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

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.

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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:

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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):

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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).

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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. 

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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.

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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.

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This post was written by Scot Hasselman and Debra McCurdy.

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.

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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.
 

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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.

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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.

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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.

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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.

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This post was written by Paul Pitts and Rachel M. Golick.

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.

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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.
 

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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.

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On March 15, 2012, MedPAC released its annual report to Congress on Medicare payment policy.  Major recommendations for 2013 are highlighted after the jump.

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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.

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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.

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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.

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