consumers and its potential to facilitate price coordination among health care providers.
The bipartisan leadership of the House Energy and Commerce Committee, House Ways & Means Committee, and Senate Finance Committee have released a consensus Medicare physician fee schedule reform bill expected to be considered by Congress before the latest temporary payment patch expires at the end of March. Highlights of H.R. 4015, the SGR Repeal and Medicare Provider Payment Modernization Act, include the following:
- The bill would repeal the statutory “Sustainable Growth Rate” (SGR) provision, which has called for deep cuts in Medicare rates in recent years. Congress has routinely stepped in to override the full application of the formula – most recently replacing a 20.1% cut scheduled to go into effect January 1, 2014 with a 0.5% update for the first three months of 2014 – but H.R. 4015 would offer a permanent fix.
- For five years (2014-2018) the bill would provide annual Medicare physician fee schedule updates of 0.5% during a transition period to a new quality-based system (thus for 2014, the temporary 0.5% update in place through March would be extended for the full year).
- Three current physician quality programs would be consolidated into a single value-based program called the “Merit-Based Incentive Payment System,” which starting in 2018 would tie payment to performance in four categories: quality; resource use; electronic health record meaningful use; and clinical practice improvement activities. Quality measures will be developed and updated in consultation with physicians and other stakeholders.
- The bill would provide bonus payments to providers who receive a significant portion of their revenue from an alternative payment model (APM) or patient centered medical home (PCMH); the threshold would begin at 25% in 2018 and increase over time.
- The measure includes a number of other provisions designed to improve payment accuracy for individual provider services, promote appropriate use criteria for certain advanced diagnostic imaging services, expand care coordination for individuals with chronic care, and expand the use of Medicare data for transparency and quality improvement.
A formal budget estimate for the package has not yet been released, although earlier versions of the plans have had 10-year costs of more than $121 billion over 10 years. The Committees have not yet identified what “offsets” would be used to pay for the package, but cuts impacting a broad range of health care provider types, health plans, and drug manufacturers have all been unofficially floated as options.
The OIG has issued a report entitled “CMS and Its Contractors Have Adopted Few Program Integrity Practices to Address Vulnerabilities in EHRs,” which concluded that few Medicare contractors were reviewing EHRs differently from paper medical records, and not all contractors reported being able to determine whether a provider had copied language or over-documented in a medical record. The OIG recommends that CMS provide guidance to its contractors on detecting fraud associated with EHRs, including specific guidance addressing EHR documentation and electronic signatures in EHRs. The OIG also suggested that CMS should direct its contractors to use providers’ audit logs, which distinguish EHRs from paper medical records and could be valuable to CMS’s contractors when reviewing medical records.
As previously reported, the Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS) published final rules in December amending Anti-Kickback Statute (AKS) and Stark Law regulations permitting certain arrangements involving the donation of interoperable electronic health record (EHR) software or information technology and training services. Reed Smith has prepared a summary of the final rules, including a side-by-side comparison of the EHR AKS Safe Harbor and the Stark Law’s EHR Exception that highlights the recent revisions.
An OIG report released in December 2013 assessed the extent to which hospitals that received Medicare EHR incentive payments as of March 2012 had implemented fraud safeguards for EHR technology previously recommended by an HHS contractor, RTI International, and set forth in a 2007 HHS Office of the National Coordinator for Health Information Technology (ONC) report. The OIG found widespread hospital compliance with RTI-recommended audit functions, user authorization and access controls, and data transfer safeguards, but less than half of hospitals had begun implementing RTI recommendations to include patient involvement in anti-fraud efforts, and only about one quarter of hospitals had policies regarding the use of the copy-paste feature in EHR technology, which potentially could pose a fraud vulnerability. The OIG report includes several recommendations for ONC and CMS to strengthen efforts to address fraud vulnerabilities in EHRs, with which the agencies concurred.
On December 27, 2013, the Office of Inspector General and the Centers for Medicare & Medicaid Services each published, in the Federal Register, a final rule that amends regulations protecting, from the Anti-Kickback Statute and Stark law, certain arrangements involving the donation of interoperable electronic health records (EHR) software or information technology and training services related to such EHR software. The final rules:
- Extend the protections of the Stark law exception (42 C.F.R. § 411.357(w)) and the Anti-Kickback safe harbor (42 C.F.R. § 1001.952(y)) from December 31, 2013 to December 31, 2021 (the “sunset” provisions)
- Exclude laboratory companies from the types of entities that may donate EHR items and services
- Update the provisions under which an EHR donor or recipient can ascertain, with certainty, that EHR is interoperable pursuant to the exception and safe harbor (the “deeming” provisions)
- Remove the requirements that donated EHR include electronic prescribing capability
- Clarify the requirement prohibiting any action that limits or restricts the use, compatibility, or interoperability of donated items or services
With the exception of the amendments to the sunset provisions, which go into effect December 31, 2013, the amended regulations will be effective as of March 27, 2014.
Reed Smith will prepare a comprehensive Client Alert on the final rules, which will be published shortly.
Reed Smith lawyers have significant experience advising clients on EHR technology issues and will continue to monitor regulatory changes in this area. For more information regarding how we can assist you, please contact your principal Reed Smith lawyer or a lawyer listed in this publication.
On December 10, 2013, CMS published its final rule updating Medicare physician fee schedule (PFS) rates and polices for calendar year (CY) 2014, which includes a 20.1% across-the-board cut in PFS rates in 2014 (down from 24.4% projected under the proposed rule). The cuts are largely due to the statutory Sustainable Growth Rate (SGR) update formula, although lawmakers are seeking agreement on legislation to block the automatic cuts. The rule also includes a number of significant Part B policy changes, including the following highlights:
- The final 2014 conversion factor (CF) is $27.2006, compared to the 2013 CF of $34.0230, mainly as a result of the statutory SGR formula. Congress is expected to override this formula, either on a temporary or permanent basis, but final action is still uncertain (see legislative update below). CMS estimates that if Congress freezes the PFS update for 2014, it would actually result in a CF of $35.6446, an increase compared to 2013, due to the application of a budget neutrality adjustment. Reimbursement changes for individual procedures vary based on numerous other policies.
- CMS did not finalize a controversial proposal under its potentially misvalued code initiative to reduce PFS rates for more than 200 codes if Medicare physician office payment exceeds the payment under the hospital outpatient prospective payment system (OPPS) or ambulatory surgical center (ASC) prospective payment system (PPS). CMS expects to develop a revised proposal for using OPPS and ASC rates in establishing physician practice expense relative value units, which CMS will propose through future notice and comment rulemaking. CMS is continuing its efforts to identify and adjust payment for potentially misvalued codes, however, including by adopting on an interim basis work relative value units for approximately 200 additional codes. These interim values are subject for public comment until January 27, 2014.
- CMS will make payment for non-face-to-face complex chronic care management services for Medicare beneficiaries who have multiple (two or more) significant chronic conditions, beginning in 2015. CMS will establish practice standards for such chronic care management services through future rulemaking.
- CMS is modifying the definition of eligible telehealth originating sites to include health professional shortage areas (HPSAs) located in rural census tracts of urban areas as determined by the Office of Rural Health Policy, which CMS expects to result in the inclusion of additional HPSAs as areas for telehealth originating sites. CMS is adding transitional care management services to the list of eligible Medicare telehealth services.
- CMS will continue implementation of the physician value-based payment modifier, which was mandated by the Affordable Care Act (ACA) to reward physicians for providing higher quality and more efficient care. The value modifier is being phased in from CY 2015 to CY 2017. CY 2014 is the performance period for the CY 2016 value modifier. CMS is finalizing plans to apply the value modifier to groups of 10 or more eligible physicians in 2016 (compared to groups of 100 or more in 2015), and increase the amount of payment at risk from 1% to 2% in 2016. CMS also is refining the methodologies used to calculate the value modifier to better identify both high and low performers for upward and downward payment adjustments.
- CMS has adopted its proposal to amend the “incident to” regulations to require that services and supplies be furnished in accordance with applicable state law, and that the individual performing “incident to” services meet any applicable requirements to provide the services, including state licensure requirements. The policy is intended to ensure that auxiliary personnel providing services to Medicare beneficiaries “incident to” the services of other practitioners do so in accordance with applicable state requirements, and that Medicare payments can be recovered when such services are not furnished in compliance with the state law.
- CMS has adopted without change its proposed process to systematically reexamine payment amounts under the Clinical Laboratory Fee Schedule to determine if changes in technology for the delivery of that service (e.g., changes to the tools, machines, supplies, labor, instruments, skills, techniques, and devices by which laboratory tests are produced and used) warrant an adjustment to the payment amount. Beginning with the CY 2015 PFS proposed rule, CMS will identify the test code, discuss how it has been impacted by technological changes, and propose an associated payment adjustment. CMS will solicit comments, and any payment adjustment would be adopted in the final rule, beginning with the CY 2015 final rule.
- CMS is establishing a centralized review process under which a single entity will make Investigational Device Exemption (IDE) coverage decisions, although the policy will not be implemented until 2015. The rule also establishes minimum standards for IDE studies and trials for which Medicare coverage of devices or routine items and services is provided (but CMS dropped earlier references to pivotal study and superiority study design criteria).
- CMS will apply the outpatient therapy cap limitations and related policies to outpatient therapy services furnished in a critical access hospital beginning on January 1, 2014, in conformance with the American Taxpayers Relief Act (ATRA).
- The final rule also addresses, among many other things: updates to the geographic practice cost indices; revisions to the calculation of the Medicare Economic Index; revisions to the Physician Quality Reporting System and the Electronic Health Record (EHR) Incentive program; revisions to regulations regarding liability for overpayments to conform to ATRA provisions with regard to the timing of the triggering event for the ‘‘without fault’’ and ‘‘against equity and good conscience’’ presumptions; and updates to the ambulance fee schedule regulations to conform with statutory requirements.
In light of the late release of the final Medicare PFS rule, CMS is extending the annual Medicare participation enrollment period for 2014 through January 31, 2014 (instead of the window ending on December 31, 2013). During this period, eligible physicians, practitioners, and suppliers may change their participation status, but the effective date for any participation status changes remains January 1, 2014.
CMS Blog Post Announces Delay in Electronic Health Record (EHR) Incentive Program "Stage 3" Meaningful Use Start
On December 6, 2013, CMS announced its intention to push back implementation of the Stage 3 meaningful use criteria for the Medicare and Medicaid EHR Incentive Programs. Under the new timeline, Stage 2 will be extended through 2016 and Stage 3 will begin in 2017 (instead of 2016) for those providers that have completed at least two years in Stage 2. By way of background, under Stage 1 (which began in 2011), the “meaningful use” criteria focus on capturing and sharing data. Stage 2 meaningful use criteria focus on exchange of clinically relevant information between providers and promote patients’ secure online access to their health information. Under Stage 3, meaningful use will include demonstrating improvement in quality of health care. CMS intends to release a proposed rule for Stage 3 in the fall of 2014, with a final rule to follow in the first half of 2015. The blog post also outlines a related Office of the National Coordinator for Health Information Technology (ONC) plan to allow for more frequent updates of certification criteria under the ONC HIT Certification Program.
On December 17, 2013, CMS is hosting a call to provide an overview of the quality reporting provisions in the 2014 Physician Fee Schedule (PFS) final rule (which has not yet been released). The call will provide details on how an eligible professional or group practice can meet the criteria for satisfactory reporting for the 2014 Physician Quality Reporting System (PQRS) incentive and 2016 PQRS payment adjustment (including a discussion of criteria for satisfactory participation under the new qualified clinical data registry option). The call also will provide updates on the Electronic Health Record (EHR) Incentive Program and Physician Compare.
Medicare electronic health records (EHR) incentive payments to hospitals and health care professionals topped $6.3 billion for 2012 – more than twice the $2.3 billion awarded for 2011 -- according to a GAO report entitled Electronic Health Records: Number and Characteristics of Providers Awarded Medicare Incentive Payments for 2011-2012. The proportion of eligible hospitals and professionals receiving payments also grew from 2011 to 2011, with 48% of eligible hospitals (2,291) receiving payments in 2012 compared to 777 hospitals (16%) in 2011. For 2012, 31% of eligible professionals (183,712) were awarded payments, up from 10% (58,331) in 2011. Among hospitals and professionals awarded an incentive payment for 2012, the largest proportions were in the South, the smallest proportions were in the West, and a majority were in urban areas. More than four-fifths of the hospitals were acute care hospitals and three-fifths were nonprofit hospitals, while more than half of professionals were specialty practice physicians.
On November 15, 2013, CMS is hosting a provider call to discuss recent changes in the way providers and suppliers access the Provider Enrollment Chain and Ownership System (PECOS), the Electronic Health Records (EHR) Incentive Program, and the National Plan and Provider Enumeration System (NPPES). These updates are intended to facilitate registration as an individual practitioner, authorized or delegated official of an organization, or someone working within PECOS on behalf of a provider or supplier. The call will provide detailed instructions on these new processes, which have been available since October 7.
On July 23, 2013, CMS is hosting a call on the Medicare and Medicaid Electronic Health Records (EHR) incentive programs. The call will focus on the clinical quality measures for reporting beginning in 2014, the recommended core set for reporting purposes, and the 2014 electronic specifications for the Medicare EHR Incentive Program. Registration is required.
On a June 27, 2013 call, CMS and the Office of the National Coordinator for Health Information Technology (ONC) will provide an overview of the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs, including the use of certified EHR technology to meet meaningful use.
CMS and ONC have posted a fact sheet that details progress HHS has made in promoting the growth of health information technology since the enactment of the Health Information Technology for Economic and Clinical Health (HITECH). The fact sheet addresses, among other things, statistics on participation in the Electronic Health Record Incentive Programs and electronic prescribing and information on HHS plans to accelerate health information exchange development.
CMS is reminding eligible professionals (EPs), eligible hospitals, and critical access hospitals (CAHs) attesting to receive an incentive payment for either the Medicare or Medicaid Electronic Health Record (EHR) Incentive Program that they may be subject to a pre-payment or post-payment audit. CMS has provided a fact sheet on supporting documentation for providers selected for such audits.
On May 3, 2013, CMS and the Office of the National Coordinator for Health Information Technology (ONC) are hosting a meeting to discuss electronic health records, the increase in code levels billed for some Medicare services, and appropriate coding in an increasingly-electronic environment. The meeting, which is aimed at providers, health information technology vendors, and other interested stakeholders, will address issues such as the impact of EHRs on high quality clinical care, provider efficiency and coding, and coding challenges and opportunities facing various groups, including hospitals and clinicians. Attendees may participate in person, via telephone, or web streaming. Registration is required.