CMS to Host Calls on Electronic Clinical Template for Home Health Orders

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. Calls are scheduled for April 22, May 8, June 19, and July 16, 2014.

Highlights from Reed Smith's Post-Acute Care Conference

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.

Congressional Activity

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.

CMS to Implement Fingerprint-Based Background Checks for High-Risk Providers and Suppliers in 2014

Fingerprint-based background checks intended to “detect bad actors” enrolled or attempting to enroll in federal health programs

This post was authored by Elizabeth Carder-Thompson and Debra McCurdy.

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 2014Not 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.

HHS OIG Identifies "Top 25" Priorities

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.  

MedPAC Issues 2014 Report to Congress on Medicare Payment Policy

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.

CMS Proposes Emergency Preparedness Requirements for Medicare/Medicaid Providers

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.

Medicare Home Health PPS Rates Cut 1.05% Under Final 2014 Rule

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.  

CMS "Phase 2" Ordering/Referral Denial Edits to Go Live on Jan. 6, 2014

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. 

CMS Warns of Delay in Final CY 2014 Medicare Rules

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.

Ways and Means Committee Releases Draft Medicare Post-Acute Care Reform Legislation

The House Ways and Means Committee is inviting comments on draft legislation to reform Medicare post-acute care (PAC) policy, based on reforms included in President Obama’s fiscal year 2014 budget. The legislation would:

1. Reduce market basket updates for home health agencies, skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs) and long-term care hospitals;
2. Create site neutral payments between IRFs and SNFs for certain procedures (unilateral knee replacement, unilateral hip replacement, unilateral hip fracture, and other appropriate conditions)
3. Modify the criteria required for IRF status (the so-called “75 percent rule”);
4. Establish a SNF readmissions program; and
5. Establish a prospective payment system for Part A and Part B payment for bundles of PAC services (determined by the Secretary, with consideration to the Bundled Payments for Care Improvement Initiative) provided after a hospitalization, beginning in 2018.

Comments will be accepted until August 30, 2013.

CMS Announces First Temporary Moratoria on HHA, Ambulance Supplier Enrollment in High-Risk Areas under ACA Authority

On July 26, 2013, CMS announced temporary moratoria on enrollment of new home health providers and ambulance suppliers under Medicare, Medicaid and the Children’s Health Insurance Program (CHIP) in three parts of the country identified as “fraud hot-spots.” This is the first time the agency is exercising its authority under the Affordable Care Act (ACA) to impose temporary moratoria on new provider enrollment to protect against a high risk of fraud. The temporary moratorium applies to: (1) the enrollment of home health agencies (HHAs) in Miami-Dade County (Florida) and Cook County (Illinois), as well as selected surrounding areas, and (2) the enrollment of new ambulance suppliers and providers in Harris County, Texas and surrounding counties. CMS selected these areas and services, in consultation with the Health and Human Services’ Office of Inspector General (OIG) and the Department of Justice, because of the high potential fraud risk indicated by such factors as a disproportionate number of providers and suppliers relative to beneficiaries, a rapid increase in enrollment applications from providers and suppliers, and extremely high utilization of services.

The temporary enrollment moratoria begin on July 30, 2013 and will remain in effect for 6 months. If CMS deems it necessary, the moratoria may be extended in 6-month increments (with notification in the Federal Register). During the moratoria, existing providers and suppliers can continue to provide and bill for services, but no new provider and supplier applications for these provider types will be approved in these geographic areas. Note that the temporary moratorium does not apply to changes in practice locations, changes to provider or supplier information such as phone number, address, or changes in ownership (except changes in ownership of HHAs that require initial enrollments), nor does it apply to an enrollment application that a CMS contractor has already approved, but has not yet entered into the Provider Enrollment Chain and Ownership System (PECOS) at the time the moratorium is imposed.

CMS observes the tendency of health care fraud to “migrate” -- as enforcement efforts target a particular activity, “criminals may redesign the scheme or relocate to a new geographic area.” CMS will therefore monitor the broad geographic areas for “indicia of activity designed to evade these moratoria” and to address the spread of fraud activities beyond the identified areas.

Medicare Home Health PPS Rates to Drop under Proposed CY 2014 Rule

CMS’s proposed Medicare home health PPS (HH PPS) rule for CY 2014 would cut payment by 1.5% ($290 million) compared to 2013 levels. This proposed reduction reflects a 2.4% home health payment update, which is more than offset by an ICD–9 grouper refinement and an 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 in an episode, the mix of services in an episode, the level of intensity of services in an episode, and the average cost of providing care per episode. CMS estimates that the difference between the 2013 average payment per episode and the average cost per episode is 13.63%; since the ACA caps the adjustment at 3.5% per year for four years, CMS proposes to reduce payments in each year from CY 2014 to CY 2017 by 3.5% (for a total of 14% over four years). In addition to other home health policy updates, the proposed rule would revise 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. The proposed rule would also clarify cost allocation of home health agency survey expenses; for that portion of costs attributable to Medicare and Medicaid, CMS would assign 50% to Medicare and 50% to Medicaid. CMS will accept comments on the proposed rule until August 26, 2013.

CMS Delays Phase 2 Ordering and Referring Denial Edits

On April 25, 2013, CMS announced that, due to technical issues, it is delaying implementation of the Phase 2 ordering and referring denial edits until further notice. By way of background, CMS plans to implement edits that will deny claims for Medicare Part B services (including the technical/non-interpretation component of imaging services, lab services, and durable medical equipment) and Part A home health agency 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. While CMS intended to require Medicare contractors to activate these edits effective May 1, 2013, concerns had been raised 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. CMS expects to announce a new implementation date in the near future.

Obama Administration's Proposed FY 2014 Budget Includes $401 Billion in Health Program Savings

Today, the Obama Administration released its proposed federal budget for fiscal year 2014. As widely reported, the budget incorporates an offer the President made to Congress in December 2012 to achieve nearly $1.8 trillion in additional deficit reduction over the next 10 years, including $401 billion in health savings (the Administration observes that this level of cuts would “provide more than enough deficit reduction to replace the damaging cuts required by the Joint Committee sequestration”).

Virtually all provider types – and drug manufacturers – would be impacted by the budget provisions, if adopted as proposed. The budget proposal is certainly subject to change during the legislative process, particularly as the House and Senate leadership pursue alternative budget frameworks, and indeed, gridlock could prevent significant action on entitlement reform this year. Nevertheless, the proposals bear careful monitoring because they could eventually be included in any long-elusive “grand bargain” to reform the Medicare program and reduce the federal debt.

Highlights of the Administration’s Medicare and Medicaid proposals include the following:

Medicare Provider Payments

  • Reform the Medicare physician fee schedule/sustainable growth rate (SGR) formula to provide stable payments followed by payment linked to participation in an “accountable payment model.”
  • Reduce Medicare coverage of bad debts from 65% generally to 25% over three years starting in 2014.
  • Reduce Medicare indirect medical education add-on payments by $11 billion over 10 years.
  • Reduce payment for post-acute care services in several ways.
    • Reduce payment updates for inpatient rehabilitation facilities (IRFs), long-term care hospitals (LTCHs), skilled nursing facilities (SNFs), and home health agencies (HHAs) by 1.1 percentage points, beginning in 2014 through 2023 (the update could not fall below 0%). This provision would save $79 billion over 10 years.
    • Adjust the standard for classifying a facility as an IRF (at least 75% of patient cases admitted to an IRF must meet one or more of 13 designated severity conditions), saving about $2.5 billion over 10 years.
    • Equalize IRF and SNF payments for three conditions involving hips and knees, pulmonary conditions, as well as other conditions selected by the Secretary, saving $2.0 billion over 10 years.
    • Reduce by up to 3% payments to SNFs with high rates of care-sensitive, preventable hospital readmissions, beginning in 2017, saving $2.2 billion over 10 years.
    • Implement bundled payments for post-acute care providers (LTCHs, IRFs, SNFs, and HHAs) beginning in 2018. Payments would be bundled for at least half of the total payments for post-acute care providers. Rates based on patient characteristics and other factors would be set to produce a permanent and total cumulative adjustment of -2.85% by 2020. Beneficiary coinsurance would equal levels under current law. This provision would save $8.2 billion over 10 years.
  • Align Medicare payments to rural providers with the cost of care, saving $2 billion over 10 years.
  • Align Medicare payment for clinical laboratory services with private sector rates and encourage electronic reporting of laboratory results.

Prescription Drug Provisions

  • Reduce payment for physician-administered Medicare Part B drugs from 106% of average sales price to 103% of average sales price. Manufacturers would be required to provide a specified rebate in certain instances as determined by the Secretary “to preserve access to care.”
  • Provide Medicaid-level drug rebates for brand name and generic drugs provided to beneficiaries who receive Part D low-income subsidies, saving $123 billion over 10 years.
  • Close the Medicare Part D donut hole by 2015, rather than 2020, by increasing manufacturer discounts to from 50% to 75% beginning in plan year 2015.
  • Lower Medicaid drug costs by clarifying the definition of brand drugs, excluding authorized generic drugs from average manufacturer price calculations for determining manufacturer rebate obligations for brand drugs, making a technical correction to the Affordable Care Act (ACA) alternative rebate for new drug formulations, and calculating Medicaid federal upper limits based only on generic drug prices. These proposals are projected to save $8.8 billion over 10 years. 
  • Encourage the use of generic drugs by Part D low-income subsidy beneficiaries by modifying copayments, saving approximately $7 billion over 10 years. 
  • Improve program integrity for Medicaid drug coverage by directing states to track high prescribers and utilizers of Medicaid prescription drugs; requiring manufacturers to make full restitution to states for any covered drug improperly reported by the manufacturer on the Medicaid drug coverage list; allowing more regular audits and surveys of manufacturers to ensure compliance with Medicaid drug rebate agreement requirements; requiring drugs to be electronically listed with the FDA to receive Medicaid coverage; and expanding penalties for reporting false information for the calculation of Medicaid rebates. 
  • Increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission to stop companies from entering into “pay for delay” agreements and modifying the length of exclusivity on brand name biologics.

Program Integrity/Efficiency Provisions

  • Provide $640 million in combined mandatory and discretionary program integrity funding to implement activities that reduce payment error rates, prevent fraud and abuse, target high-risk services and supplies, and enhance civil and criminal enforcement for Medicare, Medicaid, and CHIP. 
  • Authorize civil monetary penalties or other intermediate sanctions for providers who do not update enrollment records and permit exclusion of individuals affiliated with entities sanctioned for fraudulent or other prohibited actions from federal health care programs. 
  • Expand authority to investigate and prosecute allegations of abuse or neglect of Medicaid beneficiaries in additional health care settings.
  • Exclude radiation therapy, therapy services, and advanced imaging from the in-office ancillary services exception to the prohibition against physician self-referrals (Stark law), except in cases where a practice meets certain accountability standards, as defined by the Secretary.
  • Require prior authorization of advance imaging services.
  • Require prepayment review or prior authorization for power mobility devices.
  • Allow the Secretary to create a system to validate practitioners’ orders for certain high-risk items and services.

Other Medicare Provisions

  • Revise beneficiary cost-sharing requirements, including increased income-related premiums under Parts B and D, a new home health copayment, and increased premiums for beneficiaries with Medigap policies with particularly low cost-sharing requirements.
  • Increase the minimum Medicare Advantage (MA) coding intensity adjustment (which decreases MA plan payments to reflect differences in coding practices between Medicare fee-for-service and MA) and align employer group waiver plan payments with MA bids, saving $19 billion over 10 years. 
  • Strengthen the Independent Payment Advisory Board (IPAB) by reducing the target rate of Medicare cost growth from gross domestic product plus one percentage point to plus 0.5 percentage point.
  • Expand the availability of Medicare data released to physicians and other providers for performance improvement, fraud prevention, value-added analysis, and other purposes.

Medicaid Provisions

  • Base Medicaid rates for durable medical equipment on Medicare rates to save $4.5 billion over 10 years.
  • Align Medicaid Disproportionate Share Hospital (DSH) payments with expected levels of uncompensated care to save $3.6 billion over 10 years. 
  • Affirm Medicaid’s position as a payer of last resort when another entity is legally liable to pay claims.

A 131-page Department of Health and Human Services (HHS) “Budget in Brief” summary discusses these provisions in greater detail, and also addresses other HHS agency budget proposals and discusses HHS’s implementation of private health insurance protections and programs under the ACA.

MedPAC's March 2013 Report to Congress

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.

 

Implementation of Medicare Ordering/Referring Provider Edits (March 20 Call)

Effective May 1, 2013, Medicare contractors will activate edits that will deny claims for Medicare Part B (including imaging and lab services), DME, 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. Concerns have been raised by physicians and suppliers that they could experience claims denials and delays after May 1 based on discrepancies between the names of the ordering physician on the 1500 claim form and in Medicare’s enrollment records. CMS is holding a March 20, 2013 National Provider Call to discuss these new requirements.

OIG Assesses Medicare Oversight of Home Health Agencies

The OIG has examined CMS and Medicare contractor oversight of home health agencies (HHAs) in light of persistent concerns about Medicare fraud, waste, and abuse involving HHAs. In the report, “CMS and Contractor Oversight of Home Health Agencies,” the OIG concludes that the effectiveness of such oversight efforts is mixed. While two Medicare Administrative Contractors (MACs) reviewed by the OIG prevented a total of $275 million in improper payments and referred 14 instances of potential fraud in 2011, four Zone Program Integrity Contractors (ZPICs) did not identify any HHA vulnerabilities. The OIG also found limited instances of CMS inappropriately paying HHAs with suspended or revoked billing privileges. The OIG makes a series of recommendations in this area, including calling on CMS to establish additional contractor performance standards for high-risk providers in fraud-prone areas and to prevent inappropriate payments made to HHAs with suspended or revoked billing privileges. CMS concurred with the OIG recommendations. 

CMS Adopts 2013 Medicare Home Health PPS Rates, Update to Hospice Quality Program

Medicare home health rates will be largely unchanged in 2013 under a CMS final rule published November 8, 2012. Specifically, under the final rule, Medicare home health PPS (HH PPS) rates will be cut by approximately 0.01%, or a total of $10 million compared to 2012 levels. This reduction results from a 2.3% market basket update that is more than offset by a 1% reduction mandated by the ACA and a 1.32% reduction to account for increases in aggregate case-mix that CMS considers unrelated to changes in the patient’s health status (finalized in the CY 2012 rule), along with various other payment policies. The rule also finalizes several policy proposals impacting home health agencies (HHAs). Among other things, CMS is providing for alternative sanctions (in addition to termination) that could be imposed if an HHA were out of compliance with federal Conditions of Participation (CoPs) in certain circumstances. Such alternative sanctions include civil money penalties (CMPs), suspensions of payment for all new admissions, temporary management of the HHA, directed plans of correction, and directed in-service training. These alternative sanctions could remain in effect for up to 6 months, until the HHA achieved compliance with the CoPs, or until the HHA’s provider agreement were terminated. CMS also adopts new HHA survey and certification requirements, including requirements for different types of surveys (including for unannounced, standard, and extended surveys), survey frequency, surveyor qualifications, and an informal dispute resolution (IDR) process. In addition, the rule addresses, among other things, home health quality reporting, policy changes regarding therapy reassessments and face-to-face encounter requirements, and grouper enhancements. The rule generally is effective on January 1, 2013, except the effective date of the CMP, suspension of payment for new admissions, and IDR provisions will be July 1, 2014, and the effective date of other survey and enforcement provisions will be July 1, 2013. In addition to these home health provisions, the rule specifies quality measures that hospices will be required to report under the Hospice Quality Reporting Program for the FY 2015 payment determination.

CY 2013 Medicare Payment Rules at OMB

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. 

Older Entries

October 31, 2012 — MedPAC Meeting on Medicare Policy Issues (Nov. 1-2)

October 15, 2012 — OIG Faults CMS Failure to Implement HHA Surety Bond Rule

August 17, 2012 — OIG Reports on Questionable Medicare HHA Billing

July 27, 2012 — CMS Publishes FY 2013 Medicare Hospice Wage Index/Rate Update Notice, Comorbidity Diagnosis Reminder, Quality Update

July 19, 2012 — CMS Proposes Reduction in 2013 Medicare Home Health PPS Rates, Update to Hospice Quality Program

June 27, 2012 — Medicare Proposed Payment Rules for 2013 Awaiting Clearance

June 27, 2012 — CMS Outlines Conditions for Provider Use of Repackaged Medications

May 14, 2012 — CMS Resources on Medicare Home Health Face-to-Face Encounter Requirements

April 23, 2012 — CMS Posts Patient Survey Data on Home Health Compare

April 23, 2012 — HHS seeks Comments on Revised Healthcare-Associated Infections (HAI) Action Plan

April 2, 2012 — MedPAC Issues March 2012 Medicare Recommendations

March 14, 2012 — OIG Reports Examine Home Health Agency (HHA) Issues

December 13, 2011 — CMS Addresses Denials of HHA Claims Related to Face-to-Face Documentation Issues

November 14, 2011 — CMS Adopts Home Health PPS Rate Cut for 2012

October 28, 2011 — Final CY 2012 Medicare Payment Rules in the Pipeline

August 31, 2011 — CMS Seeks Applicants for ACA Bundled Payment Initiative

July 18, 2011 — CMS Proposes Home Health PPS Rate Cut for 2012

July 18, 2011 — Face-To-Face Encounter Requirement for Medicaid Home Health/DME

May 31, 2011 — OIG Report on Physician Therapy Services Provided Under the Home Health PPS

April 13, 2011 — Home Health/Hospice Face-to-Face Encounter Requirement

March 29, 2011 — MedPAC Report to Congress on 2012 Payment Recommendations

March 29, 2011 — CBO Presents Budget Options, Including Potential Health Policy Savings

March 24, 2011 — CMS Forum on Home Health Payment Revisions to Account for Underserved/High-Severity Patients (March 31)

March 8, 2011 — CMS Proposes Medicaid Community First Choice Option Under ACA

March 7, 2011 — Revised Home Health Agency (HHA) Survey Protocols

February 14, 2011 — CMS Forum on Home Health Value-Based Purchasing (Feb. 24, 2011)

January 10, 2011 — MedPAC to Examine Medicare Provider Payment Adequacy (Jan. 13-14)

December 29, 2010 — Correction of 2011 Home Health PPS Rule

December 29, 2010 — Delayed Enforcement of Face-to-Face Encounter Requirement for Home Health & Hospice Eligibility Certifications

November 29, 2010 — MedPAC Meeting on Medicare Payment Adequacy (Dec. 2-3)

November 16, 2010 — Medicare 2011 Home Health PPS Final Rule, Including Home Health/Hospice Certification Provisions

September 17, 2010 — MedPAC Policy Meeting

August 31, 2010 — CMS Finalizes New DMEPOS Supplier Standards

August 13, 2010 — DMEPOS Competitive Bidding Educational Articles

July 29, 2010 — Medicare 2011 Home Health PPS Proposed Rule with Home Health/Hospice Certification Provisions

June 17, 2010 — GAO Report on Home Infusion Therapy

May 13, 2010 — Medicare/Medicaid Provider and Supplier Enrollment, Ordering and Referring, and Documentation Requirements, and Changes in Provider Agreements

May 13, 2010 — CMS Rescinds Transmittal on HHA 36-Month Rule

April 16, 2010 — HHS/CMS PPACA Implementation Announcements

April 16, 2010 — CMS Announces Series of "RAC 101" Calls

March 15, 2010 — MedPAC Issues 2011 Medicare Payment Recommendations

January 27, 2010 — MedPAC Votes on 2011 Medicare Provider Update Recommendations

January 13, 2010 — New Medicare Home Health Outlier Policy Guidance Issued

December 21, 2009 — Aberrant Medicare Home Health Outlier Payment Patterns

December 4, 2009 — HH PPS Outlier Policy Guidance

December 1, 2009 — CMS OASIS-C Educational Call (Dec. 8).

November 11, 2009 — Final CY 2010 Medicare Home Health PPS Rule

November 6, 2009 — CMS OASIS-C Educational Call (Nov. 12)

October 12, 2009 — OASIS-C Provider Call (Oct. 22, 2009)

August 14, 2009 — CMS Corrects Physician Fee Schedule, Inpatient Psychiatric Facility PPS, and Home Health PPS Rules

August 3, 2009 — CY 2010 Home Health PPS Proposed Rule

June 13, 2009 — White House proposes $313 billion in additional Medicare/Medicaid cuts

May 18, 2009 — Senate Finance Releases Health Reform Financing Options -- Comments Due May 26, 2009

May 7, 2009 — Finance Committee Releases Health Care Delivery System Reform Options; Comment Opportunity (Due May 15)

March 20, 2009 — GAO Report on Home Health Payments

March 6, 2009 — Obama Budget Proposal

February 27, 2009 — MedPAC Report to Congress -- Medicare Payment/Transparency Provisions

February 11, 2009 — Clinical Laboratory Certification/Public Health Testing, HHAs, and Hospices

February 11, 2009 — Medicaid and Medicare Home Health Payments

January 12, 2009 — DME Supplier, HHA Enforcement Efforts

January 9, 2009 — MedPAC to Consider Medicare Proposals January 8-9, 2009

December 22, 2008 — HHA PPS Correction Notice

December 8, 2008 — OIG Report on HHAs and DMEPOS Suppliers

November 4, 2008 — Medicare Home Health Payments

August 14, 2008 — HHA Deficiencies