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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CMS has announced that the CY 2013 Medicare outpatient therapy limit is $1900 for physical therapy (PT) and speech-language pathology (SLP) combined and $1900 for occupational therapy (OT). CMS also has updated the Medicare Claims Processing Manual and the Medicare Benefit Policy Manual to implement the Middle Class Tax Relief and Jobs Creation Act’s (MCTRJCA) claims-based data collection requirement for outpatient therapy services. Specifically, regulations issued pursuant to the MCTRJCA require the reporting of 42 new nonpayable functional G-codes and 7 new modifiers on claims for PT, OT, and SLP services. These G-codes and related modifiers are required on all claims for outpatient therapy services furnished under Medicare Part B after the effective date – not just those over the therapy caps. While this functional data reporting and collection system is effective for therapy services with dates of service on and after January 1, 2013, CMS is designating a testing period for providers from January 1, 2013, through June 30, 2013 during which claims without G-codes and modifiers will be processed.

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MedPAC is meeting on November 1 -2, 2012 to discuss a variety of Medicare policy issues, including: Medicare payment for ambulance services, reducing the hospitalization rate for Medicare beneficiaries receiving home health care, Medicare payment for outpatient therapy services, geographic adjustment of payments for the work of physicians and other health professional, the role of provider prices in determining private-plan Medicare costs relative to fee-for-service Medicare, Medicare Advantage special needs plans, and Medicare payment differences for ambulatory care services across settings.

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CMS is holding a conference call on September 26, 2012 to enable providers to ask questions about the mandated manual medical review of therapy services from October 1 through December 31, 2012 that was enacted by the Middle Class Tax Relief and Job Creation Act of 2012. CMS invites providers who order or provide therapy services to participate in the call. 

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On September 6 and 7, 2012, MedPAC is meeting to discuss a variety of Medicare issues, including reforming the traditional benefit package, bundling, readmissions, and physical therapy policy. More information, including issue briefs for each of the topics, is available on the MedPAC web site.

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On September 5, 2012, CMS is hosting a Special Open Door Forum (ODF) on Manual Medical Review of Therapy Claims. The call will provide an opportunity for providers to ask questions about the documentation requirements associated with the mandated manual medical review of therapy services from October 1-December 31, 2012 that was enacted by the Middle Class Tax Relief and Job Creation Act of 2012.

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The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would update Medicare payment and other policies for the hospital outpatient prospective payment system (OPPS) and ambulatory surgical centers (ASCs) for calendar year (CY) 2013. The proposed rule also would update Medicare inpatient rehabilitation facility (IRF) quality reporting program policies and various other Medicare policies. The official version of the rule is scheduled to be published in the Federal Register on July 30, 2012. CMS will accept comments on the rule until September 4, 2012. Key provisions of the proposed rule include the following:

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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:

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The HHS Office of Inspector General has issued a report entitled "Medicaid Payments for Therapy Services in Excess of State Limits." According to the OIG, 35 of the 48 states that pay for any type of Medicaid therapy services (physical, occupational, or speech therapy) placed limits on the amount of services a beneficiary could receive. In eight states where the OIG examined paid claims for the period July 1, 2008, through June 30, 2009, each described safeguards established to prevent payments in excess of state limits, but six still improperly paid claims totaling approximately $744,000 and three states paid claims that were potentially improper. The OIG recommends that CMS work with states to prevent Medicaid payments for therapy services in excess of state limits and to follow up on the inappropriate claims identified in our review; CMS concurred.

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On February 22, 2012, President Obama signed into law H.R. 3630, the Middle Class Tax Relief and Job Creation Act, which was approved by Congress on February 17. In addition to extending a payroll tax cut through the end of the year and extending unemployment benefits, the new law includes a number of Medicare and Medicaid provisions, including a provision temporarily averting a steep cut in Medicare physician payments. The following are highlights of the health policy provisions included in H.R. 3630 and accompanying conference report (House Report 112-399).

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On December 13, 2011, the House of Representatives approved H.R. 3630, the Middle Class Tax Relief and Job Creation Act of 2011, a wide-ranging bill making payroll tax, unemployment insurance, energy, and other policy changes. Among many other things, the bill would avert a scheduled 27.4% cut in Medicare physician fee schedule (MPFS) payments in 2012 under the statutory Sustainable Growth Rate (SGR) formula and instead provide for a 1% payment update in 2012 and 2013. The costs of the MPFS fix would be offset through a variety of health care policy changes, including reducing funding for the ACA prevention and public health fund and ACA insurance subsidies, cutting Medicare reimbursement for hospital outpatient evaluation and management office visit services; reducing bad debt reimbursement, and rebasing Medicaid disproportionate share hospital allotments. The legislation also would extend: the Medicare outpatient therapy cap exceptions process; certain ambulance add-on payments; the floor used in the physician work geographic adjustment; the Qualified Individual program that reimburses states for certain Part B premiums; and the Transitional Medical Assistance program. In addition, the bill would relax certain restrictions on the expansion of physician-owned hospitals. The measure also would increase Medicare Part B and D premiums for higher-income beneficiaries beginning in 2017.  Note that the Senate is not expected to approve the House bill, and President Obama has announced that he would veto the bill if it does reach his desk. While Congress ultimately is expected to pass an SGR fix, the scope and timing of any such bill is uncertain at this time.

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On November 3, 2011, CMS is hosting a National Provider Call on "Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Minimum Data Set (MDS) 3.0 and Resource Utilization Group-Version 4 (RUG-IV) Policies and Clarifications.” CMS will provide a brief overview of the policies, along with clarifications on FY 2012 SNF PPS policies related to the MDS 3.0. The call will cover: Allocation of group therapy; Changes to the MDS Assessment Schedule; End of Therapy Other Medicare Required Assessment (OMRA) Clarifications; End Of Therapy with Resumption; and Change of Therapy (COT) OMRA. A question and answer session will follow the CMS presentations.  Registration is required to participate in the call. 

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On August 23, 2011, CMS will host a National Provider Call on "Skilled Nursing Facility (SNF) Prospective Payment System (PPS) FY 2012 Policy Changes Relating to the Minimum Data Set (MDS) 3.0." The session is scheduled to cover: allocation of group therapy; student supervision; changes to the MDS assessment schedule; End of Therapy Other Medicare Required Assessment (OMRA) clarifications; End Of Therapy with Resumption; Change of Therapy OMRA; and transition timeline for new policies. Registration will close at 1:30 pm on August 22 or when available space has been filled.

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On July 29, 2011, the Centers for Medicare & Medicaid Services (CMS) released its final update to Medicare skilled nursing facility (SNF) prospective payment system (PPS) rates and policies for fiscal year (FY) 2012. Under the final rule, SNF rates would be reduced by 11.1% -- or $3.87 billion – compared to FY 2011 levels. The rate reduction results from adoption of a controversial plan to “recalibrate” SNF PPS rates to correct what CMS characterizes as an “unexpected spike” in payments in FY 2011, when CMS implemented the Resource Utilization Groups, version four (RUG-IV) patient classification system. Although CMS intended implementation of RUG-IV to be budget-neutral, CMS maintains that claims under the updated system show a significant increase in Medicare expenditures, primarily due to changes in therapy use under the new classification system. CMS declined to phase in the reductions over several years, as had been recommended by commenters, since it “would continue to reimburse facilities at levels that significantly exceed intended SNF payments.” Instead, CMS is applying a 12.6% recalibration reduction, which is partially offset by a 1.7% standard rate update (which represents a 2.7% market basket update reduced by a 1.0% percentage point “multifactor productivity adjustment” mandated by the Affordable Care Act, or ACA). CMS observes that despite the recalibration, payments in FY 2012 will be 3.4% higher than in 2010, before the adoption of RUG-IV. In addition to these payment policies, the final rule establishes a standard for group therapy, defined as therapy provided simultaneously to four patients, regardless of payer source, who are performing the same or similar activities and are supervised by a therapist or assistant who is not supervising any other individuals. The rule also adopts policies related to the reporting and allocation of group therapy minutes, and requires new reporting when changes occur in the intensity of therapy. CMS also has adopted other modifications to the schedule for completing the MDS 3.0 patient assessment instrument. In addition, CMS has revised its policy regarding supervision of therapy students to provide that a therapy student working in an SNF will no longer be required to be in the supervising therapist’s “line of sight.” Note that CMS is deferring the adoption of the proposed rule to implement an ACA provision requiring Medicare SNFs and Medicaid nursing facilities to disclose certain information regarding the ownership and organizational structure of their facilities; these requirements will be finalized in a separate rule early in CY 2012.  The official version of the rule will be published on August 8, 2011.

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The OIG has issued a report entitled “Medicaid Services Provided in an Adult Day Health Setting.” Based on a random sample of 300 adult day health service days from the last 6 months of 2007, the OIG found that: meals and/or snacks were the only documented services for Medicaid beneficiaries on 34% of service days; about 43% of therapy services were provided by staff who lacked required supervision; and in some cases documentation lacked appropriate physician orders or was inconsistent with plans of care. The OIG recommends that CMS: specify what services are required for Medicaid reimbursement of adult day health services; direct states to enforce therapy supervision requirements; and address the centers that did not respond to repeated OIG data requests. CMS concurred with the recommendations. 

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CMS published a proposed rule on July 12, 2011 that would decrease Medicare home health agency (HHA) PPS payments for CY 2012 by 3.35%, or $640 million, compared to 2011 levels. This reimbursement cut would reflect a 2.5% market basket update that is reduced by 1 percentage point as mandated by the ACA, a 0.1% wage index increase, and a 5.06% reduction to account for increases in aggregate case-mix that are unrelated to changes in the patient’s health status. In addition, if an HHA does not submit required quality data, the home health market basket percentage increase would be reduced by an additional 2 percentage points. The rule also would make a number of case-mix changes, including removing two hypertension codes from the case-mix system, lowering payments for high-therapy episodes, and recalibrating case-mix weights. The rule also addresses a number of home health policy issues. For instance, the rule would allow physicians who attend to a home health patient in an acute or post-acute setting to inform the certifying physician of their encounters with the patient in order to satisfy the requirement that a certifying physician or an allowed non-physician practitioner (NPP) has see a patient prior to certifying a patient as eligible for the home health benefit. CMS also proposes to clarify its ‘‘confined to the home’’ definition and certain occupational therapy policies. Comments on the proposed rule will be accepted until September 6, 2011. 

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The OIG released a report entitled "Changes in Skilled Nursing Facilities Billing in Fiscal Year 2011."  The report discusses changes in skilled nursing facility (SNF) therapy reimbursement adopted in 2011 that unintentionally led to higher payments to SNFs. The OIG recommends that CMS make reimbursement changes in the FY 2012 rulemaking process to address the increased payments to SNFs. The OIG also recommends that CMS modify SNF group therapy billing policies and further adjust payments to reflect beneficiaries’ care and resource needs. Note that CMS’s May 6, 2011 proposed SNF PPS rule for FY 2012, apparently in alignment with the OIG recommendations, does set forth the option of applying a prospective adjustment to case mix weights to address the increase in Medicare expenditures associated with implementation of the Resource Utilization Groups, version four (RUG-IV) patient classification system, which would cut rates by $4.47 billion. CMS has not yet finalized this rule, but by law CMS is required to issue the SNF PPS update before August 1. In a separate report, the OIG examined the extent to which Medicare paid for Part B services for nursing home stays not paid for by Part A (non-Part A stays). Non-Part A stays are not subject to the same “consolidated billing” requirements as Part A stays, so individual providers may bill for services rendered to these individuals, which the OIG contends presents program integrity vulnerabilities. The OIG estimates that Medicare paid $4.9 billion in 2008 for Part B services during non-Part A stays; the OIG did not examine the medical appropriateness of these Part B services. Payments varied widely across service categories and by state. Three service categories – therapy services, evaluation and management, and major and minor medical procedures – accounted for 58% of the total payments, while the State of Louisiana had the highest average daily payments. The OIG concludes that its findings “will guide further review and identification of providers of Part B services warranting scrutiny by OIG and CMS.”

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The HHS Office of Inspector General (OIG) has issued a report entitled "Review of Physician Therapy Services Provided During Home Health Episodes in Calendar Year 2008." The OIG notes CMS includes in the home health prospective payment system (HH PPS) base rate physician-provided therapy services that are not subject to the consolidated billing requirement and are billable by physicians. As a result, when a physician bills Medicare Part B for therapy provided to a beneficiary during a home health episode, Medicare pays twice for the same service (once to the physician under Part B and again to the home health agency under the HH PPS).   The OIG recommends that CMS eliminate any duplicate payments when rebasing home health payments by adjusting the HH PPS rate to exclude physician-provided therapy services or by making physician therapy services subject to the consolidated billing requirement. CMS agreed and provided information on action that it planned to take to address the recommendation.

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On April 28, 2011, CMS released its proposed update to Medicare skilled nursing facility (SNF) PPS rates and policies for FY 2012. CMS sets forth two very different options under consideration for revising rates for 2012. The first option, applying the standard rate update methodology, would increase rates by 1.5% ($530 million) as a result of a 2.7% market basket update reduced by a 1.2 percentage point “Multifactor Productivity Adjustment” mandated by the ACA. The second option seeks to address what CMS characterizes as an “unexpected spike” in SNF PPS payments in FY 2011, when CMS implemented the Resource Utilization Groups, version four (RUG-IV) patient classification system. Although CMS intended implementation of RUG-IV to be budget-neutral, initial claims under the updated system show a significant increase in Medicare expenditures, in part because the proportion of patients grouped in the highest-paying RUG therapy categories greatly exceeded CMS expectations. Although CMS will continue to analyze claims data, the agency is considering making a prospective adjustment to case mix weights to “restore overall payments to their intended levels,” which would cut rates by $4.47 billion. While this amount would be partly offset by the 1.5% update, this option would still result in a net payment decrease of $3.94 billion (-11.3%) for FY 2012. In addition to these payment policies, the proposed rule would implement an ACA provision requiring Medicare SNFs and Medicaid nursing facilities to disclose certain information in a standardized format to HHS and other entities regarding the ownership and organizational structure of their facilities. CMS also proposes to establish a standard that defines group therapy under the SNF PPS as therapy provided simultaneously to four patients who are performing similar therapy activities, and to require the allocation of group therapy minutes in assigning RUG-IV payment groups. In addition, the rule would require a new Medicare-required assessment to be completed by SNFs when changes occur in the intensity of therapy, and CMS proposes modifications to the schedule for completing the MDS 3.0. In addition, CMS proposes revising its current policy regarding supervision of therapy students to provide that a therapy student working in an SNF would no longer be required to be in the supervising therapist’s “line of sight.”  The official version of the rule will be published on May 6, 2011. Comments on the proposal will be accepted until June 27.

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CMS is hosting three listening sessions on provider compliance issues March 22-24, 2011, focusing on a number of OIG reports. The schedule is as follows:

Tuesday, March 22

• Inappropriate Medicare Payments for Transforaminal Epidural Injections Services
• Medicare Part B Services During a Non-Part A Nursing Home Stays: Mental Health
• Medicare Part B services during Non-Part A Nursing Home Stays: Enteral Nutrition Therapy
• Review of Point Of Service (POS) Coding for Physician Services Processed by Part B Carriers

Wednesday, March 23

• Medicare Part B Payments for Ambulance Services Rendered to Beneficiaries During Inpatient Stays
• Review of Inpatient Rehabilitation Facilities (IRF) Compliance with Medicare Transfer Regulation
• Part A ER Department Adjust Nationwide Review of Medicare Part A Emergency Dept Adjustments for Inpatient Psychiatric Facilities
• Nationwide Review of IRF Transmission of Patients’ Assessment Instruments

Thursday, March 24

• Review of Claims for Capped Rental Durable Medical Equipment
• Questionable Billing for Physicians Services for Hospice Beneficiaries
• Questionable Billing for Medicare Outpatient Therapy Services
• Chiropractor Outreach and Education

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