CMS Proposes Emergency Preparedness Requirements for Medicare/Medicaid Providers

On December 27, 2013, CMS published a proposed rule that would establish national emergency preparedness requirements for Medicare- and Medicaid-participating providers and suppliers to ensure that they can meet the needs of patients and residents during emergency situations, both natural and man-made. The proposed requirements cover four aspects of emergency preparedness:

  • Risk assessment and planning: Providers and suppliers must perform a risk assessment using an “all-hazards'' approach focusing capabilities needed to prepare for a full spectrum of emergencies. This approach is location-specific considering the types of hazards most likely to occur in a provider or supplier’s area.
  • Policies and procedures: Providers must develop and implement policies and procedures based on their emergency plan and risk assessment.
  • Communication plan: Providers must develop and maintain an emergency preparedness communication plan that complies with both federal and state law. Patient care must be well-coordinated within the facility, across health care providers, and with state and local public health departments and emergency systems to protect health and safety.
  • Training and testing: Providers must develop and maintain emergency preparedness training and testing programs, including initial and annual training and annual emergency drills.

The new requirements would apply to 17 provider types (with certain variations): hospitals; critical access hospitals; long-term care facilities; psychiatric residential treatment facilities; intermediate care facilities for individuals with intellectual disabilities; religious nonmedical health care institutions; transplant centers; hospice, ambulatory surgical centers, Program for the All-inclusive Care for the Elderly organizations; home health agencies; comprehensive outpatient rehabilitation facilities; community mental health centers; organ procurement organizations; clinics, rehabilitation, and therapy providers; rural health clinics/federally qualified health clinics; and end-stage renal disease providers.

CMS is seeking comments on numerous aspects of its proposal, including when these requirements should be implemented; comments will be accepted until February 25, 2014.

** February 21 update: CMS has extended the comment period until March 31, 2014.

House Panel to Examine Medicare "Extenders" Policy

On January 9, 2014, the House Energy and Commerce Health Subcommittee is holding a hearing on “The Extenders Policies: What Are They and How Should They Continue Under a Permanent SGR (Sustainable Growth Rate) Repeal Landscape?” The so-called extenders are measures that secure the continuation of various temporary Medicare payment and policy revisions impacting hospitals, physicians, therapy providers, and certain other provider types that are routinely extended by Congress (most recently as part of the Pathway for SGR Reform Act).

President Signs 2-Year Funding Bill with Medicare SGR Patch, Sequestration Extension for Medicare Providers

This post was written by Debbie McCurdy and Paul Pitts.

On December 26, 2013, President Obama signed into law H.J. Res. 59, the Bipartisan Budget Act of 2013, which includes the Pathway for SGR Reform Act of 2013 (“the Act”). In addition to establishing federal budget targets for fiscal years (FYs) 2014 and 2015, the Act includes a number of provisions impacting the Medicare and Medicaid programs. Most notably, the Act provides a short-term reprieve from a looming Medicare physician fee schedule cut while lawmakers work to finalize a longer-term solution. It also extends Medicare provider payment cuts under existing sequestration authority for two years and makes a variety of other policy changes. The Act’s major Medicare and Medicaid provisions are summarized below.

Short-Term Medicare Physician Fee Schedule Patch. The final Medicare physician fee schedule rule, which was published on December 10, 2013, called for a 20.1% reduction in the fee schedule update for 2014, largely as a result of the statutory sustainable growth rate (SGR) formula.  The Act blocks the 20.1% cut and replaces it with a 0.5% increase for services provided through March 31, 2014, resulting in a 2014 conversion factor after all adjustments of $35.8228 (note that Medicare sequestration cuts applicable to the MPFS and other Medicare payment systems continue, as described below.). This temporary payment boost is intended to provide Congress with additional time to finalize pending legislation that would permanently repeal the SGR policy and replace it with a period of stable payment followed by reimbursement linked to quality of care. Bipartisan SGR reform bills have been overwhelmingly approved by the Senate Finance Committee, the House Ways and Means Committee, and the House Energy and Commerce Committee, but differences in the measures must still be resolved and spending offsets need to be identified.

2-Year Extension of Medicare Sequestration Cuts. While the Act provides limited relief from sequestration cuts for certain defense and non-defense spending for FYs 2014 and 2015, the Act does not extend relief to sequestration reductions impacting mandatory programs such as Medicare; the 2% reduction to Medicare provider and plan payments therefore will continue in 2014 unless additional Congressional action is taken. In fact, the Act achieves new savings by extending sequestration for mandatory programs – including Medicare – for another two years, through 2023.  The Act also “realigns” the Medicare sequestration amounts for FY 2023 to capture more of the sequestration savings during the first half of FY 2023, which falls in the legislation’s 10-year budget window. Specifically, the 2% cap on Medicare provider payment cuts will be raised to 2.9% for the first 6 months of FY 2023, and then drop to 1.11% for the second half of FY 2023. This change “scores” as $2.1 billion in savings, although the provision is billed as not increasing the overall effect of the sequester on Medicare providers. Obviously, there is a hope that Congress will adopt an alternative deficit reduction framework well before the sequestration extension would be triggered.

Extension of Therapy Cap Exceptions. The Act maintains the status quo for outpatient therapy services by extending the exceptions process for outpatient therapy caps through March 31, 2014.  The Medicare program has annual limitations (or caps) on the amount of expenses a patient can accrue for outpatient therapy services in a given year. When an exception to the cap is requested for medically-necessary services furnished through March 31, 2014, therapy providers must continue to include the KX modifier on the claim form.  All claims exceeding the cap continue to be subject to manual medical review. In addition, the Act extends the application of the therapy cap and exceptions to therapy services furnished in a hospital outpatient department through March 31, 2014 (which was otherwise set to expire on December 31, 2013).

Extension of Other Expiring Provisions. The Act extends for three months certain Medicare policies set to expire December 31, 2013, including: the floor used in the Medicare physician work geographic adjustment; certain ambulance add-on payments;the Qualified Individual program that reimburses states for certain Part B premiums; and the Transitional Medical Assistance program.

The Act also extends for six months (through March 31, 2014) the Medicare low-volume hospital payment and the Medicare-dependent Hospital program. In addition, the Act extends for one year the authority for Medicare Advantage Special Needs Plans (through 2016) and certain Medicare reasonable cost contracts (through 2014).  Funding for the National Quality Forum (NQF) for certain health care performance measurement activities is extended until currently-available funds expire.

Medicare Long Term Care Hospital (LTCH) Payments. The Act includes a number of provisions impacting the provision of and payment for LTCH services provided to Medicare beneficiaries. Among other things, the Act establishes new criteria for LTCHs to be paid under the LTCH PPS rather than the acute inpatient prospective payment system (IPPS) rate. In particular, the Act establishes new “site neutral” Medicare payment criteria for LTCH services provided on or after October 1, 2015. Subject to certain exceptions, LTCHs will be reimbursed at the rate otherwise paid under the IPPS unless the patient had a preceding hospital stay including at least three days in an Intensive Care Unit (ICU) or received qualifying ventilator services. The Act provides for a two-year transition to the site neutral payment rate, during which time a blended rate will be paid. 

For cost reporting periods beginning in FY 2020, payment for all discharges from an LTCH may be subject to the new site neutral payment limitation unless the number of discharges for which payment is not made at the site neutral payment rate is greater than 50% of the total number of discharges for the LTCH. In other words, if the LTCH’s site neutral payment rate is 50% or greater, then all discharges (beginning in the next cost reporting period) will be reimbursed at the IPPS rate. The Act requires CMS to establish a process for an LTCH subject to the IPPS payment rate to re-qualify for payment under LTCH PPS.

Moreover, the Act delays full implementation of the so-called “25% rule” for three years, through FY 2017 (when this policy is implemented, if an LTCH admits more than the specified percentage of its patients from a single acute care hospital during a fiscal year, it will be paid at a rate comparable to the IPPS rate for patients above the specified percentage threshold). In addition, the Act extends the current moratorium on establishing or increasing LTCH beds (with certain exceptions) through September 30, 2017.

For cost reporting periods beginning on or after October 1, 2015, LTCH discharges paid at the site neutral payment rate or by a Medicare Advantage plan will be excluded from calculation of the LTCH’s average length of stay.

Medicaid DSH Payments.  The Act restructures planned reductions in Medicaid disproportionate share hospital (DSH) payments by delaying FY 2014 cuts until FY 2016 but increasing the overall level of reductions and extending cuts through FY 2023, for a total savings of $3.9 billion during the FY 2014-2023 budget window.

Strengthening Medicaid Third-Party Liability. The Act includes provisions intended to strengthen Medicaid third-party liability. Among other things, the Act reinforces Medicaid’s standing as the payer of last resort by letting states delay paying certain prenatal and preventive pediatric care claims, to the extent that doing so is cost-effective and will not adversely affect access to care. It also allows Medicaid to recover costs from beneficiary liability settlements. These provisions take effect on October 1, 2014.

CMS Updates Medicare Physician Fee Schedule, Other Part B Policies for CY 2014

On December 10, 2013, CMS published its final rule updating Medicare physician fee schedule (PFS) rates and polices for calendar year (CY) 2014, which includes a 20.1% across-the-board cut in PFS rates in 2014 (down from 24.4% projected under the proposed rule). The cuts are largely due to the statutory Sustainable Growth Rate (SGR) update formula, although lawmakers are seeking agreement on legislation to block the automatic cuts. The rule also includes a number of significant Part B policy changes, including the following highlights:
 

  • The final 2014 conversion factor (CF) is $27.2006, compared to the 2013 CF of $34.0230, mainly as a result of the statutory SGR formula. Congress is expected to override this formula, either on a temporary or permanent basis, but final action is still uncertain (see legislative update below). CMS estimates that if Congress freezes the PFS update for 2014, it would actually result in a CF of $35.6446, an increase compared to 2013, due to the application of a budget neutrality adjustment. Reimbursement changes for individual procedures vary based on numerous other policies. 
  • CMS did not finalize a controversial proposal under its potentially misvalued code initiative to reduce PFS rates for more than 200 codes if Medicare physician office payment exceeds the payment under the hospital outpatient prospective payment system (OPPS) or ambulatory surgical center (ASC) prospective payment system (PPS). CMS expects to develop a revised proposal for using OPPS and ASC rates in establishing physician practice expense relative value units, which CMS will propose through future notice and comment rulemaking. CMS is continuing its efforts to identify and adjust payment for potentially misvalued codes, however, including by adopting on an interim basis work relative value units for approximately 200 additional codes. These interim values are subject for public comment until January 27, 2014.
  • CMS will make payment for non-face-to-face complex chronic care management services for Medicare beneficiaries who have multiple (two or more) significant chronic conditions, beginning in 2015. CMS will establish practice standards for such chronic care management services through future rulemaking. 
  • CMS is modifying the definition of eligible telehealth originating sites to include health professional shortage areas (HPSAs) located in rural census tracts of urban areas as determined by the Office of Rural Health Policy, which CMS expects to result in the inclusion of additional HPSAs as areas for telehealth originating sites. CMS is adding transitional care management services to the list of eligible Medicare telehealth services.
  • CMS will continue implementation of the physician value-based payment modifier, which was mandated by the Affordable Care Act (ACA) to reward physicians for providing higher quality and more efficient care. The value modifier is being phased in from CY 2015 to CY 2017. CY 2014 is the performance period for the CY 2016 value modifier. CMS is finalizing plans to apply the value modifier to groups of 10 or more eligible physicians in 2016 (compared to groups of 100 or more in 2015), and increase the amount of payment at risk from 1% to 2% in 2016. CMS also is refining the methodologies used to calculate the value modifier to better identify both high and low performers for upward and downward payment adjustments. 
  • CMS has adopted its proposal to amend the “incident to” regulations to require that services and supplies be furnished in accordance with applicable state law, and that the individual performing “incident to” services meet any applicable requirements to provide the services, including state licensure requirements. The policy is intended to ensure that auxiliary personnel providing services to Medicare beneficiaries “incident to” the services of other practitioners do so in accordance with applicable state requirements, and that Medicare payments can be recovered when such services are not furnished in compliance with the state law.
  • CMS has adopted without change its proposed process to systematically reexamine payment amounts under the Clinical Laboratory Fee Schedule to determine if changes in technology for the delivery of that service (e.g., changes to the tools, machines, supplies, labor, instruments, skills, techniques, and devices by which laboratory tests are produced and used) warrant an adjustment to the payment amount. Beginning with the CY 2015 PFS proposed rule, CMS will identify the test code, discuss how it has been impacted by technological changes, and propose an associated payment adjustment. CMS will solicit comments, and any payment adjustment would be adopted in the final rule, beginning with the CY 2015 final rule. 
  • CMS is establishing a centralized review process under which a single entity will make Investigational Device Exemption (IDE) coverage decisions, although the policy will not be implemented until 2015. The rule also establishes minimum standards for IDE studies and trials for which Medicare coverage of devices or routine items and services is provided (but CMS dropped earlier references to pivotal study and superiority study design criteria). 
  • CMS will apply the outpatient therapy cap limitations and related policies to outpatient therapy services furnished in a critical access hospital beginning on January 1, 2014, in conformance with the American Taxpayers Relief Act (ATRA). 
  • The final rule also addresses, among many other things: updates to the geographic practice cost indices; revisions to the calculation of the Medicare Economic Index; revisions to the Physician Quality Reporting System and the Electronic Health Record (EHR) Incentive program; revisions to regulations regarding liability for overpayments to conform to ATRA provisions with regard to the timing of the triggering event for the ‘‘without fault’’ and ‘‘against equity and good conscience’’ presumptions; and updates to the ambulance fee schedule regulations to conform with statutory requirements. 

In light of the late release of the final Medicare PFS rule, CMS is extending the annual Medicare participation enrollment period for 2014 through January 31, 2014 (instead of the window ending on December 31, 2013). During this period, eligible physicians, practitioners, and suppliers may change their participation status, but the effective date for any participation status changes remains January 1, 2014.

CMS Publishes Final FY 2014 Medicare SNF PPS Rates, Policies

On August 6, 2013, CMS published a final rule to update Medicare skilled nursing facility (SNF) PPS rates for FY 2014 and make other updates to SNF reimbursement policy. CMS estimates that the final rule will increase aggregate Medicare payments to SNFs in FY 2014 by $470 million, or 1.3%, compared to FY 2013 rates. Specifically, SNF PPS rates will be updated to reflect a 2.3% market basket increase, but that update is reduced by a 0.5 percentage point multifactor productivity adjustment required by the ACA, and further reduced by a 0.5 percentage point forecast error correction (resulting from 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 rounds to 0.5%). CMS also adopted its proposals to rebase the SNF market basket to reflect FY 2010 data, rather than data from FY 2004, and to change the components of the SNF market basket index. With regard to therapy services, CMS is adding 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). The rule is effective October 1, 2013.

CMS Proposes Updates to Medicare Physician Fee Schedule, Other Part B Policies for CY 2014

On July 19, 2013, the Centers for Medicare & Medicaid Services (CMS) published its proposed rule updating Medicare physician fee schedule (PFS) rates and polices for calendar year (CY) 2014. CMS projects that PFS payments will be reduced by approximately 24.4% in 2014, 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). The rule also includes a number of significant policy proposals, including the following highlights:

  • Under the proposed rule, CMS projects an estimated 2014 conversion factor of $25.7109, adjusted to $26.8199 to include a budget neutrality adjustment, compared to the 2013 conversion factor of $34.0230. 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. Reimbursement changes for individual procedures would vary based on numerous other policy proposals and updates.
  • Under its potentially misvalued code initiative, CMS is proposing to reduce PFS rates for more than 200 codes if Medicare physician office payment exceeds the payment in the outpatient hospital department or ambulatory surgical center (ASC) setting. CMS proposes limiting PFS payment in such cases to the total payment that Medicare would make to the practitioner and the facility when the service is furnished in a hospital outpatient department or ASC. Certain services would be exempt from this provision, including services without separate hospital outpatient prospective payment system (OPPS) payment rates and codes already subject to cuts pursuant to the Deficit Reduction Act imaging cap, among others). CMS estimates that this policy would have the biggest negative impact on allowed charges for independent laboratory PFS payments, radiation therapy center services, and pathology services. CMS also proposes to examine other specific codes as part of the agency’s ongoing review of misvalued codes.
  • CMS proposes to make payments for non-face-to-face complex chronic care management services for Medicare beneficiaries who have multiple (two or more) significant chronic conditions. This provision would be implemented in 2015 to provide sufficient time to develop and obtain public input on the standards necessary to demonstrate the capability to provide these services.
  • CMS proposes to modify the definition of eligible telehealth originating sites to include health professional shortage areas (HPSAs) located in rural census tracts of urban areas as determined by the Office of Rural Health Policy, which CMS expects to result in the inclusion of additional HPSAs as areas for telehealth originating sites. CMS also proposes adding transitional care management services to the list of eligible Medicare telehealth services.
  • CMS proposes to continue implementation of the physician value-based payment modifier (Value Modifier), which was mandated by the Affordable Care Act (ACA) to reward physicians for providing higher quality and more efficient care. The Value Modifier is being phased in from CY 2015 to CY 2017, with CY 2013 serving as the initial performance period for the CY 2015 Value Modifier. In the proposed 2014 rule, CMS calls for the value modifier to apply to groups of 10 or more eligible physicians in 2016 (compared to groups of 100 or more in 2015), and increases the amount of payment at risk from 1% to 2% in 2016. CMS also proposes to refine the methodologies used to calculate the value-based payment modifier to better identify both high and low performers for upward and downward payment adjustments.
  • CMS proposes to amend the “incident to” regulations to require that services and supplies be furnished in accordance with applicable state law, and that the individual performing “incident to” services meet any applicable requirements to provide the services, including state licensure requirements. CMS is proposing this policy to ensure that auxiliary personnel providing services to Medicare beneficiaries incident to the services of other practitioners do so in accordance with applicable state requirements, and to ensure that Medicare payments can be recovered when such services are not furnished in compliance with the state law.
  • CMS proposes a process to systematically reexamine payment amounts under the Clinical Laboratory Fee Schedule (CLFS) to determine if changes in technology for the delivery of that service (e.g., changes to the tools, machines, supplies, labor, instruments, skills, techniques, and devices by which laboratory tests are produced and used) warrant an adjustment to the payment amount. Beginning with the CY 2015 PFS proposed rule, CMS would identify the test code, discuss how it has been impacted by technological changes, and propose an associated payment adjustment. CMS would solicit comments, and any payment adjustment would be adopted in the final rule, beginning with the CY 2015 final rule. CMS would first examine the codes that have been on the CLFS the longest and then work forward, over multiple years, until all of the codes on the CLFS have been reviewed.
  • CMS proposes a centralized review process under which a single entity would be responsible for making Investigational Device Exemption (IDE) coverage decisions. The rule also would establish minimum standards for IDE studies and trials for which Medicare coverage of devices or routine items and services is provided (including pivotal study and superiority study design criteria).
  • CMS proposes to apply the outpatient therapy cap limitations and related policies to outpatient therapy services furnished in a critical access hospital beginning on January 1, 2014, in conformance with the American Taxpayers Relief Act (ATRA).
  • The sweeping rule also addresses, among many other things: updates to the geographic practice cost indices (GPCIs) and revisions to the weights assigned to each GPCI to increase the weight of work and reduce the weight of practice expense; revisions to the calculation of the Medicare Economic Index (MEI); revisions to the Physician Quality Reporting System (PQRS) and the Electronic Health Record (EHR) Incentive program; revisions to regulations regarding liability for overpayments to conform to ATRA provisions with regard to the timing of the triggering event for the ‘‘without fault’’ and ‘‘against equity and good conscience’’ presumptions; and updates to the ambulance fee schedule regulations to conform with statutory requirements.

The comment deadline is September 6, 2013.

MedPAC Report to Congress on Delivery Reform

The Medicare Payment Advisory Commission (MedPAC) has released its June 2013 Report to the Congress on Medicare and the Health Care Delivery System. The report examines a number of potential ways to reform Medicare, including the following: 

  • Redesigning the Medicare benefit. MedPAC continues to discuss the concept of competitively determined plan contributions (CPC), under which Medicare beneficiaries could receive care through either a private plan or traditional fee-for-service, but the premium paid by the beneficiary could vary depending on the coverage option chosen. The federal government’s payment for a beneficiary’s care would be determined through a competitive process comparing the costs of available options for coverage. The report identifies key issues to be addressed if the Congress wishes to pursue a policy option like CPC, such as how benefits could be standardized for comparability, how to calculate the Medicare contribution, and the structure of subsidies for low-income beneficiaries.
  • Reducing Medicare payment differences across sites of care. MedPAC notes that Medicare payment rates often vary for similar services provided to similar patients, simply because they are provided in different sites of care (e.g., physician’s office vs. hospital outpatient department). The report identifies services that may be eligible for equalizing or narrowing payment differences across settings.
  • Bundling post-acute care services. MedPAC explores the implications for quality and program spending for different design features of post-acute care payment bundles, such as the services included, the length of time covered by the bundle, and the method of payment.
  • Reducing hospital readmissions. MedPAC suggests further refinements to improve incentives for hospitals and generate program savings through reduced readmissions, including proposals to address the effect of random variation on hospitals with small numbers of cases, the inability of the industry to reduce average penalties with improved performance, the correlation of patient income and readmission rates, and the inverse relationship between readmissions and mortality for cardiac patients.
  • Payments for hospice services. MedPAC presents information on the prevalence of long-stay patients and the use of hospice services among nursing home patients to inform future hospice payment reforms. MedPAC also provides additional information supporting its March 2009 recommendations to revise the hospice payment system.
  • Improving care for dual-eligible beneficiaries. MedPAC discusses the potential role that federally qualified health centers and community health centers can play in coordinating care for Medicare-Medicaid dual-eligible beneficiaries.

In addition to discussing these delivery reforms, the MedPAC report addresses Congressionally-mandated reviews of the following topics: Medicare ambulance add-on payments; geographic adjustment of fee schedule payments for the work effort of physicians and other health professionals; and Medicare payment for outpatient therapy services.

CMS Issues FY 2014 Medicare SNF PPS Proposed Rule

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.

CMS Updates Outpatient Therapy Limits, Coding Policy for 2013

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.

MedPAC Meeting on Medicare Policy Issues (Nov. 1-2)

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.

CMS Call: Manual Medical Review of Therapy Claims (Sept. 26)

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. 

MedPAC Meeting on Medicare Policy Issues (Sept. 6-7)

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.

CMS Open Door Forum on Manual Medical Review of Therapy Claims (Sept. 5)

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.

CMS Issues Proposed OPPS, ASC Policies for 2013

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:

  • The rule would increase 2013 OPPS rates by 2.1% compared to 2012 levels (although the impact on particular procedures would vary). This update reflects a hospital market basket increase of 3.0%, which is reduced under two Affordable Care Act (ACA) provisions – a 0.1 percentage point reduction and an estimated 0.8% “multi-factor productivity” (MFP) adjustment/reduction. The OPPS update is subject to other adjustments, including a 2 percentage point reductions for hospitals that do not meet quality reporting requirements. For 2013, CMS proposes to determine OPPS relative weights using the geometric mean costs of services within an Ambulatory Payment Classification, rather than median costs, which CMS expects would have a limited payment impact on most providers.
  • CMS proposes setting OPPS payment for separately payable drugs and biologicals without pass-through status at average sales price (ASP) plus 6% (which it refers to as the “statutory default” rate), compared to the current ASP plus 4%. Notably, CMS is not proposing to make an adjustment for pharmacy overhead costs in 2013 to reflect the redistribution of package costs, as it had for 2010 through 2012. The proposed 2013 threshold for separate payment for outpatient drugs would be a cost per day that exceeds $80, compared to $75 in 2012. CMS also proposes a special payment adjustment policy for radioisotopes derived from non-highly enriched uranium sources.
  • With regard to ASC policy, CMS is proposing to increase ASC payment rates by 1.3%, which is derived from a 2.2% inflation update reduced by an MFP adjustment of -0.9%. ASC payment rates for CY 2013 will represent 57% of rates for the same services under the OPPS. CMS is soliciting comments on development of an ASC-specific inflation index in place of the current Consumer Price Index for All Urban Consumers. CMS also proposes changes to the regulations regarding payment for new technology intraocular lens (NTIOLs) in the ASC setting to require more stringent labeling and clinical outcomes evidence to support NTIOL applications.
  • CMS proposes changes to the IRF Quality Reporting Program, including updates to the quality measures that will impact annual prospective payment amounts in FY 2014 and procedural changes to the process for updating quality measures.
  • In addition, the proposed rule addresses: refinements to the Hospital Outpatient Quality Reporting (OQR) Program and the ASC Quality Reporting (ASCQR) Program; payment for partial hospitalization services; potential changes to the Part A to Part B Rebilling Demonstration; revisions to the electronic reporting pilot for the Electronic Health Record Incentive Program; clarification of the application of the supervision regulations to physical therapy, speech-language pathology, and occupational therapy services furnished in OPPS hospitals and critical access hospitals; and changes to regulations governing Quality Improvement Organizations, including the secure transmittal of electronic medical information, beneficiary complaint resolution and notification processes.

CMS Proposes Update to 2013 Medicare Physician Rates, Other Part B Policies

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).

OIG Examines Medicaid Payments for Therapy Services

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.

 

President Obama Signs Payroll Tax Bill with Medicare/Medicaid Provisions

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).

Medicare Extensions

  • Temporarily blocks a 27.4% cut in the Medicare physician fee schedule set to go into effect March 1, 2012 as a result of the statutory Sustainable Growth Rate (SGR) formula, and instead extends current Medicare payment rates through December 31, 2012. The conference report also requires the Secretary of the Department of Health and Human Services (HHS) to report on bundled or episode-based payments to cover physicians' services for one or more prevalent chronic conditions or major procedures, and it requires a Government Accountability Office (GAO) report examining private sector initiatives that tie physician payment rates to quality, efficiency, and care delivery improvement, such as adherence to evidence-based guidelines.
  • Extends Medicare Modernization Act (MMA) section 508 hospital geographic reclassifications through March 31, 2012.
  • Extends outpatient hold harmless payments through December 31, 2012 (except for sole community hospitals with more than 100 beds), and requires an HHS study on which types of hospitals should continue to receive hold harmless payments.
  • Extends the 1.0 floor used in the physician work geographic adjustment through December 31, 2012.
  • Extends the Medicare outpatient therapy cap exceptions process through December 31, 2012.  The provision also temporarily extends the therapy cap to services received in hospital outpatient departments through December 31, 2012. Effective with services provided on or after October 1, 2012, the Secretary must ensure that therapy claims for which an exemption is requested include appropriate modifiers indicating that such services are medically necessary. The National Provider Identifier (NPI) of the physician who reviews therapy plans also must be included on Medicare claims. In addition, the Secretary is directed to implement a manual medical review process for beneficiaries whose annual spending for therapy services furnished in calendar year 2012 reaches $3,700 for physical therapy and speech-language pathology, or $3,700 in occupational therapy (the GAO subsequently must issue a report regarding this manual review process). The law also directs the Medicare Payment Advisory Commission (MedPAC) to issue recommendations on how to improve the Medicare outpatient therapy benefit to reflect individual acuity, condition, and therapy needs of the patient. Finally, the Secretary is required to implement, beginning on January 1, 2013, a claims-based strategy to collect data on patient function during the course of therapy services in order to better understand patient condition and outcomes in order to assist in reforming the Medicare outpatient therapy payment system.
  • Extends authorization for independent laboratories to receive direct payments for the technical component for certain pathology services through June 30, 2012.
  • Extends the add-on payment for ground and air ambulance services, including in super rural areas, through December 31, 2012 and requires related MedPAC and GAO reports.

Health Offsets

  • Bad debt reimbursement for all Medicare providers is reduced gradually to 65%. Specifically, providers now paid at 100% will have a three-year transition of 88% in 2013, 76% in 2014, and 65% in 2015, while providers now paid at 70% will be reduced to 65% in 2013. (This provision saves $6.9 billion over 11 years).
  • ReducesMedicare clinical laboratory fee schedule rates by 2 percent in 2013, and the reduced fee schedules will serve as the base for 2014 and subsequent years (saving $2.7 billion over 11 years).
  • Extends Medicaid disproportionate share hospital (DSH) payment reductions under the Affordable Care Act (ACA) for an additional year (saving $4.1 billion over 11 years).
  • Makes technical corrections to the ACA “disaster recovery federal medical assistance percentage (FMAP) provision ($2.5 billion in savings over 11 years).
  • Reduces funding for the ACA Prevention and Public Health Trust Fund by $5 billion over 10 years.

Other Health Provisions

  • Extends through December 31, 2012 the Qualifying Individual (QI) program (which allows Medicaid to pay the Medicare Part B premiums for certain low-income Medicare beneficiaries) and the Transitional Medical Assistance (TMA) program (which allows low-income families to keep Medicaid coverage as they transition into employment).

House Approves Tax/Jobs Bill with Medicare Provisions; Fate Uncertain

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.

CMS Call on SNF PPS MDS 3.0 and RUG-4 (Nov. 3)

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. 

CMS Hosts Call on SNF PPS FY 2012 MDS 3.0 Policy Changes (Aug. 23, 2011)

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.

Older Entries

August 1, 2011 — CMS Issues Final Medicare SNF PPS Update for FY 2012

July 29, 2011 — Medicaid Adult Day Health Services

July 18, 2011 — CMS Proposes Home Health PPS Rate Cut for 2012

July 18, 2011 — OIG Reports on Nursing Home Reimbursement

May 31, 2011 — OIG Report on Physician Therapy Services Provided Under the Home Health PPS

April 29, 2011 — CMS Proposes Medicare SNF PPS Update for FY 2012

March 19, 2011 — CMS Calls: Provider Compliance Group National Outreach/OIG Reports (March 22-24)

December 28, 2010 — Questionable Billing for Medicare Therapy Services

December 28, 2010 — OIG Report on Questionable SNF Claims

December 15, 2010 — Medicare Physician Fee Schedule Fix/Extenders Bill Awaits President's Signature

December 9, 2010 — Congress Clears One-Year Medicare Physician Fee Schedule Fix and Other Health Policy Revisions

December 1, 2010 — President Signs Short-Term Medicare Physician Fee Schedule Fix, Outpatient Therapy Policy Update

November 29, 2010 — Congress Clears One-Month Medicare Physician Fee Schedule Fix, Therapy Policy Change

November 16, 2010 — CMS Issues Final CY 2011 Physician Fee Schedule Rule

August 31, 2010 — CMS Finalizes New DMEPOS Supplier Standards

August 31, 2010 — CMS Issues Comparative Billing Reports for Physical Therapists

August 6, 2010 — CMS Forum on Medicare Outpatient Therapy Payment Alternatives (Aug. 19, 2010)

July 12, 2010 — CMS Issues Proposed CY 2011 Physician Fee Schedule Update

April 16, 2010 — HHS/CMS PPACA Implementation Announcements

March 17, 2010 — House Approves Additional Short-Term Extension of Medicare Physician Fee Schedule Fix/Therapy Cap Exception Process

March 11, 2010 — Senate Approves Bill to Extend Medicare Physician Payment Fix, Make Other Medicare/Medicaid Policy Changes

March 3, 2010 — New Law Provides Short-Term Physician Fee Schedule Fix, Extension of Therapy Cap Exceptions Process

February 26, 2010 — House Approves Bill to Extend Temporary SGR Freeze, Therapy Cap Exceptions Through March 2010

February 12, 2010 — Bipartisan Senate Jobs Bill Would Extend Expiring Health Provisions

January 13, 2010 — CMS Guidance on Expiration of Therapy Cap Exceptions Process, Independent Lab Billing Policies

November 11, 2009 — Final CY 2010 Medicare Physician Fee Schedule Rule Released

July 29, 2008 — Medicare Physician Payment/DMEPOS Bidding Delay Legislation Enacted

July 29, 2008 — Medicare Outpatient Therapy Payment

July 16, 2008 — MIPPA: Medicare Physician Payment/DMEPOS Bidding Delay Legislation Enacted

July 9, 2008 — Medicare Claims for Physician Services, Outpatient Therapy, and Pathology Services

May 21, 2008 — Outpatient Therapy Requirements