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

On April 25, 2013, CMS announced that, due to technical issues, it is delaying implementation of the Phase 2 ordering and referring deniial editsntil 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.

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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:

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MedPAC has released its annual report to Congress on Medicare Payment Policy, including payment update recommendations for all the major Medicare FFS payment systems and limited Medicare Advantage (MA) recommendations. The report also includes data on the status of the MA and Medicare Part D programs, including information about enrollment, plan options, and beneficiary cost-sharing. Note that while MedPAC’s recommendations are not binding, Congress and CMS often take into account MedPAC’s assessments when updating Medicare payment policies. Major recommendations include the following (many of which were included in previous reports):

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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.

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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. 

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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.

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

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MedPAC is meeting on November 1 -2, 2012 to discuss a variety of Medicare policy issues, including: Medicare payment for ambulance services, reducing the hospitalization rate for Medicare beneficiaries receiving home health care, Medicare payment for outpatient therapy services, geographic adjustment of payments for the work of physicians and other health professional, the role of provider prices in determining private-plan Medicare costs relative to fee-for-service Medicare, Medicare Advantage special needs plans, and Medicare payment differences for ambulatory care services across settings.

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A recent OIG report, “Surety Bonds Remain an Unused Tool to Protect Medicare from Home Health Overpayments,” faults CMS for not implementing its January 1998 final rule requiring every home health agency (HHA) participating in Medicare to obtain a surety bond in the amount of $50,000 or 15% of annual Medicare payments to the HHA, whichever is greater. As of the end of February 2012, 2,004 HHAs owed CMS a total of approximately $408 million out of $590 million in overpayments CMS identified between 2007 and 2011. According to the OIG’s calculations, CMS could have recovered at least $39 million if this amount if the agency had required each HHA to obtain a $50,000 surety bond. By not implementing this requirement after almost 15 years, the OIG charges CMS placing “Medicare at risk of losing millions of dollars in overpayments.” The OIG therefore recommend that CMS implement the HHA surety bond requirement, and consider increasing the surety bond amounts for HHAs with high overall Medicare payment amounts. CMS agreed that implementing a surety bond requirement for HHAs may help reduce potential program vulnerabilities, and stated that it is currently evaluating its options in implementing this requirement.

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A recent HHS Office of Inspector General (OIG) report asserts that Medicare inappropriately paid $5 million for home health claims in 2010 with the following three errors: overlapping with claims for inpatient hospital stay; overlapping with claims for skilled nursing facility (SNF) stays; or billing for services on dates after the beneficiary’s death. The OIG also estimates that 25% of HHAs exceeded the OIG’s threshold indicating unusually-high billing for at least one of six measures of questionable billing (e.g., high average outlier payment amount per beneficiary; high average number of visits per beneficiary; high percentage of beneficiaries for whom other HHAs billed Medicare; high average number of late episodes per beneficiary; high average number of therapy visits per beneficiary; and high average Medicare payment amount per beneficiary). The OIG points out that while these six measures indicate potential fraud, there may be legitimate reasons for an HHA to exceed the OIG’s thresholds on the measures. The OIG also found that 80% of the HHAs with questionable billing were located in one of four states: TX, FL, CA, or MI. In response to these findings, the OIG recommends that CMS: (1) improve the use of claims processing edits to prevent inappropriate payments for identified errors; (2) Increase monitoring of billing for home health services; (3) enforce and consider lowering the 10% annual cap on an HHA’s total outlier payments; (4) consider imposing a temporary moratorium on new HHA enrollments in Florida and Texas, and (5) take appropriate action regarding identified inappropriate payments. While CMS concurred with the recommendations, the agency disagreed with the OIG’s estimate of the inappropriate payments for home health claims overlapping with inpatient hospital and SNF stays.
 

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On July 27, 2012, CMS published a notice announcing that Medicare hospice rates will increase by 0.9% in FY 2013. This update is based on a 2.6% market basket increase, which is reduced under the ACA by a 0.7 percentage point productivity adjustment/reduction and an additional 0.3 percentage point reduction, and further reduced by 0.7 percentage point reduction due to updated wage data and an additional wage index budget neutrality adjustment factor (BNAF) reduction. Under the BNAF provision, CMS is continuing its seven-year phase-out of the wage index BNAF with an additional 15% BNAF reduction for 2013, for a total BNAF reduction through FY 2013 of 55%. The BNAF phase-out is scheduled to continue with successive 15% reductions from FY 2014 through FY 2016. The notice also discusses its contractor’s finding that most hospice claims contain only a principal diagnosis, when hospice patients are likely to have multiple comorbidities. CMS therefore is clarifying that all of a patient's coexisting or additional diagnoses should be reported on the hospice claim (unless they are unrelated to the terminal illness). CMS notes that comorbidity information is needed to help the agency determine if it should include a case-mix adjustment in its ongoing hospice payment reform efforts. CMS also directs interested parties to its July 13, 2012 Medicare proposed home health prospective payment system (PPS) rate update for calendar year 2013, which includes a detailed discussion of CMS’s proposed hospice quality data reporting requirements affecting payments in FY 2015 and subsequent years.  CMS will accept comments on the home health PPS proposed rule (including hospice quality provisions) until September 4, 2012.

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Medicare home health rates would decrease by 0.1% – or $20 million – in CY 2013 under a proposed rule published by CMS on July 13, 2012. CMS anticipates a 2013 home health market basket update of 2.5%, but this increase would be offset by a 1% reduction mandated by the ACA, a 1.32% reduction to account for increases in aggregate case-mix that are unrelated to changes in the patient’s health status (finalized in the CY 2012 rule), and wage index updates that have the aggregate effect of decreasing payments. The proposed rule also includes several policy proposals. Among other things, CMS proposes alternative sanctions (in addition to termination) that could be imposed if a home health agency (HHA) were out of compliance with federal Conditions of Participation (CoPs) in certain circumstances. The proposed alternative sanctions include civil money penalties, suspensions of payment for all new admissions and new payment episodes, 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 proposes new HHA survey and certification requirements, including requirements for different types of surveys, survey frequency, surveyor qualifications, and an informal dispute resolution process. In addition to these home health provisions, the rule specifies quality measures that hospices would be required to report under the Hospice Quality Reporting Program for the FY 2015 payment determination (no changes are being proposed to the quality measures for the FY 2014 payment determination that were included in the August 4, 2011 hospice wage index final rule for FY 2012). CMS also discusses additional hospice measures under consideration for subsequent years, along with plans to develop a hospice patient-level data item set to be used by all hospices to collect and submit standardized data items about each patient admitted to hospice as early as CY 2014. CMS will accept comments on the proposed rule until September 4, 2012.

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

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On June 15, 2012, CMS issued instructions to state survey agencies on the “Safe Use of Single Dose/Single Use Medications to Prevent Healthcare-Associated Infections.” While CMS is not changing its policy regarding the reuse of single-dose vials or single use vials (collectively referred to as “SDVs”), CMS outlined conditions under which certain health care providers may repackage SDVs into smaller doses, each intended for a single patient. The policy clarification is prompted by recent drug shortages and the interest of facilities in reducing waste of SDV medication that exceeds the needed dosage for a single patient. The policy applies to a number of provider types, including nursing facilities, hospitals, ASCs, hospices, and HHAs.

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CMS has released new educational materials on Medicare home health certification requirements (homebound criteria and requirements for the face-to-face encounter and documentation). The guidance is intended to ensure that physicians, non-physician practitioners, physician support personnel, and home health agencies understand and meet all certification requirements.

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On April 19, 2012, CMS announced that results from the Home Health Care Consumer Assessment of Healthcare Providers and Systems (HHCAHPS) Survey is now available on the agency’s Medicare “Home Health Compare” website. The national survey results, which provide feedback on patient experience with Medicare-certified home health agencies, will be updated every four months. According to CMS, these “survey results are designed to create incentives for home health agencies to improve quality of care, as well as to give patients additional information so they are aware of the types of care they will receive from a particular agency.”

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HHS is seeking comments on it updated National Action Plan to eliminate HAIs in acute care hospitals, ambulatory surgical settings, and end-stage renal disease facilities and to promote the influenza vaccination of healthcare personnel. HHS is accepting comments on the revised Action Plan through June 25, 2012. HHS also has announced that a new phase of the HAI initiative, expected to be launched in May 2012, will focus on HAIs in long-term care facilities.

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

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A recent OIG report, “Limited Oversight of Home Health Agency OASIS Data,” examined HHA compliance with Outcome and Assessment Information Set (OASIS) data reporting requirements. OASIS data are used in Medicare payment policy, quality measures, consumer information on the Home Health Compare web site, and state surveys. According to the OIG, HHAs did not submit required OASIS data for 6% percent of claims in 2009, representing over $1 billion in Medicare payments, and 15% of reports were submitted late. While the Deficit Reduction Act imposes a 2% market basket payment reduction if an HHA fails to submit OASIS data, only 199 HHAs were thus penalized from 2007 through 2010. The OIG also found shortcomings in state and CMS oversight of OASIS data. The OIG recommends that CMS: (1) apply the 2% payment reduction to all HHAs that failed to submit OASIS data; (2) take enforcement action regarding late submission of OASIS data; and (3) develop guidelines for state review of OASIS data (CMS concurred with the first recommendation). Another new report, “Documentation of Coverage Requirements for Medicare Home Health Claims,” reviewed the medical necessity of HHA services. According to the OIG, the 84% increase in Medicare home health spending from 2000 to 2007 raises concerns about the potential for improper payments due to fraud and abuse. Based on a review of 495 beneficiaries’ medical records, the OIG found that in 2008, 98% of beneficiaries reviewed met the homebound requirement, needed skilled nursing care or therapy services, and were under the care of a physician. Nevertheless, 22% of claims were in error because services were not medically necessary or claims were coded inaccurately, resulting in $432 million in improper Medicare payments. The OIG intends to continue to monitor Medicare home health claims to determine whether services are appropriate and merit payment. Finally, the OIG has issued a report entitled “Intermediate Sanctions for Noncompliant Home Health Agencies.” The report reviews the status of implementation of an Omnibus Budget Reconciliation Act of 1987 provision mandating intermediate sanctions, such as civil money penalties, payment suspension, and appointment of temporary management, to promote compliance with Medicare conditions of participation. After more than 20 years, CMS has not implemented such sanctions, although CMS states that it anticipates publishing a proposed rule by September 2012. The OIG continues to recommend that CMS make implementation a high priority.

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CMS has notified providers that it is aware that some Medicare contractors are denying payment for patients who use home health services following an acute or post-acute stay when the home health agency (HHA) uses a single form (i.e., CMS-485) for the plan of care and the certification with a single signature by the community physician who assumes oversight of the patient’s home healthcare. CMS confirms the situations in which the CMS-485 form satisfies all of the certification and plan of care content requirements and will be accepted by the Medicare contractors. Additionally, CMS has learned that some contractors are denying claims for failure of the acute or post-acute physician to identify the community physician who will assume care for the patient. CMS notes that it has not mandated a specific documentation protocol to hand-off a patient to the community physician. For claims that have been previously denied for these reasons, contractors have been instructed to reopen and determine if face-to-face requirements have been met upon request of the HHA.

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