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

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.

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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.”

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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):

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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. 

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On March 13, 2013, CMS is hosting a provider call on the Medicare End-Stage Renal Disease (ESRD) Quality Incentive Program (QIP) for Payment Year (PY) 2015. Among other things, the call will review the measures, standards, scoring methodology, and payment reduction scale that will be applied to the PY 2015 program.

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CMS is soliciting applications from organizations to participate in testing a new Comprehensive End-Stage Renal Disease (ESRD) Care Model designed to promote seamless, integrated care for Medicare beneficiaries with ESRD. The model envisions that nephrologist-led interdisciplinary care teams comprised of dialysis facilities, health care professionals, paraprofessionals, and non-traditional health providers will coordinate a full-range of clinical and non-clinical services across providers, suppliers, and settings. Participating organizations will be clinically and financially accountable for care provided to a group of beneficiaries with ESRD based on the beneficiaries’ historical and ongoing care patterns. Organizations that successfully improve beneficiary outcomes and lower per capita Medicare Parts A and B expenditures can share in Medicare savings generated, while organizations that do not improve outcomes and lower costs may be subject to losses. CMS is hosting an educational call on the initiative on February 26. 

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A recent GAO report suggests that the bundled Medicare payment for dialysis care over-compensates dialysis facilities for end-stage renal disease (ESRD) drug costs. By way of background, the Medicare ESRD payment bundle was expanded in 2011 to include payment for injectable ESRD drugs and their oral equivalents and certain other items and services for which Medicare previously had paid separately. According to the GAO, utilization of ESRD drugs was about 23% lower on average in 2011 than in 2007, the year on which 2011 rates were based (attributed largely to a decline in the utilization of erythropoiesis stimulating agents). The GAO estimates that Medicare dialysis spending would have been $650 million to $880 million lower in 2011 if the bundled rate were rebased to reflect the 2011 utilization level of ESRD drugs, and potential savings could be even more significant in future years. According to the report, CMS does not believe that the statute provides it with explicit authority to rebase rates. The GAO therefore recommends that Congress require the Secretary of HHS to rebase the ESRD bundled payment rate as soon as possible and on a periodic basis thereafter, using the most current available data.

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CMS published a final rule on November 9, 2012 that updates the Medicare end-stage renal disease (ESRD) PPS for CY 2013 and codifies certain statutory reduction in Medicare bad debt reimbursement.

• With regard to the ESRD provisions, the final rule provides for a 2.3% increase in the ESRD PPS base rate in CY 2013, which is derived from 2.9% market basket update that is partially offset by a -0.6% multi-factor productivity adjustment under the ACA. After applying a wage index budget-neutrality adjustment factor, the 2013 base rate for the ESRD PPS is $240.36, and the composite base rate for facilities in the ESRD PPS transition period is $145.20. The rule also reduces the outlier threshold (allowing more cases to qualify for outlier payments), maintains the composite rate drug add-on at $20.33, and reduces the wage index floor. Because CMS claims analyses show that ESRD facilities are continuing to report composite rate drugs on ESRD claims, CMS reiterates that any item or service included in the composite rate should not be identified on ESRD claims (an AY modifier can be appended to claims for drugs and laboratory tests that are not ESRD-related to allow for separate payment). CMS is continuing to monitor claims submission and CMS “may consider eliminating the AY modifier in future rulemaking" if CMS believes that "the AY modifier is not being used for the purpose intended.” The rule also makes changes to the ESRD Quality Incentive Program (QIP), which adjusts payments to dialysis facilities based on their performance on quality measures. Among other things, the rule adds new measures, expands the scope of certain existing measures, establishes measure performance standards, and adopts scoring and payment reduction methodologies.
• As part of the rule, CMS also is codifying provisions of section 3201 of the Middle Class Tax Extension and Job Creation Act of 2012 that require reductions in bad debt reimbursement to all providers, suppliers, and other entities eligible to receive bad debt reimbursement. CMS notes that the bad debt provisions are specifically prescribed by statute and thus are self-implementing (except for certain technical corrections). The bad debt rules are applicable for cost reporting periods beginning October 1, 2012. CMS estimates that there will be a $10.9 billion savings to Medicare over 10 years resulting from the self-implementing reductions in bad debt reimbursement, while a provision removing the ESRD bad debt provisions will result in a cost to the Medicare program of $170 million over 10 years. 

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The Centers for Medicare & Medicaid Services (CMS) has sent several final Medicare calendar year 2013 payment rules to the White House Office of Management and Budget (OMB) for final regulatory clearance. Rules under review will establish final 2013 payment and other policies under the Medicare physician fee schedule, hospital outpatient prospective payment system,, home health prospective payment system (PPS), and end-stage renal disease PPS. Copies of the rules are not available at this point, but they are expected to go on display at the Federal Register in the coming days. 

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CMS has been monitoring the impact of implementation of the End Stage Renal Disease (ESRD) PPS in January 2011 on health outcomes for beneficiaries receiving outpatient maintenance dialysis. A new CMS report, “ESRD Prospective Payment System (ESRD PPS) Overview of 2011 Claims based Monitoring,” concludes that, while the ESRD PPS impacted utilization of certain ESRD-related services and procedures, no sustained changes in Medicare beneficiary health status were observed in 2011.

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On July 31, 2012, CMS will host an Open Door Forum on Improving Care for Medicare Beneficiaries with End Stage Renal Disease (ESRD). The event will provide an opportunity for the public to provide input on ways the CMS Innovation Center can develop and evaluate new models of payment and service delivery to reduce Medicaid expenditures and improve quality of care for Medicare beneficiaries with ESRD.

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On July 11, 2012, CMS published a proposed rule to update the Medicare end-stage renal disease (ESRD) PPS for CY 2013. CMS projects a 2.5% increase in the ESRD PPS base rate in CY 2013, which is derived from an estimated 3.2% market basket update that is partially offset by a -0.7% MFP adjustment under the ACA. After applying a proposed wage index budget-neutrality adjustment factor, the proposed base rate for the ESRD PPS is $240.88 for 2013, and the composite base rate for facilities in the ESRD PPS transition period is $145.49. The rule also would reduce the outlier thresholds (allowing more cases to qualify for outlier payments), maintain the composite rate drug add-on at $20.33, and reduce the wage index floor. CMS estimates that the proposed rule would increase aggregate payments to all dialysis facilities by 3.1% for 2013. CMS also proposes changes to the ESRD Quality Incentive Program (QIP), which adjusts payments to dialysis facilities based on their performance on quality measures. CMS proposes a total of 11 measures (seven clinical measures and four reporting measures) for the 2015 payment determination, solicits comments on topics for future measure development, and proposes requirements regarding notification of QIP performance. As part of the rule, CMS proposes codifying the provisions of section 3201 of the Middle Class Tax Extension and Job Creation Act of 2012 that requires reductions in bad debt reimbursement to all providers, suppliers, and other entities eligible to receive bad debt reimbursement. CMS notes that the bad debt provisions are specifically prescribed by statute and thus are self-implementing (except for certain technical corrections). According to CMS, Medicare will save $10.9 billion over 10 years resulting from the bad debt provisions. Comments will be accepted until August 31, 2012.

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CMS has sent several major calendar year 2013 proposed Medicare payment rules to the White House Office of Management and Budget (OMB) for final regulatory clearance. Rules under consideration include the proposed Medicare outpatient hospital, ambulatory surgical center (ASC), end-stage renal disease, and home health prospective payment system rules for calendar year (CY) 2013, along with notices updating payment policies for inpatient rehabilitation facilities and hospices for fiscal year 2013. We also expect the CY 2013 proposed Medicare physician fee schedule rule to reach the OMB shortly. While the text of the regulations are not available at this point, we expect that they will be put on display at the Federal Register in the near future. We will be providing summaries of the rules in future updates.

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On June 8, 2012, the Centers for Medicare & Medicaid Services (CMS) published a notice describing the standards and procedures it will use to evaluate an End-Stage Renal Disease (ESRD) Network Organization's capabilities to perform, and actual performance of, the duties and functions under the ESRD Network Statement of Work, effective June 8, 2012.  

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On March 15, 2012, MedPAC released its annual report to Congress on Medicare payment policy.  Major recommendations for 2013 are highlighted after the jump.

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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.

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On October 24, 2011, the Centers for Medicare & Medicaid Services (CMS) published three rules designed to reduce regulatory burdens on health care providers in conjunction with the President’s January 18, 2011 Executive Order 13563 entitled “Improving Regulation and Regulatory Review.” First, CMS has proposed reforming the requirements that hospitals and critical access hospitals (CAHs) must meet in order to participate in the Medicare and Medicaid programs. Among other things, the proposed rule would: eliminate requirements that bar hospital patients or their caregivers from administering certain medications; remove the requirement for a single Director of Outpatient Services; allow one governing body to oversee multiple hospitals in a single health system; allow hospitals to have a single, interdisciplinary care plan supporting coordination of care instead of a stand-alone nursing care plan; and allow CAHs to provide certain services, including laboratory and radiology services, under arrangement. CMS estimates that the rule would save hospitals and CAHs more than $940 million each year. 

A second proposed rule would make 14 specific reforms to regulations identified as unnecessary, obsolete, or excessively burdensome for health care providers and beneficiaries. For instance, the rule would: clarify which end stage renal disease (ESRD) facilities must comply with the full federal Life Safety Code requirements; revise the requirements for emergency equipment at ambulatory surgical centers (ASCs); eliminate the Medicare re-enrollment bar in instances when revocation of billing privileges is based solely upon the failure of a provider or supplier to respond timely to a revalidation request or other CMS information request; revise requirements related to deactivation of Medicare billing privileges; remove obsolete language related to initial determinations, appeals, and reopenings of Part A and Part B claims and entitlement determinations; remove duplicative language on ASC infection practices; update obsolete e-prescribing technical requirements to meet current standards; and remove outdated Medicaid personnel qualifications language for physical therapists and occupational therapists. CMS expects the rule will save almost $200 million in the first year. Comments on both proposed rules will be accepted until December 23, 2011. 

CMS also published a final rule that revises the ASC conditions for coverage (CfC) by, among other things, allowing patient rights information to be provided to the patient, the patient's representative, or the patient's surrogate prior to the start of the surgical procedure. CMS estimates that the rule will save ASCs $50 million per year. The rule is effective December 23, 2011.

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CMS has sent several major calendar year 2012 Medicare payment rules to the White House Office of Management and Budget for final regulatory clearance. Rules under consideration include the final Medicare physician fee schedule, outpatient hospital, ambulatory surgical center, ESRD and home health prospective payment system rules for 2012. While the text of the regulations are not available at this point, we expect that they will be put on display at the Federal Register in the coming days. We will be providing summaries of the final rules in future updates. 

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On August 4, 2011, CMS is hosting a Special Open Door Forum to focus on its July 8, 2011 ESRD Quality Incentive Program (QIP) proposed rule. The session will address CMS's proposed quality measures, scoring methodology, and payment implications of these changes.

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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.

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