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

• 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.

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.

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.

• CMS is cutting technical component payments for certain non-hospital imaging procedures by changing the imaging equipment usage assumption for equipment priced over $1 million from the current 50% usage rate to a 90% usage rate, which will reduce per procedure practice expense (PE) relative value units (RVUs) -- and thus the per procedure technical component reimbursement -- for services using such imaging equipment).   In the final rule, CMS decided only to apply this change to MRIs and CTs. The payment cut will be transitioned with full implementation not for four years. Beginning 2010, 75% of the practice expense is paid based on the old usage rate with full implementation in 2013. CMS also has adopted provisions to begin implementing the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) provision mandating an accreditation process for entities furnishing the technical component of certain advanced diagnostic testing procedures by January 1, 2012. CMS also is publishing a separate notice inviting independent accreditation organizations to participate in the accreditation program. 
• The final rule revises the Electronic Prescribing Incentive Program and the Physician Quality Reporting Initiative (PQRI) to, among other things, simplify e-prescribing reporting requirements, provide additional reporting options (including an electronic health record-based reporting mechanism), allow group practices to be considered successful e-prescribers; and expand PQRI quality measures. 
• CMS is adopting its proposal to refine malpractice RVUs to redirect payment to physicians with the highest malpractice costs.
• CMS is ending payment for consultation codes and instead requiring use of evaluation and management (E/M) codes. Note that under the final rule, CMS is making an exception to this policy for telehealth consultations and maintaining payment for G-codes used to bill for these consultations. Savings from the discontinuation of consultation codes are being redistributed to increase payments for the existing E/M services and to the payment for the surgical global period.
• The final rule clarifies the "stand in the shoes" standard for considering compensation arrangements under Stark.
• CMS is establishing 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 making changes in the “grandfathering” rules for noncontract suppliers. CMS is also finalizing policy changes regarding maintenance and servicing of oxygen equipment. 
• The rule provides that the annual per beneficiary outpatient therapy caps for CY 2010 will be $1860 each for (1) outpatient physical therapy and speech-language pathology services combined, and (2) outpatient occupational therapy services. CMS also notes that its authority to provide for exceptions to therapy caps will expire on December 31, 2009, unless the Congress acts to extend it.
• The final rule implements a variety of other Part B policies, including provisions that: establish Medicare coverage of cardiac and pulmonary rehabilitation services and chronic kidney disease education; update end-stage renal disease (ESRD) facility rates; require authorized compendia used to determining medically-accepted indications of drugs and biologicals used off-label in anti-cancer chemotherapeutic regimens to have a transparent process to evaluate therapies and identify potential conflicts of interests; revise certain requirements under the Part B drug competitive acquisition program. 

The official version of the rule is scheduled to be published in the Federal Register on November 25, 2009. CMS will accept comments on certain provisions of the final rule until December 29, 2009. Specifically, CMS is accepting comments on the following issues: interim RVUs for selected codes, the physician self-referral designated health services, services for consideration for the Five-Year Review of work RVUs, and whether additional guidance is needed regarding CMS’s policy regarding services provided under arrangement.  

• 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.

• 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.  

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.

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.