: Physician Payments : Health Industry Washington Watch

Posted on January 5, 2012 by Debra A. McCurdy

New Law Provides Short-Term Medicare Physician Fee Schedule Fix and Extends Expiring Medicare Provisions for Two Months

On December 23, 2011, President Obama signed into law H.R. 3765, the Temporary Payroll Tax Cut Continuation Act of 2011. Among other things, the law freezes Medicare physician fee schedule (MPFS) rates at 2011 levels through February 2012, temporarily averting a scheduled 27.4% cut under the statutory Sustainable Growth Rate (SGR) formula. The measure also extends for two months certain Medicare policies set to expire December 31, 2011, including: the floor used in the physician work geographic adjustment; the Medicare outpatient therapy cap exceptions process; payment for the technical component of certain physician pathology services; certain ambulance add-on payments; physician fee schedule mental health add-on payment; the outpatient hold harmless provision; minimum payment for bone mass measurement; the Qualified Individual program that reimburses states for certain Part B premiums; and the Transitional Medical Assistance program. The bill also extends for two months the authority for Medicare Modernization Act section 508 hospital reclassifications, with special rules for October and November 2011. A CMS summary of the law is available here. Note that the final version of the legislation does not include provisions adopted earlier by the House of Representatives to pay for a 2-year SGR fix through a variety of Medicare, Medicaid, and Affordable Care Act (ACA) cuts. When Congress reconvenes, Congressional leaders are expected to tackle legislation to address these Medicare policies at least through 2012, although the outcome of such efforts is speculative at this point. Note that given the uncertainties associated with MPFS rates for 2012, the Centers for Medicare & Medicaid Services (CMS) is extending the 2012 Annual Participation Enrollment Period for health professionals through February 14, 2012 (although the effective date for any participation status change remains January 1, 2012 and will be in force for the entire year).

Tags: Legislative Developments, HOPPS, Medicare Spending, Patient Protection and Affordable Care Act (PPACA), Physician Payments, Sustainable Growth Rate (SGR), ambulance services

Posted on January 4, 2012 by Debra A. McCurdy

Corrections to MPFS, HOPPS/ASC Rules

On January 4, 2012, CMS published corrections to the final 2012 Medicare physician fee schedule rule and the final Medicare hospital outpatient prospective payment system and ambulatory surgical center rule.

Tags: Centers for Medicare & Medicaid Services Developments, HOPPS, Physician Payments, ambulatory surgical centers

Posted on December 13, 2011 by Debra A. McCurdy

House Approves Tax/Jobs Bill with Medicare Provisions; Fate Uncertain

On December 13, 2011, the House of Representatives approved H.R. 3630, the Middle Class Tax Relief and Job Creation Act of 2011, a wide-ranging bill making payroll tax, unemployment insurance, energy, and other policy changes. Among many other things, the bill would avert a scheduled 27.4% cut in Medicare physician fee schedule (MPFS) payments in 2012 under the statutory Sustainable Growth Rate (SGR) formula and instead provide for a 1% payment update in 2012 and 2013. The costs of the MPFS fix would be offset through a variety of health care policy changes, including reducing funding for the ACA prevention and public health fund and ACA insurance subsidies, cutting Medicare reimbursement for hospital outpatient evaluation and management office visit services; reducing bad debt reimbursement, and rebasing Medicaid disproportionate share hospital allotments. The legislation also would extend: the Medicare outpatient therapy cap exceptions process; certain ambulance add-on payments; the floor used in the physician work geographic adjustment; the Qualified Individual program that reimburses states for certain Part B premiums; and the Transitional Medical Assistance program. In addition, the bill would relax certain restrictions on the expansion of physician-owned hospitals. The measure also would increase Medicare Part B and D premiums for higher-income beneficiaries beginning in 2017. Note that the Senate is not expected to approve the House bill, and President Obama has announced that he would veto the bill if it does reach his desk. While Congress ultimately is expected to pass an SGR fix, the scope and timing of any such bill is uncertain at this time.

Tags: Legislative Developments, Disproportionate Share Hospital (DSH) Payments, HOPPS, Medicare Spending, Patient Protection and Affordable Care Act (PPACA), Physician Ownership, Physician Payments, Sustainable Growth Rate (SGR), Therapy

Posted on November 14, 2011 by Debra A. McCurdy

CMS Issues Final Medicare Physician Fee Schedule Rule for 2012

Medicare physician fee schedule (MPFS) payments are scheduled to be cut by 27.4% in 2012 under the Centers for Medicare & Medicaid Services’ (CMS) final rule to be published November 28, 2011. The steep reduction is a result of the statutory Sustainable Growth Rate (SGR) formula. While Congress is widely expected to take action to mitigate the SGR cuts, the scope and timing of any such “fix” is uncertain at this time. If the final rule goes into effect as written, however, the conversion factor for 2012 would be $24.6712, down from the current $33.9764. In addition to updating MPFS rates, the sweeping final rule includes numerous policy provisions impacting many types of providers, including the following:

CMS has adopted a controversial policy to expand its multiple procedure payment reduction (MPPR) policy for advanced imaging services (computed tomography scans, magnetic resonance imaging, and ultrasound), which now applies to only the technical component (TC) of the service, to the professional component (PC) of the service. Effective January 1, 2012, the advance imaging procedures with the highest PC and TC payments will be paid in full, but the PC payment will be reduced by 25% for subsequent procedures furnished to the same patient, by the same physician -- including physicians in the same group practice -- in the same session on the same day (CMS initially had proposed reducing the PC by 50%). The TC payment will continue to be reduced by 50%. Note that in the proposed rule, CMS indicated it is considering more expansive MPPR policies in 2013 and beyond, which could include applying the MPPR to the all imaging services (not just advanced imaging studies) or to the technical component of all diagnostic tests (e.g., tests associated with radiology, cardiology, audiology, procedures furnished in the same encounter). CMS did not finalize any such broader expansion in the final rule.
CMS is updating certain payment policies for Part B drugs to specify that the average manufacturer price (AMP) substitution policy will apply only when the average sales price (ASP) exceeds the AMP by 5% in two consecutive quarters immediately prior to the current pricing quarter, or three of the previous four quarters immediately prior to the current quarter. CMS will make an AMP substitution only for those situations in which AMP and ASP comparisons are based on the same set of NDCs for a billing code. CMS also is adopting a number of changes to the manufacturer ASP reporting template.
CMS is updating a number of physician incentive programs, including the Physician Quality Reporting System, the ePrescribing Incentive Program, and the Electronic Health Records Incentive Program. CMS also is adopting performance measures for a new “value-based modifier,” mandated by the Affordable Care Act (ACA), that will reward physicians for providing higher quality and more efficient care. CMS is using 2013 as the initial performance year for purposes of adjusting payments in 2015.
CMS is taking a number of steps to address payment for “potentially misvalued codes,” including reviewing the value of high-expenditure codes in each specialty and adopting a new public nomination process under which the public can nominate potentially misvalued codes and submit documentation supporting the need for review.
CMS has formally retracted a widely-criticized policy adopted in the 2011 MPFS rule that required the signature of a physician or qualified nonphysician practitioners on a requisition for clinical diagnostic laboratory tests paid under the Clinical Laboratory Fee Schedule. In withdrawing the policy, CMS cites stakeholder concerns about the many negative practical effects of the policy on beneficiaries and providers, including potential adverse impacts on timely patient care.
The rule also, among many other things: changes how CMS adjusts payment for geographic variation in practice costs;revises the criteria for updating services available through telehealth; updates the methodology for calculating the productivity adjustment for ambulatory surgical center (ASC), ambulance, clinical laboratory, and durable medical equipment (DME) prosthetics, orthotics, and supplies (DMEPOS) fee schedules; sets the 2012 outpatient therapy cap amount at $1,880; and clarifies the applicability of the “3-day payment window” policy to certain services furnished in a wholly owned or wholly operated physician practice.

Note that CMS will accept comments on a limited number of provisions in the rule, including the interim final relative value units for new, revised, potentially misvalued codes and the physician self-referral designated health services codes, until January 3, 2012.

Tags: AMP Reporting, Centers for Medicare & Medicaid Services Developments, Clinical Laboratories, Department of Health & Human Services, Drug Pricing, Patient Protection and Affordable Care Act (PPACA), Physician Payments, Physician Quality, Quality Reporting, Radiology, Sustainable Growth Rate (SGR)

Posted on October 28, 2011 by Debra A. McCurdy

Final CY 2012 Medicare Payment Rules in the Pipeline

CMS has sent several major calendar year 2012 Medicare payment rules to the White House Office of Management and Budget for final regulatory clearance. Rules under consideration include the final Medicare physician fee schedule, outpatient hospital, ambulatory surgical center, ESRD and home health prospective payment system rules for 2012. 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 coming days. We will be providing summaries of the final rules in future updates.

Tags: Centers for Medicare & Medicaid Services Developments, ESRD, HOPPS, Home Health, Physician Payments, ambulatory surgical centers

Posted on October 14, 2011 by Debra A. McCurdy

MedPAC Endorses Medicare SGR Proposal, With Offsetting Medicare Cuts

On October 6, 2011, the Medicare Payment Advisory Commission (MedPAC) voted to recommend that Congress repeal and replace the statutory sustainable growth rate (SGR) formula for updating the Medicare physician fee schedule (MPFS). Without legislative action, CMS estimates that the SGR formula would result in an almost 30% MPFS cut in 2012. As discussed in a previous blog posting, the controversial MedPAC plan – which would require Congressional approval -- would freeze current Medicare MPFS rates for primary care services for 10 years, while other services would be subject to annual payment reductions of 5.9% for 3 years, followed by a freeze. MedPAC offered a list of options for Congress to consider if it decides to offset SGR repeal costs (estimated at about $200 billion over 10 years) within the Medicare program. In addition to the SGR proposal, MedPAC endorsed budget-neutral changes to improve data on which MPFS relative value unit (RVU) weights are based and to redistribute payments to underpriced services. MedPAC also recommended that CMS increase the shared savings opportunity for physicians and health professionals who join or lead “two-sided” risk ACOs (where providers can receive bonuses or financial penalties based on performance).

Tags: Odds & Ends, Accountable Care Organizations, MedPAC, Physician Payments, Sustainable Growth Rate (SGR)

Posted on September 30, 2011 by Debra A. McCurdy

MedPAC Offers Medicare SGR Proposal, With Offsetting Medicare Cuts

At a recent meeting, the Medicare Payment Advisory Commission (MedPAC) discussed a recommendation to repeal and replace the statutory sustainable growth rate (SGR) formula for updating the Medicare physician fee schedule (MPFS). In recent years, the SGR formula has produced steep cuts in the MPFS update, which Congress has repeatedly blocked through legislation, For 2012, CMS estimates that the SGR formula would result in an almost 30% MPFS cut in the absence of Congressional action. MedPAC is considering an SGR reform proposal that would repeal the SGR and replace it with 10-years of statutory fee schedule updates. The plan would freeze current Medicare payment levels for primary care services, and all other services would be subject to annual payment reductions of 5.9% for 3 years, followed by a freeze. MedPAC also has released a list of potential offsetting Medicare cuts that would raise $235 billion over 10 years to finance the reforms. The proposals include, among others: reduced Medicare payments for many Medicare provider types and services; expanded DMEPOS competitive bidding; various reductions in payments to Medicare Advantage plans; prior authorization for certain imaging services; changes to certain Part D cost sharing; prepayment review of power wheelchairs; drug manufacturer rebates for dual eligibles; bundled payments for hospitals and physicians; payment of hospital outpatient evaluation and management visits at MPFS rates; establishment of least costly alternative authority; expansion of readmissions policies for additional provider types, and validation of physician orders for high cost services.

Tags: Odds & Ends, DMEPOS Competitive Bidding, MedPAC, Medicare Spending, Physician Payments, Radiology, physician

Posted on September 27, 2011 by Debra A. McCurdy

OIG Reviews Place-of-Service Coding for Physician Services

The OIG has examined the extent to which physicians were overpaid in 2008 and 2009 because they incorrectly used non-facility place-of-service codes for services that actually were performed in hospital outpatient departments or ambulatory surgical centers. An OIG sample review of 2009 claims found that physicians incorrectly coded 83 out of 100 services by using non-facility place-of-service codes, which results in higher reimbursement to physicians to account for increased overhead expenses. Based on sample results, the OIG estimated that Medicare contractors nationwide overpaid physicians $9.5 million for such incorrectly coded services provided during calendar year 2009. A similar review of 2008 claims found that 89 out of 100 sampled claims had incorrect place-of-service codes, which the OIG extrapolates to an estimated $19.3 million in overpayments to physicians for incorrectly coded Part B services in 2008. In both reports, the OIG recommends that CMS instruct its Medicare contractors to: (1) recover identified overpayments; (2) reopen claims associated with nonsampled services and work with physicians to recover any overpayments; (3) strengthen their education process regarding correct coding of the place of service; and (4) continue to work with other Medicare contractors to develop a data match to identify physician services at high risk for place-of-service miscoding and recover any identified overpayments. CMS concurred with the OIG’s recommendations, and described its corrective actions.

Tags: Other OIG Developments, Fraud and Abuse, Hospital, OIG, Physician Payments, ambulatory surgical centers, physician

Posted on July 19, 2011 by Debra A. McCurdy

CMS Issues Proposed CY 2012 Physician Fee Schedule Rule

July 19, 2011, the Centers for Medicare & Medicaid Services (CMS) published its proposed update to the Medicare physician fee schedule (MPFS) for calendar year (CY) 2012. Most notably, the proposed rule calls for a negative 29.5% update for 2012 under the statutory sustainable growth rate (SGR) formula. For 2012, CMS projects a conversion factor of $23.9635, compared to the 2011 conversion factor of $33.9764. While Congress is expected to consider legislation to advert the upcoming cut, as it has in previous years, the scope, timing, and outcome of any such legislative “fix” is still speculative. The sweeping proposed rule includes numerous other policy proposals, which are summarized after the jump.

CMS has made a proposal that is very controversial in the industry to expand its multiple procedure payment reduction (MPPR) policy for advanced imaging services (computed tomography scans, magnetic resonance imaging, and ultrasound), which now applies to only the technical component of the service, to the professional component (physician interpretation) of the service. If finalized, Medicare would pay 100% of the technical and professional component for highest-paid procedure, while the payments for the technical and professional component of the second and each additional imaging service done on the same patient during the same session would be reduced by 50%. CMS also has requested comments on more expansive reduction policies in 2013 and beyond, which could include applying the MPPR to the all imaging services (not just advanced imaging studies) or to the technical component of all diagnostic tests (e.g., tests associated with radiology, cardiology, audiology, procedures furnished in the same encounter).
CMS proposes to updates certain payment policies for Part B drugs to specify that the average manufacturer price (AMP) substitution policy will apply only when the average sales price (ASP) exceeds the AMP by 5 percent in two consecutive quarters immediately prior to the current pricing quarter, or three of the previous four quarters immediately prior to the current quarter. CMS is also proposing a number of changes to the manufacturer ASP reporting template.
CMS proposes to update a number of physician incentive programs, including the Physician Quality Reporting System, the ePrescribing Incentive Program, and the Electronic Health Records Incentive Program. CMS also proposes quality and cost measures for a new value-based modifier, mandated by the Affordable Care Act (ACA), that would reward physicians for providing higher quality and more efficient care. CMS is proposing to use CY 2013 as the initial performance year for purposes of adjusting payments in CY 2015. Payments under the value-based payment modifier provision will be risk-adjusted and budget-neutral.
Among many other things, CMS identifies a variety of potentially misvalued code and proposes a new public nomination process under which the public could nominate potentially misvalued codes and submit documentation supporting the need for review. CMS also proposes changes in how it adjusts payment for geographic variation in the cost of practice; revisions to how it updates services available through telehealth; updates to the productivity adjustment for ambulatory surgical center (ASC), ambulance, clinical laboratory, and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedules; and clarification of the applicability of the “3-day payment window” policy to certain services furnished in a wholly owned or wholly operated physician practice. CMS also seeks comments on physician activities and the associated resources involved in physician provision of effective care coordination surrounding a hospital discharge.

Comments on the proposed rule will be accepted until August 30, 2011. A variety of supporting files are posted at www.cms.gov/PhysicianFeeSched/PFSFRN/itemdetail.asp?filterType=none&filterByDID=-99&sortByDID=4&sortOrder=descending&itemID=CMS1249142&intNumPerPage=10.

Tags: Centers for Medicare & Medicaid Services Developments, DMEPOS, Medicare Part B Drugs, Physician Payments, Physician Quality, Quality Reporting, Radiology, Sustainable Growth Rate (SGR), ambulance services

Posted on May 31, 2011 by Debra A. McCurdy

CMS Releases Proposed Revisions to Physician RVUs

On May 24, 2011, CMS released a notice that sets forth proposed revisions to work relative value units (RVUs) and corresponding changes to the practice expense and malpractice RVUs affecting Medicare physician fee schedule payment for physicians' services. Under the Social Security Act, CMS must review RVUs no less often than every 5 years. Under its latest review, CMS proposes to make revisions effective for services furnished beginning January 1, 2012 in order to reflect changes in medical practice and coding that affect the relative amount of physician work required to perform each service. The review reflects services that were submitted through public comment and by the Medicare contractor medical directors, as well as a number of potentially misvalued codes identified by CMS (so-called “Harvard-valued codes” and codes with “Site-of-Service” anomalies). CMS expects the RVU revisions to change Medicare expenditures by less than $20 million (the statutory threshold that would trigger a budget neutrality adjustment). Moreover, CMS currently estimates that the proposed RVU changes will have no significant impact at the specialty level based on its most recent data. The official version of the rule is scheduled to be published on June 6, 2011. CMS will accept comments on the notice until July 25, 2011.

Tags: Centers for Medicare & Medicaid Services Developments, Department of Health & Human Services, Physician Payments

Posted on May 13, 2011 by Debra A. McCurdy

Congressional Hearings on Health Policy Issues

A number of Congressional panels have held hearings this month on health policy issues, including Senate Health, Education, Labor and Pensions (HELP) Committee hearings entitled “First, Do No Harm: Improving Health Quality and Patient Safety” and "Diverting Non-Urgent Emergency Room Use: Providing Better Care and Lower Costs." Both the House Energy & Commerce Subcommittee on Health and the House Ways and Means Committee have examined reform of the Medicare Sustainable Growth Rate/physician fee schedule formula. In addition, the House Education and the Workforce Committee held a hearing on "Policies and Priorities of the U.S. Department of Health and Human Services." Looking ahead, on May 17, the HELP Committee has scheduled a hearing on “Strengthening Medical and Public Health Preparedness and Response.”

Tags: Legislative Developments, Hearings and Markups, Patient Safety, Physician Payments, Public Health, Sustainable Growth Rate (SGR), emergency care

Posted on March 29, 2011 by Debra A. McCurdy

CMS Estimates 29.5% Cut in 2012 Medicare Physician Fee Schedule (MPFS) Conversion Factor Without Congressional Action

CMS recently released its preliminary estimate that, in the absence of a statutory change, the 2012 MPFS conversion factor (CF) will be $23.9396 -- a 29.5% reduction from the December 2011 CF. Contributing to this decline is an expected 17.2% reduction mandated by the Sustainable Growth Rate (SGR) and a requirement that the update be based on payments that would have been made if Congress had not passed a series of bills to temporarily avert payment cuts in recent years. Note that the 2012 CF is subject to change as additional economic data becomes available to CMS. Moreover, lawmakers are continuing their efforts to develop a long-term reform of the SGR formula, although a deal on this issue has been elusive.

Tags: Other CMS Developments, Other HHS Developments, Physician Payments, Sustainable Growth Rate (SGR)

Posted on March 29, 2011 by Debra A. McCurdy

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.

Tags: Odds & Ends, ASC, ESRD, HOPPS, Home Health, Hospice, Inpatient Rehabilitation Facilities, Inpatient hospital, LTAC, MedPAC, Medicare, Physician Payments, Skilled Nursing Facilities

Posted on February 18, 2011 by Debra A. McCurdy

President Obama Proposes FY 2012 Budget

On February 14, 2011, President Obama released his proposed fiscal year (FY) 2012 budget. The President proposes a variety of changes in Medicare and Medicaid policy and other Department of Health and Human Services (HHS) programs, including the following highlights:

The budget includes 19 new legislative proposals designed to strengthen program integrity for Medicare, Medicaid, and CHIP, saving $32.3 billion over ten years. The proposals include, among others: recovering “erroneous” payments from insurers participating in Medicare Advantage (MA); new sanctions for providers who do not update enrollment records; prepayment validation of physician orders for certain high risk services (such as durable medical equipment (DME) and home health) and prepayment review for all power wheelchair claims; identifying excessive utilization of certain prescription drugs under Medicaid; requiring drug manufacturers to repay states for improperly reported Medicaid-covered prescription drugs; regularly auditing drug manufacturer compliance with Medicaid drug rebate requirements and increasing penalties for noncompliance with rebate agreements; and providing the HHS Secretary with additional permissive authority to exclude providers from participation in federal health care programs if they are affiliated with a sanctioned entity. The President also includes as a “program integrity” provision a limit on states’ ability to use provider taxes to pay the state share of Medicaid by phasing down the Medicaid provider tax threshold from the current 6% to 3.5% by FY 2017.
The President proposes Medicare physician fee schedule Sustainable Growth Rate (SGR) relief through 2013 by extending the 0% update to the Medicare physician fee schedule for two additional years, and offsetting the cost with specific savings (e.g., Medicaid provider taxes and savings from the pharmaceutical industry) while the Administration works with Congress to achieve permanent reform.
With regard to prescription drug/biologics policy, the budget would reduce the length of the exclusivity period for generic biologics from 12 to 7 years; prohibit manufacturers who revise their product from extending their exclusivity period (“evergreening”); and provide the Federal Trade Commission (FTC) with authority to prohibit “pay-for-delay” agreements between brand and generic pharmaceutical companies that delay entry of generic drugs into the market.
The budget would cap federal reimbursement for a state’s aggregate Medicaid spending on certain DME services to what Medicare would have paid in the same state for the same services based in the Medicare DMEPOS competitive bidding program (savings $2.3 billion over 5 years).
In other areas, the budget proposes $2.7 billion in budget authority and $4.4 billion in total program resources for the Food and Drug Administration (FDA) and affirms the FDA’s commitment to advancing efforts to implement the Affordable Care Act’s (ACA) provisions to establish a pathway to approve biosimilar products; calls for $32 billion for basic and applied biomedical research supported by the National Institutes of Health, and would consolidate and eliminate certain public health programs (such as elimination of a children’s hospital graduate medical education program).

Note that many provisions of the proposed budget would require Congressional approval to implement. Numerous lawmakers have faulted the plan for not addressing entitlement reform, including changes to shore up the long-term financing of the Medicare program. House Republican leaders have committed to enacting a budget with “real entitlement reform,” although specifics have not yet been released. In the meantime, the House is debating a continuing resolution (H.R. 1) to fund the federal government for the last seven months of FY 2011 that would reduce federal discretionary spending by more than $100 billion compared to the President’s FY 2011 request, including reductions in a variety of HHS-administered programs such as community health centers and the National Health Service Corps. It is too early to know the specifics of how the short- and long-term budget debate will be resolved. Nevertheless, it appears that health care programs will be examined as part of any health care spending package. Moreover, there is growing resolve in Congress to tackle the fundamental fiscal condition of the Medicare program, which could have profound ramifications for the health care industry.

Tags: Budget, DMEPOS, Drugs, FDA, Fraud and Abuse, Medicare Spending, Obama Administration News, Physician Payments

Posted on February 18, 2011 by Debra A. McCurdy

Reprocessing Medicare Claims Affected by ACA/2010 Medicare Physician Fee Schedule Changes

CMS recently provided instructions to Medicare providers affected by retroactive provisions of the ACA and corrections to the 2010 Medicare physician fee schedule. Contractors will begin reprocessing a large volume of Medicare fee-for-service claims in the coming weeks. While the provider’s Medicare contractor will automatically reprocess most claims, any claims with submitted charges lower than the revised 2010 fee schedule amounts cannot be automatically reprocessed at the higher rates. In such cases, providers must request a manual reopening/adjustment from their Medicare contractor. CMS provides additional details on the reprocessing procedure, along with a discussion of HHS Office of Inspector General (OIG) policy related to waiving beneficiary cost-sharing amounts attributable to retroactive increases in payment rates.

Tags: Other CMS Developments, Other HHS Developments, OIG, Patient Protection and Affordable Care Act (PPACA), Physician Payments

Posted on January 13, 2011 by Debra A. McCurdy

CMS Revises CY 2011 Medicare Physician Fee Schedule Payments

On January 11, 2011, CMS published corrections to its November 20, 2010 final Medicare physician fee schedule rule for calendar year 2011. The document addresses errors in the budget neutrality, conversion, anesthesia, and other factors; errors in the work, practice expense, and malpractice relative value units (RVUs); and errors in the addenda. In a related development, CMS has posted an "emergency update" to the 2011 Medicare physician fee schedule files, reflecting the recent statutory changes and certain technical corrections. The final conversion factor for 2011 is$33.9764, compared to the December 20, 2010 conversion factor of $36.8729. Although the Medicare and Medicaid Extenders Act of 2010 (MMEA) called for a 0% update to the physician fee schedule, CMS has adjusted the conversion factor downward to ensure budget neutrality in light of other changes to RVUs. CMS also has issued a corresponding transmittal to contractors with additional details on recent statutory policy changes impacting physician fee schedule payments.

Tags: Centers for Medicare & Medicaid Services Developments, Department of Health & Human Services, Medicare, Physician Payments

Posted on December 30, 2010 by Debra A. McCurdy

CMS Announces Final 2011 Medicare Physician Fee Schedule Rates

CMS has posted an "emergency update" to the 2011 Medicare physician fee schedule (MPFS) files, reflecting recent statutory changes and certain technical corrections. The final conversion factor for 2011 is $33.9764, compared to the December 20, 2010 conversion factor of $36.8729. Although recent physician fee schedule fix legislation, the Medicare and Medicaid Extenders Act of 2010 (MMEA), called for a zero percent update to the physician fee schedule, CMS has adjusted the conversion factor downward to ensure budget neutrality in light of other changes to relative value units (RVUs). In addition to the conversion factor change, CMS also has revised practice expense and malpractice RVUs and payment indicators for certain procedures, among other changes. CMS also has released a corresponding transmittal to contractors with additional details on recent statutory policy changes impacting the MPFS.

Tags: Other CMS Developments, Medicare, Physician Payments

Posted on December 28, 2010 by Debra A. McCurdy

President Signs into Law Physician Fee Schedule Fix/Extenders Bill, Red Flag Rule Relief, Health Policy Bills

On December 15, 2010, President Obama signed into law H.R. 4994, the “Medicare and Medicaid Extenders Act of 2010.” The new law averts a 25% Medicare physician fee schedule cut previously scheduled to take effect January 1, 2011 under the statutory “sustainable growth rate” formula. The law also continues a variety of expiring Medicare provisions and makes other health policy changes, funded primarily through a change in limits on recoveries of excessive tax credits provided to subsidize insurance premiums under the ACA. A CMS summary of the new law with additional implementation details is available here. In addition, on December 18, the President signed into law the “Red Flag Program Clarification Act of 2010,” which is intended to clarify that health care providers and other non-financial businesses are not subject to the Federal Trade Commission’s (FTC) “Red Flag” identity theft rule simply because they extend credit to patients who do not pay for all services at the time services are received. The President also has signed into law H.R. 2941, to reauthorize and enhance Johanna's Law to increase public awareness and knowledge with respect to gynecologic cancers, and S. 3199, the “Early Hearing Detection and Intervention Act.” More information on these bills is available here.

Tags: Legislative Developments, Odds & Ends, Federal Trade Commission (FTC), Patient Protection and Affordable Care Act (PPACA), Physician Payments, Public Health

Posted on December 15, 2010 by Debra A. McCurdy

Medicare Physician Fee Schedule Fix/Extenders Bill Awaits President's Signature

As previously reported, last week Congress approved legislation (H.R. 4994) that averts a 25% Medicare physician fee schedule cut scheduled to take effect January 1, 2011 under the statutory “sustainable growth rate” formula (Congress had already approved legislation to provide a one-month fix through December 2010). In addition, H.R. 4994 continues a variety of expiring Medicare provisions and makes other health policy changes, funded primarily through a change in limits on recoveries of excessive tax credits provided to subsidize insurance premiums under the ACA. The legislation still is awaiting the President’s signature, although the White House has previously expressed its support for the bill.

Tags: Legislative Developments, 340B, Clinical Laboratories, Hospital, Medicaid, Medicare Spending, Patient Protection and Affordable Care Act (PPACA), Physician Payments, Skilled Nursing Facilities, Therapy

Posted on December 9, 2010 by Debra A. McCurdy

Congress Clears One-Year Medicare Physician Fee Schedule Fix and Other Health Policy Revisions

Today the House of Representatives overwhelmingly approved a bill (H.R. 4994) that averts a 25% Medicare physician fee schedule cut scheduled to take effect January 1, 2011 under the statutory “sustainable growth rate” formula (Congress had already approved legislation to provide a one-month fix through December 2010). The vote, which followed a unanimous Senate vote yesterday, sends the measure to the President, who has expressed his support for the legislation. In addition to extending current Medicare physician payment rates through the end of 2011, H.R. 4994 continues a variety of expiring Medicare provisions and makes other health policy changes, funded primarily through a change in limits on recoveries of excessive tax credits provided to subsidize insurance premiums under the Affordable Care Act (ACA). Other highlights of the legislation include:

Extensions of: hospital geographic reclassifications authorized under section 508 of the Medicare Modernization Act, the Medicare physician fee schedule work geographic adjustment floor, the outpatient therapy services exception process, the authority for independent laboratories to receive direct payments for the technical component of certain pathology services, ambulance service and physician fee schedule mental health add-on payments, the outpatient hold harmless provision, Medicare reasonable costs payments for certain clinical diagnostic laboratory tests furnished by certain rural hospitals, the qualifying individual program, the Transitional Medical Assistance program, and the Special Diabetes Programs.
Implementation on October 1, 2010 of version four of the Resource Utilization Groups (RUG IV) case mix system for purposes of the Medicare skilled nursing facility prospective payment system.
Clarification that residency positions that are being shared between teaching hospitals under an “affiliation agreement” may not be redistributed to other hospitals.
Inclusion of orphan drugs in the definition of “covered outpatient drugs” with respect to children’s hospitals under the 340B drug discount program.
Various technical corrections to Medicaid and CHIP relating to exclusion from participation, children’s income eligibility levels, payment error rate measurement, coverage of children of state employees, and payment for electronic health records.
A $275 million reduction in the Medicare Improvement Fund over 10 years.
$19 billion in savings by revising the limits on recoveries of tax credits under the ACA. Currently, if an individual’s income actually is higher than the amount that was used to calculate advanced premium tax credits, there is a limit on how much of the excessive credits certain low-income individuals and families must return to the government. The legislation replaces these limits with a scaled repayment structure.

As noted, this is the second time in a month that Congress has considered Medicare physician reimbursement. On November 30, 2010, President Obama signed into law H.R. 5712, “The Physician Payment and Therapy Relief Act of 2010.” The law provided a one-month continuation of physician fee schedule rates, paid for by adopting – with modification – the Centers for Medicare & Medicaid Services’ (CMS) new multiple procedure payment reduction (MPPR) policy for outpatient therapy procedures included in the 2011 MPFS final rule. As approved by Congress, the provision applies a 20% (rather than 25% in the CMS rule) MPPR to the practice expense component of Medicare payment for the second and subsequent therapy services when multiple outpatient therapy services are furnished to a single patient by a single provider on the same day.

Tags: Legislative Developments, 340B, Clinical Laboratories, Hospital, Medicaid, Medicare Spending, Patient Protection and Affordable Care Act (PPACA), Physician Payments, Skilled Nursing Facilities, Therapy

Posted on December 1, 2010 by Debra A. McCurdy

President Signs Short-Term Medicare Physician Fee Schedule Fix, Outpatient Therapy Policy Update

On November 30, 2010, President Obama signed into law H.R. 5712, “The Physician Payment and Therapy Relief Act of 2010.” The law continues current temporary Medicare physician fee schedule rates through the end of 2010, avoiding a steep cut previously scheduled for December 1, 2010, financed by adopting – with modification – CMS’s new multiple procedure payment reduction policy for outpatient therapy procedures for 2011. For more information on the legislation, see our earlier article.

Tags: Legislative Developments, Medicare, Physician Payments, Therapy

Posted on November 29, 2010 by Debra A. McCurdy

Congress Clears One-Month Medicare Physician Fee Schedule Fix, Therapy Policy Change

On November 29, 2010, the House of Representatives approved H.R. 5712, a one-month Medicare physician fee schedule (MPFS) “fix,” financed by an outpatient therapy reimbursement change. Specifically, H.R. 5712 would continue current temporary MPFS rates through the end of the year, averting a 23% cut scheduled to go into effect December 1, 2010 under the statutory “sustainable growth rate” (SGR) formula. The legislation would be financed by adopting – with modification – the Centers for Medicare & Medicaid Services’ (CMS) new multiple procedure payment reduction (MPPR) policy for outpatient therapy procedures included in the final 2011 Medicare physician fee schedule rule. As approved by Congress, the provision would apply a 20% (rather than 25% in the CMS rule) MPPR to the practice expense component of Medicare payment for the second and subsequent therapy services when multiple outpatient therapy services are furnished to a single patient by a single provider on the same day. H.R. 5712 is now cleared for the President, who is expected to sign the measure into law. Note that when this latest stop-gap measure expires, physicians still will be facing a roughly 25% cut in MPFS payments under the SGR formula unless Congress acts yet again to avert the cuts.

Tags: Legislative Developments, Medicare, Physician Payments, Therapy

Posted on November 29, 2010 by Debra A. McCurdy

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

Tags: Health Care Industry Events, ASC, ESRD, HOPPS, Home Health, Hospice, Hospital, Inpatient Rehabilitation Facilities, Long-term Care Hospital (LTCH), MedPAC, Medicare Spending, Physician Payments, Skilled Nursing Facilities

Posted on November 16, 2010 by Debra A. McCurdy

CMS Issues Final CY 2011 Physician Fee Schedule Rule

On November 29, 2010, CMS is publishing its final Medicare physician fee schedule (MPFS) rule for 2011. The rule addresses a wide variety of Medicare Part B policies, including many changes mandated by the ACA, as detailed after the jump.

Among many other things, the final rule:

Establishes a 2011 conversion factor of $25.5217, compared to the conversion factor of $36.8728 applicable June 1-November 30, 2010. This steep drop is due primarily to the statutory sustainable growth rate (SGR) formula, which reduces rates by a total of 24.9% from November 2010 to January 2011 (reflecting the December 1, 2010 expiration of a temporary increase established by Congress plus an additional 2.9% cut that goes into effect January 1, 2011). CMS also has adopted a rescaling /budget neutrality adjustment of -8.2%, which is designed to offset rescaled relative value units and a rebased Medicare Economic Index (MEI) for 2011. Congress is expected to once again step in to at least mitigate the SGR cuts, but the timing and scope of any such action is still speculative at this time.
Updates several durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program policies, including provisions that: expand Round 2 by adding 21 of the largest metropolitan statistical areas (MSAs); subdivide three of the largest MSAs; implement a national mail order competitive bidding program for diabetic testing supplies and make other refinements related to the furnishing of diabetes supplies; modify the definition of mail-order suppliers; create an appeals process for suppliers considered to be in breach of contract; and modify policies related to off-the-shelf orthotics, oxygen and oxygen equipment, and reimbursement to grandfathered suppliers. In addition, the rule addresses payment policy for power wheelchairs outside of the competitive bidding program.
Implements ACA provisions that assign a 75% utilization rate assumption to certain expensive diagnostic imaging equipment used in diagnostic CT and MRI services, and that increase the multiple procedure payment reduction (MPPR) applied to the technical component of certain single session imaging services to contiguous body parts from 25% to 50% for more than one imaging procedure preformed in the same session. CMS also adopted its proposal (not mandated by the ACA) to apply the MPPR policy across imaging families and not limited to contiguous body areas. In addition, the rule implements an ACA requirement that physicians who refer patients to certain imaging services under the in-office ancillary services exception to the physician self-referral prohibition inform patients of their option to receive these services from other area suppliers and to provide a list of at least five alternative suppliers within a 25-mile radius of the physician’s office.
Establishes a multiple procedure payment reduction policy applicable to certain Part B outpatient therapy services, under which CMS will apply a 25% payment reduction to the practice expense component of the second and subsequent therapy services for certain multiple therapy services furnished to a single patient in a single day (note that under the proposed rule, CMS would have imposed a 50% reduction).
Updates certain payment policies for Part B drugs, including establishing a new “carry over” process to address certain delays in manufacturer reporting of pricing data for multiple-source drugs, and establishing an “intentional overfill” policy under which the Medicare payment limit will based on the amount of product in a vial or container as reflected on the FDA-approved label.
Finalizes a proposal to use the annual MPFS rulemaking to consider changes in practice expense (PE) price inputs for supplies and equipment, but CMS deferred adopting its proposal to base PE inputs for supplies $150 or more on the U.S. General Services Administration medical supply schedule while it continues to review this policy.
Implements ACA provisions that: establish the methodology for applying the ACA’s “multi-factor productivity” adjustment to the updates for the ASC, ambulance, clinical laboratory and DMEPOS fee schedules; update the Physician Quality Reporting Initiative and Electronic Prescribing Incentive Program; eliminate beneficiary coinsurance for most preventive services and expand coverage of certain preventive services; require the Secretary to identify and make appropriate adjustments to the relative values of misvalued services; and revise the timely filing requirements for Medicare claims.

Tags: Centers for Medicare & Medicaid Services Developments, DMEPOS Competitive Bidding, Medicare Part B Drugs, Physician Payments, Physician Quality, Radiology, Therapy

Posted on October 29, 2010 by Debra A. McCurdy

Upcoming Medicare Hospital Outpatient, Physician Fee Schedule Final Rules

CMS has submitted its final 2011 Medicare hospital outpatient prospective payment system (OPPS) and Medicare physician fee schedule rules to the White House Office of Management and Budget for final regulatory clearance. The rules are expected to be released as soon as today.

Tags: Centers for Medicare & Medicaid Services Developments, Department of Health & Human Services, HOPPS, Medicare, Physician Payments

Posted on August 31, 2010 by Debra A. McCurdy

Technical Corrections to Medicare Physician Fee Schedule Proposed Rule

On August 26, 2010, CMS published a notice correcting technical and typographical errors in the July 13, 2010 Medicare physician fee schedule proposed rule.

Tags: Centers for Medicare & Medicaid Services Developments, Medicare, Physician Payments

Posted on August 3, 2010 by Debra A. McCurdy

CMS Listening Session on ACA Physician Resource Use Reporting Provisions (Sept. 24, 2010)

On September 24, 2010, CMS is hosting a listening session on the "Phased Implementation of Physician Resource Use Reporting Provision of the Patient Protection and Affordable Care Act of 2010." The session will focus on options being considered by CMS to implement confidential physician feedback reports and a value-based payment modifier to the fee-for-service physician fee schedule. Interested parties can participate in person or via teleconference, but space is limited. Registration is required. CMS has posted the materials for Listening Session here.

Tags: Health Care Industry Events, Medicare, Physician Payments, Physician Quality

Posted on July 12, 2010 by Debra A. McCurdy

CMS Issues Proposed CY 2011 Physician Fee Schedule Update

On July 13, 2010, CMS is publishing its proposed rule to update the Medicare physician fee schedule (MPFS) for 2011. The proposed rule addresses a wide variety of Medicare Part B policies, including many policy revisions mandated by the ACA. CMS will accept comments on the proposed rule until August 24, 2010. A summary of the rule is available after the jump:

Among many other things, the proposed rule would:

Provide a negative 6.1% update for 2011 under the statutory sustainable growth rate (SGR) formula. Coupled with the expiration of a temporary 2.2% boost in MPFS payments on November 30, 2010 (see summary of related legislation below) and the more than 21% cut that goes into effect December 1, 2010, along with a proposed 0.921 “rescaling factor”/ budget neutrality adjustment, the conversion factor will be reduced by approximately 29% in 2011 unless Congress takes further action.
Update several durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program policies, including provisions that: expand Round 2 by adding 21 of the largest metropolitan statistical areas (MSAs); implement a national mail order competitive bidding program for diabetic testing supplies and make other refinements related to the furnishing of diabetes supplies, create an appeals process for suppliers considered to be in breach of contract; and modify policies related to off-the-shelf orthotics, oxygen and oxygen equipment, and reimbursement to grandfathered suppliers. In addition, the rule addresses payment policy for power wheelchairs and oxygen and oxygen equipment outside of competitive bidding.
Implement ACA provisions that reduce Medicare payments for certain diagnostic imaging equipment, including assigning a 75% utilization rate assumption to certain expensive diagnostic imaging equipment used in diagnostic CT and MRI services and increases the multiple procedure payment reduction applied to the technical component of certain single session imaging services to contiguous body parts from 25% to 50% for more than one imaging procedure preformed in the same session (CMS also is proposing to apply the MPPR policy across imaging families and not limited to contiguous body areas). CMS estimates that this provision, along with the equipment utilization change, will save Medicare $160 million in 2011. In addition, CMS discusses how it will implement the ACA requirement that physicians who refer patients to certain imaging services under the in-office ancillary services exception to the physician self-referral prohibition inform patients of their option to receive these services from other area suppliers and to provide a list of alternative suppliers.
Establish a multiple procedure payment reduction (MPPR) policy applicable to certain outpatient therapy services reimbursed under Medicare Part B, under which CMS would apply a 50% payment reduction to the practice expense (PE) component of the second and subsequent therapy services for certain multiple therapy services furnished to a single patient in a single day..
Update certain payment policies for Part B drugs, including implementing the ACA provision providing for Medicare payment of biosimilar biological products using the ASP methodology.
Implement an ACA requirement that the Secretary periodically review and identify potentially misvalued codes and make appropriate adjustments to the relative values of misvalued services. As part of this effort, CMS has asked the RUC to review services that fall into five categories: high volume/cost items on the RUC's "Multi-Specialty Points of Comparison list of procedures, codes with low work values that are reported with multiple units; codes with high volume and low work RVUs; 23 hour stay services, and procedures that were inpatient and have subsequently migrated to the outpatient setting.
Base future PE updates for certain high cost supplies (priced at $150 or more) on the U.S. General Services Administration medical supply schedule.
Establish the methodology for applying the ACA’s “multi-factor productivity” adjustment to the updates for the ASC, ambulance, clinical laboratory and DMEPOS fee schedules.
Update a variety of policies applicable to payment for renal dialysis services furnished by end stage renal disease facilities.
Implement ACA provisions that authorize Physician Quality Reporting Initiative incentive payments through calendar year 2014, with a penalty thereafter for eligible professionals who do not provide satisfactory reports, and make revisions to the Electronic Prescribing Incentive Program and the Physician Feedback Program.
Implement ACA provisions that eliminate beneficiary coinsurance for most preventive services and expand coverage of certain preventive services.

Tags: Centers for Medicare & Medicaid Services Developments, DMEPOS, DMEPOS Competitive Bidding, ESRD, Medicare, Medicare Part B Drugs, PPACA Implementation, Patient Protection and Affordable Care Act (PPACA), Physician Payments, Physician Quality, Radiology, Therapy

Posted on July 12, 2010 by Debra A. McCurdy

New Law Increases Medicare Physician Rates through Nov. 2010, Clarifies Hospital Outpatient "3-Day Payment Window" Policy

On June 25, 2010, President Obama signed into law H.R. 3962, the “Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010.” Among other things, the law provides a 2.2% increase to Medicare physician fee schedule payment rates, retroactive from June 1, 2010 through November 30, 2010 -- temporarily cancelling a more than 21% reduction that was briefly triggered on June 1 when other temporary measures expired. Note that the law does not provide for long-term reform of the statutory sustainable growth formula, and the 21% cut will apply to December 2010 payments unless Congress takes additional action. CMS has directed contractors to reprocess all claims containing June 2010 dates of service that were paid under the negative update. In light of the temporary increase in rates, CMS is offering currently-nonparticipating physicians and other practitioners the opportunity to become participating providers through July 16, 2010. The cost of increasing physician fee schedule payment under H.R. 3962 is partially offset by a provision that clarifies Medicare payment of services provided in hospital outpatient departments on either the day of or during the three days prior to an inpatient admission (known as the 3-day payment window). The Senate Finance Committee describes the provision as closing a “loophole that had allowed the unbundling of services and submission of adjustment claims seeking separate and additional Medicare payments.” Note that the law makes no changes to the billing of diagnostic services. H.R. 3962 also includes a CMS-IRS “data match” program that authorizes CMS to collaborate with the IRS to determine whether providers applying to enroll or re-enroll in Medicare have failed to file federal tax returns or have delinquent tax debts.

Tags: Legislative Developments, Hospital, Medicare, Physician Payments

Posted on July 10, 2010 by Debra A. McCurdy

OIG Guidance on Waiver of Copayments

The OIG has posted a policy statement assuring providers, practitioners, and suppliers that they would not be subject to OIG administrative sanctions for waiving retroactive Medicare beneficiary cost-sharing liability that arises when new federal statutes or regulations retroactively increase payment rates and corresponding beneficiary cost-sharing amounts (such as the recently-enacted law providing a temporary increase in Medicare physician fee schedule payments). This policy statement applies only when providers uniformly offer such waivers to all of their affected beneficiaries without regard to the types of items and services furnished or a beneficiary's diagnosis, and the providers do not offer the waivers as part of any advertisement or solicitation. This policy statement does not apply to retroactive beneficiary liability waivers that are conditioned on the provision of items, supplies, or services. The OIG also notes that providers are not required to waive beneficiary liability.

Tags: Other OIG Developments, Fraud and Abuse, Medicare, OIG, Physician Payments

Posted on June 18, 2010 by Debra A. McCurdy

Medicare Physician Fee Schedule Update

Congressional leaders have been struggling to enact legislation that would temporarily block a more than 21% cut in Medicare physician fee schedule payments that went into effect June 1, 2010 under the sustainable growth rate (SGR) formula. On June 17, 2010, the Senate failed on a procedural vote to move ahead on a pared-down version of H.R. 4213, "The American Jobs and Closing Tax Loopholes Act of 2010." This version would have provided a 6-month SGR fix, under which physicians would receive a 2.2% payment increase through November 30, 2010 (rather than the 19-month plan the House approved in May). It also would have extended enhanced Medicaid matching rates and made a series of changes to Medicare and Medicaid payments included in the earlier House bill . The SGR change and other modifications designed to reduce– but not full offset -- the cost of the package failed to attract the super-majority of votes of 60 Senators necessary to cut off debate and allow a final vote. Most recently, today the Senate approved by voice vote a measure (H.R. 3962) that separates the SGR component from the broader jobs bill, offset in part by clarifying Medicare inpatient hospital "3-day payment window" policy designed to prevent unbundling of certain services. Under the Senate bill, Medicare physician fee schedule amounts would be increased by 2.2% for the period of June through November 2010, with the SGR cut applying December 1, 2010 unless Congress acts again. Note, however, that the legislation still must be approved by the House (which is out of session until Monday) before it could be sent to the President’s desk. In the meantime, the Centers for Medicare & Medicaid Services (CMS) issued a list-serve announcement today that it is lifting the hold it had placed on contractor processing of June Medicare physician fee schedule claims; the hold expired June 17, 2010. Held claims will be released and processed on a first-in/first-out basis, and subject to the approximately 21% negative update. CMS adds if Congress acts to modify the negative update now in effect, "CMS is prepared to act expeditiously to make the appropriate changes to Medicare claims processing systems."

Tags: Legislative Developments, Other CMS Developments, Hospital, Medicaid, Medicare, Physician Payments

Posted on June 8, 2010 by Debra A. McCurdy

Physician Fee Schedule Cut Takes Effect; Fix Awaits Senate Action

On May 28, 2010, the House of Representatives approved an amended version of H.R. 4213, "The American Jobs and Closing Tax Loopholes Act of 2010.” The legislation would avert a more than 21% cut in Medicare physician fee schedule (MPFS) payments that went into effect June 1, 2010 under the statutory sustainable growth rate (SGR) formula (although CMS is exercising its authority to hold claims for the first 10 business days of June while legislative action is pending to avoid applying the negative update). Under the House bill – which still awaits Senate action -- MPFS rates would be increased by 2.2% for the rest of 2010 and by 1% in 2011, but there would be no relief from the SGR formula for 2012 or thereafter (the Congressional Budget Office estimates that in 2012, rates would be cut by about 33% in the absence of yet another legislative fix). The House bill also would, among other things: expand eligibility for the 340B drug discount program; repeal the delay in the use of RUG-IV for purposes of the Medicare SNF PPS; tighten restrictions on inpatient hospital billing under the “3-day payment window”; and establish a CMS-IRS data match to identify fraudulent providers. The House dropped from its package a 6-month extension of a temporary increase in the federal Medicaid matching rate and an extension of premium assistance for COBRA benefits to reduce the cost of the package. The prospects for Senate action on H.R. 4213 are still uncertain due to concerns that the new spending in the bill still is not fully offset by cuts, so additional shorter-term extensions of the previous physician fee schedule freezes are possible.

Tags: Legislative Developments, Drug Pricing, Health Insurance, Hospital, Medicaid Spending, Physician Payments, Skilled Nursing Facilities

Posted on May 28, 2010 by Debra A. McCurdy

Congress Wrestles with Legislation to Delay Medicare Physician Fee Schedule Cut, Make Other Health Policy Changes

Congressional leaders have been seeking support for a jobs bill with a number of Medicare and other health policy provisions, but to date have been unable to muster the necessary votes for passage before the Congressional Memorial Day break due to concerns about the cost of the package. Among other things, H.R. 4213, "The American Jobs and Closing Tax Loopholes Act of 2010,” would avert a more than 21% cut in Medicare physician fee schedule (MPFS) payments scheduled to take effect June 1, 2010 under the statutory sustainable growth rate (SGR) formula. Instead, Congressional leaders are proposing to increase MPFS rates by 2.2% for the rest of 2010 and by 1% in 2011, but would provide no relief from the SGR formula for 2012 or thereafter. The legislation also would, among other things: extend for 6 months a temporary increase in the federal Medicaid matching rate; expand eligibility for the 340B drug discount program; repeal the delay in the use of the Resource Utilization Groups (RUG IV) for purposes of the Medicare skilled nursing facility (SNF) prospective payment system (PPS); tighten restrictions on inpatient hospital billing under the “3-day payment window”; establish a CMS-IRS data match to identify fraudulent providers; and extend premium assistance for COBRA benefits. Note that the legislative situation is very fluid, and leaders may revise the package further, including possibly holding a separate vote on the MPFS fix provision. Given the uncertainties of the Congressional outlook, CMS has ordered contractors to hold MPFS claims for the first 10 business days of June (CMS expects the hold to have minimum impact on provider cash flow since clean electronic claims are not paid before 14 calendar days after receipt).

Tags: Legislative Developments, Drug Pricing, Health Insurance, Hospital, Medicaid Spending, Physician Payments, Skilled Nursing Facilities

Posted on May 13, 2010 by Debra A. McCurdy

Other PPACA Updates

CMS has released several manual updates and other transmittals regarding implementation of PPACA policies, including the following:

Revised Payment Files for the 2010 Medicare Physician Fee Schedule Database and Retroactive Provisions under the PPACA;.
Multiple Procedure Payment Reduction on the Technical Component of Certain Diagnostic Imaging Procedures;
Systems Changes Necessary to Implement the PPACA Section 6404 - Maximum Period for Submission of Medicare Claims Reduced to Not More Than 12 Months; and
Revised Outpatient Prospective Payment System Addenda A and B for January and April 2010 to reflect the PPACA.

Tags: HOPPS, PPACA Implementation, Patient Protection and Affordable Care Act (PPACA), Physician Payments, Radiology

Posted on May 12, 2010 by Debra A. McCurdy

2010 Physician Fee Schedule Rule Correction Notice

On May 11, 2010, CMS published a final rule correcting several technical and typographical errors in the final 2010 Medicare physician fee schedule rule with comment period that appeared in the November 25, 2009 Federal Register, as well as errors in the December 10, 2009 correction notice to the final rule. The correction notice, which is effective January 1, 2010, revises the conversion factor as a result of corrections to the practice expense (PE) and malpractice relative value units. Under the revised rule, the 2010 conversion factor is slightly reduced from $28.3895 to $28.3868. However, Congress has blocked through May 2010 the application of the 2010 conversion factor, which reflects a 21.2% reduction compared to 2009 levels because of the sustainable growth rate formula (SGR). Instead, providers still are being reimbursed using the 2009 conversion factor – which increases slightly under the correction notice from $36.0666 to $36.0791. CMS is also correcting errors in PE values, among many other revisions. Note that lawmakers are continuing to grapple with a solution to the SGR formula when the short-term fix expires at the end of this month.

Tags: Centers for Medicare & Medicaid Services Developments, Medicare, Physician Payments

Posted on April 16, 2010 by Debra A. McCurdy

New Law Extends Physician Fee Schedule Fix Through May

On April 15, 2010, Congress approved and President Obama signed into law a measure that retroactively blocks a 21.2% Medicare physician fee schedule cut that went into effect April 1, 2010 under the statutory sustainable growth rate (SGR) formula when a previous short-term fix expired. The amended version of the H.R. 4851, the Continuing Extension Act, provides that Medicare physician fee schedule rates in effect in 2009 are extended through May 31, 2010 (rather than April 30, as in an earlier House-approved version). The new law also clarifies that doctors in outpatient facilities are eligible for health information technology incentive payments, extends COBRA premium assistance subsidies through May 31, 2010, and makes changes to unemployment insurance and other federal policies. Lawmakers still are seeking agreement on a long-term fix for the looming Medicare physician fee schedule SGR cuts.

Tags: Legislative Developments, Health IT, Insurance, Physician Payments

Posted on April 5, 2010 by Debra A. McCurdy

Senate to Consider Additional Short-Term Medicare Physician Fee Schedule Fix Extension on April 12

The Senate is scheduled to consider H.R. 4851, the Continuing Extension Act of 2010, on April 12, 2010 when it returns from its Easter recess. This bill would, among other things, extend 2009 Medicare physician fee schedule rates through April 30, 2010, retroactively blocking a 21.2% physician payment reduction that went into effect April 1, 2010 under the sustainable growth rate (SGR) formula when a previous short-term fix contained in H.R. 4691 expired. The House already approved H.R. 4851 on a voice vote last month. Congress continues to struggle with crafting a longer-term solution to the Medicare physician fee schedule fix given the significant budgetary impact associated with this policy.

Tags: Legislative Developments, Physician Payments

Posted on March 30, 2010 by Debra A. McCurdy

Medicare Physician Fee Schedule Update: Hold on April Claims

Congress adjourned March 26, 2010 for a two-week recess without taking final action on legislation to avert the 21.2% cut in the Medicare physician fee schedule (MPFS) that currently is scheduled to go into effect April 1, 2010. (There is a House bill that was not approved by the Senate before the recess to extend the freeze until April 30, 2010; the Senate has separately approved the fix through September 2010, but neither bill was approved by both chambers.) Nevertheless, in light of the potential for Congress to retroactively restore Medicare payment rates, CMS has instructed its contractors to hold claims containing services paid under the MPFS for the first 10 business days of April to accommodate future Congressional action. This hold will only affect claims with dates of service April 1, 2010 and forward. CMS notes that the hold should have minimum impact on provider cash flow because clean electronic claims are not paid before 14 calendar days (29 for paper claims) after the date of receipt.

Tags: Other CMS Developments, Physician Payments

Posted on March 17, 2010 by Debra A. McCurdy

House Approves Additional Short-Term Extension of Medicare Physician Fee Schedule Fix/Therapy Cap Exception Process

Today the House approved H.R. 4851, the Continuing Extension Act of 2010, by a voice vote. The legislation, which still awaits Senate action, would: extend current Medicare physician fee schedule rates through April 30, 2010 (preventing a 21.2% payment reduction), extend the outpatient therapy cap exceptions process through April 30, 2010; clarify that doctors in outpatient facilities are eligible for health information technology incentive payments; extend COBRA premium assistance subsidies through April 30, 2010; and make other policy changes. Congress still is grappling with funding a package of longer-term policy extenders.

Tags: Legislative Developments, Health IT, Insurance, Physician Payments, Therapy

Posted on March 15, 2010 by Debra A. McCurdy

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.

Tags: Odds & Ends, ASC, ESRD, HOPPS, Home Health, Inpatient Rehabilitation Facilities, Inpatient hospital, LTAC, MedPAC, Medicare, Physician Payments, Skilled Nursing Facilities

Posted on March 11, 2010 by Debra A. McCurdy

Senate Approves Bill to Extend Medicare Physician Payment Fix, Make Other Medicare/Medicaid Policy Changes

Last night the Senate approved a variety of Medicare and Medicaid policy extenders as part of its version of H.R. 4213, the “Tax Extenders Act." This legislation builds on the recently-enacted “Temporary Extension Act of 2010” (H R. 4691), which extended 2009 Medicare physician fee schedule rates through the end of March 2010 (in lieu of a 21.2% across-the-board cut previously set to take effect March 1, 2010) and continued the Medicare outpatient therapy cap exceptions process through March 2010. With regard to Medicare and Medicaid policy, the Senate-approved version of H.R. 4691 would, among other things:

Extend the current freeze on Medicare physician fee schedule rates through September 30, 2010 (in the absence of Congressional action, the statutory sustainable growth rate formula would require a 21.2% rate cut on April 1, 2010).
Extend through December 31, 2010: the Medicare outpatient therapy cap exceptions process, add-on payments for Medicare mental health services, increased Medicare rates for ambulance services, the 1.0 floor on the work geographic practice cost index, the authority for independent laboratories to receive direct payments for the technical component for certain pathology services, and the hospital outpatient hold harmless provision for small rural hospitals.
Exempt certain pharmacies from accreditation standards for suppliers of durable medical equipment, prosthetics, orthotics, and other supplies (DMEPOS).
Clarify that non-hospital-based physicians and other health professionals who bill Medicare and Medicaid through a hospital may qualify for incentives for use of electronic health records.
Extend certain legislative relief for Medicare long-term care hospital services.
Continue the authority of special needs plans, cost plans, and senior housing programs to offer Medicare Advantage plans.
Extend through June 30, 2011 the increased federal medical assistance percentage (FMAP) funding made available to states under the American Recovery and Reinvestment Act of 2009 (ARRA).

Note that the House approved a different version of the measure in December. It is not clear at this point what the timetable or process will be for reconciling the differences between the two measures.

Tags: Legislative Developments, DMEPOS, LTAC, Medicaid, Medicare Advantage, Physician Payments, Therapy

Posted on March 3, 2010 by Debra A. McCurdy

New Law Provides Short-Term Physician Fee Schedule Fix, Extension of Therapy Cap Exceptions Process

Last night the Senate joined the House in approving H.R. 4691, the Temporary Extension Act of 2010, which President Obama promptly signed into law. The legislation includes a one-month extension of the Medicare physician fee schedule freeze in lieu of the 21.2% cut that briefly went into effect March 1, 2010 (that is, the law continues to hold payments at 2009 levels through the end of March). The measure also extends the outpatient therapy cap extension process, which had expired at the end of 2009, through March 31, 2010. In addition, the law extends COBRA insurance premium assistance through March 31, 2010. Note that lawmakers are negotiating a longer-term extension of expiring Medicare provisions, along with an extension of enhanced federal Medicaid matching payments and other health policy revisions, as part of a broader jobs bill, the "American Workers, State and Business Relief Act."

Tags: Legislative Developments, Insurance, Physician Payments, Therapy

Posted on March 2, 2010 by Debra A. McCurdy

Medicare Physician Fee Schedule Cut Takes Effect; CMS Holds Claims for 10 Days

On March 1, 2010, a 21.2% across-the-board cut in Medicare physician fee schedule (MPFS) payments went into effect under the statutory sustainable growth rate (SGR) formula. While Congress had temporarily blocked the cut and maintained rates at 2009 levels for the first two months of 2010, that authorizing legislation expired February 28, 2010. Lawmakers are working to implement a fee schedule fix as part of job promotion legislation, but while the details of the bill and the timing for enactment still are uncertain, action in the next week is anticipated with reports that extension of the freeze may be continued until September 30, 2010. In the meantime, CMS has instructed its contractors to hold for the first 10 business days of March MPFS claims with dates of service on or after March 1, 2010. According to CMS, the hold should have a minimum impact on provider cash flow, since current law provides that clean electronic claims are not paid before 14 calendar days (29 for paper claims) after the date of receipt.

** March 3 update: In light of Congressional passage of a one-month extension of the physician fee schedule fix, CMS announced it has lifted the hold on MPFS claims.

Tags: Legislative Developments, Other CMS Developments, Physician Payments

Posted on February 26, 2010 by Debra A. McCurdy

House Approves Bill to Extend Temporary SGR Freeze, Therapy Cap Exceptions Through March 2010

On February 25, 2010, the House of Representatives approved H. R. 4691, the “Temporary Extension Act of 2010,” by a voice vote. Among other things, the bill would extend current Medicare physician fee schedule rates through the end of March 2010; in the absence of such an extension, Medicare payments will be subject to a 21.2 % across-the-board cut on March 1, 2010 under the statutory sustainable growth rate (SGR) formula. The bill also would extend the Medicare outpatient therapy cap exceptions process – which expired at the end of 2009 – through March 2010. The bill now moves to the Senate, where its fate is uncertain because at least one Senator is objecting to the legislation's cost not being offset. A vote on the measure therefore may not come until mid-week next week if parliamentary steps (cloture vote) must be taken to move the legislation. Even if the SGR fix does not occur before March 1, CMS can hold claims for physician services for 14 days before processing them with the 21.2 % fee cut.

Tags: Legislative Developments, Physician Payments, Therapy

Posted on February 12, 2010 by Debra A. McCurdy

Bipartisan Senate Jobs Bill Would Extend Expiring Health Provisions

On February 11, 2010, Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Member Chuck Grassley (R-IA) released their draft “Hiring Incentives to Restore Employment (HIRE) Act.” In addition to providing tax incentives to spur hiring and extending uninsurance and COBRA health insurance premium subsidies, the legislation would extend a number of Medicare provisions, some of which expired at the end of 2009. As noted above, the legislation would extend until October 1, 2010 the current freeze on Medicare physician fee schedule payments, further blocking the 21.2% fee schedule cut now set for March 1, 2010. The bill also would, among other things: extend the outpatient therapy cap exceptions process; extend certain legislative relief for long-term care hospitals; extend payment provisions impacting mental health providers, ambulance services, certain physician and physician pathology services, rural health providers; extend certain Medicare Advantage policies; exempt certain pharmacies from Medicare supplier accreditation requirements; and clarify eligibility for physician health information technology incentive payments. Note that after the Finance Committee released its draft bill, however, Majority Leader Harry Reid (D-NV) announced that the Senate will consider job promotion legislation in stages, and the first bill will not include the Finance Committee health provisions. The Senate is expected to take up the jobs bill later this month. The House approved a separate jobs package in December 2009; differences between the two chambers’ approaches would need to be reconciled before a bill (or bills) could be sent to the President.

Tags: Legislative Developments, LTAC, Medicare, Physician Payments, Therapy

Posted on February 12, 2010 by Debra A. McCurdy

House and Senate Pass "PAYGO" Budget Rules, Include Funding for Physician Fee Schedule Fix

The House and Senate have approved statutory “pay-as-you-go” (dubbed “PAYGO”) budget rules as part of legislation increasing the public debt limit (H.J.Res. 45). Under the PAYGO rules, future legislation reducing revenues or increasing spending, including entitlement spending, must be offset over five and 10 years by other savings. Certain spending would be exempt from the PAYGO rules, including legislation providing relief from a 21.2% cut in Medicare physician fee schedule payments scheduled to go into effect March 1, 2010 under the statutory Sustainable Growth Rate (SGR) formula. Specifically, the legislation would only count for PAYGO purposes the costs of SGR reforms to the extent that they exceed the cost of a five-year freeze in rates at 2009 levels. While this PAYGO exception does not actually reform the SGR policy, it frees Congress from the obligation of finding offsetting revenue for the full cost of SGR reforms, brightening the prospects for legislative action on this issue. The debt limit bill is now awaiting the President’s signature. Note that a draft Senate Finance Committee jobs bill released February 11 includes a number of Medicare policy “extenders,” including a 7-month extension of the Medicare physician fee schedule freeze (further delaying the 21.2% cut until October 1, 2010). More information on the jobs bill is available in a separate posting.

Tags: Legislative Developments, Medicare Spending, Physician Payments

Posted on January 27, 2010 by Debra A. McCurdy

MedPAC Votes on 2011 Medicare Provider Update Recommendations

The Medicare Payment Advisory Commission (MedPAC) recently voted on recommendations it will make to Congress regarding Medicare payment updates for 2011. At the meeting, MedPAC voted to recommend increasing acute inpatient and outpatient prospective payment system reimbursement in 2011 by the projected rate of increase in the hospital market basket index (MBI). This rate increase would be coupled with implementation of a quality incentive payment program, along with an offset in 2011 through 2013 to recover payments attributable to hospital documentation and coding improvements. MedPAC also recommends that Congress increase payments for physician services in 2011 by 1.0%. For ambulatory surgical centers (ASCs), MedPAC recommends a 0.6% increase in rates, together with a requirement that ASCs to submit cost and quality data. MedPAC recommends updating the end stage renal disease (ESRD) composite rate by the ESRD MBI increase minus a productivity growth adjustment. MedPAC approved a series of recommendations regarding home health services, including elimination of the inflation update for 2011, rebasing of home health rates with provisions to protect quality of care, development of quality outcomes measures, and implementation of certain program integrity safeguards. With regard to other post-acute services, MedPAC recommends no payment update in 2011 for skilled nursing facilities, inpatient rehabilitation facilities, or long-term care hospitals. MedPAC also recommends updating hospice rates by the projected MBI for 2011, minus an adjustment for productivity gains. These recommendations will be included in MedPAC's March 2010 report to Congress. While the recommendations are not binding, MedPAC’s assessments often help shape federal policy.

Tags: Odds & Ends, ASC, ESRD, HOPPS, Home Health, Influenza Pandemic, Inpatient hospital, LTAC, MedPAC, Medicare, Physician Payments, Skilled Nursing Facilities

Posted on January 13, 2010 by Debra A. McCurdy

CMS Implements Two-Month Medicare Physician Fee Schedule Fix

CMS Implements Two-Month Medicare Physician Fee Schedule Fix. President Obama has signed into law an appropriations bill that includes a 2-month freeze in physician fee schedule payments, instead of the 21.2% cut that was set to go into effect January 1, 2010. CMS has provided instructions to Medicare contractors on the processing of 2010 physician fee aschedule claims that temporarily had been put on hold while the legislation was pending. Under the CMS policy, contractors are directed to begin processing claims at the new rates no later than January 19, 2010. CMS also has extended the 2010 Annual Participation Enrollment Program deadline from January 31, 2010, to March 17, 2010 in light of the temporary changes in physician rates. CMS notes, however, that the effective date for any participation status change during the enrollment extension remains January 1, 2010, and will be in force for the entire year.

Tags: Other CMS Developments, Medicare, Physician Payments

Posted on December 24, 2009 by Debra A. McCurdy

Two-Month Medicare Physician Fee Schedule Fix Signed Into Law

On December 19, 2009, President Obama signed into law H.R. 3326, the FY 2010 Department of Defense appropriations bill, which includes a 2-month freeze in physician fee schedule payments (instead of the 21.2 percent cut that was set to go into effect January 1, 2010). The bill is now Public Law No. 111-118.

Tags: Legislative Developments, Physician Payments

Posted on December 21, 2009 by Debra A. McCurdy

Legislative Recap: Health Reform/Medicare Physician Fee Schedule

As reported this weekend, on December 16, 2009, Senate Majority Leader Harry Reid released his "manager's amendment" to the pending Senate health reform bill, the Patient Protection and Affordable Care Act (H.R. 3590). The amendment reflects a series of agreements negotiated with individual Senators in recent weeks, and its release sets the stage for a possible Senate vote on the underlying health reform measure by Christmas. The amendment cleared the first procedural hurdle early this morning, when a motion to cut off debate and proceed to a vote on the amendment was approved by the needed 60-40 margin. In other important health policy news, the Senate has joined the House in approving a short-term delay in the looming 21.2% Medicare physician fee schedule payment cut caused by the application of the controversial sustainable growth rate (SGR) formula to the annual fee update.

Tags: Legislative Developments, Health Reform, Physician Payments

Posted on December 19, 2009 by Debra A. McCurdy

Senate Leaders Release Health Reform Compromise; Congress Clears 2-Month Delay of 21% Medicare Physician Fee Schedule Cut

Today Senate Majority Leader Harry Reid released his “manager’s amendment” to the pending Senate health reform bill, the Patient Protection and Affordable Care Act (H.R. 3590). The amendment reflects a series of agreements negotiated with individual Senators in recent weeks, and its release sets the stage for a possible Senate vote on the underlying health reform measure by Christmas. Even if adopted, however, lawmakers will still face the difficult task of reconciling the differences between Senate and House approaches to health reform before a bill can reach President Obama’s desk.

The 383-page amendment makes changes throughout the legislation, including changes to provisions addressing various insurance coverage and market reforms, Medicare reimbursement policies, fraud and abuse authorities, and taxes, among many others. According to the Congressional Budget Office, the provisions of the manager’s amendment with the largest budgetary effects include:

Expanded eligibility for a small business tax credit;
Increased penalties on certain uninsured individuals;
Replacement of the proposed public health insurance plan with multi-state plans that would be offered under contract with the Office of Personnel Management;
Deletion of an increase in Medicare physician payment rates (which is likely to be addressed in a separate vehicle); and
Increased payroll taxes on higher-income individuals and families.

Other significant changes include:

Lowering the threshold for Medicare spending growth that would trigger recommendations for spending reductions by the Independent Payment Advisory Board;
Enhanced Medicare quality of care provisions (including the development of hospital and physician outcomes measures, the development of a framework for public reporting of provider performance information, pay-for-performance requirements for additional Medicare provider types, and value-based purchasing for ambulatory surgical centers);
Revisions to Medicare payment policy for a wide range of providers, including hospitals, home health agencies, skilled nursing facilities, inpatient rehabilitation facilities, long-term care hospitals, and hospices; expanded Medicare Part D medication therapy management requirements; and an extension of the proposed date by which a physician-owned hospital must have a Medicare provider agreement to quality for the “whole hospital” exception to the Stark law's self-referral prohibition from February 1, 2010 to August 1, 2010;
Stronger health fraud enforcement provisions, including an extension of the federal health fraud statute to violations in which a person did not have specific intent to commit health fraud, revisions to the federal sentencing guidelines for federal health care offenses, and increased subpoena authority; and
Modifications to the proposed annual taxes on the medical device and health insurance industries.

Note that the CBO warns that certain Medicare cost-saving provision in the legislation “might be difficult to sustain over a long period of time.” The CBO expects inflation-adjusted Medicare spending per beneficiary under the legislation would increase at an average rate of less than 2% annually during the next two decades -- about half the rate over the past two decades. According to the CBO, “it is unclear whether such a reduction in the growth rate could be achieved, and if so, whether it would be accomplished through greater efficiencies in the delivery of health care or would reduce access to care or diminish the quality of care.”

In other important health policy news, today the Senate joined the House in approving a short-term delay in the looming - and very large - Medicare physician fee schedule payment reductions caused by the application of the controversial sustainable growth rate (SGR) formula to the annual fee update. Specifically, H.R. 3326, the Department of Defense Appropriations Act for 2010, includes a provision that freezes Medicare physician rates at currents levels for January and February 2010, in lieu of the 21.2% cut scheduled to go into effect January 1, 2010. The legislation now goes to the President, who is expected to sign the bill into law. Note that lawmakers also are working on longer-range solutions to the Medicare physician fee schedule's SGR formula, but as the health reform debate drags out it is seen as increasingly unlikely that a more permanent fix can be adopted before the start of the new year.

Tags: Legislative Developments, Health Reform, Medicare Spending, Physician Payments, congressional budget office

Posted on December 16, 2009 by Debra A. McCurdy

House Passes 2-Month Delay in Medicare Physician Fee Schedule Cut

On December 16, 2009, the House of Representatives approved a short-term delay in looming - and very large - Medicare physician fee schedule payment reductions caused by the application of the controversial sustainable growth rate (SGR) formula to the annual fee update. Specifically, the House version of H.R. 3326, the Department of Defense Appropriations Act for 2010, includes a provision that freezes Medicare rates at currents levels for January and February 2010, in lieu of the 21.2 percent cut scheduled to go into effect January 1, 2010. The legislation is expected to be considered by the Senate before the end of the year. Lawmakers also are working on longer-range solutions to the Medicare physician fee schedule's SGR formula, but as the health reform debate drags out it is seen as increasingly unlikely that a more permanent fix can be adopted before the start of the new year.

Tags: Legislative Developments, Centers for Medicare & Medicaid Services Developments, Physician Payments

Posted on December 10, 2009 by Debra A. McCurdy

CMS Corrects Physician Fee Schedule Rule, Reduces Conversion Factor to $28.3895

On December 10, 2009, CMS published a notice correcting technical and typographical errors in the Medicare CY 2010 physician fee schedule final rule with comment period, published November 25, 2009. Among other things, CMS is correcting the CY 2010 conversion factor because of a technical error in adjusting relative value units to reflect the agency’s policy related to the consultation codes. The change results in the conversion factor being reduced from $28.4061 to $28.3895 (although as reported in a separate posting, legislation is awaiting the President's signature that would freeze the conversion factor at 2009 levels for January and February 2010).

Tags: Centers for Medicare & Medicaid Services Developments, Centers for Medicare & Medicaid Services Developments, Physician Payments

Posted on December 4, 2009 by Debra A. McCurdy

House Passes Medicare Physician Payment Reform

On November 19, 2009, the House of Representatives approved H.R. 3961, the Medicare Physician Payment Reform Act, by a vote of 243-183. The bill would block a 21.2% Medicare physician fee reduction scheduled to go into effect January 1, 2010, and would replace the current sustainable growth rate formula for calculating physician payments with a new update methodology. Most notably, under the House plan, the fee schedule update for 2010 would equal the percentage increase in the Medicare economic index (1.2%). Beginning in 2011, there would be separate target growth rates and conversion factor updates for two categories of service: (1) evaluation, management, and preventive services (updates would be set at the GDP growth rate plus 2 percentage points per year), and (2) all other services (which would be updated by the GDP plus 1 percentage point). The CBO estimates that the bill would increase Medicare payments to physicians by about $195 billion over 10 years. Note that in October, the Senate blocked consideration of a separate bill (S. 1776) to address physician fee schedule payments, so it is uncertain when or if the Senate will consider the new House measure. The Senate health reform plan (discussed above) includes a more limited, one-year fix of the fee schedule, which would provide a 0.5% update for 2010. While Congress eventually is expected to take legislative action to avert the upcoming fee schedule cut for 2010, the timing and the scope of the legislation (permanent reform vs. a temporary fix) is still unclear.

Tags: Legislative Developments, Physician Payments

Posted on October 30, 2009 by Debra A. McCurdy

Medicare Physician Payment Fix Blocked in Senate

On October 21, 2009, a Senate effort to block upcoming reductions to Medicare physician fee schedule payments failed on a procedural “cloture” vote that would have ended debate and allowed a vote on the bill. By way of background, under the current statutory “sustainable growth rate” (SGR) formula, Medicare physician payments are expected to be reduced by 21.5% in 2010 and by about 6% more annually for several subsequent years. The bill that came before the Senate, S. 1776, would repeal the SGR formula and permanently freeze the physician fee schedule. In blocking the measure, lawmakers voiced concerns about the proposal's price tag (almost $250 billion over 10 years), which was not paid for under the bill. Most recently, on October 29, 2009, House leaders released H.R. 3961, the Medicare Physician Payment Reform Act of 2009, which would provide a permanent fix to the physician fee schedule formula. While Congress is widely expected act before the end of the year to avert the upcoming fee schedule cut for 2010, the timing and the scope of the legislation (permanent reform vs. one or two year fix) still has not been determined.

Tags: Legislative Developments, Health Reform, Physician Payments

Posted on September 28, 2009 by Debra A. McCurdy

Medicare Physician Resource Use Measurement Program Listening Session (Nov. 10, 2009)

On November 10, 2009, CMS is conducting a listening session the Medicare Physician Resource Use Measurement Reporting Program, focusing on the available tools to identify discrete episodes of care for Medicare beneficiaries. At the listening session, CMS staff will present research findings on the key attributes of a grouper logic for Medicare beneficiaries, and the agency will seek input on other strategies for improving how episodes for Medicare beneficiaries are designed. Specific issues to be considered include the challenges associated with: beneficiaries with multiple co-morbidities, post-acute care diagnoses not matching inpatient diagnoses; grouping physician services delivered in a hospital stay with the same episode as the hospitalization; and risk-adjustment. CMS will accept written comments on these issues until November 17, 2009.

Tags: Health Care Industry Events, Physician Payments

Posted on August 14, 2009 by Debra A. McCurdy

CMS Corrects Physician Fee Schedule, Inpatient Psychiatric Facility PPS, and Home Health PPS Rules

On August 5, 2009, CMS published a correction to its July 13, 2009 proposed rule on Medicare physician fee schedule payments and policies for calendar year (CY) 2010. The notice makes technical questions and adds quality reporting measures regarding Functional Communications. CMS also has published a notice correcting typographical errors that appeared in its May 1, 2009 notice on Medicare inpatient psychiatric facilities prospective payment system (PPS) rates effective July 1, 2009. In addition, on August 13, 2009, CMS republished its August 6, 2009 Medicare home health PPS proposed rule for CY 2010 to correct data in the tables.

Tags: Centers for Medicare & Medicaid Services Developments, Home Health, Physician Payments, Psychiatric Facilities

Posted on July 7, 2009 by Debra A. McCurdy

CMS Proposes CY 2010 Medicare Physician Fee Schedule Rule

On July 1, 2009, the Centers for Medicare & Medicaid Services (CMS) released the advance text of its proposed rule with comment period updating the Medicare physician fee schedule (MPFS) for calendar year (CY) 2010. Most notably, the proposed rule calls for a 21.5% across-the-board reduction in physician fee schedule payments under the statutory sustainable growth rate (SGR) formula. Over the past several years, Congress has repeatedly stepped in to block cuts triggered by the SGR formula, and such efforts are underway as part of broader health reform legislation, although the level of relief, if any, that may be provided is uncertain at this time. In the proposed rule, CMS has exercised its regulatory authority to remove drugs from the definition of “physicians’ services” for purposes of the SGR formula. CMS notes that spending on physician-administered drugs has risen faster than all other MPFS services, contributing significantly to the large projected reductions in future MPFS updates under the SGR formula. While this would not mitigate the projected negative 21.5% update for 2010, it would reduce the number of years in which negative updates are expected. In other policy areas the rule would, among many other things:

Change the equipment usage assumption for imaging equipment priced over $1 million from the current 50% usage rate to a 90% (which would significantly reduce per procedure practice expense relative value units (RVUs) -- and thus the per procedure technical component reimbursement -- for services using such imaging equipment) and begin to implement the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) provision mandating an accreditation process for entities furnishing certain non-hospital advanced diagnostic testing procedures by January 1, 2012;
Expand the measures and measure groups that eligible physicians can report under the Physician Quality Reporting Initiative (PQRI), allow physicians to report data on PQRI measures through a qualified electronic health record product, and establish a new process for group practices to be considered successful electronic prescribers.
Refine malpractice RVUs to redirect payment to physicians with the highest malpractice costs;
End payments for consultation codes and instead require use of evaluation and management codes;
Amend the "stand in the shoes" standard for considering compensation arrangements under Stark;
Establish a process for submitting claims for damages caused by the MIPPA provision terminating contracts awarded in 2008 under the durable medical equipment, prosthetic, orthotic and supplies (DMEPOS) competitive bidding program, and make changes in the “grandfathering” rules for noncontract suppliers;
Implement MIPPA provisions that provide Medicare coverage of cardiac and pulmonary rehabilitation services and chronic kidney disease (CKD) education;
Revise Medicare end stage renal disease facility (ESRD) rates, including updating the drug add-on adjustment (using a refined methodology for projecting growth in drug expenditures), the wage index adjustment, and the ESRD wage index floor;.
Make changes to the Part B drug competitive acquisition program designed to better define certain aspects of the program and minimize the administrative burden for participating physicians and vendors; and
Require authorized compendia used in determining medically-accepted indications of drugs and biologicals used off-label in an anti-cancer chemotherapeutic regimen to have a transparent process for evaluating therapies and for identifying potential conflicts of interests.

The official version of the rule will be published in the Federal Register on July 13, 2009, and comments will be accepted until August 31, 2009.

Tags: Centers for Medicare & Medicaid Services Developments, DMEPOS Competitive Bidding, ESRD, Medicare Part B Drugs, Physician Payments, Quality Reporting, Radiology

Posted on June 16, 2009 by Debra A. McCurdy

MedPAC Report on Medicare Payment Policy

MedPAC has issued its June 2009 "Report to the Congress: Improving Incentives in the Medicare Program." Among other things, the report addresses follow-on biologicals, chronic care management, physician self-referrals involving imaging services, physician resource use measurement, graduate medical education, accountable care organizations, Medicare benefit design, and Medicare Advantage payment policy.

Tags: Odds & Ends, Follow-on Biologicals, MedPAC, Medicare Advantage, Physician Ownership, Physician Payments, Radiology

Posted on June 15, 2009 by Debra A. McCurdy

House Chairmen Outline Draft Physician Fee Schedule/SGR Reforms

On June 15, 2009, the House Ways and Means Committee posted a press release outlining Medicare physician fee schedule reforms being developed by key House lawmakers. Under current law, known as the sustainable growth rate (SGR) formula, Medicare physician payments are expected to be reduced by 21% in 2010 and by additional amounts in future years. Under the plan being developed in the House, the SGR formula would replaced with a new formula that:

Removes items such as drugs and laboratory services not paid directly to practitioners from spending targets;
Allows the volume of most services to grow at the rate of GDP plus 1 percentage point per year;
Allows the volume of primary and preventive care services to grow at GDP plus 2% per year; and
Encourages new Accountable Care Organizations "to be responsible for their own growth paths, irrespective of reductions or increases that apply elsewhere in the system."

The press release touts the reforms as costing "less than $300 billion over ten years."

Tags: Legislative Developments, Health Reform, Physician Payments

Posted on May 4, 2009 by Debra A. McCurdy

Practicing Physicians Advisory Council Meeting (June 1, 2009)

On June 1, 2009, the Practicing Physicians Advisory Council (PPAC) is holding its quarterly meeting to discuss certain proposed changes in regulations and manual instructions related to physicians' services. Agenda topics include value-based purchasing, Recovery Audit Contractors (RAC), IPPS issues, DMEPOS surety bond, and various Medicare Part C and D issues. Registration is required.

Tags: Health Care Industry Events, DMEPOS, Medicare Advantage, Medicare Part D Drugs, Physician Payments, Physicians

Posted on April 7, 2009 by Debra A. McCurdy

Budget Resolutions Advance with Health Reform Funding

On April 2, 2009, the House and Senate approved separate budget resolutions (H.Con.Res. 85 and S.Con.Res. 13, respectively) that establish nonbinding spending and revenue frameworks for the Congressional committees for fiscal year (FY) 2010. Both bills include deficit-neutral “reserve funds” authorizing committees to adopt health reform measures if offsetting revenues are specified. Such reforms could include, among other things, provisions to make health coverage more affordable, expand access to insurance, improve quality, reduce health care costs, and preserve choice of providers and health plans. In a notable difference, the House bill would allow the Senate to use a procedure called reconciliation to approve health reform legislation by a simple majority, effectively blocking the minority’s ability to force Senate leaders to muster 60 votes in favor of a health reform bill. The House bill also would require the Committees on Ways and Means and Energy and Commerce each to identify $1 billion in health care savings over five years. The Senate adopted an amendment that would prohibit adoption of President Obama’s proposal to change the tax treatment of charitable contributions to pay for health reform. In addition, the House and Senate differ in their approach to fixing the Medicare physician fee schedule formula, which now would trigger an across-the-board payment cut of approximately 21% in 2010. Specifically, the Senate would require that any change to the physician fee schedule be done on a deficit-neutral basis, while the House allocates approximately $87 million over five years/$285 billion over 10 years to reform the formula. The Senate also calls for the importation of prescription drugs approved by the Food and Drug Administration (FDA) from a specified list of countries, and it would establish a deficit-neutral reserve fund to address Medicare and Medicaid reimbursement inequities that lead to access problems in rural areas. Both the House and Senate resolutions also provide up to $311 million for the Health Care Fraud and Abuse Control program for FY 2010. Lawmakers will work to iron out differences between the two measures when Congress returns from recess on April 20, 2009.

Tags: Legislative Developments, Drugs, Fraud and Abuse, Health Reform, Health Spending, Physician Payments

Posted on March 13, 2009 by Debra A. McCurdy

PQRI Educational Calls - March 18 and 19, 2009

Under the Physician Quality Reporting Initiative (PQRI) Program, certain eligible professionals who meet the criteria for satisfactory submission of quality measures data can earn incentive payments of 2.0 percent of their total allowed charges for Physician Fee Schedule covered professional services furnished during that same period. On March 18, 2009, CMS is co-hosting a Special Open Door Forum on the 2009 PQRI Program with the American College of Cardiology to concentrate on cardiology-specific topics related to participation in PQRI. In addition, CMS is hosting a PQRI National Provider Question & Answer Session on March 19 to provide an update on what’s new for the 2009 PQRI and to allow participants to ask questions of CMS PQRI experts; note that preregistration is required for this call.

Tags: Health Care Industry Events, Physician Payments, Physician Quality

Posted on March 10, 2009 by Debra A. McCurdy

MedPAC Meeting -- March 12-13, 2009

On March 12-13, 2009, MedPAC is meeting to discuss a number of health policy issues, including: accountable care organizations; physician resource use measurement; MIPPA Medicare Advantage payment report; improving Medicare’s chronic care demonstration programs; the effects of secondary coverage on Medicare spending; medical education; and follow-on biologics.

Tags: Health Care Industry Events, Follow-on Biologicals, MIPPA, MedPAC, Medicare Advantage, Physician Payments

Posted on March 6, 2009 by Debra A. McCurdy

Obama Budget Proposal

On February 26, 2009, the Obama Administration released its proposed federal budget for fiscal year (FY) 2010. Most significantly in terms of health policy, the proposal would establish a reserve fund of $633.8 billion over 10 years to finance health reform. While half of the reserve funds would come from tax increases on higher-income individuals, the rest would come from health system savings impacting a wide range of providers, health plans, and manufacturers. While additional details are expected to be released in the coming weeks, the following are highlights of the information released to date:

Medicare Advantage (MA) Payments. The budget would replace the current mechanism for establishing MA rates with a competitive system in which Medicare payments would be based upon an average of plans’ bids. The Administration estimates a savings of more than $175 billion over 10 years from this provision – approximately half of the health care savings in the budget proposal.
Reducing Drug Prices. The Administration proposes establishing a regulatory pathway for approval of follow-on biologicals. Additionally, brand biologic manufacturers would be prohibited from reformulating existing products into new products to restart the exclusivity process. The Administration also would prevent drug companies from blocking generic drugs from consumers by prohibiting anticompetitive agreements between brand name and generic drug manufacturers intended to keep generic drugs off the market. The budget also would increase the Medicaid drug rebate for brand-name drugs from 15.1% to 22.1% of the average manufacturer price (AMP), apply the additional rebate to new drug formulations, and allow states to collect rebates on drugs provided through Medicaid managed care organizations. The budget also supports the Food and Drug Administration’s (FDA) efforts to allow Americans to buy drugs from other countries.
Medicare and Medicaid Payment Accuracy/Program Integrity. The budget would expand CMS’s capacity to identify excessive payments and correct problems, such as through use of National Correct Coding Initiative edits for Medicaid claims. The budget also proposes to dedicate additional resources for oversight and program integrity activities related to the Medicare prescription drug program, MA, and Medicaid.
Hospital/Post-Acute Care Bundling, Reduced Hospital Readmission Rates. The budget calls for bundling payments to hospitals and certain post-acute providers for services provided within 30 days after discharge from the hospital. In addition, hospitals with high rates of readmission would be paid less if patients are re-admitted to the hospital within the same 30-day period.
Hospital Quality Improvement. The budget would link a portion of Medicare payments for acute inpatient hospital services to hospital performance on specific quality measures.
Physician Payment System Reforms. The Administration supports “comprehensive, but fiscally responsible” reforms to the physician fee schedule formula.
Cancer Research. The budget includes over $6 billion in funding for the National Institutes of Health (NIH) to support cancer research.

Other Medicare/Medicaid health policy line-items identified in the budget charts include the following, among others:

Establishing survey and certification revisit and recertification user fees;
Enabling physicians to form voluntary groups that coordinate care for Medicare beneficiaries and to receive performance-based payments for coordinated care;
Addressing financial conflicts of interest in physician-owned specialty hospitals;
Requiring the use of radiology benefit managers for Medicare imaging services;
Aligning Medicare home health payments with costs; and
Imposing higher Medicare drug benefit premiums on certain higher-income beneficiaries.

Note that many provisions of the proposed budget would require Congressional approval to implement. To that end, a number of Congressional committees have scheduled hearings on the budget proposal, including a March 10 Senate Finance Committee hearing focusing on the budget’s health care provisions.

Tags: Drug Pricing, Drugs, Fraud and Abuse, Health Reform, Home Health, Hospital, Hospital Ownership, Medicare, Medicare Advantage, Obama Administration News, Physician Payments, Radiology

Posted on February 15, 2009 by Debra A. McCurdy

2009 Physician Quality Reporting Initiative Call (Feb 18)

The Centers for Medicare & Medicaid Services will host the second in a series of national provider conference calls on the 2009 Physician Quality Reporting Initiative (PQRI). This call will take place from 1:30 p.m. – 3:30 p.m., EST, on Wednesday, February 18, 2009. The deadline for registration is February 17.

Tags: Health Care Industry Events, Physician Payments, Physician Quality

Posted on January 26, 2009 by Debra A. McCurdy

Practicing Physicians Advisory Council Meeting (March 9, 2009)

The Practicing Physicians Advisory Council is meeting on March 9, 2009 to discuss proposed changes in regulations and manual instructions related to physicians' services. Specific Issues on the agenda include, among others, Value-Based Purchasing, Recovery Audit Contractors, the local and national coverage determination processes, and Medicare appeals.

Tags: Health Care Industry Events, Coverage, Physician Payments, Physicians

Posted on January 9, 2009 by Debra A. McCurdy

MedPAC to Consider Medicare Proposals January 8-9, 2009

The Medicare Payment Advisory Commission (MedPAC) is meeting January 8-9, 2009 to discuss a variety of Medicare payment and policy issues, including payments to hospitals, physicians, ambulatory surgical centers, dialysis providers, skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, long-term care hospitals, hospices, and Medicare Advantage plans.

Tags: Health Care Industry Events, ASC, ESRD, Home Health, Hospital, LTAC, MedPAC, Medicare Advantage, Physician Payments, Skilled Nursing Facilities

Posted on December 31, 2008 by Debra A. McCurdy

Corrections to Final 2009 Medicare Physician Fee Schedule, Inpatient Hospital Rules

On December 31, 2008, CMS published a notice correcting a number of technical and typographical errors in the November 19, 2008 final Medicare physician fee schedule rule for calendar year 2009. In addition, on December 30, 2008, CMS published a notice correcting certain wage data included in the October 3, 2008 final FY 2009 Medicare hospital inpatient prospective payment system rule.

Tags: Centers for Medicare & Medicaid Services Developments, Inpatient hospital, Physician Payments

Posted on December 22, 2008 by Debra A. McCurdy

FAQ on Mobile Testing Provider Requirements

CMS has provided additional guidance on a provision of the November 19, 2008 final Medicare physician fee schedule rule for calendar year 2009. In the final rule, CMS adopted a requirement that an entity providing mobile diagnostic testing services enroll with Medicare as an Independent Diagnostic Testing Facility (IDTF), comply with the IDTF performance standards, and bill Medicare directly for its services (although CMS did not require a mobile testing entity to bill directly for its services they are furnished “under arrangement” to hospitals). In a frequently-asked question dated December 15, 2008, CMS clarifies that if the mobile provider of testing services provides only the equipment and the non-physician technicians, they are not required to enroll and bill as an IDTF. Note, however, that if the mobile provider also provides the physician supervision of the test as well as the equipment and the technician, the mobile entity would be required to enroll and bill as an IDTF effective January 1, 2009.

Tags: Other CMS Developments, Medicare, Physician Payments

Posted on December 22, 2008 by Debra A. McCurdy

2009 Physician Quality Reporting Initiative

CMS has released the detailed specifications for the 2009 Physician Quality Reporting Initiative (PQRI) measures and the 2009 PQRI measures groups. In addition, a new 2009 PQRI Implementation Guide instructs physicians on how to implement 2009 PQRI claims-based reporting of measures to facilitate satisfactory reporting of quality data codes.

Tags: Other CMS Developments, Physician Payments, Physician Quality

Posted on December 19, 2008 by Debra A. McCurdy

Congressional Budget Office Reports on Health Care Budget Options, Insurance Reform

On December 18, 2008, the Congressional Budget Office (CBO) released a major report entitled “Budget Options, Volume 1: Health Care,” which sets forth 115 policy options for Congress to consider as it addresses health care system reform. The CBO points out that Medicare is expected to grow from 2.8 percent of gross domestic product (GDP) in 2008 to nearly 9 percent of GDP in 2050. This spending growth will be fueled primarily by growth in per capita medical costs, according to the CBO, with the aging of the population playing a secondary role. In light of these trends, the CBO offers specific options addressing such areas as: health insurance (market reforms, tax treatment, access to federal programs); health care quality and efficiency; geographic variation in Medicare spending; paying for Medicare services (including hospital, physician, imaging, and post-acute care, and Medicare Advantage plan services, among others); financing and paying for services in Medicaid (including drug payment revisions) and SCHIP; premiums and cost sharing in federal health programs; long-term care; health behavior and health promotion; and closing the gap between Medicare’s spending and receipts. The CBO also issued a separate report focusing on insurance reform, “Key Issues in Analyzing Major Health Insurance Proposals.” The CBO warns that without changes in policy, a substantial and growing number of nonelderly people are likely to be without health insurance. This issue cannot be addressed without making major changes in the financing or provision of health insurance and health care, which will involve "difficult trade-offs between the objectives of expanding insurance coverage and controlling both federal and total costs for health care." The report describes the assumptions that CBO would use in estimating the effects of key elements of proposals to modify the health insurance system on federal costs, insurance coverage, and other outcomes. In particular, it considers the types of issues that would arise in estimating the effects of proposals to: provide tax credits or other types of subsidies to make insurance less expensive to the purchaser; require individuals to purchase health insurance; require firms to offer health insurance to their workers or pay into a fund that subsidizes insurance purchases; replace employment-based coverage with new purchasing arrangements or provide strong incentives for people to shift toward individually purchased coverage; and provide individuals with coverage under, or access to, existing insurance plans such as the Medicare program, either as an additional option or under a “Medicare-for-all” single-payer arrangement.

Tags: Odds & Ends, Cost Effectiveness, Coverage, Drug Pricing, Health Reform, Health Spending, Hospital, Insurance, Medicaid, Medicare, Medicare Advantage, Physician Payments, Skilled Nursing Facilities, congressional budget office

Posted on December 8, 2008 by Debra A. McCurdy

Physician Quality Reporting Initiative Conference Call (Dec. 16, 2008)

CMS is holding a provider conference call December 16, 2008 to discuss the final results of the 2007 Physician Quality Reporting Initiative (PQRI).

Tags: Health Care Industry Events, Physician Payments, Physician Quality, Quality Reporting

Posted on December 5, 2008 by Debra A. McCurdy

CMS Issues Paper on Physician Value-Based Purchasing

CMS has released an “Issues Paper” as part of it’s plan to transition to a Medicare value-based purchasing program for physician and other professional services, as required by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).

Tags: Other CMS Developments, Medicare, Physician Payments, Physician Quality

Posted on December 3, 2008 by Debra A. McCurdy

CMS Listening Session: Medicare Value-Based Purchasing Program for Physician and Other Professional Services (Dec. 9)

On December 9, 2008, CMS is hosting a listening session as part of the development of a plan for the transition to a value-based purchasing program for physician and other professional services, as required by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). CMS is seeking feedback on an issues paper discussing components of the plan under development, including measures, data infrastructure and reporting, incentive methodology; and public reporting. Physicians, physician associations, and other interested parties are invited to participate in person or via teleconference. The registration deadline has been extended until Thursday, December 4th at 5 PM EST.

Tags: Health Care Industry Events, Medicare, Physician Payments, Physician Quality

Posted on December 2, 2008 by Debra A. McCurdy

E-Prescribing Update: Dec. 11 Open Door Forum, Technical Specifications Released

On December 11, 2008, CMS is hosting its second “special open door forum” on electronic prescribing (e-prescribing), at which CMS will provide an overview of Part D e-prescribing standards and discuss e-prescribing resources, incentives and measures. In a related development, CMS has announced the specifications for the e-prescribing measure, including the requirements for a qualified e-prescribing system, which will be used to determine whether an eligible professional is a successful e-prescriber and may qualify for a 2% incentive payment for the 2009 reporting period.

Tags: Health Care Industry Events, E-Prescribing, Physician Payments, Quality Reporting

Posted on November 17, 2008 by Debra A. McCurdy

Finance Chairman Baucus Outlines Health Reform Priorities

On November 12, 2008, Senate Finance Committee Chairman Max Baucus released a white paper entitled "Call to Action: Health Reform 2009." The document details Senator Baucus’ goals for health care reform in the broad areas of coverage, quality, and cost. Highlights of the lengthy plan include the following.

Ensuring Health Coverage for All Americans. The Baucus plan seeks universal health insurance coverage by supplementing the current employer-based system with a nationwide insurance pool called the Health Insurance Exchange. Premium subsidies would be available to qualifying families and small businesses. While the Exchange is being created, individuals aged 55 to 64 could buy in to Medicare, and access would be expanded to Medicaid and the State Children’s Health Insurance Program (CHIP). Once affordable health insurance options are available, all individuals would be required to have insurance coverage.
Improving Value by Reforming the Health Care Delivery System. Among other things, the plan calls for strengthening the role of primary care and chronic care management; refocusing payment incentives toward quality and value; and encouraging providers in different settings to collaborate in a way that improves quality and saves money (e.g., gainsharing). As part of the payment reforms, Baucus calls for overhaul of the Medicare physician fee schedule formula, greater surveillance of high-growth services, expanded use of pay-for-performance methodologies, and global payments for services provided to a patient during hospitalization and post-discharge. The Baucus plan also seeks to improve the health care infrastructure by supporting comparative effectiveness research through a new Health Care Comparative Effectiveness Research Institute and by promoting the adoption of health information technology.
Financing a More Efficient Health Care System. The Baucus plan seeks to prevent Medicare fraud, waste, and abuse through: more stringent enrollment criteria; enactment of payment methodologies that discourage waste (such as the DMEPOS competitive bidding program); encouraging provider and supplier compliance; vigilant government oversight of government health programs; and strong punishment for program abuses. The plan also seeks to increase transparency in the health system by mandating disclosure of gifts and other transfers of value made by drug and device companies to physicians and other health care professionals; increasing scrutiny of physician self-referrals (including a focus on physician-owned hospitals); and requiring public reporting and disclosure of health care price and quality information. With regard to private plans in Medicare, the Baucus plan also would address overpayments to Medicare Advantage (MA) plans, promote performance measures for Part D prescription drug plans and the application of pay-for-performance principles to these plans, and extend Medicaid price discounts to the drugs used by the dual-eligible population in the Part D program. In addition, the plan addresses long-term care reforms, including policies to continue to shift care from institutional settings to home and community settings, malpractice reform, and reforms of the tax code designed to make incentives more efficient, distribute benefits more fairly, and promote smarter consumer spending of health care dollars.

Health care reform promises to be a high-profile issue for the new Congress and the incoming Obama Administration. The broad scope of the Baucus white paper suggests that Congress intends to focus beyond access to insurance or the immediate problem of fixing the Medicare physician fee schedule and examine fundamental policy questions concerning how to promote quality and value throughout the health system at a time of limited federal resources.

Tags: Legislative Developments, Cost Effectiveness, Fraud and Abuse, Health IT, Health Reform, Medicare, Physician Ownership, Physician Payments, Physician Quality

Posted on November 4, 2008 by Debra A. McCurdy

Medicare Physician Fee Schedule Final CY 2009 Rule

On October 30, 2008, the Centers for Medicare & Medicaid Services (CMS) released the text of its final rule updating the Medicare physician fee schedule (MPFS) for calendar year (CY) 2009. As required under the “Medicare Improvements for Patients and Providers Act of 2008” (MIPPA), the rule increases physician payments by 1.1% in 2009, rather than the 5.4% cut CMS anticipated would result from the Sustainable Growth Rate (SGR) formula when it issued the July 7, 2008 proposed rule. Note that MIPPA did not amend the underlying SGR formula or modify payments for years after 2009; the Congressional Budget Office estimates that physician payment rates will be cut by 21% in 2010 unless Congress takes further action. In addition to making changes to physician payment rates, the sweeping rule includes many other policy changes, include the following.

CMS has adopted changes to the antimarkup rule for diagnostic tests billed by an ordering physician. In the proposed rule, CMS had offered two alternative approaches to reforming the anti-markup rules. Under the first approach, the anti-markup provision would apply if the professional component (PC) or technical component (TC) of a diagnostic test is ordered by a billing physician and is either: (i) purchased from an outside supplier, or (ii) performed or supervised by a physician who does not share a practice with the billing physician or physician organization. A supervising or interpreting physician could "share" a practice as an employee or contractor of the single physician or physician group billing the test; otherwise the anti-markup restriction would apply. Under the second alternative approach, CMS would maintain the current regulatory text that applies the anti-markup provisions to the technical and professional components of diagnostic tests performed outside the “office of the billing physician or other supplier,” but CMS would more broadly define the “office of the billing physician or other supplier” to include space in which diagnostic testing is performed provided that it is located in the same building in which the billing physician or other supplier regularly furnishes patient care. In the final rule, CMS provides that a billing physician or other supplier can avoid application of the anti-markup provisions by meeting either alternative 1 or, on a case-by-case basis, the “site-of-service” approach of alternative 2, both of which were subject to certain modification in the final rule. Specifically, under alternative 1, a performing physician "shares a practice" with the billing physician group if he or she provides at least 75% of his or her professional services through the billing physician group-- even if the physician works for one or more billing physician groups or other health care entities. There are no restrictions on the location where the services can be performed under alternative 1. If the performing physician does not meet the 75% test, the billing physician may avoid the anti-markup rule if the performing physician is an owner, employee or independent contractor and the services are performed in the billing physician’s office. The “office” means any medical office space (regardless of the number of locations) in which the ordering physician regularly furnishes patient care and includes space where the billing physician furnishes diagnostic testing if the space is located in the same building where the ordering physician regularly furnishes patient care.
CMS did not adopt its proposal to require any physician or nonphysician practitioners organization furnishing diagnostic testing services (except diagnostic mammography services) to enroll as an independent diagnostic testing facility (IDTF) and meet most IDTF performance standards. Instead, CMS cites a MIPPA provision requiring accreditation of entities furnishing certain advanced diagnostic testing procedures by January 1, 2012. CMS states that it may reconsider finalizing the IDTF standard in a future rulemaking. CMS did, however, adopt its proposal to require entities providing mobile diagnostic testing services to enroll in Medicare, comply with IDTF performance standards and bill Medicare directly for their services (although CMS is not requiring mobile testing entities to bill directly for the services they furnish when such services are furnished “under arrangement” with hospitals).
CMS did not finalize in the rule its proposed exception to the physician self-referral rule that would have protected remuneration provided by a hospital to physicians on its medical staff under incentive payment or shared savings programs under certain conditions. Instead, in order to finalize the exception(s) CMS is reopening the comment period and soliciting detailed information on 55 specific questions related to such issues as the definition of key terms, safeguards against patient or program abuses, and various aspects of program design.
The final rule expands the quality measures that eligible professionals may report to qualify for incentive payments under the Physician Quality Reporting Initiative in 2009thatequal to 2% of their total Medicare allowed charges. It also provides new PQRI reporting periods and provides for certain PQRI data to be submitted via clinical registries. In addition, as authorized by MIPPA, physicians and other eligible professionals who use a qualified electronic prescribing (e-prescribing) system to transmit prescriptions to pharmacies and submit required information on the claim may earn an incentive payment of 2% of their total Medicare allowed charges during 2009 (in addition to any PQRI incentive payment).
In the final rule, CMS is refining relative value units (RVUs), continuing the transition to a new “bottom up” methodology for practice expense RVUs, and applying the budget neutrality adjustment factor to the overall conversion factor (rather than applying the adjustment only to the physician work RVUs).
CMS is codifying changes to the Part B drug average sales price payment methodology resulting from the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) that went into effect April 1, 2008, including the use of a volume-weighted methodology and revised payment rules for certain inhalation drugs. CMS had proposed several changes to the competitive acquisition program (CAP), which offers physicians the option to acquire certain injectable and infused Part B drugs from an approved CAP vendor rather than buying and billing the drugs directly. On September 10, 2008, CMS announced it was postponing the 2009 CAP indefinitely. In light of this postponement, CMS is not adopting changes in the CAP at this time, but the agency continues to solicit public feedback on a range of CAP issues.
The final rule updates the End Stage Renal Disease (ESRD) facility wage index, implements a MIPPA provision providing a 1% increase to the ESRD composite rate and establishing a site-neutral base composite rate for hospital-based and independent dialysis facilities, and provides no update to the drug add-on payment.
CMS has adopted a series of enrollment and documentation-related changes. Currently, newly enrolled physicians and non-physician practitioners may retroactively bill Medicare for up to 27 months prior to the effective date of their enrollment. The new enrollment rules will significantly limit retroactive billing by physicians and non-physician practitioners to no more than 30 days prior to the effective date of enrollment. In addition, the rule requires physicians and nonphysician practitioners to report to their carrier any changes of ownership, adverse legal actions, or change in practice location within 30 days (versus the current 90 days) or face revocation of Medicare billing privileges and the recoupment of Medicare payments from the date of the reportable change. Physicians and non-physician practitioners are barred from billing for services furnished after certain adverse actions. The final rule also requires providers and suppliers to maintain ordering and referring documentation (including the referring physician’s National Provider Identifier) for 7 years (rather than the proposed 10 years) years from the date of service, and it requires physicians and nonphysician practitioners to maintain written ordering and referring documentation for 7 years (rather than 10 years) from the date of service. CMS also clarifies the effective date of Medicare billing privileges.
The final rule implements a MIPPA provision related to Medicare coverage of oxygen equipment. Specifically, MIPPA repeals a requirement that a supplier of oxygen equipment transfer title of the equipment to the beneficiary at the end of a 36-month rental period. Medicare payment for oxygen equipment will continue to be capped at 36 months (although payment will continue to be made for the oxygen contents). MIPPA requires the supplier that furnishes oxygen equipment during the 36-month rental period continue to furnish the equipment after the rental period ends for any period of medical need for the remainder of the “reasonable useful lifetime” of the equipment, even if the beneficiary moves out of the supplier’s normal service area. In addition, if a break in medical need occurs following the 36-month rental period, the supplier must resume furnishing the oxygen equipment when the beneficiary once again has a medical need for the oxygen equipment. While MIPPA authorizes CMS to make maintenance and servicing payments for non-routine maintenance and servicing of supplier-owned oxygen equipment, CMS has determined that it is not reasonable and necessary to make such payments. However, for CY 2009 only, CMS will make payments when the supplier performs a routine maintenance and servicing visit (but not replacement parts) for oxygen concentrators and transfilling equipment following each period of continuous use of 6 months after the 36-month rental period ends. CMS welcomes comments on this issue, especially regarding whether these payments should continue past CY 2009.
The final rule includes numerous other policy and payment changes, including provisions to address: potentially misvalued services; an expansion of the procedures subject to the multiple imaging procedure payment reduction; updates to the telehealth policy; potential refinements to geographic practice cost indices; revisions to the conditions of participation and other requirements affecting comprehensive outpatient rehabilitation facilities; changes to rehabilitation agency requirements, including provisions related to extension locations and emergency care; a prohibition on payment to suppliers of a continuous positive air pressure device when the supplier or its affiliate is directly or indirectly the provider of the sleep test that is used to diagnose a Medicare beneficiary with obstructive sleep apnea (although in the final rule CMS provides an exception for attended facility-based polysomnography); a new payment methodology for therapeutic shoes; and codification of other MIPPA self-implementing provisions, including an extension of the therapy cap exceptions process and changes to payments for clinical laboratory and ambulance services, among others.

CMS has released the advanced text of the rule, and the official version is scheduled to be published in the Federal Register on November 19, 2008. CMS is accepting comments on a limited number of provisions until December 29, 2008, including the exception for incentive payment and shared savings programs; certain MIPPA provisions, interim RVUs and pricing information for selected codes; and physician self-referral designated health services codes.

Tags: Centers for Medicare & Medicaid Services Developments, DMEPOS, E-Prescribing, ESRD, Medicare Part B Drugs, Physician Payments, Physician Quality, Radiology, Stark

Posted on November 3, 2008 by Debra A. McCurdy

MedPAC Meeting

On November 6 and 7, 2008, the Medicare Payment Advisory Commission (MedPAC) is meeting to discuss a number of health care policy issues, including reporting of physicians’ financial relationships, medical imaging services, the Medicare Part D and Medicare Advantage programs, hospice payments, and physician resource use.

Tags: Health Care Industry Events, Hospice, MedPAC, Medicare Advantage, Medicare Part D Drugs, Physician Payments, Radiology

Posted on October 24, 2008 by Debra A. McCurdy

Practicing Physicians Advisory Council Meeting

On December 8, 2008, the Practicing Physicians Advisory Council is holding its quarterly meeting to discuss Medicare policy changes related to physicians’ services. Agenda items include: Physician Fee Schedule Final Rule; Outpatient Prospective Payment System/Ambulatory Surgical Center Fee Schedule Final Rule; Stark Reform; Value Based Purchasing—Efficiency Measures; CMS-FDA Collaboration; and Medically Unlikely Edits Update.

Tags: Health Care Industry Events, ASC, HOPPS, Medicare, Physician Ownership, Physician Payments, Physician Quality

Posted on October 16, 2008 by Debra A. McCurdy

Alternative Payment Localities under the Medicare Physician Fee Schedule

CMS is soliciting comments regarding an interim study of options for revising geographic location adjustments under the Medicare physician fee schedule, entitled “Review of Alternative GPCI Payment Locality Structures.” CMS notes that it is not proposing to make any changes to the payment localities at this time, but CMS encourages comments on the options presented in the report as well as suggestions for other options, which will be considered in the development of possible future rulemaking on this issue. Electronic comments on the interim report may be submitted to MPFS@cms.hhs.gov until November 3, 2008.

Tags: Other CMS Developments, Physician Payments

Posted on October 15, 2008 by Debra A. McCurdy

Medicare Medical Home Demonstration

On October 28, 2008, CMS is hosting a Special Open Door Forum for physicians on the Medicare Medical Home Demonstration (MMHD) project. The Medical Home program is a three-year demonstration to provide coordination of services for certain Medicare beneficiaries with chronic or prolonged illnesses through a personal physician. Outreach and recruitment of eligible practices is expected to begin in January 2009, and monthly medical home fee payments will begin in January 2010. On the call, CMS will present background information, define the core capabilities required to qualify as a Medical Home, and discuss the monthly Medical Home fee amounts. The call will take place from 2:00 PM to 4:00 PM EDT; to participate, dial 1-800-837-1935, and reference conference ID number 65752061.

Tags: Health Care Industry Events, Medicare, Physician Payments

Posted on October 7, 2008 by Debra A. McCurdy

Trends in Medicare Imaging Services

A new Government Accountability Office (GAO) report reviews the impact of a Deficit Reduction Act of 2005 (DRA) provision capping Medicare fees for certain imaging services covered by the physician fee schedule at the rate for these services under Medicare’s hospital outpatient prospective payment system (OPPS). The GAO found that the OPPS cap reduced the fee for the performance of about one in four physician imaging tests overall in 2007, and fees for advanced tests were more likely than other imaging tests to be paid at the OPPS rate. Moreover, the GAO found that from 2000 through 2006 both expenditures for and utilization of Medicare physician imaging services increased, but in 2007 expenditures declined while per-beneficiary utilization continued to rise.

Tags: Other GAO Developments, Fraud and Abuse, Physician Payments, Radiology

Posted on September 26, 2008 by Debra A. McCurdy

Congressional Hearings

Numerous recent Congressional committee hearings have focused on health policy issues, including the following:

On September 24, 2008, the Senate Aging Committee examined "ways to respect Americans' choices at the end of life.” The panel also held a hearing September 17 on direct-to-consumer medical device advertising.
House Ways and Means Health Subcommittee held a hearing September 23, 2008 on problems in the private health insurance market, with a focus on the need for reforms in the non-group or individual market. The panel also met September 11 to examine on Medicare physician payment policy reform.
On September 23, 2008, the House Oversight and Government Reform Domestic Policy Subcommittee held a hearing on Medicaid pediatric dental care reform. The full Committee also held a hearing September 16 on HIV prevention.
The House Energy and Commerce Subcommittee on Health held a hearing September 18, 2008 on health reform, as did the House Small Business Committee.
The Senate Finance Committee held a hearing September 16, 2008, on health care delivery system reform, focusing on creating a patient-centered model of care and supporting primary care. On September 23, 2008, the Committee held a hearing on insurance market reform, highlighting health insurance exchanges that connect individuals, small businesses and those eligible for premium subsidies to available health insurance plans.
The Senate Special Committee on Aging held a hearing September 11, 2008 on Medicare information issues.

Tags: Health Reform, Hearings and Markups, Insurance, Medicaid, Medicare, Physician Payments

Posted on August 14, 2008 by Debra A. McCurdy

HOPPS, Physician Fee Schedule Correction Notice

On August 11, 2008, CMS published a notice correcting proposed drug administration ambulatory payment classifications (APCs) included in its July 18, 2008 proposed 2009 Medicare hospital outpatient prospective payment system (HOPPS) rule. In addition, on August 1, CMS published a notice making a series of technical changes to its July 7, 2008 proposed 2009 Medicare physician fee schedule rule.

Tags: Regulatory Developments, Centers for Medicare & Medicaid Services Developments, HOPPS, Medicare, Physician Payments

Posted on July 29, 2008 by Debra A. McCurdy

Medicare Physician Payment/DMEPOS Bidding Delay Legislation Enacted

On July 15, 2008, the House and Senate overrode the President's veto of H.R. 6331, the “Medicare Improvements for Patients and Providers Act of 2008” (MIPPA). The law rescinds a 10.6% cut in physician payments and delays a controversial medical equipment competitive bidding program, both of which temporarily went into effect July 1, 2008, and makes numerous other Medicare and Medicaid policy changes. Highlights of the law include the following:

Physician Payments: MIPPA cancels a 10.6% Medicare physician fee schedule cut that was triggered on July 1, 2008 and provides a 1.1% increase for 2009 (rather than the forecasted 5.4% cut). The law also expands the Physician Quality Reporting Initiative, promotes electronic prescribing, and requires non-hospital advanced imaging providers to be accredited by 2012.

DMEPOS Competitive Bidding. MIPPA delays and reforms the Centers for Medicare & Medicaid Services’ (CMS) competitive bidding program for certain categories of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). H.R. 6331 terminates contracts awarded under round one, rebids those areas in 2009, and delays round two bidding until 2011. The delay is financed by cutting fee schedule payments for round one items by 9.5% nationwide beginning January 1, 2009. MIPPA also includes a series of procedural improvements to the bidding process. A detailed Reed Smith analysis of the MIPPA DMEPOS bidding provisions is available on our website.
Therapy Caps Exception Process. MIPPA extends through December 31, 2009 the outpatient therapy service cap exceptions process.
Clinical Laboratory Services. The act repeals the clinical lab competitive bidding demonstration project and reduces the clinical lab fee schedule update by 0.5% in each of the next 5 years.
Medicare Advantage (MA) Provisions. MIPPA makes a series of MA payment and policy changes, including a $1.8 billion cut in the regional MA stabilization fund in 2012 and a phase-out of the adjustment for indirect medical education.
Medicare Part D Drug Plans. MIPPA sets timeframes for plan payments to pharmacies and long-term care pharmacy submission of claims; mandates coverage of certain classes of drugs; clarifies the use of Part D drug data; limits certain sales and marketing activities; and makes other Part D reforms.
End-Stage Renal Disease (ESRD) Provisions. The law updates the ESRD composite rate by 1.0% for 2009 and 2010, and mandates a fully-bundled ESRD payment system and quality incentive program by January 1, 2011.
Medicaid Drug Reimbursement. MIPPA delays the adoption of Medicaid payment based on average manufacturer price (AMP) for multiple source drugs and prevents publication of AMP data until October 1, 2009.

Reed Smith is preparing a client memo analyzing the new law, which will be available on our web site.

Tags: Legislative Developments, Clinical Laboratories, DMEPOS Competitive Bidding, Drug Pricing, MIPPA, Medicare Advantage, Medicare Part D Drugs, Physician Payments, Physician Quality, Therapy

Posted on July 29, 2008 by Debra A. McCurdy

CMS Guidance on MIPPA Implementation.

When MIPPA was enacted July 15, 2008, it included a number of retroactive Medicare policy provisions. CMS has begun providing guidance on implementation of these provisions, including the positive update in the physician fee schedule, the reinstatement of the therapy cap exception process, and the ability of all suppliers to furnish items in the first round DMEPOS competitive bidding areas (CBAs) at fee schedule rates. Likewise, CMS has announced that as a result of MIPPA enactment, the special accreditation deadlines previously established for the second round of the DMEPOS competitive bidding program have been cancelled, although the September 30, 2009 deadline for accreditation of all DMEPOS suppliers still is in effect.

Tags: Other CMS Developments, DMEPOS Competitive Bidding, MIPPA, Physician Payments

Posted on July 29, 2008 by Debra A. McCurdy

OIG Guidance on MIPPA/Waiver of Copayments

Certain retroactive payment increase provisions in MIPPA result in increased beneficiary copayment amounts for certain items and services furnished from July 1 through July 14, 2009. As a result, beneficiaries who already paid or were billed for cost-sharing amounts based on lower prices temporarily in effect are liable for additional cost-sharing amounts. On July 24, 2008, the OIG issued a policy statement assuring suppliers and providers affected by retroactive rate increases that they will not be subject to OIG administrative sanctions if they waive retroactive beneficiary cost-sharing amounts attributable to those increased payment rates (subject to certain conditions). The policy impacts the following types of items and services: physician fee schedule services; certain DMEPOS in the initial bidding areas; brachytherapy sources and therapeutic radiopharmaceuticals under the outpatient prospective payment system; and ambulance services. Note, however, that suppliers and providers are not required to waive retroactive beneficiary liability, and they may instead choose to bill the beneficiary for the additional copayment obligation.

Tags: Other OIG Developments, DMEPOS Competitive Bidding, Fraud and Abuse, MIPPA, OIG, Physician Payments

Posted on July 29, 2008 by Debra A. McCurdy

Practicing Physicians Advisory Council

On August 18, 2008, the PPAC is meeting to discuss proposed regulatory and other policy changes related to physicians' services.

Tags: Health Care Industry Events, Physician Payments

Posted on July 16, 2008 by Debra A. McCurdy

MIPPA: Medicare Physician Payment/DMEPOS Bidding Delay Legislation Enacted

On July 15, 2008, the House and Senate overrode the President's veto of H.R. 6331, the "Medicare Improvements for Patients and Providers Act of 2008” (MIPPA). The law rescinds a 10.6% cut in physician payments and delays a controversial medical equipment competitive bidding program, both of which went into effect July 1, 2008, and makes numerous other Medicare and Medicaid policy changes. The vote was 70-26 in the Senate and 383-41 in the House, following the President's veto earlier in the day.

The following are highlights of the legislation:

Physician Fee Schedule: MIPPA maintains physician payment rates for 2008 (rather than implement the 10.6% cut that was triggered on July 1, 2008), and provides a 1.1% increase for 2009 (rather than the forecasted 5.4% cut). The law also extends for two years the Physician Quality Reporting Initiative (PQRI), increases incentive payments for reporting by 2%, and makes other reforms to the program. The act promotes electronic prescribing (e-prescribing) by providing incentive payments for practitioners who use a qualified e-prescribing systems in 2009 through 2013, and reducing payments by 2% for providers practitioners who fail to e-prescribe beginning in 2011 (with limited exceptions). MIPPA also requires non-hospital advanced imaging providers to be accredited by 2012 and establishes a voluntary demonstration program to test the use of appropriateness criteria for advanced diagnostic imaging services.
DMEPOS Competitive Bidding. MIPPA delays and reforms the Centers for Medicare & Medicaid Services' (CMS) competitive bidding program for certain categories of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS). The first round of the program went into effect in 10 geographic areas on July 1, 2008. H.R. 6331 terminates contracts awarded under round one and rebids those areas in 2009, with bidding for round two delayed until 2011. The delay is financed by cutting fee schedule payments for all items covered by round one bidding program by 9.5% nationwide beginning January 1, 2009, followed by a 2% increase in 2014 (with certain exceptions). MIPPA also includes a series of procedural improvements to the bidding process, and addresses quality by, among other things, requiring subcontractor accreditation, excluding complex rehabilitation wheelchairs and negative pressure wound therapy from bidding, and exempting of certain rural and low-population areas from bidding. Separately, MIPPA repeals current oxygen equipment transfer of ownership requirements.
Therapy Caps Exception Process. MIPPA extends through December 31, 2009 the exceptions process relative to the annual per-beneficiary limitations on outpatient therapy services.
Clinical Laboratory Services. The act repeals the competitive bidding demonstration project for clinical laboratory services and instead reduces the fee schedule update for clinical lab services by 0.5% in each of the next 5 years.
Medicare Advantage (MA) Provisions. MIPPA makes a series of payment and policy changes affecting Medicare Advantage plans, including a $1.8 billion cut in the MA stabilization fund for regional preferred provider organizations in 2012 and a phase-out of the adjustment for indirect medical education.
Medicare Part D Drug Plans. MIPPA establishes timeframes for plan payments to pharmacies and long-term care pharmacy submission of claims; codifies current coverage of certain “protected classes” of drugs; clarifies the use of Part D drug data for research and other purposes; limits certain sales and marketing activities; and makes other Part D reforms.
End-Stage Renal Disease Provisions. The law provides a 1.0% update to the composite rate for renal dialysis services for 2009 and 2010, requires the Secretary to establish a fully bundled ESRD payment system by January 1, 2011, and establishes a quality incentive payment program for ESRD providers, effective January 1, 2011.
Medicaid Drug Reimbursement. MIPPA delays the adoption of Medicaid payment based on average manufacturer price (AMP) for multiple source drugs and prevent publication of AMP data until October 1, 2009.

Additional details regarding the legislation are available on the House Ways and Means Committee web site.

Tags: Legislative Developments, Clinical Laboratories, DMEPOS Competitive Bidding, E-Prescribing, ESRD, MIPPA, Medicaid Legislation, Medicare Advantage, Medicare Part D Drugs, Physician Payments, Physician Quality, Therapy

Posted on July 11, 2008 by Debra A. McCurdy

Medicare Physician Fee Schedule Proposed Rule

On July 7, 2008, CMS published its proposed rule to update the Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2009. The rule, which was issued prior to Congressional passage of H.R. 6331, calls for a 5.4 percent across-the-board cut in 2009 physician fee schedule payments as a result of the statutory sustainable growth rate (SGR) formula. Note that upon enactment of H.R. 6331, MPFS payments for 2009 instead will be increased by 1.1 percent.

The sweeping rule proposes many other policy changes, include the following:

CMS is proposing to amend the independent diagnostic testing facility (IDTF) performance standards to require any physician or nonphysician practitioners organization furnishing diagnostic testing services (except diagnostic mammography services) to enroll as an IDTF and be subject to most of the IDTF performance standards, including licensure, supervision, and practice location requirements. CMS seeks comments on whether these standards should apply to all diagnostic services or to a subset of services, such as those that require more costly testing and equipment, imaging services generally, or only advanced imaging techniques, such as MR, CT, and nuclear medicine (including PET).
CMS offers two alternative approaches to revising the anti-markup rule. In brief, under the first alternative approach, the anti-markup provision would apply if the professional component or technical component of a diagnostic test is ordered by a billing physician and is either: purchased from an outside supplier, or performed or supervised by a physician who does not share a practice with the billing physician or physician organization. A supervising or interpreting physician can "share" a practice as an employee or contractor of the single physician or physician group billing the test; otherwise the anti-markup restriction applies. Under the second alternative approach, CMS would continue to apply the anti-markup provisions to the technical and professional components of diagnostic tests performed outside the “office of the billing physician or other supplier,” but CMS would more broadly define the “office of the billing physician or other supplier” to include space in which diagnostic testing is performed provided that it is located in the same building (not including certain mobile vehicles) in which the billing physician or other supplier regularly furnishes patient care. Under this option, CMS also would clarify other aspects of the definition of office of the billing physician with respect to physician organizations and clarify when the anti-markup provision applies to the technical component of a diagnostic test furnished by an outside supplier. CMS is soliciting public comments on a number of specific aspects of the anti-markup provisions, including how to define the term net charge, whether direct billing should be required in certain situations, and the effective date of certain related provisions.
CMS suggests providing an exception to the physician self-referral rule that would protect remuneration provided by a hospital to physicians on its medical staff under incentive payment or shared savings programs, if specified conditions are met. In proposing these provisions, CMS notes that “the Medicare program and private industry stakeholders are increasingly exploring the benefits of various types of gainsharing, pay-for-performance, value-based purchasing, and similarly-styled incentive payment or shared savings programs that use economic incentives to foster high quality, cost-effective care.”
CMS proposes expanding the quality measures that eligible professionals may report to qualify for incentive payments under the Physician Quality Reporting Initiative (PQRI), providing new PQRI reporting periods, and allowing PQRI data to be submitted via clinical registries and electronic health records systems.
CMS outlines its proposed plans to identify and correct potentially misvalued services under the physician fee schedule, including a process to update the prices for high cost supply items that are paid under the practice expense methodology, and a review of services often billed together (which could lead to the application of the multiple procedure payment reduction to additional non-surgical procedures).
CMS is proposing a series of enrollment and documentation-related changes. Among other things, the rule would require physicians to report to their carrier any changes of ownership, adverse legal actions, or change in practice location within 30 days or face revocation of Medicare billing privileges and the recoupment of Medicare payments from the date of the reportable change. CMS also is proposing that providers and suppliers maintain ordering and referring documentation (including the referring physician’s National Provider Identifier) for 10 years from the date of service, and that physicians and nonphysician practitioners maintain written ordering and referring documentation for 10 years from the date of service. CMS also proposes clarifying the date of effective date of Medicare billing privileges.
The rule would codify changes to the Part B drug average sales price payment methodology resulting from the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) that went into effect April 1, 2008, including the use of a volume-weighted methodology and revised payment rules for certain inhalation drugs.
CMS proposes several changes to the competitive acquisition program (CAP) for Part B drugs, including refinement of the annual CAP payment update methodology, changes to the definition of a CAP physician, a relaxing of restrictions on physician transportation of CAP drugs between practice locations, and modification of the dispute resolution process.
The rule would add new HCPCS codes specific to the telehealth delivery of follow-up inpatient consultations to the list of Medicare approved telehealth services.
CMS proposes to update the End Stage Renal Disease (ESRD) facility wage index, and proposes no change in the drug add-on payment, although CMS seeks comment on alternative methods to calculate the drug-add on adjustment.
CMS proposes numerous other policy and payment changes, including refinements to resource-based practice expense and malpractice expense relative value units and geographic practice cost indices; performance standards for mobile independent diagnostic testing facilities; revisions to the conditions of participation and other requirements affecting comprehensive outpatient rehabilitation facilities; technical changes to rehabilitation agency requirements; a solicitation of comments regarding payment for physician certification/recertification for home health services; and a prohibition on payment to suppliers of a continuous positive air pressure device when the supplier, or its affiliate, is directly or indirectly the provider of the sleep test that is used to diagnose a Medicare beneficiary with obstructive sleep apnea.

CMS will accept comments on the proposed rule until August 29, 2008. The text of the rule is posted here.

Tags: Regulatory Developments, Centers for Medicare & Medicaid Services Developments, Physician Payments, Physician Quality

Posted on July 9, 2008 by Debra A. McCurdy

Medicare Claims for Physician Services, Outpatient Therapy, and Pathology Services

Congress’ failure to enact legislation prior to July 1, 2008 to avert the 10.6 percent Medicare physician fee schedule cut that went into effect July 1, 2008 has triggered certain CMS administrative actions. CMS has instructed its contractors to hold claims for physician fee schedule services provided in July for the first 10 business days of July. After 10 business days, contractors will begin releasing claims into processing, which will reflect the negative 10.6 percent update. If a new law is enacted which retroactively restores funding, CMS could automatically reprocess most previously-processed claims. CMS notes that providers may hold claims until it becomes clearer whether new legislation will be enacted or until cash flow becomes problematic to reduce the need to reconcile payments and simplify beneficiary billing. CMS also has reminded providers that the exception process related to outpatient therapy caps also expired June 30, 2008 since Congress did not extend the effective date of the program. Likewise, CMS has instructed contractors that due to the expiration of statutory authority, independent laboratories may no longer bill the carrier for the technical component of physician pathology services furnished to patients of a covered hospital for services on or after July 1, 2008. Note that while Congress subsequently passed legislation by a veto-proof margin to increase physician payments and extend these expiring provisions, the timing of enactment is still unclear (see related legislative story).

Tags: Other CMS Developments, Physician Payments, Therapy

Posted on June 20, 2008 by Debra A. McCurdy

Update on Medicare Legislation

As previously reported, on June 6, 2008, Senate Finance Committee Chairman Max Baucus introduced the “Medicare Improvements for Patients and Providers Act of 2008” (S. 3101). The legislation would block a 10.6 percent cut in Medicare physician payments scheduled to go into effect July 1, 2008 and make numerous other Medicare policy changes. The Senate held a procedural vote on the measure on June 16, 2008, but Senate Democratic leaders failed to muster the 60 votes needed to proceed with consideration of the bill. On June 20, 2008, the House Ways and Means Committee released its proposed amendments to S. 3101. The House could consider this amended version the week of June 23 in an attempt to avert the upcoming physician payment cut.

Tags: Legislative Developments, Medicare, Physician Payments

Posted on June 9, 2008 by Debra A. McCurdy

Senate Finance Committee Releases Medicare Payment Legislation

On June 6, 2008, Senate Finance Committee Chairman Max Baucus introduced the “Medicare Improvements for Patients and Providers Act of 2008” (S. 3101). Most notably, the legislation would block a scheduled cut in Medicare physician payments, extend certain expiring health care provisions, and make numerous other Medicare and Medicaid payment and coverage changes.

The following are highlights of the bill:

Physician Payments: In the absence of Congressional action, Medicare physician fee schedule payments will be subject to a more than 10 percent across-the-board cut effective July 1, 2008. The Baucus bill would delay the cut through December 31, 2009 and provide a 1.1% update for 2009. In addition, the bill would extend the physician quality reporting initiative (PQRI) through December 31, 2010, with an increase in the PQRI bonus to 2.0% for 2009 and 2010. The bill also would provide financial incentives for physicians to use e-prescribing, establish accreditation requirements for providers of the technical component of certain diagnostic imaging services, extend the current treatment of certain physician pathology services, and extend an increase in the geographic adjustment to payment for physician work in rural areas.
Renal Dialysis Provisions: The bill would increase the composite rate for end stage renal disease (ESRD) services by 1 percentage point for both 2009 and 2010, and require the Secretary to established a fully bundled payment system for ESRD services. In addition, dialysis providers would be subject to new quality standards.
Other Part B Provisions: Among other things, the bill would extend the outpatient therapy cap exceptions process; extend current payment rules covering brachytherapy and radiopharmaceuticals; extend the Medicare hold harmless provision under the hospital outpatient prospective payment system for certain small rural hospitals; repeal the clinical laboratory competitive bidding demonstration project (offset by a 0.5 percent reduction in lab payment updates for each of the next 5 years); improve payments for clinical lab tests performed by critical access hospitals; and modify payments for oxygen and power wheelchairs.
Hospital Provisions: The legislation would extend the Medicare Rural Hospital Flexibility Program, rebase sole community hospital payments, and make other rural hospital improvements.
Medicare Advantage Reforms: The proposal includes a series of changes to Medicare Advantage payment and other policies, including a phase-out of indirect medical education payments and a $1.8 billion cut in the Medicare Advantage Stabilization Fund.
Medicare Part D Drug Plan Provisions: Among other things, the bill would set deadlines for drug plan payment to pharmacies; establish claims submission time-frames for long-term care pharmacies; require weekly updates on pricing standards used for pharmacy reimbursement; allow coverage of barbiturates and benzodiazepines; codify coverage of certain “protected classes” of drugs; clarify the use of compendia for the drug benefit; and clarify the use of Part B data for research and other purposes.
Clinical Trials, Clinical Effectiveness: The bill would authorize alternative methods of payment for Medicare services provided to beneficiaries who participate in certain randomized control trials conducted by a Department of Health and Human Services (HHS) agency. It also would authorize Institute of Medicine studies on best practices in setting clinical decision-making protocols and on methodological standards for conducting systematic reviews of clinical effectiveness research.
Medicaid Drug Payments: The bill would delay the establishment of Medicaid payment limits using Average Manufacturer Price for multiple source drugs through September 30, 2009.
Beneficiary Improvements: The bill would expand coverage of preventive services, reduce copayments for outpatient mental health services, expand access to certain low-income programs, and limit certain Medicare Advantage and Part D drug plan sales and marketing practices, among other things.

Additional details regarding the Baucus bill are available here. The full Senate is expected to consider the legislation later this month. If approved by the Senate, attention would then shift to reaching an agreement with the House, which passed a much different Medicare bill last summer (H.R. 3162). Prospects for enactment are uncertain, given the Administration’s strong opposition to reductions in Medicare Advantage funding. Note that Senator Chuck Grassley, Ranking Republican on the Finance Committee, also has outlined an alternative Medicare proposal that does not include managed care cuts, which could serve as the basis of a compromise agreement.

Tags: Legislative Developments, E-Prescribing, ESRD, Medicare, Medicare Advantage, Medicare Part D Drugs, Physician Payments