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.
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.
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.
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.
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.
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.
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.