CMS published its final rule to update the Medicare end-stage renal disease (ESRD) PPS for CY 2015 on November 6, 2014. For CY 2015, the final ESRD PPS base rate is $239.43, which reflects a 0.0 percent update mandated by section 217(b)(2) of PAMA, and the application of a wage index budget-neutrality adjustment factor to the CY 2014 ESRD PPS base rate of $239.02. Nevertheless, CMS estimates that the rule will increase payments to ESRD facilities by approximately $30 million in 2015 due to updates to the outlier threshold amounts. The final rule also, among other things: rebases the ESRD bundled market basket using 2012 data; revises the market basket measures; updates the labor-related share value with a two-year transition; clarifies the eligibility criteria for the low volume payment adjustment; and implements a PAMA provision providing that payment for ESRD-related oral-only drugs will not be made under the ESRD PPS prior to January 1, 2024. CMS also adopted updates to the ESRD Quality Incentive Program (QIP) for payment years 2017 and 2018, including changes to the measure sets and establishment of a new scoring methodology beginning in 2018. Finally, the rule makes significant changes to Medicare reimbursement policy for DME, prosthetics, orthotics, and supplies (DMEPOS), as discussed in a separate post.
CMS is expected to publish several major final Medicare payment rules for 2015 in the coming days. The agency has already submitted to the White House Office of Management and Budget (OMB) for regulatory clearance the final 2015 rules updating Medicare payments for outpatient hospitals, ambulatory surgical centers, home health agencies, and end-stage renal disease facilities, along with reimbursement policy updates impacting suppliers of durable medical equipment, prosthetics, orthotics, and supplies. The final Medicare physician fee schedule rule is not yet at OMB, but it should be following shortly. While the text of the regulations are not yet available, we expect that the rules will be put on display at the Federal Register in the near future. We will be providing summaries of the final rules in future updates.
On July 11, 2014, CMS published a proposed rule to update the Medicare end-stage renal disease (ESRD) PPS for CY 2015, which CMS anticipates would increase total payments to all ESRD facilities by 0.3% compared to CY 2014. While CMS projects that the ESRD market basket update, as adjusted for MFP, would have been 1.6%, the “Protecting Access to Medicare Act of 2014” (PAMA) sets the CY 2015 ESRD payment update at 0.0 percent. After applying a proposed wage index budget-neutrality adjustment factor, CMS estimates that the CY 2015 ESRD PPS base rate would be $239.33 under the proposed rule. The proposed rule also would, among other things: rebase the ESRD bundled market basket using 2012 data; update outlier Medicare Allowable Payment (MAP) and fixed dollar loss amounts (which will increase payments to ESRD facilities for beneficiaries requiring higher resource utilization); revise the market basket measures; update the labor -related share value with a two-year transition; clarify the eligibility criteria for the low volume payment adjustment ; and implement a PAMA provision providing that payment for ESRD-related oral-only drugs will not be made under the ESRD PPS prior to January 1, 2024. CMS also proposes updates to the ESRD Quality Incentive Program (QIP) for payment years 2017 and 2018. Finally, the proposed rule would make significant changes to Medicare reimbursement policy for DME, prosthetics, orthotics, and supplies (DMEPOS). CMS will accept comments on the proposed rule until September 2, 2014.
On July 10, 2014, CMS is hosting a national provider call to discuss the new Five Star Rating system that will be added to Dialysis Facility Compare (DFC) in October 2014. Among other things, the call will address the methodology used to calculate the ratings and how to access and preview the ratings. In addition, CMS is holding a provider call on July 16 on the End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP), a pay-for-performance initiative that ties a facility's quality scores to payment during a payment year (PY). The call will focus on the preliminary ESRD QIP PY 2015 Performance Score Report, which previews how well facilities scored on the relevant quality measures. Finally, a July 23 call will focus on PY 2017 and PY 2018 ESRD QIP provisions in the upcoming ESRD prospective payment system proposed rule.
On June 18, 2014, CMS announced in a blog posting that it is planning to add a “Five Star” quality rating system to the Hospital Compare, Dialysis Facility Compare, and Home Health Compare websites on Medicare.gov. The agency will start making the new quality ratings available later this year and into early 2015. CMS already maintains star ratings on its Nursing Home Compare and Physician Compare sites.
CMS has made changes to its Comprehensive ESRD Care (CEC) Initiative to encourage greater participation by both large dialysis organizations (LDOs) and non-LDOs. The goal of the CEC initiative is to improve outcomes for Medicare beneficiaries with ESRD while reducing expenditures by creating financial incentives for dialysis facilities, nephrologists, and other Medicare providers to effectively collaborate on caring for the complex ESRD beneficiary population. In particular, CMS has made changes to the participant owner requirements, the financial risk arrangement, and the financial calculation options. In light of these changes, CMS has reopened the application period; for details on submission dates and additional information, see the CMS web site.
The OIG recently offered recommendations to CMS on how to update Medicare payments to end stage renal disease (ESRD) facilities for drugs used by dialysis patients. Based on a review of ESRD drug prices in the first quarter of 2012, the OIG concluded that independent dialysis facilities can purchase ESRD drugs for less than the levels provided in the ESRD base rate (9% below, in the aggregate), but average acquisition costs for hospital based dialysis facilities exceeded the reimbursement amounts (5% above, in the aggregate). Thus the OIG cautioned that any reductions to the ESRD base rate could potentially harm hospital-based dialysis facilities. While dialysis facilities’ average acquisition costs for the majority of drugs under review have decreased over the last 3 years, the average costs for epoetin alfa (which represented more than three-quarters of drug costs in responding facilities) have increased by at least 17%. The OIG also determined that the concluded that the Producer Price Index (PPI) for Prescription Drugs was not an accurate predictor of cost changes for most drugs under review. In addition to rebasing the ESRD base rate to reflect current trends in drug acquisition costs (as is required by law), the OIG recommends that CMS (1) distinguish payments in the ESRD base rate between independent and hospital-based dialysis facilities, and (2) consider updating the ESRD payment bundle using a factor that takes into account drug acquisition costs.
The Medicare Payment Advisory Commission (MedPAC) has released its annual report to Congress on Medicare payment policy, including payment update recommendations for all the major Medicare fee-for-service payment (FFS) systems, limited recommendations related to the Medicare Advantage (MA) program, and a status report on the Medicare Part D program. The following are highlights of the recommendations for 2015 (many of which were recommended previously):
- MedPAC recommends a 3.25% update to inpatient and outpatient hospital payment rates, concurrent with two changes that would institute site-neutral payments among settings. First, Congress should direct the HHS Secretary to reduce or eliminate differences in payment rates between outpatient departments and physician offices for selected ambulatory payment classifications. Second, MedPAC recommends reducing payment for long-term care hospital (LTCH) services furnished to patients whose illness is not characterized as chronically critically ill (CCI) to the same rate that an acute care hospital would be paid for such care; savings from this provision would fund an outlier pool for acute care hospitals that treat costly CCI patients.
- Congress should repeal the sustainable growth rate (SGR) system for physician services and replace it with a 10-year path of statutory updates that includes a higher update for primary care services than for specialty care services. MedPAC also endorsed the collection of data to establish more accurate work and practice expense values; budget-neutral changes to improve data on which relative value unit weights are based and to redistribute payments from overpriced to underpriced services; and relative value unit reductions to achieve fee schedule savings.
- Congress should eliminate the ambulatory surgical center (ASC) payment update for 2015, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
- Congress should eliminate the skilled nursing facility (SNF) market basket update. Congress also should direct the Secretary to revise the prospective payment system for SNFs and begin a process of rebasing with an initial reduction of 4% and subsequent reductions until Medicare’s payments better align with providers’ costs. Moreover, Congress should direct the Secretary to reduce payments to SNFs with relatively high risk-adjusted rates of rehospitalization during Medicare-covered stays.
- MedPAC reiterates previous recommendations to rebase home health rates, eliminate the market basket update, revise the home health case-mix system to rely on patient characteristics to set payment for therapy and nontherapy services, and establish a per episode copay for home health episodes not preceded by hospitalization or post-acute care use. In addition, Congress should direct the Secretary to reduce payments to home health agencies with relatively high risk-adjusted rates of hospital readmission.
- Congress should eliminate the update to hospice rates for FY 2015 and adopt a series of previous MedPAC payment reform recommendations.
- Congress should eliminate the 2015 updates for outpatient dialysis services and direct the Secretary to establish a quality measure that assesses poor outcomes related to anemia in the End-Stage Renal Disease Quality Incentive Program, revise the low-volume adjustment, and audit dialysis facilities’ cost reports.
- Congress should eliminate the FY 2015 payment updates for inpatient rehabilitation facilities and LTCHs.
- With regard to Medicare Advantage (MA), MedPAC recommends that Congress: (1) direct the Secretary to determine payments for employer-group MA plans in a manner more consistent with the determination of payments for comparable non-employer group plans; and (2) include the Medicare hospice benefit in the MA benefits package beginning 2016.
Note that while MedPAC’s recommendations are not binding, Congress and CMS often take into account MedPAC’s assessments when updating Medicare payment policies.
On December 27, 2013, CMS published a proposed rule that would establish national emergency preparedness requirements for Medicare- and Medicaid-participating providers and suppliers to ensure that they can meet the needs of patients and residents during emergency situations, both natural and man-made. The proposed requirements cover four aspects of emergency preparedness:
- Risk assessment and planning: Providers and suppliers must perform a risk assessment using an “all-hazards'' approach focusing capabilities needed to prepare for a full spectrum of emergencies. This approach is location-specific considering the types of hazards most likely to occur in a provider or supplier’s area.
- Policies and procedures: Providers must develop and implement policies and procedures based on their emergency plan and risk assessment.
- Communication plan: Providers must develop and maintain an emergency preparedness communication plan that complies with both federal and state law. Patient care must be well-coordinated within the facility, across health care providers, and with state and local public health departments and emergency systems to protect health and safety.
- Training and testing: Providers must develop and maintain emergency preparedness training and testing programs, including initial and annual training and annual emergency drills.
The new requirements would apply to 17 provider types (with certain variations): hospitals; critical access hospitals; long-term care facilities; psychiatric residential treatment facilities; intermediate care facilities for individuals with intellectual disabilities; religious nonmedical health care institutions; transplant centers; hospice, ambulatory surgical centers, Program for the All-inclusive Care for the Elderly organizations; home health agencies; comprehensive outpatient rehabilitation facilities; community mental health centers; organ procurement organizations; clinics, rehabilitation, and therapy providers; rural health clinics/federally qualified health clinics; and end-stage renal disease providers.
CMS is seeking comments on numerous aspects of its proposal, including when these requirements should be implemented; comments will be accepted until February 25, 2014.
** February 21 update: CMS has extended the comment period until March 31, 2014.
A January 15, 2015 CMS call will focus on the 2016 Medicare End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP). Among other things, the call will cover the final measures, standards, scoring methodology, and payment reduction scale that are applied to the payment year 2016 program.
On December 2, 2013, CMS published its final rule updating Medicare end-stage renal disease (ESRD) PPS rates and policies for 2014. Instead of cutting rates by more than 9%, as CMS proposed this summer, the final rule holds 2014 rates flat compared to 2013. This improved reimbursement picture is a result of CMS adopting a multi-year phase-in of a drug utilization adjustment to the base rate mandated by the ATRA, which is intended to reflect changes in ESRD-related drugs and biologicals use since 2007. Instead of making the full drug utilization adjustment in 2014, which would be -$29.93, CMS is applying a $8.16 reduction in 2014, and the remainder of the adjustment will be phased in over the next two to three years (to be determined in the 2016 rulemaking). The 2014 drug utilization adjustment offsets other payment updates in the rule, including the 2.5% base rate update (derived from a 3.2% market basket update reduced by a 0.4% productivity adjustment). The rule also finalizes a 50% increase to the home dialysis training add-on payment adjustment for peritoneal dialysis and home hemodialysis training treatments. Moreover, CMS is updating ESRD Quality Incentive Program measures and scoring methodologies for 2016. Note that 2014 is the last year of the transition to the ESRD PPS; all ESRD facilities will be paid 100% of the ESRD PPS rate for services furnished on or after January 1, 2014. In addition to ESRD policy changes, the final rule addresses Medicare coverage of and payment for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), which are discussed in a separate post.
As part of the CY 2014 Medicare end stage renal disease (ESRD) prospective payment system (PPS) final rule, published on December 2, 2013, CMS has adopted updates to three Medicare durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) policies.
- 3-Year Minimum Lifetime Requirement (MLR). CMS previously issued regulations providing that, effective for items classified as DME after January 1, 2012, the item must have an expected life of at least 3 years to be considered “durable.” The final ESRD PPS rule clarifies the treatment of a “grandfathered item” classified as DME on or before January 1, 2012 if that product is subsequently modified (e.g., upgraded, refined, or reengineered). Specifically, effective April 1, 2014, if a grandfathered product is modified, and the modified product has an expected life that is shorter than that of the original product, the modified item will lose its grandfathered status and it will be subject to the 3-year MLR requirement. The impact of the loss of grandfathered status on coverage would depend on the new expected lifetime of the modified product. For instance, if a grandfathered product covered as DME prior to 2012 with a lifetime of four years is modified, resulting in a product with a lifetime of 2.5 years, this product would lose its grandfathered status and no longer meet the definition of DME because the 3-year MLR would not be met. On the other hand, if this modification reduced the lifetime of the product to 3.5 years, the product would lose its grandfathering status but would satisfy the 3-year rule and continue to meet the definition of DME.
- Reclassification of Routinely-Purchased DME. The final clarifies the definition of routinely purchased equipment at §414.220(a)(2) to address inconsistencies in how CMS has classified certain expensive items as routinely purchased, rather than capped rental. CMS adopted its proposal to reclassify as capped rental items about 80 DME and DME accessory HCPCS codes added after 1989 that are currently classified as routinely purchased (although CMS agreed with commenters that E0760, Osteogenesis Ultrasound Stimulator, should remain classified as routinely purchased equipment). The complete list of codes subject to this provision is set forth in Table 11. The effective dates for the reclassifications are: (1) April 1, 2014, for items not included in DMEPOS competitive bidding (which is 3 months later than CMS initially proposed); (2) July 1, 2016, for (a) items furnished in all areas of the country if the item is included in a Round 2 competitive bidding program (CBP) and not in a Round 1 Recompete CBP, and (b) for items included in a Round 1 Recompete CBP but furnished in an area other than one of the nine Round 1 Recompete areas; and (3) January 1, 2017, for items included in a Round 1 Recompete CBP and furnished in one of the nine Round 1 Recompete areas.
- Fee Schedules for Splints, Casts, and Certain IOLs. CMS has adopted its proposal to implement on a budget-neutral basis Medicare fee schedules for splints and casts, and intraocular lenses (IOLs) inserted in a physician’s office. This provision is effective for services furnished on or after April 1, 2014. In future years, the fee schedule amounts will be updated by the percentage increase in the CPI-U for the 12-month period ending with June of the preceding year, reduced by the multifactor productivity adjustment.
CMS also has adopted certain technical amendments to DMEPOS payment regulations.
As a result of the partial government shutdown, CMS is warning that it may delay until late November a series of major final rules setting a wide range of Medicare payment rates and policies for 2014. While CMS usually releases the final calendar year updates by November 1st each year, CMS is now saying that the 16-day government shutdown could push back the release date of the following rules to November 27th (or potentially later):
• CY 2014 Changes to the Hospital Outpatient Prospective Payment System (HOPPS) and Ambulatory Surgical Center (ASC) Payment System;
• Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Part B for CY 2014;
• Medicare Program; End-Stage Renal Disease (ESRD) Prospective Payment System, Quality Incentive Program, and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS); and
• CY 2014 Home Health Prospective Payment System Final Rule.
This timeline could leave providers, suppliers, and other health care entities only a few weeks to prepare for potentially sweeping changes before they go into effect on January 1, 2014 (although certain provisions have different effective dates). For instance, stakeholder are awaiting final disposition of CMS proposals to, among many other things: expand payment bundles under the HOPPS; cut physician fee schedule reimbursement for more than 200 codes if the Medicare physician office payment exceeds the HOPPS or ASC payment; systematically reexamine payment amounts under the Clinical Laboratory Fee Schedule; establish a centralized review process for Investigational Device Exemption (IDE) coverage decisions; reduce ESRD rates by 9.4%; and revise various DMEPOS payment policies.
On July 8, 2013, CMS published a proposed rule to update Medicare end-stage renal disease (ESRD) prospective payment system (PPS) rates and policies for 2014. While CMS proposes a 2.5% base rate update (a 2.9% market basket update reduced by an estimated 0.4% ACA multi-factor productivity (MFP) adjustment), this amount would be more than offset by a -12% drug utilization offset. Specifically, under the American Taxpayer Relief Act of 2012, CMS must reduce the ESRD PPS base rate to reflect estimated change in the utilization of ESRD-related drugs and biologicals since 2007. CMS invites comments on whether this change should be phased in over more than one year (which CMS often does in the face of steep payment swings). In total, CMS estimates that CY 2014 ESRD PPS rates will decrease by 9.4% -- or $780 million -- compared to 2013 after application of all rate adjustments in the proposed rule. CMS also proposes to update ESRD Quality Incentive Program (QIP) measures and scoring methodologies for payment year 2016. In addition to ESRD policy changes, the proposed rule addresses Medicare coverage of and payment for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), including the definition of routinely purchased DME; the three-year Minimum Lifetime Requirement; and fee schedules for splints, casts, and intraocular lens (IOLs) inserted in a physician’s office. The DMEPOS provisions are discussed in a separate post. CMS will accept comments on the proposed rule until August 30, 2013.
As part of the CY 2014 Medicare end stage renal disease prospective payment system proposed rule, CMS is proposing updates to three Medicare durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) policies:
- 3-Year Minimum Lifetime Requirement (MLR) -- CMS previously issued regulations providing that, effective for items classified as DME after January 1, 2012, the item must have an expected life of at least 3 years to be considered “durable.” The proposed rule would clarify treatment of “grandfathered items” classified as DME on or before January 1, 2012. CMS states that it will not reopen those prior decisions and reclassify the equipment in light of the new 3-year standard since it “recognizes that the healthcare industry and beneficiaries have come to rely on items that have qualified as DME on or prior to January 1, 2012, regardless of whether those items met the 3-year MLR.” Under the proposed rule, if a grandfathered product is modified (e.g., upgraded, refined, or reengineered) after January 1, 2012, the item would still be classified as DME as a grandfathered item unless the modified product has an expected life that is shorter than that of the original product; in such a case, CMS would consider the item, as modified, to be a new item that is subject to the 3-year MLR. In other words, if the modified product has a shorter expected life than the original product, the product essentially loses its grandfathered status. For example, an item covered prior to January 1, 2012 has a life of at least 2 years. If that item subsequently is modified such that it no longer lasts 2 years, the item would be considered “new” (not grandfathered) and it would be subject to the 3-year MLR. Since the new (modified) product lasts less than 2 years (not at least 3), it would not meet the definition of DME and could not be covered or be billed under Medicare using the code that described the item before it was modified.
- Reclassification of Routinely-Purchased DME. The proposed rule would clarify the definition of routinely purchased equipment at §414.220(a)(2) to address inconsistencies in how CMS has classified certain expensive items as routinely purchased, rather than capped rental. CMS also proposes reclassifying as capped rental items about 80 DME and DME accessory HCPCS codes added after 1989 that are currently classified as routinely purchased (the majority of codes relate to manual wheelchairs and wheelchair accessories). The proposed effective dates for the reclassifications would be: (1) January 1, 2014, for items not included in DMEPOS competitive bidding; (2) July 1, 2016, for items furnished in all areas of the country if the item is included in a Round 2 competitive bidding program (CBP) and not a Round 1 Recompete CBP and for items included in a Round 1 Recompete CBP but furnished in an area other than one of the 9 Round 1 Recompete areas; and (3) January 1, 2017, for items included in a Round 1 Recompete CBP and furnished in one of the nine Round 1 Recompete areas.
- Fee schedules for Splints, Casts, and Certain IOLs. CMS proposes implementing on a budget-neutral basis Medicare fee schedules for splints and casts, and intraocular lenses inserted in a physician’s office, effective for services furnished on or after January 1, 2014.
CMS also proposes certain technical amendments to DMEPOS payment regulations. CMS will publish the rule in the Federal Register on July 8, 2013, and comments will be accepted until August 30, 2013.
The OIG has issued a report entitled “Medicare and Beneficiaries Could Save Millions If Dialysis Payments Were Adjusted for Anemia Management Drug Utilization.” The OIG estimates that if CMS had adjusted the payments for dialysis services to incorporate anemia management drug utilization in 2011 -- rather than use 2007 data reflecting higher utilization -- the Medicare program could have saved $510 million for erythropoiesis-stimulating agents (ESAs) and $19 million for iron supplements. The OIG also identified limitations in the use of ESRD claims data for program oversight, including inaccuracies in the quantities of drugs claimed and the inability to determine the extent of drug waste or overfill usage. The OIG recommends that CMS: (1) adjust the bundled dialysis base rate to capture savings from decreased utilization of ESAs and iron supplements, (2) remind dialysis facilities of the importance of claims accuracy, and (3) develop guidance for recording drug waste and overfill on ESRD claims. CMS concurred with the recommendations.
On April 1, 2013, CMS released the 2014 rate announcement and final call letter for Medicare Advantage (MA) and Part D prescription drug plans. Notably, under final rate announcement, CMS is forecasting that the final estimate of the combined effect of the Medicare Advantage (MA) growth percentage and the fee-for-service (FFS) growth percentage is 3.3%, compared to -2.2% in the advance call letter, which has the effect of increasing MA plan payment rates. This reversal is a result of CMS building into its spending forecast the assumption that Congress will once again override scheduled cuts in Medicare payments to physicians under the sustainable growth rate formula (thereby allowing MA plan payments to be compared to higher expected FFS spending levels). CMS also is phasing in the alignment of MA benchmarks with Medicare FFS costs and adjusting for diagnostic coding differences between MA plans and FFS providers, along with revising the risk adjustment model.
With regard to Part D, CMS notes that for the first time in the Part D program’s history, the costs of beneficiary coverage are falling, with the 2014 defined standard Part D prescription drug benefit having lower co-payments and deductible than in 2013. CMS also is adopting a number of policy changes for 2014, including requiring Part D plan retail and mail pharmacies to obtain patient consent to deliver a prescription, new or refill, prior to each delivery (CMS also encourages Part D plans to implement this consent requirement for the remainder of this year). While CMS had proposed requiring Part D sponsors to place beneficiary-level prior authorization requirements on certain categories of drugs which may be covered under the hospice or end stage renal disease (ESRD) benefits, so as to ensure that these drugs are appropriately payable under Part D before the prescriptions are filled, the final policy permits sponsors to use other approaches, such as pay-and-chase, to resolve payment responsibility in these situations.
On April 24, 2013, CMS is hosting a call to discuss Medicare’s low-volume payment adjustment (LVPA) under the End-Stage Renal Disease (ESRD) prospective payment system. The call will focus on Medicare’s LVPA payment policies, including eligibility requirements and dialysis facility reporting responsibilities. It will also address the findings of a recent GAO report entitled “CMS Should Improve Design and Strengthen Monitoring of Low-Volume Adjustment.”
MedPAC has released its annual report to Congress on Medicare Payment Policy, including payment update recommendations for all the major Medicare FFS payment systems and limited Medicare Advantage (MA) recommendations. The report also includes data on the status of the MA and Medicare Part D programs, including information about enrollment, plan options, and beneficiary cost-sharing. Note that while MedPAC’s recommendations are not binding, Congress and CMS often take into account MedPAC’s assessments when updating Medicare payment policies. Major recommendations include the following (many of which were included in previous reports):
- Congress should increase payment rates for inpatient and outpatient hospital prospective payment systems by 1%, and require the difference between the statutory update and the recommended 1% update be used to offset payment increases due to documentation and coding changes and to recover past overpayments.
- Congress should repeal the sustainable growth rate (SGR) system for physician services and replace it with a 10-year path of statutory fee-schedule updates. This proposal, first offered in October 2011, would combine a freeze in payment levels for primary care and, for all other services, annual payment reductions followed by a freeze. MedPAC also endorsed the collection of data to establish more accurate work and practice expense values; budget-neutral changes to improve data on which relative value unit weights are based and to redistribute payments to underpriced services, and changes to the structure of accountable care organization shared savings payments.
- Congress should eliminate the ambulatory surgical center (ASC) payment update for 2014, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
- Congress should eliminate the skilled nursing facility market basket update, and direct the Secretary to revise the prospective payment system for SNFs and begin a process of rebasing payment as soon as practicable.
- MedPAC reiterates previous recommendations to rebase home health rates, eliminate the market basket update, revise the home health case-mix system to rely on patient characteristics to set payment for therapy and nontherapy services, establish a per episode copay for home health episodes that are not preceded by hospitalization or post-acute care use, and expand program integrity efforts.
- Congress should eliminate the update to hospice rates for FY 2014 and adopt a series of previous MedPAC recommendations addressing payment and program integrity reforms.
- Congress should eliminate the 2014 updates for outpatient dialysis services, inpatient rehabilitation facilities, and long-term care hospitals.
- With regard to Medicare Advantage, Congress should allow the authority for most MA chronic care special needs plans (SNPs) to expire (with certain exceptions) and allow MA plans to enhance benefit designs for individuals with specific chronic or disabling conditions. MedPAC also recommends that Congress permanently reauthorize dual-eligible special needs plans (D–SNPs) that assume clinical and financial responsibility for Medicare and Medicaid benefits (with certain changes) and allow the authority for all other D–SNPs to expire.
A recent GAO report found that CMS’s Medicare low-volume payment adjustment (LVPA) for dialysis facilities has not been effectively targeted at low-volume facilities with high costs. Specifically, based on a review of claims and cost reports, the GAO estimates that Medicare overpaid about $5.3 million in 2011 to dialysis facilities that were ineligible for the LVPA, but did not pay an estimated $6.7 million to facilities that were eligible. In addition, in 2011 almost 30% of LVPA-eligible facilities were located within 1 mile of another facility and more than half were within 5 miles, which the GAO believes indicates that the facilities “might not have been necessary for ensuring access to care.” The GAO also asserts that the LVPA program “gives facilities an adverse incentive to restrict service provision” since facilities could lose substantial Medicare revenues if they reach the program’s treatment threshold. To more effectively target the LVPA and promote payment accuracy, the GAO recommends that CMS, among other things, restrict payments to low-volume facilities that are isolated; consider changing the LVPA to a tiered adjustment to reduce the incentive for facilities to restrict service provision to avoid reaching the treatment threshold; recoup LVPA payments made in error; and improve guidance. HHS generally concurred with the recommendations.