On April 25, 2013, CMS announced that, due to technical issues, it is delaying implementation of the Phase 2 ordering and referring deniial editsntil further notice. By way of background, CMS plans to implement edits that will deny claims for Medicare Part B services (including the technical/non-interpretation component of imaging services, lab services, and durable medical equipment) and Part A home health agency services if the ordering/referring physician or other professional is not identified, is not in Medicare's enrollment records, or is not of a specialty type that may order/refer the service/item being billed. While CMS intended to require Medicare contractors to activate these edits effective May 1, 2013, concerns had been raised by physicians and suppliers that they could experience claims denials and delays based on discrepancies between the names of the ordering physician on the 1500 claim form and in Medicare’s enrollment records. CMS expects to announce a new implementation date in the near future.
MedPAC has released its annual report to Congress on Medicare Payment Policy, including payment update recommendations for all the major Medicare FFS payment systems and limited Medicare Advantage (MA) recommendations. The report also includes data on the status of the MA and Medicare Part D programs, including information about enrollment, plan options, and beneficiary cost-sharing. Note that while MedPAC’s recommendations are not binding, Congress and CMS often take into account MedPAC’s assessments when updating Medicare payment policies. Major recommendations include the following (many of which were included in previous reports):
- Congress should increase payment rates for inpatient and outpatient hospital prospective payment systems by 1%, and require the difference between the statutory update and the recommended 1% update be used to offset payment increases due to documentation and coding changes and to recover past overpayments.
- Congress should repeal the sustainable growth rate (SGR) system for physician services and replace it with a 10-year path of statutory fee-schedule updates. This proposal, first offered in October 2011, would combine a freeze in payment levels for primary care and, for all other services, annual payment reductions followed by a freeze. MedPAC also endorsed the collection of data to establish more accurate work and practice expense values; budget-neutral changes to improve data on which relative value unit weights are based and to redistribute payments to underpriced services, and changes to the structure of accountable care organization shared savings payments.
- Congress should eliminate the ambulatory surgical center (ASC) payment update for 2014, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
- Congress should eliminate the skilled nursing facility market basket update, and direct the Secretary to revise the prospective payment system for SNFs and begin a process of rebasing payment as soon as practicable.
- MedPAC reiterates previous recommendations to rebase home health rates, eliminate the market basket update, revise the home health case-mix system to rely on patient characteristics to set payment for therapy and nontherapy services, establish a per episode copay for home health episodes that are not preceded by hospitalization or post-acute care use, and expand program integrity efforts.
- Congress should eliminate the update to hospice rates for FY 2014 and adopt a series of previous MedPAC recommendations addressing payment and program integrity reforms.
- Congress should eliminate the 2014 updates for outpatient dialysis services, inpatient rehabilitation facilities, and long-term care hospitals.
- With regard to Medicare Advantage, Congress should allow the authority for most MA chronic care special needs plans (SNPs) to expire (with certain exceptions) and allow MA plans to enhance benefit designs for individuals with specific chronic or disabling conditions. MedPAC also recommends that Congress permanently reauthorize dual-eligible special needs plans (D–SNPs) that assume clinical and financial responsibility for Medicare and Medicaid benefits (with certain changes) and allow the authority for all other D–SNPs to expire.
Effective May 1, 2013, Medicare contractors will activate edits that will deny claims for Medicare Part B (including imaging and lab services), DME, and Part A home health agency (HHA) services if the ordering/referring physician or other professional is not identified, is not in Medicare's enrollment records, or is not of a specialty type that may order/refer the service/item being billed. Concerns have been raised by physicians and suppliers that they could experience claims denials and delays after May 1 based on discrepancies between the names of the ordering physician on the 1500 claim form and in Medicare’s enrollment records. CMS is holding a March 20, 2013 National Provider Call to discuss these new requirements.
On February 14, 2013, the House Energy and Commerce Health Subcommittee is holding a hearing entitled “SGR: Data, Measures and Models; Building a Future Medicare Physician Payment System.”
The Centers for Medicare & Medicaid Services (CMS) released late today its final rule implementing the physician payment transparency provisions of the Patient Protection and Affordable Care Act (Section 6002), commonly referred to as the "Physician Payments Sunshine Act." Among other things, the Act requires drug, device, biological or medical supply manufacturers to report payments or other transfers of value to physicians and other covered recipients. In addition, the Act requires manufacturers and group purchasing organizations (GPOs) to report certain information regarding ownership or investment interests held by a physician in the manufacturer or GPO.
The official version of the final rule, titled “Transparency Reports and Reporting of Physician Ownership of Investment Interests” (the “Final Rule”), will be published in the Federal Register on February 8, 2013. A proposed rule was previously published in the Federal Register on December 19, 2011, for which CMS received over 300 comments from a wide range of stakeholders.
The Final Rule provides important guidance to manufacturers and GPOs regarding the Physician Payments Sunshine Act, resolves several questions remaining after publication of the Proposed Rule, and raises some new ones. Notably, CMS has announced that manufacturers and GPOs will not be required to collect required information until August 1, 2013. Manufacturers and GPOs will be required to report the data for August through December of 2013 to CMS by March 31, 2014 and CMS will release the data publicly by September 30, 2014.
We are in the process of conducting a full review of the lengthy Final Rule and will release shortly a Client Alert providing a detailed analysis of the Rule. In the meantime, please contact Elizabeth Carder-Thompson (202-414-9213), Katie C. Pawlitz (202-414-9233), Nancy E. Bonifant (202-414-9353) or any other member of the Reed Smith Health Care Group with whom you work, if you would like additional information or if you have any questions.
The Senate Health, Education, Labor and Pensions (HELP) Committee held a hearing on January 24, 2013 to assess the state of America’s mental health system. In addition, the HELP Subcommittee on Primary Health and Aging held a January 29 hearing entitled “30 Million New Patients and 11 Months to Go: Who Will Provide Their Primary Care?”
The GAO has examined how private-sector efforts to adjust physician payments to reflect quality and efficiency could be applied successfully to the Medicare program. As previously reported, CMS developing a physician value-based payment modifier (Value Modifier), which was mandated by the ACA as a way to reward physicians for providing higher quality and more efficient care. The Medicare Value Modifier is being phased in from 2015 to 2017, with 2013 serving as the initial performance period for the 2015 Value Modifier. Under the final 2013 Medicare physician fee schedule rule, the Value Modifier initially will apply to all groups of physician with 100 or more eligible professionals. These groups will be able to choose two payment calculation options: (1) Value Modifier based strictly on participation in the Physician Quality Reporting System, or (2) Value Modifier based on quality tiering, with payments based on quality and costs. Based on a review of successful private-sector practices, the GAO recommends that CMS: consider rewarding physicians for performance improvement in addition to meeting absolute benchmarks; make more timely Medicare payment adjustments to enhance the significance of the incentive to physicians; and develop a strategy to reliably measure the performance of solo or small group practices. HHS concurred with the recommendations.
CMS has released the revised CMS-855S Medicare supplier enrollment application, version 01/13. Suppliers may use the 07/11 version of the CMS-855S through May 7, 2013, at which time any information received on the obsolete form will be returned to the supplier, according to the National Supplier Clearinghouse. CMS also has posted an updated (1/13) version of the CMS 855O form, the Medicare Enrollment Application - Registration for Eligible Ordering and Referring Physicians and Non-Physician Practitioners.
OIG Finds DMEPOS Competitive Bidding Not Spurring Suppliers to Solicit Specific Brands/Modes of Delivery
The OIG has released a statutorily-mandated report on the extent of supplier solicitation of physicians under the Round 1 rebid of the Medicare DMEPOS competitive bidding program, which began in nine competitive bidding areas on January 1, 2011. Under competitive bidding rules, a physician can prescribe a specific brand or mode of delivery (e.g., gaseous or liquid oxygen system) if the physician determines it is needed to avoid an adverse beneficiary medical outcome. In such cases, the contract supplier must furnish the item as prescribed, ask the physician to approve an alternative brand, or help the beneficiary find a contract supplier to furnish the prescribed brand (if a physician does not prescribe a specific brand, the supplier may choose a brand within the HCPCS code). Concerns have been raised that suppliers might have a financial motivation to solicit physicians to change a prescribed brand if the supplier does not carry the brand or have it in stock rather than send the patient to a different supplier, even though it would not result in a different Medicare payment amount. For its report, “Limited Supplier Solicitation of Prescribing Physicians under Medicare DMEPOS Competitive Bidding Program,” the OIG surveyed a sample of 294 physicians who prescribed competitive-bid items during the first half of 2011. The OIG found that 58% of the physicians did not prescribe brand-specific products, so had no reason to be solicited by suppliers regarding brand changes. Of the physicians that did prescribe a specific brand or mode of delivery, 69% did not receive any requests for brand changes. Only 33 physicians in the sample reported solicitations (22 of which were for diabetes supplies), and they told OIG that supplier reasons for change requests included the supplier’s belief that a change would better meet patient needs, the supplier not carrying the prescribed brand, and patient requests. The OIG also observed that none of the 37,000 Medicare hotline calls related to the competitive bidding program involved concerns about supplier solicitation of physicians regarding brand or mode of delivery.
CMS has released its final rule updating the Medicare physician fee schedule (MPFS) for 2013 and modifying numerous other Medicare Part B policies. Most significantly, the final rule includes a 26.5% across-the-board cut in physician fee schedule payments as a result of the statutory sustainable growth rate (SGR) formula. While Congress is widely expected to mitigate this policy in future legislation, the timing and scope of any such “fix” is highly uncertain. The following are highlights of the sweeping rule:
- Under the final rule, the 2013 MPFS conversion factor will be $25.0008, compared to $34.0376 in 2012. As noted, Congress could override the 26.5% SGR cut on either a temporary or permanent basis. Other provisions of the rule impact reimbursement for different types of services. For instance, the final rule seeks to benefit primary care physicians by authorizing separate payment to a patient’s community physician or practitioner to coordinate the patient’s care in the 30 days following a hospital or skilled nursing facility (SNF) stay. On the other hand, certain specialists, like diagnostic radiologists, would be negatively impacted by CMS’s continued expansion of the multiple procedure payment reduction (MPPR) policy. Under the final rule, on January 1, 2013 CMS will implement its policy, discussed in the CY 2012 final rule, applying the MPPR when one or more physicians in the same group practice furnish the interpretation of advance imaging services to the same patient, in the same session, on the same day. CMS also will apply the MPPR to the technical component of certain cardiovascular and ophthalmology diagnostic services for 2013. Under this policy, CMS will make full payment for the highest paid cardiovascular or ophthalmology diagnostic service and reduce the technical component payment for subsequent cardiovascular or ophthalmologic diagnostic services furnished by the same physician or group practice to the same patient on the same day by 25% for cardiovascular diagnostic services or 20% for ophthalmologic diagnostic services.
- CMS announced it is continuing to pay certain molecular pathology tests under the clinical laboratory fee schedule (CLFS), instead of assigning new genetic and genomic test codes to the physician fee schedule (as contemplated under the proposed rule). CMS also is establishing a new code (G0452, Molecular diagnostics; interpretation and report) to reimburse physicians under the MPFS for interpreting these tests.
- CMS is continuing implementation of the physician value-based payment modifier (Value Modifier), which was mandated by the ACA as a way to reward physicians for providing higher quality and more efficient care. In the final 2012 rule, CMS adopted performance measures to be used for future MPFS payment adjustments based on the Value Modifier. The final 2013 rule sets forth the payment methodology and phase-in plans. The Value Modifier is being phased in over from CY 2015 to CY 2017, with CY 2013 serving as the initial performance period for the CY 2015 Value Modifier. Under the final 2013 rule, the Value Modifier initially will apply to all groups of physician with 100 or more eligible professionals (up from 25 in the proposed rule). These groups will be able to choose two payment calculation options: (1) Value Modifier based strictly on participation in the Physician Quality Reporting System (PQRS), with groups that do not participate in the PQRS having a Value Modifier set at a -1.0% and groups that have reported at least one measure or elected the PQRS administrative claims option receiving a modifier of 0.0% (no payment adjustment, or (2) Value Modifier based on quality tiering, whereby groups with higher quality and lower costs will be paid more (maximum 2% increase), and groups with lower quality and higher costs will be paid less (maximum 1% negative adjustment).
- The rule also addresses, among many other things: modification of CMS’s Part B drug average manufacturer price (AMP) substitution policy to address drug shortage situations; payment reviews and adjustments for potentially misvalued codes; revisions to the PQRS and the Electronic Prescribing (eRx) Incentive Program; allowing Medicare to pay for portable x-ray services ordered by non-physician practitioners acting within their services within their state scope of practice and the scope of their Medicare benefit (in addition to physicians who currently may do so); termination of non-random prepayment review under the Medicare Prescription Drug, Improvement, and Modernization Act, and new claims-based data reporting requirements for therapy services under the Middle Class Tax Relief and Jobs Creation Act. Also, as discussed in the separate summary below, CMS has adopted a requirement for a face-to-face evaluation as a condition of Medicare payment for certain types of durable medical equipment (DME).
The rule was published in the Federal Register on November 16, 2012. CMS will accept comments on a limited number of provisions (interim final work, practice expense (PE), and malpractice RVUs for new, revised, potentially misvalued, and certain other CY 2013 HCPCS codes) until December 31, 2012.
On November 6, 2012, CMS published a final rule implementing an ACA provision requiring states to reimburse certain primary care physicians in CYs 2013 and 2014 at rates not less than the applicable Medicare rates. This minimum payment level applies to specified primary care services furnished by a physician with a specialty designation of family medicine, general internal medicine, or pediatric medicine, and it also applies to services rendered by these providers under Medicaid managed care plans. CMS will provide 100% federal matching funds for the difference in payment between the applicable Medicare payment and the Medicaid rate in effect as of July 1, 2009. The final rule specifies which services and types of physicians qualify for the minimum payment level, and the method for calculating the payment amount and any increase for which increased federal funding is due. The final rule also updates the interim regional maximum fees that providers may charge for the administration of pediatric vaccines to federally vaccine-eligible children under the Vaccines for Children program. CMS estimates that in CY 2013, the federal cost of the rule will be approximately $5.835 billion with $235 million in state savings, while in CY 2014, the federal cost will be approximately $6.055 billion with $310 million in state savings.
As part of CMS’s Medicare physician fee schedule rule, CMS is implementing an ACA provision requiring a face-to-face encounter as a condition of Medicare payment for certain DME items. CMS has made a number of modifications to the final policy in response to comments on the proposed rule. Under the final rule, CMS is expanding the written order requirements to provide that, as a condition of payment for specified items of DME, a physician must have documented and communicated to the DME supplier that the physician or a physician assistant, a nurse practitioner, or a clinical nurse specialist has had a face-to-face encounter with the beneficiary within the six month period before the written order. This provision is somewhat more liberal than the proposed rule, under which the face-to-face encounter would have been required no more than 90 days before or within 30 days after the order was written. However, CMS agreed with commenters that allowing the encounter to occur after the order was written could result in medically unnecessary items being delivered to beneficiaries. CMS also confirms that this 6-month deadline does not supersede the existing 45-day face-to-face encounter requirement for certain items, such as power mobility devices (PMDs), outlined in §410.38(c), which was issued under separate authority. The face-to-face encounter must be documented in accordance with specific CMS requirements, and include at a minimum: (1) the beneficiary name; (2) the item of DME ordered; (3) prescribing practitioner National Provider Identifier; (4) the signature of the prescribing practitioner; and (5) the date of the order (CMS removed the proposed requirement for orders to include “necessary and proper usage instructions” and the diagnosis). The supplier must retain the written order and supporting documentation for seven years after the date of service, and make it available to CMS on request. CMS will allow face-to-face encounters to be accomplished via a telehealth encounter if all other Medicare telehealth regulatory requirements are met. The initial items that will be subject to this provision include: items that currently require a written order prior to delivery under the Medicare Program Integrity Manual; items that cost more than $1,000; and items been identified as particularly susceptible to fraud, waste, and abuse (CMS added a criterion to remove any items where regulations explicitly state that a face-to-face encounter is not necessary). CMS lists in Table 89 of the final rule the HCPCS codes for DME items that initially will subject to this provision; CMS will update the list through rulemaking as necessary. CMS also states its intention to apply the face-to-face encounter requirements to certain prosthetic devices, orthotics, and prosthetics in a future rulemaking. CMS has established a G-code (G0454) to provide a modest payment to the physician who documents a face-to-face encounter for the specified DME items. To allow sufficient time for implementation, CMS is extending the effective date of this provision to new orders for covered items written on or after July 1, 2013. The official version of the rule will be published on November 16, 2012.
A recent GAO report examines the growing prevalence of physician self-referral (referral to the physician’s own practice) for advanced imaging services (e.g., magnetic resonance imaging (MRI) and computed tomography (CT) services) and its effect on Medicare spending. The GAO reports that while the number of both self-referred and non-self-referred advanced imaging services increased from 2004 through 2010, the growth rate was much higher for self-referred services. For instance, the number of self-referred MRI services increased by more than 80% during this period, compared to a 12% growth rate for non-self-referred MRI services. Self-referring providers referred about twice as many MRI and CT services as providers who did not self-refer in 2010, and these differences persisted even after accounting for practice size, specialty, geography, or patient characteristics. The GAO also found that providers' referrals of MRI and CT services substantially increased the year after they purchased or leased imaging equipment or joined a group practice that self-referred. The GAO estimates that providers who self-referred likely made 400,000 more referrals for advanced imaging services in 2010 than they would have if they were not self-referring, increasing Medicare costs by about $109 million. The GAO points out that any unnecessary referrals “pose unacceptable risks for beneficiaries, particularly in the case of CT services, which involve the use of ionizing radiation that has been linked to an increased risk of developing cancer.” The GAO recommends that CMS take steps to improve its ability to identify self-referral of advanced imaging services and address increases in these services, including: inserting a self-referral flag on Medicare Part B claims form to indicate whether or not an advanced imaging service is self-referred; implementing a payment reduction for self-referred advanced imaging services to “recognize efficiencies when the same provider refers and performs a service”; and determining how to ensure the appropriateness of advanced imaging services referred by self-referring providers.
CMS is holding a conference call on September 26, 2012 to enable providers to ask questions about the mandated manual medical review of therapy services from October 1 through December 31, 2012 that was enacted by the Middle Class Tax Relief and Job Creation Act of 2012. CMS invites providers who order or provide therapy services to participate in the call.
On October 25, 2012, CMS is hosting a national provider call on Preparing Physicians for ICD-10 Implementation. The call will cover, among other topics: practical pointers for providers on transitioning to ICD-10 (currently set for October 1, 2014); an overview of ICD-10 implementation requirements; plans for local coverage determination (LCD) and national coverage determination (NCD) ICD-10 conversions; and national implementation issues and plans.
Recent Congressional hearings have focused on the following health policy issues, among others:
- A House Ways and Means Health Subcommittee hearing entitled “Physician Organization Efforts to Promote High Quality Care and Implications for Medicare Physician Payment Reform";
- A Senate Commerce, Science and Transportation Committee hearing on short-supply, “gray market” prescription drugs; and
- A House Oversight and Government Reform Committee hearing on the Obama Administration’s Medicare Advantage Quality Bonus Payment Demonstration. The Panel also has scheduled an August 2 hearing on IRS enforcement of the ACA’s tax provisions.
On August 1, 2012, CMS is holding a national provider call on its proposals for the Physician Value-Based Payment Modifier under the Medicare physician fee schedule (MPFS). The Value Modifier was mandated by the ACA as a way to reward physicians for providing higher quality and more efficient care. In the final 2012 MPFS rule, CMS adopted performance measures to be used for future MPFS Value Modifier payment adjustments. The proposed 2013 MPFS rule sets forth the Value Modifier payment methodology and phase-in plans.
On July 30, 2012, CMS is publishing a proposed rule updating the Medicare physician fee schedule (MPFS) for 2013 and modifying numerous other Medicare Part B policies. Most significantly, the proposed rule would impose a 27% across-the-board cut in MPFS payments, largely due to the statutory Sustainable Growth Rate (SGR) update formula (although Congress is expected to eventually take action to block the automatic cuts, as it has in the past). Comments on the proposed rule are due by September 4, 2012. The following are highlights of the wide-ranging proposal:
- Under the proposed rule, the 2013 MPFS conversion factor would be $24.7124, compared to $34.0376 in 2012. As noted, Congress could override the SGR formula on either a temporary or permanent basis, but the timing and scope of any such action is uncertain.
- Numerous other provisions of the rule impact payment for particular services under the MPFS. For instance, CMS would boost payment to primary care physicians by authorizing separate payment to a patient’s community physician or practitioner to coordinate the patient’s care in the 30 days following a hospital or skilled nursing facility stay. On the other hand, certain specialists would be negatively impacted by CMS’s proposal to expand its multiple procedure payment reduction (MPPR) policy. Under the proposed rule, CMS will implement its policy, discussed in the CY 2012 final rule, applying the MPPR when one or more physicians in the same group practice furnish advance imaging services to the same patient, in the same session, on the same day (note that this is not a proposal; it will be effective January 1, 2013). CMS states that it generally intends to apply its MPPR policy to services furnished by physicians in the same group practice, unless special circumstances warrant a more limited application. CMS also proposes to apply the MPPR to the technical component of certain cardiovascular and ophthalmology diagnostic services for 2013. Under this proposed policy, CMS would make full payment for the highest paid cardiovascular or ophthalmology diagnostic service and reduce the technical component payment for subsequent cardiovascular or ophthalmologic diagnostic services furnished by the same physician or group practice to the same patient on the same day by 25%.
- CMS requests comments on the appropriate basis for payment for advanced diagnostic molecular pathology services. CMS is considering whether all new advanced diagnostic molecular pathology codes should be priced under the same fee schedule (either the MPFS or the clinical laboratory fee schedule). If CMS decides that such codes should be paid under the MPFS for CY 2013, the agency proposes to allow local Medicare contractors to price these codes because CMS does not believe it has sufficient information to establish accurate national pricing and because the price of tests can vary locally.
• CMS proposes to continue implementation of the physician value-based payment modifier (Value Modifier), which was mandated by the ACA as a way to reward physicians for providing higher quality and more efficient care. In the final 2012 rule, CMS adopted performance measures to be used for future MPFS payment adjustments based on the Value Modifier. The proposed 2013 rule sets forth the payment methodology and phase-in plans. The Value Modifier is being phased in over from CY 2015 to CY 2017, with CY 2013 serving as the initial performance period for the CY 2015 Value Modifier. Under the proposed 2013 rule, the Value Modifier initially will apply to all groups of physician with 25 or more eligible professionals. These groups will be able to chose two payment calculation options: (1) Value Modifier based strictly on participation in the Physician Quality Reporting System (PQRS), with groups that do not participate in the PQRS having a Value Modifier set at a -1.0 percent, or (2) Value Modifier based on quality tiering, whereby groups with higher quality and lower costs would be paid more, and groups with lower quality and higher costs would be paid less.
- The sweeping rule also addresses, among many other things: modification of CMS’s Part B drug average manufacturer price (AMP) substitution policy to address drug shortage situations; payment reviews and adjustments for potentially misvalued codes; revisions to the PQRS and the Electronic Prescribing (eRx) Incentive Program; allowing Medicare to pay for portable x-ray services ordered by non-physician practitioners acting within their services within their state scope of practice and the scope of their Medicare benefit (in addition to physicians who currently may do so); termination of non-random prepayment review under the Medicare Prescription Drug, Improvement, and Modernization Act, and new claims-based data reporting requirements for therapy services under the Middle Class Tax Relief and Jobs Creation Act. Also, as discussed in the separate summary below, CMS is proposing to require a face-to-face evaluation as a condition of Medicare payment for certain types of durable medical equipment (DME).
CMS has posted 43 new FAQs on “Bundling of Payments for Services Provided to Outpatients Who Later Are Admitted as Inpatient: 3-Day payment Window and the Impacts on Wholly Owned or Wholly Operated Physician Offices.”
Congressional panels have examined a number of health policy issues recently, including:
- ACA Hearings: The House Ways and Means Committee held a hearing on the implications of the Supreme Court's ruling that the individual mandate in the ACA is constitutional, particularly as it relates to Congress' taxing authority. The House Oversight and Government Reform Committee held separate hearings on the ACA’s impact on doctors and patients, and on job creators and the economy.
- Medicare Physician Payments: The Senate Finance Committee held a hearing on “Medicare Physician Payments: Perspectives from Physicians,” while the House Energy and Commerce Health Subcommittee examined “Using Innovation to Reform Medicare Physician Payment.” (http://energycommerce.house.gov/hearings/hearingdetail.aspx?NewsID=9692).
- Dual Eligibles: The Senate Aging Committee held a hearing on Medicare and Medicaid coordination for dual-eligibles.