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 October 9, 2014, CMS is publishing a proposed rule that would extensively revise the conditions of participation (CoPs) that home health agencies (HHAs) must meet to participate in the Medicare and Medicaid programs. The rule is intended to provide HHAs with enhanced flexibility while focusing provider efforts on the services delivered to the patient, the quality of care furnished by the HHA, and quality assessment and performance improvement efforts. According to CMS, the proposed CoPs “reflect a fundamental change in our regulatory approach -- a change that to a large extent establishes a shared commitment between CMS and HHA providers to achieve improvements in the quality of care furnished to HHA patients.” CMS expects its patient-centered, outcome-oriented approach to enhance the working relationship between state survey agencies and HHAs, and provide a basis for improved performance that will help ensure that quality care is provided to all patients.
More specifically, CMS proposes to establish the following four CoPs (in addition to retaining current requirements related to comprehensive assessment of patients):
- “Patient rights” would emphasize the HHA's responsibility to respect and promote the rights of each home health patient.
- “Care planning, coordination of services, and quality of care” would incorporate the interdisciplinary team approach to provide home health services focusing on the care planning, coordination of services, and quality of care processes.
- “Quality assessment and performance improvement” (QAPI) would require each HHA to conduct ongoing quality assessment, incorporate data-driven goals, and maintain an evidence-based performance improvement program of its own design to affect continuing improvement in the quality of patient care.
- “Infection prevention and control” would require HHAs to follow accepted standards of practice to prevent and control the transmission of infectious diseases and to educate staff, patients, and family members or other caregivers on these accepted standards.
CMS proposes to remove many process details from the current CoPs where they do not achieve the goal of ensuring desired outcomes. CMS is not proposing to incorporate by reference any specific clinical practice guidelines or professional standards of practice; HHAs would be responsible for identifying their own performance problems through their QAPI programs, addressing them, and continuously striving to improve the quality of care, patient outcomes and satisfaction, and efficiency/economy. The proposed CoPs also are designed to enable surveyors to look at outcomes of care and “how effectively the provider was pursuing a continuous quality improvement agenda.” CMS will accept comments for 60 days after publication (December 8, 2014).
On October 6, 2014, President Obama signed into law H.R. 4994, the Improving Medicare Post-Acute Care Transformation Act of 2014 (the “IMPACT Act”). The IMPACT Act’s provisions will affect a broad range of post-acute care (PAC) providers: home health agencies (HHAs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), and long-term acute care hospitals (LTCHs). Various facets of daily operations of these PAC providers will change as a result of the Act and ensuing regulations: what information PAC providers must collect and report, the information the public will receive about PAC providers, and the method of determining future Medicare payments to PAC providers, among others. The IMPACT Act also increases survey frequency for Medicare-certified hospice programs. A Reed Smith client alert summarizing the Impact Act is available here.
Separately, President Obama also signed into law a number of other health policy bills approved by Congress, including the following:
- H.R. 594, Paul D. Wellstone Muscular Dystrophy Community Assistance, Research and Education Amendments of 2014, which revises and expands research, surveillance, and education activities relating to muscular dystrophy at the National Institutes of Health and the Centers for Disease Control and Prevention, and expands the federal agencies comprising the Muscular Dystrophy Coordinating Committee;
- S. 2154, Emergency Medical Services for Children Reauthorization Act of 2014, which reauthorizes appropriations through fiscal year 2019 for a program to provide high‑quality emergency medical care to children; and
- H.R. 4631, Autism Collaboration, Accountability, Research, Education, and Support (CARES) Act of 2014, which reauthorizes Combating Autism Act funding for autism research, screening, intervention, and education activities, as well as an HHS coordinating committee.
CMS Fingerprint-Based Background Checks are Underway - Impacting "High-Risk" Providers and Suppliers
CMS's long-awaited fingerprint-based background check screening process is underway for certain “high-risk” providers and suppliers participating in federal health care programs (specifically, Medicare, Medicaid, and the Children’s Health Insurance Program). Under CMS regulations, individuals who maintain a 5 percent or greater direct or indirect ownership interest in a provider or supplier in the high risk category -- including newly-enrolling home health agencies (HHAs) and newly-enrolling durable medical equipment, orthotics, prosthetics, and supplies (DMEPOS) suppliers -- are subject to a fingerprint-based criminal history report check of the Federal Bureau of Investigations (FBI) Integrated Automated Fingerprint Identification System.
This week CMS announced that the fingerprint-based background check process was launched on August 6, 2014. CMS confirmed that not all providers and suppliers in the “high” screening category will be included in the first phase of the background checks. Fingerprint-based background checks eventually will be required, however, “for all individuals with a 5 percent or greater ownership interest in a provider or supplier that falls into the high risk category and is currently enrolled in Medicare or has submitted an initial enrollment application.”
Medicare Administrative Contractors will send letters to the applicable providers or suppliers listing all 5 percent or greater owners who are required to be fingerprinted, and applicable individuals will have 30 days from the date of the notification letter to be fingerprinted at one of at least three specified locations. Fingerprints will be forwarded to the FBI, which will compile the background history and share results with the Fingerprint-based Background Check (FBBC) contractor (Accurate Biometrics). The FBBC will provide CMS with a "fitness recommendation" for the individual indicating whether the criminal history record information contains enrollment violations or otherwise fails to meet CMS enrollment requirements; CMS will then make the final determination about the provider or supplier.
CMS has announced that it is extending for an additional 6 months its current enrollment moratoria for new ground ambulance suppliers and home health agencies (HHAs)within designated metropolitan areas. The moratoria, which affect enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program, apply to new ground ambulances in the Houston and Philadelphia metropolitan areas and new HHAs in the metropolitan areas of Chicago, Fort Lauderdale, Detroit, Dallas, Houston, and Miami. CMS discusses its rationale for extending the enrollment moratoria, including the qualitative and quantitative factors suggesting a high risk of fraud, waste, or abuse, in an August 1, 2014 notice. The extension is effective July 30, 2014. CMS may lift the moratoria before the end of the 6-month period or announce extensions in the Federal Register notice.
The Chairman of the House Ways and Means Subcommittee on Health is seeking comments on a draft bill, the Protecting Integrity in Medicare Act of 2014, that is “aimed at combating fraud, waste and abuse in the Medicare program.” The bill covers a range of Medicare and Medicaid policies, from establishing new alternative sanctions for technical physician self-referral violations to providing more flexibility in meeting durable medical equipment (DME) documentation requirements. Among other things, the bill would:
- Establish an alternative fixed financial penalty for individuals and entities that voluntarily disclose a technical Stark violation (e.g., an arrangement that is not in writing or that is not signed by one or more parties) through the Self-Referral Disclosure Protocol; the per-arrangement penalty would be capped at $5,000 if submitted within the year of the noncompliance and $10,000 thereafter;
- Require a study on how to establish a permanent physician-hospital gainsharing program;
- Expand the professionals who can document DME face-to-face encounters beyond physicians to align with the professionals who can furnish such encounters;
- Establish claims processing edits to prevent Medicare payments for incarcerated, unlawfully present, and deceased individuals;
- Require Medicare administrative contractors (MACs) to establish improper payment outreach and education programs, and modify how MACs prioritize efforts to reduce improper payment or error rates;
- Allow Medicaid fraud control units to investigate abuse and neglect in home and community based facilities;
- Provide the HHS OIG with up to 1.5% of all amounts collected from Medicare false claim and fraud cases;
- Give the Secretary greater flexibility to protect Medicaid from fraud, waste, and abuse;
- Improve incentives for individuals to report Medicare fraud and abuse under the Senior Medicare Patrol;
- Require valid prescriber National Provider Identifiers to be included on pharmacy claims;
- Revise the process for renewing MAC contracts;
- Create a high-risk beneficiary drug management program under the supervision of a Part D plan sponsor;
- Require the Secretary to issue guidance on the application of the “Common Rule” to clinical data registries;
- Revoke eligibility for Medicare benefits for providers convicted of defrauding the Medicare program under certain circumstances;
- Require home health agencies to obtain a surety bond in the amount of at least $50,000 as a condition of Medicare participation;
- Require prior authorization (PA) for certain chiropractic visits, blepharoplasty, and browplasty surgeries and expand a PA demonstration for non-emergent ambulance services;
- Require Social Security numbers to be removed from beneficiary Medicare cards; and
- Require the Secretary to include vacuum erection systems in the DME competitive bidding program by 2016.
Subcommittee Chairman Kevin Brady (R-TX) will accept comments on the discussion draft until September 1, 2014.
Today CMS released its proposed rule to update Medicare home health prospective payment system (HH PPS) rates for CY 2015. CMS estimates that the rule would reduce Medicare payments to home health agencies by approximately $58 million (-0.3%) in 2015 compared to 2014 levels. Specifically, while CMS anticipates a 2.2% home health payment update percentage ($427 million increase), the increase would be more than offset by implementation of the second year of a four-year phase-in of the rebasing adjustments to the HH PPS rates, which would result in a -2.5% adjustment ($485 million decrease).
The proposed rule also includes a number of policy proposals, including: simplification of the face-to-face encounter documentation requirements and clarification of when such documentation is required; changes to the HH PPS case-mix weights; revisions to the home health quality reporting program; simplification of therapy reassessment timeframes; a revision to the Speech-Language Pathology personnel conditions of participation; and limitations on the reviewability of CMS’s decision to impose a civil monetary penalty for noncompliance with federal participation requirements. Finally, the rule discusses insulin injections under the HH PPS and the delay in implementation of ICD-10-CM, and it solicits comments on the HHA value-based purchasing.
The official version of the rule is scheduled to be published on July 7, 2014. CMS will accept comments until September 2, 2014.
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.
The OIG has issued a report, requested by Congress, that identifies state background check requirements for home health agencies (HHAs) and describes the types of criminal convictions that disqualify individuals for employment by HHAs under such state policies. OIG observes that the data might be useful to CMS as it administers the Nationwide Background Check Program, and it may help states that are considering establishing or enhancing background check requirements for HHA employees. A second OIG report in the works will determine the extent to which HHAs employed individuals with criminal convictions as of January 1, 2014 and identify the procedures that HHAs use to perform background checks on prospective and/or current employees.
CMS to Implement Ordering/Referring Denial Edits for HHA Certifying Physicians, Effective July 1, 2014
CMS plans to apply “Phase 2” ordering and referring denial edits to certifying physicians of Part A home health agency (HHA) services effective July 1, 2014. These edits, which currently apply only to the attending physician of an HHA, will ensure that the physician that certifies the patient’s eligibility to receive services under the Medicare home health benefit has a valid individual National Provider Identifier (NPI) and are of a specialty type eligible to order and refer the HHA items and services on the claim. The edits will deny the claim when this information is missing or invalid.
CMS is hosting a series of Special Open Door Forum calls to solicit feedback on data elements for a new “Suggested Electronic Clinical Template for Home Health.” Specifically, CMS seeks input on a list of clinical elements within a Suggested Electronic Clinical Template that would assist physicians when documenting the home health face-to-face encounter for Medicare purposes. Upcoming calls are scheduled for May 20, June 19, and July 16, 2014.
In early April, Reed Smith hosted an enlightening, industry-leading conference on post-acute care in Washington, D.C. The conference, entitled “Reed Smith 2014 Washington Health Care Conference: Focus on Post-Acute Care," brought together a panel of experts to discuss episodic care, bundling models, and alternative payment and delivery systems. The conference also featured other speakers who presented from the perspective of investors and Capitol Hill, along with a keynote address from American Enterprise Institute resident scholar Dr. Norman Ornstein.
Policy Discussion on Payment Models
The conference started with a panel discussing bundling initiatives and other alternative payment models. The panel featured Barbara Gage, Ph.D., Fellow and Managing Director of Engelberg Center for Health Care Reform at the Brookings Institution; Judy Feder, Ph.D., Professor at Georgetown University; Vincent Mor, Ph.D., Professor at Brown University School of Medicine; and James Michel, Director for Medicare Research & Reimbursement at the American Health Care Association (“AHCA”). The panel brought with them decades of experience in health care policy and research, and a deep knowledge of post-acute care providers’ current reimbursement systems, in addition to models expected to reform payment for post-acute services in the future.
Dr. Gage spoke first, and introduced bundling by discussing the triple aim adopted by the Centers for Medicare & Medicaid Services (“CMS”): achieve better care for patients, better communities’ health, and lower costs by improving the health care system. She explained how new payment models—including bundled payment initiatives and accountable care organizations—strive to accomplish the above-mentioned triple aim. Gage discussed whether the post-acute setting in which a patient receives treatment distinguishes the patient’s outcome and the level of resources that different post-acute settings (e.g., home health, skilled nursing facilities (“SNF”), inpatient rehabilitation facilities (“IRF”), or long-term acute care hospitals (“LTCH”)) furnish to patients. Gage described in great detail the arguments in favor of bundled payments, emphasizing that one of the benefits of a bundled payment model is that it forces communication across all care settings.
Dr. Feder, on the other hand, urged caution as reimbursement moves to new models. She stressed that bundled payment models, for example, create powerful incentives to potentially reduce or limit the care furnished to patients, and therefore could result in reduced quality of care. Feder explained that bundling is not new, and that, e.g., payers have bundled in the inpatient hospital setting for 30 years. Feder pointed out that when Medicare implemented diagnosis-related groups in the inpatient hospital prospective payment system, hospital length of stay “dropp[ed] like a stone.” Feder underscored that the biggest challenges arise from patients whose health is deteriorating, and explained that the number of home health visits, for instance, are the lowest when patient acuity is the highest. In order to ensure adequate, appropriate, and high-quality care for patients, Feder suggested that policymakers thoughtfully develop and implement any new payment system over time, and incorporate quality mechanisms that serve to protect patients. Feder suggested that good patient data and strong accountability measures are essential to any bundled payment program.
After Feder spoke, Dr. Mor took the podium and analogized capitation versus fee-for-service as being “between the devil and the deep blue sea.” He further explained that fee-for-service reimbursement models have encouraged runaway costs and increased utilization, and that there is a lack of provider accountability and responsibility. In contrast, he explained that in capitation reimbursement models, there is an inherent incentive to deny care. Mor discussed how policymakers can ensure patients receive quality care from providers, and raised a number of thought-provoking questions, such as whether a SNF or other post-acute provider should be responsible for rehospitalization after the discharge of a patient, and whether low rehospitalization reflects overall high-quality care. Mor urged the development of a common assessment tool that includes hospital assessment data in order to more accurately measure post-acute quality and case-mix. He also recommended that CMS use the “Welcome to Medicare” assessment and other periodic beneficiary assessments to obtain risk profiles for patients. Mor ended his presentation by suggesting that while capitation models—such as bundling—are preferable to fee-for-service because one entity is responsible for patients’ care, capitation models face challenges as well, including how to properly measure case-mix and outcomes.
James Michel from AHCA noted the operational challenges associated with bundled payments. For example, it is difficult for post-acute providers to assume the responsibility for patients after the post-acute provider discharges a given beneficiary. Michel also stated that the Center for Medicare & Medicaid Innovation Bundled Payments for Care Improvement initiative’s models incentivize low-cost providers to participate, but providers who recognize they have higher costs than the community average will not participate because of the risk that they will miss the spending target, resulting in a payment to the government. Michel noted that AHCA has developed its own bundled payment proposal, in part to preserve a process in which patients and their families can decide where the patient should be treated after an acute stay. The AHCA bundled payment proposal includes four proposed episodes (e.g., major respiratory condition and septicemia) that would account for approximately 60 percent of all SNF care and more than 50 percent of all post-acute care.
Wall Street Perspective
Jay Barnes, a Senior Vice President for Healthcare Investment Banking at Jefferies, LLC, spoke from the Wall Street perspective, addressing the current appetite for deals in the post-acute space. He described a tepid outlook for post-acute investment stemming from the uncertainty of the future payment models and the changing regulatory landscape, particularly with regard to LTCHs. He informed attendees that the private equity market has been non-existent in the post-acute space because it is challenging to create projection models when future reimbursement for post-acute care remains murky. He explained that the post-acute transactions occurring are largely driven by real estate. For example, Barnes described the recently announced Emeritus Senior Living and Brookdale Senior Living merger as driven by real estate.
Cate McCanless, Senior Policy Analyst at Brownstein Hyatt Farber Schreck, provided an insightful overview of Medicare activity on Capitol Hill. She explained that Congress has focused on post-acute care because of the perceived “comfortable” margins achieved by post-acute providers (according to the Medicare Payment Advisory Commission). McCanless also described the outlook for the discussion draft of the Improving Medicare Post-Acute Care Transformation (“IMPACT”) Act of 2014, released by the House Ways and Means Committee Chairman Dave Camp (R-Mich.) and Ranking Member Sandy Levin (D-Mich.), along with Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Ranking Member Orrin Hatch (R-Utah), March 18, 2014. The IMPACT Act draft includes one measure discussed by Mor during the bundling panel: the reporting of common data across post-acute providers, and the required reporting by acute-care hospitals of patient assessment data gathered in advance of discharge. McCanless also explained that while there has been some Congressional momentum in eliminating Medicare's sustainable growth-rate (“SGR”) formula in order to move to an alternative payment model, such momentum may lose steam this year now that a temporary patch has been enacted, because eliminating the SGR would be expensive, and it is an election year. McCanless pointed out certain post-acute policy proposals that would result in cost savings, such as reducing the SNF payment update by 1.1 percent, which would save an estimated $12 billion, and equalizing certain payments for SNFs and IRFs, which would save an estimated $1 billion; these provisions could be targets for offsets for future Medicare reforms.
Impact of Political Polarization on Health Policy
Dr. Norman Ornstein, noted observer of Congress and politics, and keynote speaker at Reed Smith’s inaugural Health Care Conference, closed the session with a thoughtful discussion regarding the current state of American politics. He described not just the polarization, but also the tribalism, of American politics today, depicting a broken American political system where opposing parties have adopted a mantra of, “if you support it, I am against it.” Despite Ornstein’s bleak description of the current state of politics, he offered some suggestions for reform, including incentivizing citizens to vote. He argued that if more of the American public is engaged, politicians must meet in the middle on at least some policy debates.
In all, the inaugural Reed Smith Health Care Conference led to provocative discussions and a deeper understanding of the political climate and policy recommendations likely to impact—or even transform—post-acute care in the not-so-distant future. We look forward to next year’s conference.
Fingerprint-based background checks intended to “detect bad actors” enrolled or attempting to enroll in federal health programs
More than three years after publication of final regulations to implement Affordable Care Act (ACA) provisions that strengthen provider and supplier enrollment screening provisions under federal health care programs, the Centers for Medicare & Medicaid Services (CMS) has selected a Fingerprint-Based Background Check Contractor (FBBC) and intends to phase in fingerprint-based background checks beginning in 2014.
By way of background, CMS published a final rule on February 2, 2011 pursuant to Section 640 of the ACA, which required the Department of Health and Human Services to establish procedures for screening providers and suppliers participating in federal health care programs (specifically, Medicare, Medicaid, and the Children’s Health Insurance Program). Among other things, the final rule applies various screening tools, including unannounced site visits, background checks, and fingerprinting, based on the level of risk associated with different provider and supplier types. CMS established three levels of risk – limited, moderate, and high – and every provider and supplier category is assigned to one of these three levels. Individuals who maintain a 5 percent or greater direct or indirect ownership interest in a provider or supplier in the high risk category -- including newly-enrolling home health agencies (HHAs) and newly-enrolling durable medical equipment, orthotics, prosthetics, and supplies (DMEPOS) suppliers -- are subject to a fingerprint-based criminal history report check of the Federal Bureau of Investigations (FBI) Integrated Automated Fingerprint Identification System.
While the final rule was effective March 25, 2011, as mandated by the ACA, CMS delayed the effective date of the fingerprint-based criminal history record check provision until after additional subregulatory guidance was issued. CMS awarded a $4.19 million FBBC contract to Accurate Biometrics, Inc. in March 2014, a significant step in the implementation process. Following this award, CMS issued a provider update announcing that it intends to phase in the fingerprint-based background check implementation beginning in 2014. Not all providers and suppliers in the "high" level of risk category will initially be a part of the fingerprint-based background check requirement, but eventually the fingerprint-based background check will be completed on all individuals with a 5 percent or greater ownership interest in a provider or supplier that falls under the high-risk category.
Providers and suppliers subject to the fingerprint requirements will receive a notification letter from their Medicare Administrative Contractor (MAC), and applicable individuals will have 30 days from the date of the notification letter to be fingerprinted at one of at least three locations identified by the FBBC (individuals will incur the cost of having their fingerprints taken). After fingerprinting is complete, the fingerprints will be forwarded to the FBI, which will compile the background history and share results with the FBBC within 24 hours of receipt. The FBBC will assess the data and provide a "fitness recommendation" to CMS indicating whether the criminal history record information contains enrollment violations or otherwise fails to meet requirements or guidelines established by CMS for enrollment of a Medicare provider or supplier; CMS will then make the final determination about the provider or supplier. CMS will notify providers and suppliers if the assessment of the fingerprint-based background check results in the denial of an enrollment application or revocation of existing Medicare billing privileges. The CMS guidance also provides information on standards for securing the data under the review process.
This announcement marks the latest steps in seemingly ever-escalating CMS efforts to clamp down on fraud and abuse in the Medicare and Medicaid programs. While the initial targets of the fingerprint-based background requirements are new DMEPOS suppliers and HHAs, the policy also will apply to those who are elevated to the high risk category in accordance with enrollment screening regulations, which could include providers/suppliers coming back into the Medicare fee-for-service program after a moratorium is lifted, or providers which have been subject to a payment suspension, exclusion, or revocation. It is likely that some "owners" of entities, such principals of investment firms with financial interests in providers and suppliers, will balk at the whole idea of being fingerprinted. Moreover, the pending fingerprint process will doubtless provide even more opportunities for administrative missteps, and erroneous and time-consuming supplier/provider number revocations.
The OIG has released its “Compendium of Priority Recommendations,” which lists 25 priority issues for which the OIG has open recommendation and that, if implemented, would best protect the integrity of HHS programs. The 25 top priorities are as follows:
- Medicare Policies and Payments: address wasteful Medicare policies and payment rates for clinical laboratories, hospitals, and hospices; improve controls to address improper Medicare billings by community mental health centers, home health agencies, and skilled nursing facilities; detect and recover improper Medicare payments for services to incarcerated, unlawfully present, or deceased individuals; maximize recovery of Medicare overpayments; improve monitoring and reconciliation of Medicare hospital outlier payments; ensure that Medicare Advantage Organizations are implementing programs to prevent and detect waste, fraud, and abuse; and improve controls to address questionable billing and prescribing practices for Part D prescription drugs.
- Medicare Quality of Care and Safety Issues: address adverse events in hospital settings; improve care planning and discharge planning for beneficiaries in nursing home settings; address harm to patients, questionable resident hospitalizations, and inappropriate drug use in nursing homes; improve nursing home emergency preparedness and response; and ensure hospice compliance with Medicare conditions of participation.
- Medicaid Program Policies and Payments: ensure that state claims and practices do not inappropriately inflate federal reimbursements; ensure that states prevent, detect, and recover improper payments and return the federal share of recoveries to the federal government; assist states to better align Medicaid drug reimbursements with pharmacy acquisition costs; ensure that Medicaid Information Systems are fully functional; and address Medicaid managed care fraud and abuse concerns.
- Medicaid Quality of Care and Safety Issues: ensure that Medicaid home- and community-based care service providers comply with quality and safety requirements; and ensure that States improve utilization of preventive screening services for eligible children.
- Oversight of Food Safety: improve oversight of dietary supplements; and improve oversight of food inspections and traceability.
- HHS Grants and Contracts: improve oversight of grantee compliance, quality assurance, and conflicts of interest; and improve oversight of Medicare contractor performance and conflicts of interest.
- HHS Financial Stewardship: reduce improper payments and fraud; and correct deficiencies found in financial statement audits.
Note that some of these recommendations would require additional authority or other legislative change.
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.
CMS Extends and Expands Moratoria on Enrollment of Home Health Agency, Ambulance Suppliers in Designated Areas
Citing significant potential for fraud and abuse, CMS has announced that it is temporarily suspending new home health agency (HHA) and ground ambulance enrollment in Medicare, Medicaid, and the Children’s Health Insurance Program in several geographic areas, and it is extending the current enrollment moratoria for these provider types in separate areas. Specifically, effective January 30, 2014, CMS is establishing a 6-month moratorium on HHA enrollment in the following metropolitan areas: Fort Lauderdale, Detroit, Dallas and Houston. CMS also is temporarily suspending enrollment of new ground ambulance suppliers in the Greater Philadelphia area. In addition, CMS is extending for six-months a current enrollment moratoria (announced in July 2013) impacting HHAs in Chicago and Miami and ground ambulance suppliers in Houston. Note that CMS may lift the moratoria earlier or extend them for another six months through issuance of a Federal Register notice.
While existing providers and suppliers can continue to deliver and bill for services in moratoria areas, no new applications for the designated provider types will be approved, unless the provider’s enrollment application has already been approved, but not yet entered into PECOS or the State Provider/Supplier Enrollment System at the time the moratorium is imposed. According to CMS, the initial moratoria that began in July 2013 resulted in the denial of the enrollment applications of 231 HHAs and 7 ambulance companies in the geographic areas affected by the moratoria. A CMS notice explains the rationale for the imposition and extension of the moratoria.
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.
Under the final Medicare home health PPS (HH PPS) rule released on November 22, 2013, payments in 2014 will be cut by 1.05% (about $200 million) compared to 2013 levels (and compared to a -1.5% cut forecast in the proposed rule). This reduction reflects a 2.3% home health payment update, which is more than offset by a -0.62% ICD–9 grouper refinement and a -2.73% ACA-mandated rebasing adjustment to the national, standardized 60-day episode payment rate and other applicable payment amounts. The ACA rebasing adjustment is intended to reflect factors such as changes in the number of visits, the mix of services, the level of intensity, and the average cost of providing care in an episode.
CMS estimates that the difference between the 2013 average payment per episode and the average cost per episode is 13.09%; CMS is recouping this difference over four years (from CY 2014 to CY 2017). The final rule also revises the Home Health Quality Reporting Program, including adding quality measures relating to hospital readmissions and Emergency Department visits with the first 30 days of a home health stay; CMS will begin reporting feedback to HHAs on performance on these measures in CY 2014, and they will be added to Home Health Compare for public reporting in CY 2015. On the other hand, the final rule reduces the number of process measures reported on the certification and survey provider enhanced reports (CASPER) by eliminating the stratification by episode length for nine process measures. The rule also clarifies cost allocation of home health agency survey expenses; for that portion of costs attributable to Medicare and Medicaid, CMS will assign 50% to Medicare and 50% to Medicaid. The official version of the rule will be published in the Federal Register on December 2, 2013.
Despite continuing provider concerns, CMS has announced that it will direct Medicare administrative contractors (MACs) to activate controversial “phase 2” ordering/referral edits effective January 6, 2014. Once activated, MACs will deny claims for Medicare Part B services (including lab services and the technical component of imaging services), durable medical equipment, and Part A home health agency (HHA) services if the ordering/referring physician or other professional is not identified, is not in Medicare's enrollment records, or is not of a specialty type that may order/refer the service/item being billed. CMS had previously delayed an earlier May 1, 2013 target date for implementation due to objections by physicians and suppliers that they could experience claims denials and delays based on discrepancies between the names of the ordering physician on the 1500 claim form and in Medicare’s enrollment records. There has been no assurance from CMS, however, that these concerns have been fully resolved, and the only recourse for providers if claims are inappropriately denied claim will be to file an appeal. A CMS educational article accompanying the announcement suggests that imaging suppliers and providers bill global claims separately to prevent a denial for the professional component in the event that the new edits deny the technical component of imaging services.
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.