On May 6, 2013, CMS published a proposed rule to update Medicare skilled nursing facility PPS rates for FY 2014 and make other updates to SNF reimbursement policy. CMS estimates that the proposed rule would increase aggregate Medicare payments to SNFs in FY 2014 by $500 million, or 1.4%, compared to FY 2013. Specifically, SNF PPS rates would be updated to reflect a 2.3% market basket increase that is reduced by a 0.4 percentage point multifactor productivity adjustment required by the ACA, and that is further reduced by a proposed 0.5 percentage point forecast error correction. Specifically, CMS proposes a technical change in the methodology for determining whether to make a forecast error correction when the difference between the actual and projected market basket percentage change exceeds 0.5%. By modifying how CMS determines the forecast error when it rounds to 0.5%, this policy would result in a 0.5 percentage point reduction in the FY 2014 market basket update. CMS also proposes to rebase the SNF market basket to reflect FY 2010 data, rather than data from FY 2004, and to make changes to the components of the SNF market basket index. With regard to therapy services, CMS proposes to add an item to the Minimum Data Set (MDS) to record the number of distinct calendar days of therapy provided to a beneficiary by all rehabilitation disciplines over the 7-day look-back period, and to specify the number of calendar days of therapy required to qualify for the Medium Rehab (RM) and Low Rehab (RL) Category Resource Utilization Group (RUG). CMS will accept comments on the proposed rule until July 1, 2013.
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.
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.
On March 19, 2013, CMS published a final rule that adopts, with technical changes and a few clarifications, a February 18, 2011 interim final rule implementing an ACA provision imposing notification requirements in connection with closure of a Medicare skilled nursing facility (SNF) or Medicaid nursing facility (NF). Under the rule, in the case of a long-term care (LTC) facility closure, the SNF or NF administrator must provide written notification of the impending closure and a plan for the relocation of residents to the state survey agency at least 60 days prior to the impending closure (or, if the Secretary terminates the facility’s participation in Medicare or Medicaid, not later than the date the Secretary determines appropriate). Notice and the plan also must be provided to residents, their legal representatives or other responsible parties, and the state LTC Ombudsman. While the ACA authorizes civil monetary penalties (CMPs) of up to $100,000 and exclusion for an administrator's failure to comply with this provision, CMS is finalizing the lower levels of CMPs established in the interim final rule in recognition that there are cases in which an administrator may not have had control over implementing notice procedures. The final rule therefore sets CMPs of: a minimum of $500 for the first offense; a minimum of $1,500 for the second offense; and a minimum of $3,000 for the third and subsequent offenses (CMS states that interpretive guidelines are being developed that will establish criteria for determination of CMP amounts). CMS also provides appeal rights for an individual who is subject to administrator sanctions under the rule. The final rule is effective April 18, 2013 (although note that the statutory closure notice requirements are effective March 23, 2011).
The OIG has issued a report, “Skilled Nursing Facilities Often Fail to Meet Care Planning and Discharge Planning Requirements,” assessing SNF compliance with federal requirements to develop a care plan for each Medicare beneficiary, provide services in accordance with the individual’s care plan, and establish a discharge plan for each beneficiary. Based on an extremely small sample of only 190 SNF stays in 2009 – which OIG projects to more than 1.1 million stays – the OIG estimates that 37% of SNFs did not develop care plans that met federal requirements or did not provide services in accordance with care plans. In addition, the OIG estimates that SNFs did not meet discharge planning requirements in 31% of stays. The report also reviews examples of what it considers poor quality of care in the SNF setting, including a few cases involving wound care, medication management, and therapy. In response to these findings, the OIG recommends that CMS, among other things: strengthen care planning and discharge planning regulations; provide more detailed guidance to SNFs; improve surveyor efforts to identify and hold accountable SNFs that do not meet care and discharge planning requirements; and link payments to meeting quality-of-care requirements (such as by incorporating quality measures for care planning and discharge planning in its SNF Value-Based Purchasing program). CMS concurred with the OIG’s recommendations and discussed the status of its efforts in this area. Related OIG information is posted here.
On January 8, 2013, the Obama Administration published its latest semiannual regulatory agenda, outlining planned regulatory initiatives in a number of policy areas. The Federal Register version of the agenda includes only a portion of the regulations in the pipeline, however; the full agenda has been posted on the Office of Management and Budget (OMB) web site. Major Department of Health and Human Services (HHS) regulations are highlighted after the jump.
- An HHS Office of Inspector General (OIG) proposed rule that would add new/modify existing safe harbors under the anti-kickback statute; add new/revise existing regulations governing OIG's authority to impose civil money penalties and assessments; add new/revise existing regulations governing OIG's exclusion authority; and codify new exceptions to the beneficiary inducement prohibition (expected July 2013);
- A final Centers for Medicare & Medicaid Services (CMS) rule implementing Affordable Care Act (ACA) provisions related to Medicaid reimbursement for covered outpatient drugs (expected in August 2013);
- A CMS proposed rule to establish Medicare payment safeguards to prevent providers and suppliers that do not meet Medicare requirements from remaining enrolled in or submitting claims to Medicare (expected May 2013);
- Proposed emergency preparedness requirements for Medicare and Medicaid participating providers and suppliers (expected in July 2013);
- A final CMS rule establishing requirements for disclosure of skilled nursing facilities' ownership (expected May 2013);
- A final rule on long-term care facility agreements with hospice agencies (expected October 2013);
- A proposed rule to establish a prospective payment system for Federally Qualified Health Centers (expected June 2013);
- Annual Medicare payment update rules (various dates);
- Various rules implementing insurance-related provisions of the ACA (various dates);
- A final rule modifying HIPAA privacy, security, enforcement, and breach notification rules (expected but not released in December 2012);
- An advance notice of proposed rulemaking to establish a methodology allowing an individual harmed by an offense punishable under HIPAA to receive a percentage of any civil money penalty or monetary settlement collected (expected March 2013);
- A final rule to enhance human subjects research protections (expected April 2013); and
- A Food and Drug Administration (FDA) final rule establishing a unique device identification system for medical devices (expected May 2013).
There are also some surprises on the Administration’s list of “long-term actions” – including the long-overdue final ACA “Sunshine Act” rule requiring applicable manufacturers of drugs, devices, biologicals, or medical supplies to annually report certain payments to physicians or teaching hospitals (“final action” listed as December 2014). Other long-term actions include a final rule implementing ACA requirements related to reporting and returning of overpayments (February 2015); a variety of rules dealing with the 340B discount drug program (timing listed as “to be determined”); and a final HIPAA privacy rule on accounting for disclosures under the Health Information Technology for Economic and Clinical Health Act (TBD).
On January 31, 2013, CMS is hosting a call on its National Partnership to Improve Dementia Care in Nursing Homes. The partnership is focused on improving dementia care through the use of individualized, person-centered care approaches, which CMS hopes will reduce the use of unnecessary antipsychotic medications in nursing homes and eventually other care settings. The CMS call will provide information on the goals of the national partnership, quality measures, and ongoing outreach efforts. The target audience for the call includes consumer and advocacy groups, nursing home providers, surveyors, prescribers, professional associations, and other interested stakeholders. Registration is required to participate in the call.
An OIG report released November 13, 2012 estimates that one-fourth of Medicare SNF claims in 2009 were in error, resulting in more than $1 billion in inappropriate payments. Note that the OIG’s findings were based on a medical record review of a random sample of only 245 SNF stays and 499 claims, which the OIG projected to the 6.4 million claims in the population. Based on this limited sample, the OIG found that 20.3% of SNF claims were upcoded, with about half of these claims involved SNFs billing for ultrahigh therapy resource utilization groups (RUGs) instead of lower levels of therapy or nontherapy RUGs. In addition, 2.5% of claims were downcoded and 2.1% did not meet coverage requirements because the beneficiaries were not eligible for SNF care. The OIG concludes that while “CMS has made several significant changes to SNF payments for FYs 2011 and 2012…more needs to be done to reduce inappropriate payments to SNFs.” The OIG therefore recommends that CMS: (1) increase and expand reviews of SNF claims; (2) use its Fraud Prevention System to identify SNFs that are billing for higher paying RUGs; (3) monitor compliance with new therapy assessments (including through Medicare Administrative Contractor (MAC) and Recovery Audit Contractor (RAC) analysis and review); (4) change the methodology for determining how much therapy is needed; (5) improve the accuracy of MDS items, and (6) follow up on the SNFs that billed in error. CMS concurred with the recommendations, set forth in the report entitled “Inappropriate Payments to Skilled Nursing Facilities Cost Medicare More Than a Billion Dollars in 2009.”
The OIG report follows an earlier report published in December of 2010. That report, entitled, “Questionable Billing by Skilled Nursing Facilities,” has been discredited as an overwhelming majority of the disallowed claims underlying the report were overturned on appeal; OIG ignored the judicial dispensation of these claims in makings its allegations. The report is the latest in a series of federal effort to narrow the scope of coverage for beneficiaries in SNFs, which is interesting in light of the recent CMS settlement regarding the “Improvement Standard” in a case entitled Jimmo v. Sebelius. In Jimmo, the plaintiff alleged that HHS had adopted an “unlawful and clandestine standard” (known as the “Improvement Standard”) to determine whether Medicare beneficiaries are entitled to coverage. HHS/CMS recently settled this matter and agreed to revise the appropriate Medicare manuals, and to engage in a nationwide education campaign to inform providers and Medicare contractors of maintenance coverage standards. As in Jimmo, we believe that the federal government has adopted a clandestine policy to restrict Medicare coverage in SNFs, which is being implemented via the OIG, MAC and RAC audits, and Zone Program Integrity Contractor and Department of Justice investigations.
A recent HHS Office of Inspector General (OIG) report asserts that Medicare inappropriately paid $5 million for home health claims in 2010 with the following three errors: overlapping with claims for inpatient hospital stay; overlapping with claims for skilled nursing facility (SNF) stays; or billing for services on dates after the beneficiary’s death. The OIG also estimates that 25% of HHAs exceeded the OIG’s threshold indicating unusually-high billing for at least one of six measures of questionable billing (e.g., high average outlier payment amount per beneficiary; high average number of visits per beneficiary; high percentage of beneficiaries for whom other HHAs billed Medicare; high average number of late episodes per beneficiary; high average number of therapy visits per beneficiary; and high average Medicare payment amount per beneficiary). The OIG points out that while these six measures indicate potential fraud, there may be legitimate reasons for an HHA to exceed the OIG’s thresholds on the measures. The OIG also found that 80% of the HHAs with questionable billing were located in one of four states: TX, FL, CA, or MI. In response to these findings, the OIG recommends that CMS: (1) improve the use of claims processing edits to prevent inappropriate payments for identified errors; (2) Increase monitoring of billing for home health services; (3) enforce and consider lowering the 10% annual cap on an HHA’s total outlier payments; (4) consider imposing a temporary moratorium on new HHA enrollments in Florida and Texas, and (5) take appropriate action regarding identified inappropriate payments. While CMS concurred with the recommendations, the agency disagreed with the OIG’s estimate of the inappropriate payments for home health claims overlapping with inpatient hospital and SNF stays.
On July 27, 2012, CMS released its Medicare skilled nursing facility (SNF) prospective payment system (PPS) update for fiscal year (FY) 2013, which begins October 1, 2012. The notice provides a 1.8% rate update, which reflects a 2.5% market basket increase that is reduced under the Affordable Care Act by 0.7 percentage point multifactor productivity adjustment. CMS estimates that the update will increase overall payments to SNFs in FY 2013 by $670 million compared to FY 2012 levels. The notice also provides an update on CMS activities to monitor the impact on the SNF PPS of certain FY 2012 policy changes involving recalibration of the SNF parity adjustment, reallocation of group therapy time, and changes to the Minimum Data Set (MDS) 3.0 patient assessment instrument. The notice is scheduled to be published in the Federal Register on August 2, 2012.
On July 23, 2012, the Department of Health and Human Services (HHS) published a notice soliciting public comments on the development of a new long-term care facilities strategy module of the National Action Plan to Prevent Healthcare-Associated Infections: Roadmap to Elimination. This module will be part of a broader plan to reduce healthcare-associated infections (HAIs) in acute care hospitals, ambulatory surgical centers, and end stage renal disease facilities, and to increase healthcare personnel influenza vaccination coverage. Comments on the draft document will be accepted until August 22, 2012.
CMS has released its 2012 Nursing Home Action Plan, which discusses CMS strategies to: (1) enhance consumer engagement; (2) strengthen survey processes, standards, and enforcement; (3) promote quality improvement; (4) create strategic approaches through partnerships; and (5) advance quality through innovation and demonstration.
On June 15, 2012, CMS issued instructions to state survey agencies on the “Safe Use of Single Dose/Single Use Medications to Prevent Healthcare-Associated Infections.” While CMS is not changing its policy regarding the reuse of single-dose vials or single use vials (collectively referred to as “SDVs”), CMS outlined conditions under which certain health care providers may repackage SDVs into smaller doses, each intended for a single patient. The policy clarification is prompted by recent drug shortages and the interest of facilities in reducing waste of SDV medication that exceeds the needed dosage for a single patient. The policy applies to a number of provider types, including nursing facilities, hospitals, ASCs, hospices, and HHAs.
A new Medicare payment policy on readmissions may place more pressure on post-acute providers to coordinate care with the general acute-care hospitals in their community. The Centers for Medicare & Medicaid Services is in the process of adopting a new policy for reducing payments under the inpatient prospective payment system to those hospitals with high readmission rates for patients with certain conditions. As a result, hospitals paid under the IPPS may incur a payment penalty if a skilled nursing facility, long-term acute care hospital, inpatient rehabilitation facility or other post-acute care provider transfers a patient or resident back to the hospital for additional inpatient services. This policy change provides a powerful incentive to coordinate care and standardize procedures across providers. To read the full Alert, click here.
The OIG has issued a report entitled “Gaps Continue To Exist in Nursing Home Emergency Preparedness and Response during Disasters: 2007–2010.” According to the OIG, most nursing homes nationwide met federal requirements for written emergency plans and preparedness training. Some gaps in nursing home preparedness and response continue, however, including unreliable transportation contracts, lack of collaboration with local emergency management, and residents who developed health problems during evacuation. The OIG recommended that CMS establish specific regulatory requirements for emergency plans and training, update the State Operations Manual to provide detailed guidance for survey agencies on nursing home compliance with emergency plans and training, and promote use of previous CMS emergency preparedness checklists. The OIG also outlined guidance that CMS can consider when revising its checklist for health care facilities. In addition, the OIG recommended that the Administration on Aging (AOA) develop model policies and procedures for long-term care ombudsmen to protect residents during and after disasters. CMS and AOA agreed with the recommendations.
The Government Accountability Office (GAO) has issued a report entitled “Nursing Homes: CMS Needs Milestones and Timelines to Ensure Goals for the Five-Star Quality Rating System are Met." The report, which was mandated by the ACA, examines how CMS developed the Five-Star System, which assigns nursing homes an overall rating and three component ratings (health inspections, staffing, and quality measures) based on the nursing home’s performance on CMS measures. The ratings range from one to five stars, with more stars indicating higher quality. The GAO reports that CMS has several planned efforts intended to improve the Five-Star System, including evaluating the usability of the system, adding nursing home capability information, revising the staffing component, and developing additional quality measures. CMS has not effectively accomplished these improvements, however, because the agency has not set specific goals and deadlines to make the changes, according to the GAO. The GAO recommends that CMS use strategic planning to establish how its planned efforts will help meet the goals of the Five-Star System, and develop milestones and timelines for each of its planned efforts. CMS agreed with these recommendations.
On March 15, 2012, MedPAC released its annual report to Congress on Medicare payment policy. Major recommendations for 2013 are highlighted after the jump.
- Congress should increase acute care hospital inpatient and hospital outpatient payment rates by 1% in 2013; gradually recover past inpatient overpayments due to documentation and coding changes; and gradually reduce outpatient hospital payment rates for evaluation and management office visits to the rate of physician office visits for the same service.
- 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. The proposal, first announced in October 2011, would freeze rates for primary care services for 10 years, while other services would be subject to annual payment reductions of 5.9% for 3 years, followed by a freeze. MedPAC also endorsed budget-neutral changes to improve data on which MPFS relative value unit (RVU) weights are based and to redistribute payments to underpriced services, and made recommendations regarding the structure of accountable care organization shared savings payments.
- Congress should eliminate the 2013 update for skilled nursing facilities (SNFs), and direct the Secretary to revise the SNF payment system to redistribute payments away from intensive therapy care that is unrelated to patient care needs and toward medically complex care. The Secretary also should begin rebasing payments in 2014, with an initial reduction of 4% and additional reductions thereafter to align with providers’ costs. The Secretary also should reduce payments to SNFs with relatively high risk-adjusted rates of rehospitalization.
- Congress should eliminate the 2013 market basket update for inpatient rehabilitation facilities and long-term care hospitals, and update the outpatient dialysis payment rate by 1%.
- Congress should update payment rates for ambulatory surgical centers (ASCs) by 0.5% for 2013, require ASCs to submit cost data, and direct the Secretary to implement a value-based purchasing program for ASCs by 2016.
- Congress should direct the Secretary to: begin a two-year rebasing of home health rates in 2013; revise the case-mix system to rely on patient characteristics rather than therapy visits; establish a per episode copay for home health episodes not preceded by hospitalization or post-acute care use; and expand certain program integrity efforts.
- Congress should increase hospice rates by 0.5% for FY 2013 and adopt a series of previous MedPAC recommendations addressing payment and program integrity reforms.
- Congress should modify Part D low-income subsidy copayments for beneficiaries with incomes at or below 135% of poverty to encourage the use of generic drugs when available in selected therapeutic classes (with safeguards to prevent substitutions that are not clinically appropriate).
While MedPAC recommendations are not binding, they are often considered by lawmakers in developing Medicare legislation.
CMS has launched the “Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents,” through which the agency will partner with independent organizations to improve care for long-stay nursing facility residents enrolled in Medicare and Medicaid. CMS will support organizations (called “enhanced care & coordination providers”) that work with nursing facilities to implement evidence-based interventions to improve the quality and costs of care. Participating enhanced care & coordination providers must: hire staff who maintain a physical presence at nursing facilities and partner with facility staff to implement preventive services; work in cooperation with existing providers; facilitate residents’ transitions to and from inpatient hospitals and nursing facilities; provide support for improved communication and coordination among existing providers; and coordinate management and monitoring of prescription drugs. Eligible organizations can include physician practices, care management organizations, and other public and not-for-profit entities. The initiative is expected to last from August 2012 to August 2016. Interested organizations must submit a notice of intent to apply by April 30, 2012, and proposals are due June 14, 2012.
The GAO has issued a report entitled “Nursing Home Quality: CMS Should Improve Efforts to Monitor Implementation of the Quality Indicator Survey.” CMS developed the Quality Indicator Survey (QIS) to improve the efficiency, accuracy, and consistency of the nursing home survey process. CMS expects the QIS to be implemented nationally by 2018. According to the GAO, CMS does not have the means to routinely monitor, such as through the use of performance goals and measures, the extent to which the QIS is helping improve the survey process as intended. CMS also has not established a timeline for implementing plans to develop a more systematic process for monitoring states’ implementation progress. GAO recommends that CMS develop a means to routinely monitor progress in meeting QIS objectives, along with systematic methods for monitoring and facilitating states’ efforts to implement the QIS.
On February 13, 2012, President Obama released his proposed fiscal year (FY) 2013 budget. The budget includes a number of legislative proposals – some of which were included in the President’s September 2011 deficit reduction plan -- that would reduce Medicare spending by $302.8 billion and cut Medicaid spending by $55.7 billion over 10 years. Highlights are available after the jump.
Among other things, the proposed budget would:
- Provide $610 million in discretionary funding for Health Care Fraud and Abuse Control, plus $581 million in program integrity funding to: reduce the Medicare fee-for-service improper payment rate; invest in prevention-focused, data-driven initiatives like predictive modeling; cost-avoidance activities; and Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiatives.
- Increase program integrity funding and legislative authorities, including: creation of a Medicare claims ordering system to validate physician orders for certain high-risk services, increased scrutiny of providers using higher-risk banking arrangements to receive Medicare payments, prior authorization for advanced imaging service; tracking of high prescribers and users of Medicaid prescription drugs; strengthened enforcement of manufacturer compliance with Medicaid drug rebate requirements; and exclusion of individuals affiliated with entities sanctioned for fraudulent or other prohibited actions from federal health care programs.
- Reform post-acute care payment by reducing Medicare reimbursement for inpatient rehabilitation facilities (IRFs), long-term care hospitals, skilled nursing facilities (SNFs), and home health agencies by 1.1 percentage points beginning in 2014 through 2021 (updates would not fall below 0%), adjusting the standard for classifying a facility as an IRF; equalizing payments for certain conditions commonly treated in IRFs and SNFs; and adjusting SNF payments to reduce hospital readmissions.
- Require manufacturers to pay the same rebates for Medicare Part D low-income subsidy beneficiaries as they do for Medicaid, beginning in 2013 (manufacturers would be required to pay the difference between rebates paid to Part D plans and the Medicaid rebate levels).
- Reduce Medicare bad debt payments to 25% for all eligible providers over three years.
- Reduce Medicare add on payments to teaching hospitals for indirect costs of medical education by 10% and cut payments to critical access hospitals.
- Reduce reimbursement for certain advanced imaging equipment to account for higher levels of utilization of certain types of equipment.
- Provide an adjustment totaling $429 billion over 10 years to reflect the Administration’s best estimate of the cost of future congressional action to reform the Medicare physician fee schedule statutory Sustainable Growth Rate formula (details of the plan are not specified).
- Increase Medicare cost-sharing for higher-income beneficiaries, imposes Medicare home health copayments, and applies a premium surcharge for new beneficiaries with Medigap plans offering first-dollar coverage.
- Lower the Independent Payment Advisory Board’s target Medicare spending rate from the gross domestic product (GDP) per capita growth plus 1% to GDP per capita growth plus 0.5%.
- Reduce Medicaid spending by reducing the Medicaid provider tax threshold, instituting a single blended matching rate for Medicaid and CHIP; capping Medicaid durable medical equipment rates at Medicare levels, and rebasing Disproportionate Share Hospital allotments.
- Prohibit “pay for delay” agreements to increase the availability of generic drugs and biologics, and award brand biologic manufacturers seven years of exclusivity rather than 12 years.
Note that many provisions of the proposed budget would require Congressional approval to implement; leaders of both parties have indicated that Congress is unlikely to take up the President’s legislative proposals in its current form.