Despite continuing provider concerns, CMS has announced that it will direct Medicare administrative contractors (MACs) to activate controversial “phase 2” ordering/referral edits effective January 6, 2014. Once activated, MACs will deny claims for Medicare Part B services (including lab services and the technical component of imaging services), durable medical equipment, 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. CMS had previously delayed an earlier May 1, 2013 target date for implementation due to objections 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. There has been no assurance from CMS, however, that these concerns have been fully resolved, and the only recourse for providers if claims are inappropriately denied claim will be to file an appeal. A CMS educational article accompanying the announcement suggests that imaging suppliers and providers bill global claims separately to prevent a denial for the professional component in the event that the new edits deny the technical component of imaging services.
CMS is requesting public suggestions on potential improvements to the Advanced Diagnostic Imaging (ADI) program, an accreditation program mandated by the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) that applies to suppliers that furnish the technical component of advanced diagnostic imaging services such as diagnostic MRI, CT, and nuclear medicine (including PET), and certain other diagnostic imaging services (excluding X-ray, ultrasound, and fluoroscopy). According to a recent CMS newsletter, CMS is considering incorporating health and safety standards into the ADI program through Conditions for Coverage, potentially addressing personnel qualifications, infection control practices, quality improvement programs, image quality, patient safety, evidence-based research, among other topics. Suggestions may be sent to ADISuggestions@cms.hhs.gov.
This request for input is in response to a recent GAO report recommending that CMS publish minimum national standards for the accreditation of ADI suppliers; develop an oversight framework for evaluating accrediting organization performance; develop more specific requirements for accrediting organization audits; and clarify guidance on immediate-jeopardy deficiencies. The report, “Medicare Imaging Accreditation: Establishing Minimum National Standards and an Oversight Framework Would Help Ensure Quality and Safety of Advanced Diagnostic Imaging Services,” is posted here.
A new bill introduced in the House on August 1, 2013 by Congresswoman Jackie Speier (D-CA) and Congressman Jim McDermott (D-WI) would dramatically narrow the in-office ancillary services (IOAS) exception to the Stark law for physician groups performing imaging, pathology radiation therapy and physical therapy services. The bill (“Promoting Integrity of Medicare Act of 2013”) would amend the IOAS exception by excluding “specified non-ancillary services” from its protection. Initially, the bill identifies the following services as “non-ancillary services” excluded from the IOAS exception: (a) pathology services; (b) radiation therapy services and supplies; (c) advanced imaging services (i.e., CT, MRI and PET); and (d) physical therapy services. If adopted, the bill would prohibit, for example, a physician ordering advanced imaging services for a Medicare beneficiary if the services are performed in the ordering physician’s offices. However, referrals of low-end imaging, such as x-ray or ultrasound, would still fall within the IOAS exception.
In addition, the bill would require enhanced CMS review of so-called “non-ancillary services” to identify those creating a high risk of Stark Law noncompliance, including using prepayment reviews, claims audits, focused medical review, or computer algorithms. The bill would also create higher penalties for referrals of “non-ancillary services” by imposing upon those referrals civil monetary penalties that are greater than the penalties currently authorized for other violations of the Stark law.
The bill was introduced after others in the federal government have criticized self-referral. A September 2012 study by the Government Accounting Office found that the number of advanced imaging services ordered by physicians increased when the services were performed in the referring physician’s office. The GAO recommended that CMS improve its ability to identify self-referral of advanced imaging services and address increases in these services. More recently, the Obama Administration’s proposed federal budget for fiscal year 2014 suggested excluding radiation therapy, therapy services, and advanced imaging from the IOAS exception, except in cases where a practice meets certain accountability standards. No action on the bill, the GAO recommendation or the Obama budget has been taken to date.
The Government Accountability Office (GAO) has identified shortcomings in CMS’s implementation of accreditation requirements for suppliers of advanced diagnostic imaging (ADI) services under the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). For instance, the GAO found significant differences among the accrediting organizations arising from the lack of minimum national standards, rendering it difficult for CMS to monitor and assess such factors as qualifications of technologists and medical directors and the quality of clinical images. The GAO also reports that CMS’s oversight of the accreditation requirement is limited, with the initial focus on ensuring that claims were paid only to accredited suppliers. According to the GAO, CMS has not developed an oversight framework that would enable it to monitor and measure performance. The three accrediting organizations for ADI facilities approved by CMS are the American College of Radiology, the Intersociety Accreditation Commission and The Joint Commission (TJC). One area of controversy in the report involves the GAO’s criticism of TJC’s accreditation program for having less focus on imaging quality and physician qualifications than the other two accrediting organizations, assertions the TJC strongly contested. The GAO recommends that CMS: publish minimum national standards for the accreditation of ADI suppliers; develop an oversight framework for evaluating accrediting organization performance; develop more specific requirements for accrediting organization audits; and clarify guidance on immediate-jeopardy deficiencies. HHS concurred with the recommendations.
Bioethics Panel Seeks Comments on Ethical/Legal Issues Involving "Incidental Findings" in Research and Testing
The Presidential Commission for the Study of Bioethical Issues is requesting public comment on the ethical, legal, and social issues raised by “incidental findings” (e.g., information obtained from testing that was not its intended or expected object) that arise from genetic and genomic testing, imaging, and testing of biological specimens conducted in the clinical, research, and direct-to-consumer contexts. The Commission is particularly interested in receiving public commentary regarding:
- The likelihood of such incidental findings and any related case studies;
- What, if anything, patients, participants, and/or consumers should be told about incidental findings resulting from large-scale genetic testing, imaging, and testing of biological specimens before tests are conducted;
- Any duties or ethical obligations that clinicians, researchers, and direct-to-consumer companies might have to actively look for certain incidental findings;
- Best practices, methods, and mechanisms for determining when and how incidental findings should be returned to patients, participants, and/or consumers;
- The acceptability of holding back information--such as establishing “no return” policies, or advance stipulations that no incidental findings will be returned; and,
- Any best practices or recommendations regarding incidental findings that apply no matter the type of test or context.
Comments will be accepted until July 5, 2013. Additional information about the Commission’s work in this area is available here.
On Mayl 10, 2013, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule updating Medicare inpatient prospective payment system (IPPS) and long-term acute care hospital prospective payment system (LTCH PPS) rates and policies for fiscal year (FY) 2014, which begins October 1, 2013. Comments on the proposed rule will be accepted until June 25, 2013. Highlights of the sweeping rule include the following:
- The proposed rule would increase IPPS operating rates by 0.8% after accounting for all adjustments (if a hospital does not successfully participate in the Hospital Inpatient Quality Reporting (IQR) Program, this update is reduced by 2.0 percentage points). The 0.8% update reflects the hospital market basket of 2.5% reduced by a -0.4 percentage point multi-factor productivity adjustment and an additional -0.3 percentage point reduction in accordance with the Affordable Care Act (ACA). The rate is further decreased by 0.8% for a proposed documentation and coding recoupment adjustment required by the American Tax Relief Act of 2012 and by a 0.2% proposed adjustment to offset the cost of a proposal addressing its inpatient medical review criteria. Specifically, CMS proposes to clarify its medical review criteria to presume that Part A hospital inpatient status is appropriate if the beneficiary is admitted to the hospital pursuant to a physician order and receives care for at least two midnights. On the other hand, hospital inpatient admissions spanning less than two midnights will presumptively be inappropriate under Part A. Appropriate documentation could rebut the presumption.
- The proposed rule includes a number of hospital quality initiatives. For instance, CMS is proposing to implement the ACA’s Hospital-Acquired Condition (HAC) Reduction Program. Under this provision, effective beginning in FY 2015, hospitals that rank among the lowest-performing 25% with regard to HACs will be paid 99% of the IPPS payment that otherwise would be made. The proposed rule addresses, among other things, the payment adjustment, measure selection, risk-adjustment and scoring methodology; performance scoring; public availability of hospital-specific performance information; and limitation of administrative and judicial review. CMS also proposes to update the Hospital Value-Based Purchasing (VBP) Program, which adjusts IPPS payments based on how well a hospital performs or improves performance on a set of quality measures. For FY 2014, CMS proposes increasing the applicable percent reduction to base operating DRG payment amounts to 1.25%, increasing the total estimated amount available for value-based incentive payments (approximately $1.1 billion), and adding new measures to the program. In addition, the proposed rule would expand the Hospital Readmissions Reduction Program, under which CMS currently assesses hospitals’ penalties using three readmissions measures (heart attack, heart failure, and pneumonia). The maximum payment reduction will increase from 1% to 2% in FY 2014, as mandated by the ACA. For FY 2014, CMS also proposes to add two new measures to calculate readmission penalties effective for FY 2015: readmissions for hip/knee arthroplasty and chronic obstructive pulmonary disease. CMS also proposes a revised methodology to take into account planned readmissions for the existing readmissions measures. The proposed rule also would revise IQR program measures.
- CMS proposes to implement new cost centers for Implantable Devices, MRIs, CT scans, and cardiac catheterization for FY 2014, which would increase the total number of cost-to-charge ratios (CCRs) used to calculate the FY 2014 proposed relative weights from 15 to 19. The additional CCRs generally increase the relative weight values for surgical Medicare severity diagnosis related group (MS-DRGs) and decrease the relative weight values for medical MS-DRGs.
- CMS proposes to implement an ACA provision revising how Medicare disproportionate share hospital (DSH) payments are paid. Under the proposed rule, hospitals will receive 25% of the payment they otherwise would receive, and the remaining 75% percent will be adjusted for decreases in the national rate of uninsured individuals and distributed to hospitals payments based on the hospital’s share of uncompensated care relative to all Medicare DSH hospitals.
- The proposed rule also addresses, among many other things: MS-DRG classifications for certain procedures; applications for new technology add-on payments; direct graduate medical education and indirect medical education payments; and the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits. In addition, CMS proposes to revise the conditions of participation (CoPs) for hospitals relating to the administration of vaccines by nursing staff, and the CoPs for critical access hospitals relating to the provision of acute care inpatient services.
- With regard to the LTCH PPS, CMS proposes a 1.8% annual update for LTCHs, which would increase the standard federal rate to $40,622.06. The rule also includes a number of other LTCH PPS payment and policy provisions, including a proposal to allow the regulatory moratorium on the full application of the “25% Rule” to lapse, new quality measures, and solicitation of comments on patient criteria-based payment adjustments. Reed Smith has prepared a Client Alert with additional details on the LTCH PPS provisions.
On April 25, 2013, CMS announced that, due to technical issues, it is delaying implementation of the Phase 2 ordering and referring denial edits until 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.
Today, the Obama Administration released its proposed federal budget for fiscal year 2014. As widely reported, the budget incorporates an offer the President made to Congress in December 2012 to achieve nearly $1.8 trillion in additional deficit reduction over the next 10 years, including $401 billion in health savings (the Administration observes that this level of cuts would “provide more than enough deficit reduction to replace the damaging cuts required by the Joint Committee sequestration”).
Virtually all provider types – and drug manufacturers – would be impacted by the budget provisions, if adopted as proposed. The budget proposal is certainly subject to change during the legislative process, particularly as the House and Senate leadership pursue alternative budget frameworks, and indeed, gridlock could prevent significant action on entitlement reform this year. Nevertheless, the proposals bear careful monitoring because they could eventually be included in any long-elusive “grand bargain” to reform the Medicare program and reduce the federal debt.
Highlights of the Administration’s Medicare and Medicaid proposals include the following:
Medicare Provider Payments
- Reform the Medicare physician fee schedule/sustainable growth rate (SGR) formula to provide stable payments followed by payment linked to participation in an “accountable payment model.”
- Reduce Medicare coverage of bad debts from 65% generally to 25% over three years starting in 2014.
- Reduce Medicare indirect medical education add-on payments by $11 billion over 10 years.
- Reduce payment for post-acute care services in several ways.
- Reduce payment updates for inpatient rehabilitation facilities (IRFs), long-term care hospitals (LTCHs), skilled nursing facilities (SNFs), and home health agencies (HHAs) by 1.1 percentage points, beginning in 2014 through 2023 (the update could not fall below 0%). This provision would save $79 billion over 10 years.
- Adjust the standard for classifying a facility as an IRF (at least 75% of patient cases admitted to an IRF must meet one or more of 13 designated severity conditions), saving about $2.5 billion over 10 years.
- Equalize IRF and SNF payments for three conditions involving hips and knees, pulmonary conditions, as well as other conditions selected by the Secretary, saving $2.0 billion over 10 years.
- Reduce by up to 3% payments to SNFs with high rates of care-sensitive, preventable hospital readmissions, beginning in 2017, saving $2.2 billion over 10 years.
- Implement bundled payments for post-acute care providers (LTCHs, IRFs, SNFs, and HHAs) beginning in 2018. Payments would be bundled for at least half of the total payments for post-acute care providers. Rates based on patient characteristics and other factors would be set to produce a permanent and total cumulative adjustment of -2.85% by 2020. Beneficiary coinsurance would equal levels under current law. This provision would save $8.2 billion over 10 years.
- Align Medicare payments to rural providers with the cost of care, saving $2 billion over 10 years.
- Align Medicare payment for clinical laboratory services with private sector rates and encourage electronic reporting of laboratory results.
Prescription Drug Provisions
- Reduce payment for physician-administered Medicare Part B drugs from 106% of average sales price to 103% of average sales price. Manufacturers would be required to provide a specified rebate in certain instances as determined by the Secretary “to preserve access to care.”
- Provide Medicaid-level drug rebates for brand name and generic drugs provided to beneficiaries who receive Part D low-income subsidies, saving $123 billion over 10 years.
- Close the Medicare Part D donut hole by 2015, rather than 2020, by increasing manufacturer discounts to from 50% to 75% beginning in plan year 2015.
- Lower Medicaid drug costs by clarifying the definition of brand drugs, excluding authorized generic drugs from average manufacturer price calculations for determining manufacturer rebate obligations for brand drugs, making a technical correction to the Affordable Care Act (ACA) alternative rebate for new drug formulations, and calculating Medicaid federal upper limits based only on generic drug prices. These proposals are projected to save $8.8 billion over 10 years.
- Encourage the use of generic drugs by Part D low-income subsidy beneficiaries by modifying copayments, saving approximately $7 billion over 10 years.
- Improve program integrity for Medicaid drug coverage by directing states to track high prescribers and utilizers of Medicaid prescription drugs; requiring manufacturers to make full restitution to states for any covered drug improperly reported by the manufacturer on the Medicaid drug coverage list; allowing more regular audits and surveys of manufacturers to ensure compliance with Medicaid drug rebate agreement requirements; requiring drugs to be electronically listed with the FDA to receive Medicaid coverage; and expanding penalties for reporting false information for the calculation of Medicaid rebates.
- Increase the availability of generic drugs and biologics by authorizing the Federal Trade Commission to stop companies from entering into “pay for delay” agreements and modifying the length of exclusivity on brand name biologics.
Program Integrity/Efficiency Provisions
- Provide $640 million in combined mandatory and discretionary program integrity funding to implement activities that reduce payment error rates, prevent fraud and abuse, target high-risk services and supplies, and enhance civil and criminal enforcement for Medicare, Medicaid, and CHIP.
- Authorize civil monetary penalties or other intermediate sanctions for providers who do not update enrollment records and permit exclusion of individuals affiliated with entities sanctioned for fraudulent or other prohibited actions from federal health care programs.
- Expand authority to investigate and prosecute allegations of abuse or neglect of Medicaid beneficiaries in additional health care settings.
- Exclude radiation therapy, therapy services, and advanced imaging from the in-office ancillary services exception to the prohibition against physician self-referrals (Stark law), except in cases where a practice meets certain accountability standards, as defined by the Secretary.
- Require prior authorization of advance imaging services.
- Require prepayment review or prior authorization for power mobility devices.
- Allow the Secretary to create a system to validate practitioners’ orders for certain high-risk items and services.
Other Medicare Provisions
- Revise beneficiary cost-sharing requirements, including increased income-related premiums under Parts B and D, a new home health copayment, and increased premiums for beneficiaries with Medigap policies with particularly low cost-sharing requirements.
- Increase the minimum Medicare Advantage (MA) coding intensity adjustment (which decreases MA plan payments to reflect differences in coding practices between Medicare fee-for-service and MA) and align employer group waiver plan payments with MA bids, saving $19 billion over 10 years.
- Strengthen the Independent Payment Advisory Board (IPAB) by reducing the target rate of Medicare cost growth from gross domestic product plus one percentage point to plus 0.5 percentage point.
- Expand the availability of Medicare data released to physicians and other providers for performance improvement, fraud prevention, value-added analysis, and other purposes.
- Base Medicaid rates for durable medical equipment on Medicare rates to save $4.5 billion over 10 years.
- Align Medicaid Disproportionate Share Hospital (DSH) payments with expected levels of uncompensated care to save $3.6 billion over 10 years.
- Affirm Medicaid’s position as a payer of last resort when another entity is legally liable to pay claims.
A 131-page Department of Health and Human Services (HHS) “Budget in Brief” summary discusses these provisions in greater detail, and also addresses other HHS agency budget proposals and discusses HHS’s implementation of private health insurance protections and programs under the ACA.
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.
The Centers for Medicare & Medicaid Services (CMS) published a proposed rule on February 7, 2013 that it estimates would save health care providers $676 million annually by streamlining unnecessary, obsolete, or excessively burdensome regulations and making reforms to the Clinical Laboratory Improvement Amendments of 1988 (CLIA). The provisions of the wide-ranging proposal would affect numerous policy areas; among other things, the proposed rule would:
- Revise the requirements ambulatory surgical centers (ASCs) must meet in order to provide radiological services that are integral to procedures offered by the ASC and provide that a qualified doctor of medicine or osteopathy must supervise the provision of radiologic services (eliminating the requirement that ASCs meet the hospital condition of participation (CoP) requirement to have a radiologist supervise the provision of radiologic services);
- Permit qualified dietitians to order patient diets under the hospital CoPs;
- Revise the nuclear medicine services CoP to remove the requirement for direct supervision of hospital in-house preparation of radiopharmaceuticals;
- Eliminate a requirement that critical access hospitals (CAHs), rural health clinics (RHCs), and federally qualified health centers have a physician on site at least once in every two-week period, and eliminate the requirement that a CAH develop its patient care policies with the advice of at least one member who is not a member of the CAH staff;
- Allow long-term care facilities to apply for an extension of the August 13, 2013 deadline for installing automatic sprinkler systems;
- Eliminate a transplant center data submission requirement and an automatic re-approval survey process.
- Make a number of clarifications pertaining to CMS regulations governing proficiency testing referrals under CLIA, including establish policies under which certain PT referrals by laboratories would not generally be subject to revocation of a CLIA certificate.
- Address a variety of other issues, such as hospital reclassification of swing-bed services, hospital medical staff, hospital governing bodies, practitioners permitted to order hospital outpatient services, and potential changes to reduce barriers to the provision of telehealth, hospice, or home health services in an RHC.
CMS will accept comments on the proposed rule until April 8, 2013.
The Medical Diagnostic Equipment Accessibility Standards Advisory Committee is holding its next meeting on January 22 and 23, 2013 to discuss its February 9, 2012 proposed rule on medical diagnostic equipment accessibility standards. Among other things, the session will focus on standards for transfer surfaces.
On January 2, 2013, President Obama signed into law (via autopen) the “fiscal cliff” deal, H.R. 8, the American Taxpayer Relief Act of 2012 (ATRA). In addition to making well-publicized changes to the tax code, the new law includes numerous Medicare payment provisions. Most notably, the law includes a one-year Medicare physician fee schedule (MPFS) fix that is paid for by approximately $30 billion in other health care (mainly Medicare) spending reductions over 10 years. ATRA also delays until March 2013 the automatic, across-the-board “sequestration” cuts in federal spending imposed by the Budget Control Act of 2011, which was expected to reduce Medicare provider payments by more than $11 billion in fiscal year (FY) 2013 and $123 billion over the period of FY 2013 to 2021 (CBO subsequently estimated that the 2013 cut to Medicare payments now will be approximately $9.9 billion due to changes in the sequestration targets under the ATRA). The delay in sequestration, coupled with the government again reaching its debt ceiling, sets up another near-term battle on federal spending, during which Medicare, Medicaid, and other health care programs could be targeted for even more significant cuts.
The health provisions of ATRA are summarized in our Client Alert.
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.
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.
On the Reed Smith Life Sciences Legal Update blog, Health Care team members Thomas Greeson and Paul Pitts have written about post-election implications for the radiology industry. The report describes their assessments of the short and mid-term time horizon for a number of health policy developments such as integration (e.g., accountable care organizations), government enforcement, antitrust, and self-referrals. For additional details, see our full post.
The Medical Diagnostic Equipment Accessibility Standards Advisory Committe will hold a meeting on December 3-4, 2012 to discuss its February 9, 2012 proposed rule on medical diagnostic equipment accessibility standards.
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).
Several Congressional committees have held hearings this month on health policy issues, including the following:
- A House Education and the Workforce Health Subcommittee hearing on “Barriers to Lower Health Care Costs for Workers and Employers.”
- A House Veterans’ Affairs Committee hearing entitled “Through the Looking Glass: Return to Pharmaceutical Prime Vendor Program.”
- House Energy and Commerce Subcommittee hearings on “Examining the Appropriateness of Standards for Medical Imaging and Radiation Therapy Technologists” and “Medicare Contractors’ Efforts to Fight Fraud - Moving Beyond 'Pay and Chase.”
- A House Oversight Subcommittee on Government Organization hearing on “Assessing Medicare and Medicaid Program Integrity.”
- A Senate Aging Committee hearing on “Empowering Patients and Honoring Individual’s Choices: Lessons in Improving Care for Individuals with Advanced Illness.”
- A Senate Homeland Security and Governmental Affairs Committee hearing on "Saving Taxpayer Dollars by Curbing Waste and Fraud in Medicaid.” At the hearing, the OIG reported that neither CMS’s National Medicaid Audit Program nor the Medicare-Medicaid Data Match Program are effectively accomplishing their missions, since both programs had low findings of actual overpayments and actually yielded negative returns on investment, and they delivered very few referrals of potential fraud to OIG and law enforcement.
- On June 19, 2012, the House Ways and Means Health Subcommittee is scheduled to meet to discuss MedPAC’s June report to Congress.
On May 10, 2012, CMS released two final rules designed to reduce regulatory burdens on health care providers as part of the Administration’s ongoing regulatory review initiative. According to CMS, the regulations, will save approximately $1.1 billion across the health system in the first year and more than $5 billion over five years. The rules are summarized below.
- The first rule reforms requirements that hospitals and critical access hospitals (CAHs) must meet in order to participate in the Medicare and Medicaid programs. Among other things, the rule: allows one governing body to oversee multiple hospitals in a single health system; revises requirements for reporting of restraint-related deaths; provides flexibility to consider other practitioners (e.g., advanced practice registered nurses, physician assistants, and pharmacists) as eligible candidates for the medical staff; allows patients or their caregivers to administer certain medications; allows hospitals to have a single, interdisciplinary care plan including nursing and other disciplines or a stand-alone nursing care plan; revises the rules for standing orders and verbal orders; and removes the requirement for a single Director of Outpatient Services. The rule also allows CAHs to provide certain diagnostic and therapeutic services, including laboratory and radiology services and emergency procedures, under arrangement (rather than directly by CAH staff).
- A second final rule make a series of reforms to regulations identified as unnecessary, obsolete, or excessively burdensome for providers and suppliers. For instance, the rule: clarifies which end stage renal disease facilities must comply with the full federal Life Safety Code requirements; streamlines requirements for emergency equipment at ambulatory surgical centers (ASCs); eliminates the Medicare re-enrollment bar in instances when revocation of billing privileges is based solely upon the failure of a provider or supplier to respond timely to a revalidation request or other CMS information request; removes obsolete language related to initial determinations, appeals, and reopenings of Part A and Part B claims and entitlement determinations; removes duplicative language on ASC infection practices; updates obsolete e-prescribing technical requirements to meet current standards; and removes outdated Medicaid personnel qualifications language for physical therapists and occupational therapists.
Both rules will be published May 16, 2012, and are effective on July 16, 2012.
CMS Finalizes Changes in Medicare/Medicaid Provider and Supplier Enrollment, Ordering, Documentation Requirements
CMS published a final rule on April 27, 2012 that updates regulations regarding Medicare and Medicaid provider and supplier enrollment, ordering and referring, documentation requirements, and provider agreements, effective June 26, 2012. The rule modifies and finalizes several ACA provisions implemented in the May 5, 2010 interim final rule with comment period. Among other things, the rule:
- Requires all providers of medical or other items or services and suppliers that qualify for a National Provider Identifier (NPI) to include their NPI on all Medicare and Medicaid enrollment applications and claims.
- Requires physicians and other professionals who are permitted to order and certify Medicare covered items and services to be enrolled in Medicare. The final rule modifies a requirement that had been in the interim final rule that the ordering provider be registered in the Medicare Provider Enrollment, Chain, and Ownership System (PECOS). While the rule still requires ordering physicians and other eligible professionals to be enrolled in the Medicare program (or to maintain a valid opt-out record), enrollment in PECOS is no longer required.
- Mandates document retention and provision requirements for certain providers and suppliers that order and certify items and services for Medicare beneficiaries. The provision specifically applies to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS), laboratory, imaging, and home health services – importantly, CMS has dropped an earlier reference to “specialist services” being subject to these requirements. The final rule also clarifies that the documentation requirement is not the responsibility of the physicians interpreting imaging studies -- only the technical component entity has to meet these requirements. Under the final rule, necessary documentation must be retained for 7 years from the date of service (rather than the date of the order or certification as provided under the interim final rule). A provider or supplier that does not meet the documentation retention requirements is subject to revocation for not more than 1 year for each act of noncompliance.