CMS Call on IRF Quality Reporting (Nov. 29)
On November 29, 2011, CMS is hosting a call to provide an overview of the Quality Reporting Program for inpatient rehabilitation facilities, as mandated by the Affordable Care Act.
CMS Publishes Corrections to 2012 Medicare Payment Rules
On September 26, 2011, CMS published notices correcting technical errors in the following rules: (1) the August 18, 2011 final Medicare hospital inpatient prospective payment system (PPS) and long-term care hospital PPS rule for FY 2012; (2) the August 5, 2011 final Medicare inpatient rehabilitation facility PPS final rule for FY 2012; and the August 8, 2011 Medicare skilled nursing facility PPS final rule for FY 2012.
President Obama Outlines Proposal to Deficit Reduction Super-Committee; Medicare Provisions Loom Large
This post was written by Debra A. McCurdy and Susan A. Edwards.
On September 19, 2011, President Obama presented his deficit reduction plan – including $320 billion in proposed federal health spending cuts – to the Joint Select Committee on Deficit Reduction, which was created by the Budget Control Act of 2011 to craft a legislative package to cut the federal deficit by at least $1.5 trillion. If legislation is not adopted to achieve deficit reduction targets by January 2012, $1.2 trillion in across-the-board spending cuts (sequestration) would be triggered, effective January 2013.
The health care industry has a significant stake in the outcome of the Joint Select Committee’s work, since Medicare spending in particular is expected to figure prominently in the Committee’s package. Under President Obama’s plan (which the Joint Select Committee is not obligated to follow), Medicare spending would be cut by about $248 billion over 10 years, with more than half of the savings coming from new Medicare drug rebates. Medicaid and other health funding also would be reduced by about $72 billion. If sequestration ultimately is triggered, on the other hand, Medicare provider payments also would be subject to reduction; but the Congressional Budget Office (CBO) recently estimated that the level of Medicare cuts under sequestration would be approximately $123 billion between 2013 and 2021.
This Alert provides an overview of the Budget Control Act, including the two possible mechanisms for lowering the federal deficit: (1) enactment of the Joint Select Committee’s proposal; and (2) sequestration. In addition, this Alert discusses recent developments, including President Obama’s deficit reduction plan, and provides a timeline for action under the Budget Control Act.
CMS Seeks Applicants for ACA Bundled Payment Initiative
The Centers for Medicare & Medicaid Services (CMS) has launched the Bundled Payments for Care Improvement Initiative under Section 3021 of the Affordable Care Act (ACA), which authorizes the Secretary to test innovative delivery arrangements to reduce federal spending while preserving or enhancing the quality of care. Under the Bundled Payments Initiative, CMS seeks applicants who will strive to improve care coordination for Medicare beneficiaries who are hospitalized and when they leave the hospital. Very broadly, applicants will offer a discount to Medicare compared to usual Medicare spending; the applicant will be paid the Medicare savings beyond the discount level, but will assume risk for Medicare expenditures above an established risk threshold. CMS invites proposals with one of following four approaches to bundled payments:
- Model 1: Retrospective payment models for the acute inpatient hospital stay only.
For this model, the episode of care consist of all Part A services furnished to “included beneficiaries” during a hospital stay, including hospital diagnostic testing and all related therapeutic services furnished by an entity wholly owned/operated by the admitting hospital in the three days prior to admission and the hospital facility services furnished during the hospital stay. Awardees will offer a discount from the usual Part A hospital inpatient MS-DRG payments; the minimum discount varies by year, ranging from 0% for the first six months, gradually increasing to 2% by year three.
- Model 2: Retrospective bundled payment models for hospitals, physicians, and post-acute providers for an episode of care consisting of an inpatient hospital stay followed by post-acute care.
All beneficiaries admitted to an awardee acute care hospital for agreed-upon MS-DRGs will be included in the episode. The episode begins with the inpatient hospital admission to a participating provider and continues for a minimum of 30 days following discharge. The episode includes all hospital services (as defined in Model 1), plus Part A and Part B services furnished during the hospital stay, and Part A and Part B services furnished in the post-discharge period related to the episode “anchor.” In addition to the inpatient services, bundled services include inpatient hospital readmission services; long term care hospital services (LTCH); inpatient rehabilitation facility services (IRF); skilled nursing facility services (SNF); home health agency services (HHA); hospital outpatient services; independent outpatient therapy services; clinical laboratory services; durable medical equipment (DME); and Part B drugs. Applicants should propose a target price for the episode that includes a single rate of discount on the expected Medicare payments for all included Part A and Part B services. CMS requires minimum discount of 3% for applicants who propose a 30-89 day post-discharge episode, and a 2% minimum discount for 90 day or longer episode. Awardees may not restrict beneficiary choice of provider, including post-acute care provider, and awardees will be financially liable for care for included beneficiaries that is furnished by providers who are not participating in the model.
- Model 3: Retrospective bundled payment models for post-acute care where the bundle does not include the acute inpatient hospital stay.
The episode anchor is the initiation of post-acute care services at a SNF, IRF, LTCH, or with an HHA within 30 days of beneficiary discharge from an acute care hospital for an agreed-upon MS-DRG. The episode will begin on the date post-acute services are initiated with an awardee and continue through a minimum of 30 days following initiation of the episode. The episode must include all related Part A and Part B services furnished during the episode period, including related readmissions (all services in Model 2 except acute inpatient services). Applicants should propose a target price for the episode that includes a single rate of discount off of the expected Medicare payments for all included services. Awardees may not restrict beneficiary choice of provider; awardees are financially responsible for care for included beneficiaries furnished by providers who are not directly participating in the model.
- Model 4: Prospectively-administered bundled payment models for hospitals and physicians for the acute inpatient hospital stay only.
Proposals under Model 4 will build on the ongoing Medicare Acute Care Episode (ACE) demonstration for cardiac and orthopedic inpatient procedure hospitalizations, but will expand to additional geographic areas and clinical conditions. CMS notes that, unlike the ACE demonstration, the Bundled Payment Initiative will not include sharing savings with patients because such policies previously “have proven operationally challenging to administer and confusing for beneficiaries.” The episode of care is the acute inpatient admission to an awardee for agreed-upon MS-DRGs through patient discharge. The episode will include Part A hospital services (as defined in Model 1) and Part B professional services, along with specified services furnished during certain readmissions. The CMS will consider applicant proposals around risk adjustment, which must include a description of the methodology and may include plans for updating risk adjustment on a yearly basis. Applicants should propose a target price for the episode that includes a single rate of discount off of the expected Medicare Part A and Part B payments for all hospital facility and professional services furnished during the hospitalization and related readmissions for all beneficiaries with the agreed-upon MS-DRGs (a minimum 3% discount). CMS and the awardee will agree to the price for the bundle of services in advance, and the awardee bears full risk for the price of the episode.
Additional requirements for each model are set forth in the request for application (RFA). In general, CMS seeks to ensure that total Medicare expenditures under any model will decrease relative to what they would have been absent this initiative, and that quality measures are met. Gainsharing arrangements are permitted under each model, but they must meet criteria “designed to ensure that care is not inappropriately reduced, that the quality of care remains constant or is improved, that there are not inappropriate changes in utilization or referral patterns, and to guard against fraud, waste, and abuse.” CMS states in the RFA that it will consider using its waiver authority with respect to fraud and abuse laws and other Medicare provisions for such gainsharing arrangements as appropriate. Bundled payment agreements will include a performance period of 3 years, with the possibility of a 2-year extension, beginning with program start date (which may be as early as the first quarter of CY 2012 for Model 1 awardees). Potential applicants must submit a letter of intent by September 22, 2011 for Model 1 (subsequently extended until October 6) and by November 4, 2011 for Models 2, 3, and 4; additional deadlines are set forth in the RFA materials. CMS also published a Federal Register notice announcing the initiative.
CMS "Provider Compliance Group Outreach Calls" to Focus on Medicare Vulnerabilities (Aug. 23-25, 2011)
CMS has announced a series of calls on specific Medicare program vulnerabilities identified in HHS Office of Inspector General (OIG) reports. The topics of the calls are as follows: August 23: Inpatient Rehabilitation Facility Documentation, Power Wheelchairs/Power Mobility; August 24: Overview of Reviews, Hospice, and Electronic Submission of Medical Documentation (esMD); August 25: Diagnostic Radiology Services in Emergency Departments; Ambulatory Surgical Center Services and Ambulance Transportation Provided to Beneficiaries in Skilled Nursing Facility Stays. CMS Contractor Medical Directors, OIG representatives and CMS personnel will address compliance with Medicare policy, billing instructions, and medical review guidance related to reducing improper payments for these items and services. The calls will be broadcast over the internet.
CMS Finalizes FY 2012 Inpatient Rehabilitation Facility (IRF) PPS Policies
On July 29, 2011, CMS released an advance copy of its final rule updating Medicare IRF PPS rates and policies for FY 2012 (affecting discharges and cost reporting periods beginning on or after October 1, 2011 and through September 30, 2012). The rule, which will be published in the Federal Register on August 5, 2011, is expected to increase IRF PPS rates by 2.2% nationwide ($150 million). This rate increase reflects a 2.9% market basket increase (using a revised and rebased index) that is partially offset by a -1% productivity adjustment and 0.1% rate cut mandated by the ACA, increased by 0.4% due to an updated outlier threshold amount that increases estimated outlier payments from 2.6% in FY 2011 to 3% in FY 2012. In addition to these rate changes, the rule implements a new quality reporting program, also required by the ACA, that reduces the annual IRF PPS increase factor by 2 percentage points for facilities that fail to report quality data, beginning in 2014. Under the final rule, IRFs initially will submit data on two quality measures: “urinary catheter-associated urinary tract infection” and “pressure ulcers that are new or have worsened.” CMS is considering for future rulemaking a third measure under development on “30-day Comprehensive All Cause, Risk Standardized Readmission.” The final rule also, among other things: updates case-mix group relative weights; uses final FY 2011 inpatient PPS pre-reclassified and pre-floor wage data; freezes the facility-level adjustment factors for FY 2012 at FY 2011 levels for one additional year; allows IRFs to receive temporary adjustments to their full-time equivalent intern and resident caps if interns/residents are unable to complete their training in certain situations; and allows IRF and inpatient psychiatric facility units to expand during a cost reporting period (not just at the beginning of a cost reporting period). The rule is effective October 1, 2011.
CMS Issues Proposed FY 2012 Inpatient Rehabilitation Facility (IRF) PPS Rule
On April 29, 2011, CMS published a proposed rule to update Medicare IRF PPS rates and policies for FY 2012. The proposal would increase IRF PPS rates by 1.5% ($120 million nationwide), reflecting a 2.8% market basket increase (using a revised and rebased index) that is partially offset by a 1.3 percentage point rate reduction mandated by the ACA. In addition, the rule would implement a new quality reporting program, also required by the ACA, that reduces the annual IRF PPS increase factor by 2 percentage points for facilities that fail to report quality data, beginning in 2014. Under the proposal, IRFs initially would submit data on two quality measures: “urinary catheter-associated urinary tract infection” and “pressure ulcers that are new or have worsened.” CMS is considering for future rulemaking a third measure under development that would address readmissions within 30 days to another inpatient stay (acute care hospital, rehabilitation facility, or other setting). The proposed rule also would, among other things: update case-mix group relative weights; increase the high cost outlier threshold from $11,410 to $11,822 (which would maintain outlier payments at 3% of total IRF PPS payments in FY 2012 compared to 2.7% in 2011); use final FY 2011 IPPS pre-reclassified and pre-floor wage data; update the rural, low-income patient, and teaching status adjustment factors using more recent data; allow IRFs to receive temporary adjustments to their full-time equivalent intern and resident caps if interns/residents are unable to complete their training in certain situations; and revise rules regarding "new" facilities and changes in bed size and square footage for IRFs and inpatient rehabilitation units. Comments on the proposed rule are due by June 21, 2011.
MedPAC Report to Congress on 2012 Payment Recommendations
On March 15, 2011, MedPAC released its annual report to Congress on Medicare Payment Policy. The report includes MedPAC’s recommendations on payment rate updates and other policies, such as distribution of payments and program integrity, for Medicare fee-for-service payment systems. It also includes an overview of the status of the Medicare Advantage and Medicare Part D prescription drug programs. Major recommendations include the following:
- Congress should increase acute care hospital inpatient and HOPPS payment rates by 1% in 2012, and require the HHS Secretary to adjust inpatient payment rates in future years to fully recover all overpayments due to documentation and coding improvements.
- Congress should provide a 1% update to Medicare physician payments and outpatient dialysis services for 2012.
- Ambulatory surgical center (ASC) payments should increase by 0.5% for 2012, and ASCs should submit cost and quality data.
- Congress should: eliminate the update to payment rates for skilled nursing facility (SNF) services for FY 2012; revise payment for nontherapy ancillary services; establish a quality incentive payment program for SNFs; and strengthen SNF reporting requirements.
- Congress should: eliminate the home health update for 2012 and direct the Secretary to: begin a two-year rebasing of home health rates in 2013 (and protect beneficiaries from lower quality of care in response to rebasing); revise the case-mix system; establish a per episode copay for home health episodes not preceded by hospitalization or post-acute care use; and expand certain program integrity efforts.
- Congress should eliminate the update for inpatient rehabilitation facilities and long-term care hospitals for 2012.
- Congress should increase hospice rates by 1% for FY 2012 and adopt a series of recommendations from March 2009 addressing payment and program integrity reforms.
CMS Calls: Provider Compliance Group National Outreach/OIG Reports (March 22-24)
CMS is hosting three listening sessions on provider compliance issues March 22-24, 2011, focusing on a number of OIG reports. The schedule is as follows:
Tuesday, March 22
• Inappropriate Medicare Payments for Transforaminal Epidural Injections Services
• Medicare Part B Services During a Non-Part A Nursing Home Stays: Mental Health
• Medicare Part B services during Non-Part A Nursing Home Stays: Enteral Nutrition Therapy
• Review of Point Of Service (POS) Coding for Physician Services Processed by Part B Carriers
Wednesday, March 23
• Medicare Part B Payments for Ambulance Services Rendered to Beneficiaries During Inpatient Stays
• Review of Inpatient Rehabilitation Facilities (IRF) Compliance with Medicare Transfer Regulation
• Part A ER Department Adjust Nationwide Review of Medicare Part A Emergency Dept Adjustments for Inpatient Psychiatric Facilities
• Nationwide Review of IRF Transmission of Patients’ Assessment Instruments
Thursday, March 24
• Review of Claims for Capped Rental Durable Medical Equipment
• Questionable Billing for Physicians Services for Hospice Beneficiaries
• Questionable Billing for Medicare Outpatient Therapy Services
• Chiropractor Outreach and Education
Proposed Medicare Inpatient Psychiatric Facilities PPS Update
On January 27, 2011, CMS published a proposed rule that would update prospective payment rates for Medicare inpatient hospital services provided by inpatient psychiatric facilities (IPFs) for discharges occurring July 1, 2011 through September 30, 2012 and make other changes to the IPF PPS. The proposed rule also would rebase and revise the Rehabilitation, Psychiatric, and Long-Term Care (RPL) market basket, and make certain clarifications and corrections to terminology and regulations text. Comments will be accepted until March 22, 2011.
MedPAC to Examine Medicare Provider Payment Adequacy (Jan. 13-14)
On January 13 and 14, 2011, the Medicare Payment Advisory Commission (MedPAC) is meeting to discuss Medicare payment adequacy for a number of Medicare providers, including: physicians and other health professionals, ambulatory surgical centers, hospital inpatient and outpatient services, outpatient dialysis providers, home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, long term care hospitals, and hospice providers. The meeting will also address Medicare Advantage program quality. MedPAC’s assessments will be presented to Congress later this year; while the panel’s recommendations are not binding, they often help shape federal policy.
CMS Open Door Forum on LTCH, IRF, and Hospice Quality Measures (Dec. 16)
On December 16, 2010, CMS is hosting a Special Open Door forum on Section 3004 of the ACA, which directs the Secretary to establish Medicare quality reporting programs for long term care hospitals (LTCHs), inpatient rehabilitation facilities (IRFs), and hospice programs. Through the listening session, CMS is seeking to understand how provider experience with quality measures can inform the goals for the mandated quality measures. With regard to the timeline, the ACA requires that the quality measures be made available by 2012, with reporting on these measures expected to begin in FY 2013. For FY 2014 and each subsequent year, failure to submit required quality data will result in a 2% reduction in the annual payment update.
MedPAC Meeting on Medicare Payment Adequacy (Dec. 2-3)
On December 2-3, 2010, the Medicare Payment Advisory Commission (MedPAC) is meeting to discuss the adequacy of Medicare payment for a variety of services, including hospital (inpatient and outpatient), physician, ambulatory surgical center, outpatient dialysis, hospice, skilled nursing facility, home health, inpatient rehabilitation facility, and long-term care hospital services
Medicare Inpatient Rehabilitation Facility Rate Update for FY 2011
On July 22, 2010, CMS published a notice announcing FY 2011 Medicare inpatient rehabilitation facility (IRF) rates. CMS estimates that the rule will increase aggregate payments to IRFs by $135 million for FY 2011, or approximately 2.16%. This increase reflects a 2.5% market basket increase, which is reduced by 0.25 percentage point as mandated by the ACA, along with an approximate 0.1% overall estimated decrease in estimated IRF outlier payments resulting from an update to the outlier threshold amount from 3.1% in FY 2010 to 3% in FY 2011.
OIG Reports on IRF Transfers, Patient Assessment Transmission
The OIG has issued two recent reports on inpatient rehabilitation facilities’ (IRF) compliance with Medicare policies. One report concluded that IRFs did not always code claims in compliance with Medicare’s transfer policy, which provides lower reimbursement for cases in which a beneficiary is transferred rather than discharged to home. Of the 220 claims in the OIG’s sample, 213 claims pertained to transfers to facilities that were subject to Medicare’s transfer regulation but were improperly coded as discharges. Based on this sample, CMS estimates that fiscal intermediaries overpaid $34 million to IRFs for the 4-year period that ended September 30, 2007. In addition, while new claims edits detected miscoded claims, fiscal intermediaries did not take appropriate action to adjust the claims and prevent incorrect payments. The OIG recommended that CMS take steps to recover the overpayments and prevent future incorrect payments. In a second report, the OIG found that IRFs did not always receive reduced case-mix-group payments for claims with patient assessment instruments that were transmitted to CMS's National Assessment Collection Database more than 27 days after the beneficiaries' discharges, even though such claims should be reduced by 25%. According to the OIG, IRFs did not receive reduced case-mix-group payments for 113 of the 200 sampled claims with patient assessment instruments transmitted after the 27-day deadline. The OIG made several recommendations to address IRF payment associated with assessments not transmitted according to deadlines, with which CMS concurred.
Medicare Advantage Beneficiary Information Submission Requirement for Hospitals
CMS is requiring non-teaching hospitals to submit informational only bills for Medicare Advantage (MA) beneficiaries they treated in FY 2007 and FY 2008 on or before August 31, 2010 and submit a related attestation or before September 15, 2010. This requirement is a follow-up to a 2007 transmittal requiring all hospitals paid under the inpatient prospective payment system (PPS), inpatient rehabilitation facility PPS, and long term care hospital PPS to submit such data in order to determine the Supplemental Security Income ratio and accurately determine a variety of Medicare payment amounts. CMS has determined that many hospitals have not reported any MA days. CMS therefore is giving applicable hospitals one final opportunity to comply with the requirement to submit FY 2007 and 2008 informational only claims. In addition, these hospitals must attest in writing to their Medicare contractor that they have either submitted all of their MA claims for FY 2007 and 2008 or that they have no MA claims for that fiscal year. If a provider does not comply, CMS may instruct the contractor to use an SSI ratio of 0% to calculate Medicare disproportionate share hospital payments or take other action that may affect payments for the non-compliant providers.
Guidance on Implementation of PPACA Medicaid Rebate, Institutional Provider, Risk Pool Provisions
CMS has issued guidance to State Medicaid Directors on the Medicaid prescription drug rebate provisions of the Patient Protection and Affordable Care Act (PPACA). Specifically, the letter addresses the increased rebate percentages for covered outpatient drugs dispensed to Medicaid patients, the extension of prescription drug rebates to covered outpatient drugs dispensed to enrollees of Medicaid managed care organizations, and the rebate offset associated with the increase in the rebate percentages (designed to ensure that savings resulting from the increases in the rebate percentages will flow to the federal government rather than the states). CMS also released an informational announcement on PPACA provisions impacting institutional providers. The announcement includes a brief overview of PPACA section 3401, which imposes a 0.25 percentage point reduction to the market basket updates for inpatient acute hospitals, long-term care hospitals (LTCHs), and inpatient rehabilitation facilities for fiscal year (FY) 2010, effective for discharges on or after April 1, 2010. The update also addresses PPACA sections 3137 and 10317, modifying certain hospital reclassification policies with October 1, 2009, and April 1, 2010 effective dates. While additional information will be forthcoming, CMS notes that providers will begin seeing payments under these provision in late April or early May. Finally, HHS has posted a fact sheet on the PPACA’s new temporary high risk pool program for individuals who are uninsured because of pre-existing conditions, including the estimated state allotments under this program.
MedPAC Issues 2011 Medicare Payment Recommendations
On March 1, 2010, the Medicare Payment Advisory Commission (MedPAC) issued its recommendations to Congress regarding Medicare provider payment updates for 2011. Among other things, MedPAC recommends:
- Increasing acute inpatient and outpatient prospective payment system reimbursement in 2011 by the projected rate of increase in the hospital market basket index (MBI), coupled with implementation of a quality incentive payment program. MedPAC also proposes an offset of up to 2 percentage points in 2011 through 2013 to recover payments attributable to hospital documentation and coding changes.
- Increasing payments for physician services in 2011 by 1.0%, and establishing a budget-neutral payment adjustment for primary care services billed under the physician fee schedule and furnished by primary-care-focused practitioners.
- Increasing ambulatory surgical center (ASC) rates by 0.6% and requiring ASCs to submit cost and quality data.
- Updating the end stage renal disease (ESRD) composite rate by the ESRD MBI increase minus a productivity growth adjustment (a net updated of approximately 0.7%).
- Updating hospice rates by the projected MBI for 2011, minus an adjustment for productivity gains (a net update of approximately 1.1%). MedPAC also reiterated a series of hospice recommendation from March 2009 addressing broader payment and policy reforms.
- Eliminating the 2011 payment update for skilled nursing facilities (SNFs) and adopting previous recommendations for reforms to SNF payments, including proposals to better account for nontherapy ancillary costs, update quality measures, and promote SNF reporting of more accurate diagnostic and service-use information.
- Providing no inflation update for home health services in 2011, rebasing home health rates with provisions to protect quality of care, developing quality outcomes measures, and implementing certain program integrity safeguards.
- Eliminating the payment update in 2011 for inpatient rehabilitation facilities and long-term care hospitals.
The MedPAC report also reviews the status of MA plans and Part D prescription drug plans, and it provides recommendations on comparing quality among MA plans and between MA and fee-for-service providers. Note that while MedPAC’s recommendations are not binding, policymakers often consider MedPAC’s assessments when updating Medicare payment policies.
Medicare IRF Coverage Criteria
On October 23, 2009, CMS published a notice rescinding a 1985 policy on "Medicare Criteria for Coverage of Inpatient Hospital Rehabilitation Services." This policy, HCFA Ruling 85-2, established the criteria for Medicare coverage of inpatient hospital rehabilitation services. CMS notes that its August 7, 2009 final rule implementing the inpatient rehabilitation facility (IRF) prospective payment system (PPS) adopted IRF coverage requirements and technical revisions to certain other IRF requirements to reflect the changes that have occurred in medical practice during the past 25 years. As a result, CMS is rescinding its 1985 policy, effective January 1, 2010. In a related development, CMS has updated its Medicare Benefit Policy Manual to reflect the new IRF coverage conditions adopted in the FY 2010 IRF final rule, applicable to IRF discharges occurring on or after January 1, 2010. CMS also has posted a “follow-up information sheet” to assist providers in structuring their processes to satisfy the new requirements. Finally, on November 12, 2009, CMS is hosting a conference call to train IRF providers on the new policy; the registration deadline is 2:00 p.m. ET on November 11 or when available space has been filled.
IPPS/LTCH PPS/IRF PPS Correction Notices
On October 7, 2009, CMS published a notice correcting typographical and technical errors in its August 27, 2009 final rule updating 2010 Medicare payment rates and policies for the acute hospital inpatient prospective payment system (IPPS) and the long-term care hospital (LTCH) PPS. CMS published a separate document on October 1, 2009 correcting technical errors in its August 7, 2009 final rule updating Medicare inpatient rehabilitation facility (IRF) PPS payments for FY 2010.
FY 2010 Inpatient Rehabilitation Facility (IRF) PPS Final Rule
On July 31, 2009, CMS released its final Medicare IRF PPS update for FY 2010, which includes both payment updates and new coverage criteria. Specifically, the final rule provides a 2.5% MBI increase, which is estimated to increase payments by $145 million compared to 2009 levels, along with adjustments to the relative weights, outlier threshold, wage index, and facility level-adjustments. The standard federal rate for FY 2010 is set at $13,661, an increase from $12,958 in FY 2009. CMS also has adopted new coverage criteria, including requirements for preadmission screening, post-admission evaluations, and individualized treatment planning that emphasize the role of physicians in ordering and overseeing beneficiaries’ IRF care. Among other things, the rule requires IRF services to be ordered by a rehabilitation physician with specialized training and experience in rehabilitation services and be coordinated by an interdisciplinary team meeting the rule’s specifications. The interdisciplinary team must meet weekly to review the patient’s progress and make any needed adjustments to the individualized plan of care. IRFs must use qualified personnel to provide required rehabilitation nursing, physical therapy, occupational therapy, speech-language pathology, social services, psychological services, and prosthetic and orthotic services (CMS notes that it also is considering adopting specific standards on the use of group therapies at a future date). The rule also includes new documentation requirements, including a requirement that IRFs submit patient assessment data on Medicare Advantage patients. Note that while the final rule’s payment rate updates are effective for IRF discharges on or after October 1, 2009, CMS has adopted a January 1, 2010 effective date for the new coverage requirements to provide facilities more time to adapt their practices to comply with the new framework. In response to public comments, CMS also is moving these new coverage requirements to a new section of the Code of Federal Regulations to clarify that they do not change the criteria for determining whether a facility meets the “60 percent rule” for purposes of qualifying for payment under the IRF PPS. Under that rule, at least 60 percent of a facility’s patients in a year must have at least one of 13 specified conditions as the principal admitting diagnosis, or as a secondary diagnosis that requires an IRF level of care. The new coverage criteria will be used to determine whether individual claims are for reasonable and necessary services payable by Medicare. Companion changes to IRF-PPS policy also will be made through revisions to the Medicare Benefit Policy Manual. The official version of the rule is scheduled to be published on August 7, 2009.
FY 2010 Inpatient Rehabilitation Facility (IRF) PPS Proposed Rule
This post was written by Paul W. Pitts, Scot T. Hasselman, and Debra A. McCurdy.
On May 6, 2009, CMS published its proposed IRF PPS update for FY 2010. For FY 2010, CMS proposes to apply a 2.4% market basket increase, which is estimated to increase payments under IRF-PPS by $140 million. The rule also would increase the outlier threshold amount, resulting in an additional $10 million increase in aggregate IRF-PPS payments. In addition to updating the payment methodology, including adjustments to the relative weights, market basket and outlier threshold, CMS is proposing the most dramatic changes to the IRF-PPS since it adopted changes to the IRF “75 percent rule” criteria for cost reporting periods beginning on or after July 1, 2004 . Specifically, the rule would impose extensive preadmission screening requirements, increase the responsibilities of physicians, require additional face-to-face encounters with patients, mandate that physicians and nurses have specialized training in rehabilitation, revise the post admission evaluation process, and require IRFs to create and maintain additional documents in the patient medical record, in addition to other obligations. Companion changes to IRF-PPS policy are included in proposed revisions to Section 110 of the Medicare Benefit Policy Manual. Comments on the proposed rule are due June 29, 2009, and comments on the proposed revisions to the Medicare Benefit Policy Manual are due June 30, 2009.
MedPAC Report to Congress -- Medicare Payment/Transparency Provisions
On February 27, 2009, MedPAC released its March 2009 Report to the Congress: Medicare Payment Policy. The report includes a series of recommendations for Medicare payments designed to assure beneficiaries’ access to care and preserve Medicare’s long-term sustainability, particularly through reductions in payment updates for 2010. The report also includes recommendations to increase transparency of physician financial relationships. A listing of key recommendations follows after the jump.
Hospitals
- The Congress should increase payment rates for the acute inpatient and outpatient prospective payment systems in 2010 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program.
- The Congress should reduce the indirect medical education adjustment (IME) in 2010 by 1 percentage point to 4.5 percent per 10 percent increment in the resident-to-bed ratio. The funds obtained by reducing the IME adjustment should be used to fund a quality incentive payment program.
Physicians and Ambulatory Surgical Centers
- The Congress should update payments for physician services in 2010 by 1.1 percent.
- The Congress should establish a budget-neutral payment adjustment for primary care services billed under the physician fee schedule and furnished by primary-care-focused practitioners. Primary-care-focused practitioners are those whose specialty designation is defined as primary care and/or those whose pattern of claims meets a minimum threshold of furnishing primary care services. The Secretary would use rulemaking to establish criteria for determining a primary-care-focused practitioner.
- The Congress should direct the Secretary to increase the equipment use standard for expensive imaging machines from 25 to 45 hours per week. This change should redistribute RVUs from expensive imaging to other physician services.
- The Congress should increase payments for ambulatory surgical centers (ASC) services in calendar year 2010 by 0.6 percent. In addition, the Congress should require ASCs to submit to the Secretary cost data and quality data that will allow for an effective evaluation of the adequacy of ASC payment rates.
Dialysis Services
- The Congress should maintain current law and update the composite rate in calendar year 2010 by 1 percent.
Skilled Nursing Facility Services
- The Congress should eliminate the update to payment rates for skilled nursing facility services for fiscal year 2010.
- The Congress should require the Secretary to revise the skilled nursing facility (SNF) prospective payment system by: adding a separate nontherapy ancillary (NTA) component, replacing the therapy component with one that establishes payments based on predicted patient care needs, and adopting an outlier policy.
- The Secretary should direct SNFs to report more accurate diagnostic and service-use information by requiring that: claims include detailed diagnosis information and dates of service, services furnished since admission to the SNF be recorded separately in the patient assessment, and SNFs report their nursing costs in the Medicare cost report.
- The Congress should establish a quality incentive payment policy for SNFs in Medicare and to improve quality measurement for SNFs, the Secretary should: add the risk-adjusted rates of potentially avoidable rehospitalizations and community discharge to its publicly reported post-acute care quality measures; revise the pain, pressure ulcer, and delirium measures currently reported on CMS’s Nursing Home Compare website; and require SNFs to conduct patient assessments at admission and discharge.
Home Health Services
- The Congress should eliminate the market basket increase for 2010 and advance the planned reductions for coding adjustments in 2011 to 2010, so that payments in 2010 are reduced by 5.5 percent from 2009 levels.
- The Congress should direct the Secretary to re-base rates for home health care services in 2011 to reflect the average cost of providing care.
- The Congress should direct the Secretary to assess payment measures that protect the quality of care and ensure incentives for the efficient delivery of home health care. The study should include alternative payment strategies such as blended payments and risk corridors and outcome-based quality incentives.
Inpatient Rehabilitation Facilities
- The update to the payment rates for inpatient rehabilitation services should be eliminated for fiscal year 2010.
Long-Term Care Hospitals
- The Secretary should update payment rates for long-term care hospitals for fiscal year 2010 by the projected rate of increase in the rehabilitation, psychiatric and long-term care hospital (RPL) market basket index less the Commission’s adjustment for productivity growth.
Recommendations on Medicare Advantage Payments
- The Congress should: Eliminate the stabilization fund for regional PPOs. Remove the effect of payments for indirect medical education from the MA plan benchmarks. Set the benchmarks that CMS uses to evaluate MA plan bids at 100 percent of FFS costs. Pay-for-performance should apply in MA to reward plans that provide higher quality care. Clarify that regional plans should submit bids that are standardized for the region’s MA-eligible population.
- The Secretary should calculate clinical measures for the FFS program that would permit CMS to compare the FFS program with MA plans.
Recommendations on Public Reporting of Physician Financial Relationships
- The Congress should require all manufacturers and distributors of drugs, biologicals, medical devices, and medical supplies (and their subsidiaries) to report to the Secretary their financial relationships with: physicians, physician groups, and other prescribers; pharmacies and pharmacists; health plans, pharmacy benefit managers, and their employees; hospitals and medical schools; organizations that sponsor continuing medical education; patient organizations; and professional organizations.
- The Congress should direct the Secretary to post the information submitted by manufacturers on a public website in a format that is searchable by: manufacturer; recipient’s name, location, and specialty (if applicable); type of payment; name of the related drug or device (if applicable); and year.
- The Congress should require manufacturers and distributors of drugs to report to the Secretary the following information about drug samples: each recipient’s name and business address; the name, dosage, and number of units of each sample; and the date of distribution. The Secretary should make this information available through data use agreements.
- The Congress should require all hospitals and other entities that bill Medicare for services to annually report the ownership share of each physician who directly or indirectly owns an interest in the entity (excluding publicly traded corporations). The Secretary should post this information on a searchable public website.
- The Congress should require the Secretary to submit a report, based on the Disclosure of Financial Relationships Report, of the types and prevalence of financial arrangements between hospitals and physicians.
Recommendations on Reforming the Hospice Benefit
- The Congress should direct the Secretary to change the Medicare payment system for hospice to: have relatively higher payments per day at the beginning of the episode and relatively lower payments per day as the length of the episode increases; include a relatively higher payment for the costs associated with patient death at the end of the episode; and implement the payment system changes in 2013, with a brief transitional period. These payment system changes should be implemented in a budget neutral manner in the first year.
- The Congress should direct the Secretary to: require that a hospice physician or advanced practice nurse visit the patient to determine continued eligibility prior to the 180th-day recertification and each subsequent recertification and attest that such visits took place, require that certifications and recertifications include a brief narrative describing the clinical basis for the patient’s prognosis, and require that all stays in excess of 180 days be medically reviewed for hospices for which stays exceeding 180 days make up 40 percent or more of their total cases.
- The Secretary should direct the Office of Inspector General to investigate: the prevalence of financial relationships between hospices and long-term care facilities such as nursing facilities and assisted living facilities that may represent a conflict of interest and influence admissions to hospice, differences in patterns of nursing home referrals to hospice, the appropriateness of enrollment practices for hospices with unusual utilization patterns (e.g., high frequency of very long stays, very short stays, or enrollment of patients discharged from other hospices), and the appropriateness of hospice marketing materials and other admissions practices and potential correlations between length of stay and deficiencies in marketing or admissions practices.
- The Secretary should collect additional data on hospice care and improve the quality of all data collected to facilitate the management of the hospice benefit. Additional data could be collected from claims as a condition of payment and from hospice cost reports.
Medicare Forum on Classification Criteria for Inpatient Rehabilitation Facilities (Feb. 9, 2009)
On February 9, 2009, CMS is hosting a Special Open Door Forum on the Medicare classification criteria for inpatient rehabilitation facilities (IRFs), commonly known as the "75 percent rule." Note that the February 9 forum is separate from the February 2, 2009 "Town Hall Meeting" on this issue.
CMS Town Hall Meeting on IRF Classification Criteria (Feb. 2, 2009)
On February 2, 2009, CMS is hosting a "Town Hall Meeting" to gather public input on the Medicare inpatient rehabilitation facility (IRF) classification criteria commonly known as the “75 percent rule.” Public input from this meeting will be considered in the preparation of a report to Congress that will address, among other things, whether alternative criteria or refinements to the 75% rule could be used to determine IRF classification (including patients’ functional status, diagnosis, comorbidities, or other attributes) and whether IRF care is appropriate for certain other types of conditions which are commonly treated in IRFs, but are outside of the 13 conditions specified in the 75% rule. Interested individuals may participate in person or by phone (pre-registration is required to attend in person), and written comments also are being accepted.
Medicare IRF PPS Final Rule
On August 8, 2008, CMS published its Medicare inpatient rehabilitation facility (IRF) PPS rule for FY 2009. While the rule provides a freeze in the standard federal rate as required by the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA), CMS estimates that the rule will cut IRF payments by $40 million, or 0.7%, for FY 2009, primarily due to an increase in the outlier payment threshold amount to $10,250. As required by the MMSEA, the final rule retains the requirement that at least 60% of a facility’s patient population have one of 13 qualifying conditions, and CMS will continue to count comorbidities under certain conditions when determining an IRF’s compliance with the threshold. The rule also, among other things, updates the case mix group relative weights, average length of stay values, and wage index tables. The updated IRF PPS rates are applicable for discharges on or after October 1, 2008 and on or before September 30, 2009.
