On March 14, 2013, CMS is hosting a National Provider Call to provide an overview of the FY 2015 Medicare Hospital Value-Based Purchasing (VBP) Program design and a preview of the FY 2015 Baseline Measures Report. The event is intended to help demonstrate how hospitals will be evaluated for each of the FY 2015 domains (measures/dimensions).
CMS has released its final rule updating the Medicare physician fee schedule (MPFS) for 2013 and modifying numerous other Medicare Part B policies. Most significantly, the final rule includes a 26.5% across-the-board cut in physician fee schedule payments as a result of the statutory sustainable growth rate (SGR) formula. While Congress is widely expected to mitigate this policy in future legislation, the timing and scope of any such “fix” is highly uncertain. The following are highlights of the sweeping rule:
- Under the final rule, the 2013 MPFS conversion factor will be $25.0008, compared to $34.0376 in 2012. As noted, Congress could override the 26.5% SGR cut on either a temporary or permanent basis. Other provisions of the rule impact reimbursement for different types of services. For instance, the final rule seeks to benefit primary care physicians by authorizing separate payment to a patient’s community physician or practitioner to coordinate the patient’s care in the 30 days following a hospital or skilled nursing facility (SNF) stay. On the other hand, certain specialists, like diagnostic radiologists, would be negatively impacted by CMS’s continued expansion of the multiple procedure payment reduction (MPPR) policy. Under the final rule, on January 1, 2013 CMS will implement its policy, discussed in the CY 2012 final rule, applying the MPPR when one or more physicians in the same group practice furnish the interpretation of advance imaging services to the same patient, in the same session, on the same day. CMS also will apply the MPPR to the technical component of certain cardiovascular and ophthalmology diagnostic services for 2013. Under this policy, CMS will make full payment for the highest paid cardiovascular or ophthalmology diagnostic service and reduce the technical component payment for subsequent cardiovascular or ophthalmologic diagnostic services furnished by the same physician or group practice to the same patient on the same day by 25% for cardiovascular diagnostic services or 20% for ophthalmologic diagnostic services.
- CMS announced it is continuing to pay certain molecular pathology tests under the clinical laboratory fee schedule (CLFS), instead of assigning new genetic and genomic test codes to the physician fee schedule (as contemplated under the proposed rule). CMS also is establishing a new code (G0452, Molecular diagnostics; interpretation and report) to reimburse physicians under the MPFS for interpreting these tests.
- CMS is continuing implementation of the physician value-based payment modifier (Value Modifier), which was mandated by the ACA as a way to reward physicians for providing higher quality and more efficient care. In the final 2012 rule, CMS adopted performance measures to be used for future MPFS payment adjustments based on the Value Modifier. The final 2013 rule sets forth the payment methodology and phase-in plans. The Value Modifier is being phased in over from CY 2015 to CY 2017, with CY 2013 serving as the initial performance period for the CY 2015 Value Modifier. Under the final 2013 rule, the Value Modifier initially will apply to all groups of physician with 100 or more eligible professionals (up from 25 in the proposed rule). These groups will be able to choose two payment calculation options: (1) Value Modifier based strictly on participation in the Physician Quality Reporting System (PQRS), with groups that do not participate in the PQRS having a Value Modifier set at a -1.0% and groups that have reported at least one measure or elected the PQRS administrative claims option receiving a modifier of 0.0% (no payment adjustment, or (2) Value Modifier based on quality tiering, whereby groups with higher quality and lower costs will be paid more (maximum 2% increase), and groups with lower quality and higher costs will be paid less (maximum 1% negative adjustment).
- The rule also addresses, among many other things: modification of CMS’s Part B drug average manufacturer price (AMP) substitution policy to address drug shortage situations; payment reviews and adjustments for potentially misvalued codes; revisions to the PQRS and the Electronic Prescribing (eRx) Incentive Program; allowing Medicare to pay for portable x-ray services ordered by non-physician practitioners acting within their services within their state scope of practice and the scope of their Medicare benefit (in addition to physicians who currently may do so); termination of non-random prepayment review under the Medicare Prescription Drug, Improvement, and Modernization Act, and new claims-based data reporting requirements for therapy services under the Middle Class Tax Relief and Jobs Creation Act. Also, as discussed in the separate summary below, CMS has adopted a requirement for a face-to-face evaluation as a condition of Medicare payment for certain types of durable medical equipment (DME).
The rule was published in the Federal Register on November 16, 2012. CMS will accept comments on a limited number of provisions (interim final work, practice expense (PE), and malpractice RVUs for new, revised, potentially misvalued, and certain other CY 2013 HCPCS codes) until December 31, 2012.
On October 29, 2012, CMS published additional corrections to its August 31, 2012 final FY 2013 Medicare inpatient prospective payment system (IPPS) rule. The corrections address the achievement thresholds and benchmark values presented in the Clinical Process of Care measures section of the final performance standards for the FY 2015 Hospital Value-Based Purchasing Program table. In addition, CMS has published a notice correcting technical and typographical errors in the September 4, 2012 final rule specifying the “Stage 2” meaningful use criteria that eligible professionals, eligible hospitals, and critical access hospitals must meet in order to qualify for Medicare and/or Medicaid electronic health record (EHR) incentive payments.
On October 4, 2012, CMS will host a National Provider Call on the Hospital Value-Based Purchasing (VBP) FY 2013 Actual Percentage Payment Summary Report. The call will provide operational details for FY 2013, which is the first year in which value-based incentive payments will be made under the Hospital VBP Program. Additionally, CMS will discuss a review and corrections process and an appeals process for the program. Registration for the call is required by noon on October 4 or when available space is full.
On August 1, 2012, CMS is holding a national provider call on its proposals for the Physician Value-Based Payment Modifier under the Medicare physician fee schedule (MPFS). The Value Modifier was mandated by the ACA as a way to reward physicians for providing higher quality and more efficient care. In the final 2012 MPFS rule, CMS adopted performance measures to be used for future MPFS Value Modifier payment adjustments. The proposed 2013 MPFS rule sets forth the Value Modifier payment methodology and phase-in plans.
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).
On July 11, 2012, CMS is hosting a National Provider Call with a question and answer session on the FY 2014 Hospital Value-Based Purchasing (VBP) Program. Advance registration is required.
On February 28, 2012, CMS is hosting a call on the FY 2013 Hospital Value-Based Purchasing Program. The call will discus a sample hospital-specific performance report that shows what hospitals can expect when they receive their own reports. Registration is required.
On February 9, 2012, CMS will host a national provider call on the Medicare Spending Per Beneficiary Measure (MSPB). The MSPB measure was finalized for inclusion in Hospital Value-Based Purchasing (VBP) program in the FY 2012 hospital inpatient prospective payment system final rule. The call will provide background information and discuss how the measure is calculated, including the approach to risk adjustment and payment standardization. Registration is required.
On January 20, 2012, the Obama Administration posted its Fall 2011 Regulatory Agenda, outlining its planned regulatory initiatives in a number of policy areas. Priorities for the Department of Health and Human Services (HHS) include, among many others:
- Implementing Affordable Care Act (ACA) insurance reforms, including establishing Affordable Insurance Exchanges, establishing risk adjustment criteria for health plans, and expanding Medicaid coverage;
- Improving health care quality and patient safety, including implementing value-based purchasing programs for hospitals and other health care providers and promoting health information technology adoption and electronic health records;
- Improving response to adverse events, including establish a unique identification system to track medical devices
- Advancing scientific research by revising ethical rules governing research on human subjects; and
- Streamlining regulations to reduce regulatory burdens, including Food and Drug Administration (FDA) rules designed to reduce reporting and data submission requirements for drug and medical device manufacturers, and streamlined Medicare conditions of participation for hospitals and other providers.
POSTPONED. CMS has postponed its scheduled December 6, 2011 national provider call on Hospital Value Based Purchasing (VBP). Prior to the call, eligible hospitals will receive a CMS-created simulated, hospital-specific report that is designed to help hospitals anticipate how the VBP will affect hospital payments in fiscal year (FY) 2013. The Simulated Hospital VBP Program reports will include, among other things, the hospital's estimated incentive payment percentage and the hospital’s total and individual performance scores. The provider call will include a walk-through of the hospital specific report and a question and answer session. Additional information will be available when a new date is set.
On November 30, 2011, CMS is publishing its final rule updating the Medicare hospital outpatient prospective payment system (OPPS) and the ASC payment system rates and policies for CY 2012. The following are highlights of the lengthy rule:
- The final OPPS update for 2012 is 1.9%, which reflects a 3.0% market basket update reduced by two adjustments mandated by the ACA: (1) a 0.1 percentage point reduction for 2012, and (2) a “multi-factor productivity” (MFP) adjustment of 1% for 2012. The impact of the rule on individual procedures varies, however. There also are special payment adjustments for cancer hospital OPPS payments and for partial hospitalization services provided in hospital-based programs and freestanding community mental health centers.
- The OPPS update is reduced by 2.0 percentage points for certain hospitals that do not meet quality reporting requirements. CMS is expanding the set of measures that must be reported by hospital outpatient departments in 2012 and 2013 to qualify for the full payment update in 2014 and 2015, respectively. CMS also has modified the process for validating hospital reporting of chart-abstracted measures. In addition, CMS is updating the measures and scoring methodology for the Hospital Value-Based Purchasing Program for inpatient stays.
- CMS is increasing from $70 to $75 the cost-per-day threshold for separate payment of hospital outpatient drugs and biologicals (under the proposed rule, the threshold would have been $80). Payment for separately-payable drugs and biologicals without pass-through status will equal the ASP plus 4% (compared to the 2011 rate of ASP plus 5%). This amount reflects an adjustment under which CMS is redistributing $240.3 million of pharmacy overhead costs from packaged to separately-payable drugs and biologicals.
- CMS is establishing an independent advisory review process for consideration of stakeholder requests for assignment of supervision levels other than direct supervision for specific outpatient hospital therapeutic services. Under this process, CMS will seek recommendations from the Ambulatory Payment Classification (APC) Panel, which will be expanded to include representatives of critical access hospitals solely for deliberations relating to supervision levels.
- The final rule updates the requirements under the ACA’s Hospital Value-Based Purchasing Program for fiscal year 2014, including measures, performance standards, and scoring methodology.
- With regard to ASC services, CMS is increasing rates by 1.6 % in 2012, reflecting a 2.73% inflation update offset by a 1.1% productivity adjustment mandated by the ACA. The rule also establishes a new quality reporting program for ASCs, which require reporting of five quality measures (down from 8 in the proposed rule) beginning in 2012 for the 2014 payment determination. The measures include four outcome measures and one surgical infection control measure. Two structural measures will be added for reporting beginning in 2013 (impacting payment in 2015 and 2016) pertaining to use of a safe surgery checklist and ASC facility volume data on selected surgical procedures.
- The rule implements an ACA requirement that CMS develop an exceptions process related to the ACA’s prohibition on expanding an existing physician-owned hospital’s facility capacity.
A new GAO report, “Value in Health Care: Key Information for Policymakers to Assess Efforts to Improve Quality While Reducing Costs,” examines the availability of evidence that various health care interventions (e.g., provider payment restructuring, chronic care management, patient safety initiatives, care transitions management, and prevention programs, and care coordination activities) impact the quality and cost of health care. In brief, the GAO found that at least some information on both cost and quality effects was available for about half of the 127 interventions examined. In many cases, however, the credibility of this information is questionable due to widespread reliance on studies that did not incorporate rigorous designs that could isolate the effect of an intervention from other factors. According to the GAO, the findings suggest that “successful efforts to encourage the widespread adoption of value-enhancing interventions will need to take into account a complex mix of factors, including leadership support, organizational culture, and staff resources, that facilitate the implementation of health care interventions across a wide range of organizational contexts.”
On July 13, 2011, CMS published a document correcting technical errors that occurred in its May 5, 2011 proposed rule to update the Medicare hospital inpatient prospective payment system and the long-term care hospital prospective payment system for fiscal year (FY 2012). The corrections address the calculation of the outmigration adjustment and the listing of hospitals eligible for this adjustment (which also impacts the provider’s wage index value). The correction of this error results in an additional 104 providers being eligible for the outmigration adjustment in the FY 2012 proposed wage index. The final rule also should be released in the near future. Separately, CMS has published a notice correcting technical errors in its May 6, 2011 final rule implementing the Medicare Hospital Inpatient Value-Based Purchasing Program. The notice is effective July 1, 2011.
On July 27, 2011, CMS will host a Special Open Door Forum on the 2013 Hospital Value-Based Purchasing Program, under which quality of care factor into hospital Medicare reimbursement. Note that the period of performance for the FY 2013 program began on July 1, 2011. The call will cover, among other things, hospital eligible for the program, key dates, clinical process of care and patient experience measures, calculation of performance scores, and determination of incentive payments.
On May 5, 2011, the Centers for Medicare & Medicaid Services (CMS) is publishing its proposed rule to update Medicare inpatient prospective payment system (IPPS) hospital and long-term care hospital prospective payment system (LTCH-PPS) payment and other policies for FY 2012. Overall, CMS estimates that FY 2012 payments to general acute care hospitals for operating expenses would decrease by $498 million (0.5%) under the proposed rule, while Medicare payments to LTCHs are projected to increase by $95 million (1.9%). CMS addresses a wide variety of policies in the more than 1000-page advance version of the rule.
Highlights of the proposal are available after the jump.
- CMS proposes applying a number of adjustments to arrive at an overall operating payment reduction of approximately 0.5%. Specifically, CMS proposes updating IPPS payments by 1.5% (based on a projected market basket update of 2.8%, which is reduced by a multi-factor productivity adjustment of 1.2% and an additional 0.1% reduction mandated by the Affordable Care Act or ACA), with an additional 1.1% increase in response to litigation involving the calculation of budget neutrality for the rural floor, and a 3.15 percentage point reduction to account for changes in hospital documentation and coding practices that did not reflect actual increases in patients’ severity of illness.
- The proposed rule includes a number of hospital quality initiatives. The proposed rule would expand the measures to be reported for purposes of the Inpatient Quality Reporting (IQR) program (formerly called the Reporting Hospital Quality Data for Annual Payment Update or RHQDAPU) for the FY 2013 and FY 2014 updates. Hospitals that do not participate in the IQR quality reporting program will have their market basket update reduced by two percentage points. The rule also would streamline reporting requirements in an effort to reduce the burden on participating hospitals. CMS is also proposing to add one category of conditions (Acute Renal Failure after Contrast Administration) to the list of hospital-acquired conditions (HACs) in FY 2012 (hospitals are prevented from receiving higher payment for care solely resulting from HACs). CMS also proposes implementing the ACA’s Hospital Readmissions Reduction Program, which will reduce payments beginning in FY 2013 to certain hospitals that have excess readmissions for certain selected conditions. CMS is proposing measures regarding rates of readmissions for acute myocardial infarction, heart failure, and pneumonia, along with a methodology for calculating excess readmission rates. The proposed rule also builds on CMS’s January 13, 2011 separate proposed rule to implement the ACA’s Hospital Value-Based Purchasing (VBP) program, which will tie Medicare payments to the quality of hospital services beginning in FY 2013, by proposing an additional measure on Medicare Spending Per Beneficiary.
- The proposed rule would, among many other things: modify Medicare severity diagnosis related group (MS-DRG) classifications for certain procedures; implement ACA policies providing additional payments to certain low-volume hospitals and to qualifying hospitals in certain geographic areas with low per-beneficiary Medicare spending; clarify the payment policy for replacement of recalled devices to address partial credits; exclude hospice discharges from the disproportionate share hospital and indirect medical education adjustments; further clarify Medicare payment for services provided in hospital outpatient departments on either the day of or during the three days prior to an inpatient admission (known as the 3-day payment window); revise how pension contributions are reported for wage index and cost finding purposes; address three applications for new technology add-on payments; and institute policy changes affecting wage indices and add-on payments for hospitals treating patients with end-stage renal disease. CMS also proposes to modify Medicare “under arrangements” requirements to clarify that hospitals could provide only therapeutic and diagnostic services “under arrangements” with an outside entity. Routine services, such as contracted nursing services, furnished outside the hospital could no longer be furnished “under arrangement” and covered by Medicare. The rule also would update the rate-of-increase limits for certain hospitals excluded from the IPPS that are paid on a reasonable cost basis subject to these limits.
- The proposed rule also includes numerous changes impacting LTCHs. Reed Smith attorneys have prepared a Client Alert summarizing the LTCH proposals, including provisions addressing: changes to payment rates and other payment policies for FY 2012; revisions to and rebasing of the LTCH market basket; a requirement for budget neutrality in the area wage level adjustment; LTCH average length of stay policies; an extension of the LTCH moratorium on new LTCH beds to LTCHs “under development” on December 29, 2007; and implementation of a quality data reporting program for LTCHs as mandated by the ACA.
Supplementary information regarding the rule is posted on the CMS web site. The official version of the proposed rule will be published May 5, 2011. Comments will be accepted until on June 20, 2011.
On April 29, 2011, CMS released its final rule to implement a Hospital Value-Based Purchasing (VBP) program, as mandated by the ACA. The VBP program will build on the current pay-for-reporting program by tying Medicare payments to the quality of hospital services. Specifically, under the rule, starting in FY 2013 (which begins October 1, 2012), CMS will make value-based incentive payments to acute care hospitals based either on: (1) how well the hospital performs on certain quality measures, or (2) how much the hospital’s performance improves compared to its performance during a baseline period. The rule addresses the proposed quality measures, performance standards, scoring scheme, and framework for translating scores into value-based incentive payments. In general, the higher a hospital’s performance or improvement during the performance period for a fiscal year, the higher the hospital’s incentive payment will be. The initial measures CMS is adopting are a subset of the measures being used for the existing IQR program. As mandated by the ACA, the VBP program is deficit-neutral; that is, aggregate hospital VBP payments are funded through a reduction in base DRG payments for each discharge. The DRG reduction will be 1% in FY 2013 ($850 million, which is redistributed in VBP incentive payments), rising to 2% by FY 2017. CMS anticipates that out of 3,092 participating hospitals in FY 2013, payment increases will range from 0.0236% to 1.817%. When the base DRG payment reduction is factored in, about half of participating hospitals will receive a net increase in payments and half will receive a net decrease in payments, with no hospital experiencing a net change of more than 1%. The official version of the rule will be published May 6, 2011.
The HHS Secretary has submitted a report to Congress outlining the Department’s plan to implement a value-based purchasing (VBP) program for Medicare payments to ambulatory surgical centers (ASCs), as mandated by the ACA. The report describes current efforts to improve quality and payment efficiency in ASCs, and examines steps required in designing and implementing a Medicare ASC VBP program, including measure development, performance scoring and public reporting, and phase-in of the VBP program.
On March 10, 2011, CMS is hosting a public call on implementation of an ACA requirement that HHS develop a plan to implement a value-based purchasing program for Medicare SNF services. On the call, CMS is seeking stakeholder input on such issues as: the development, selection, and modification process for measures of quality and efficiency; the reporting, collection, and validation of quality data; the structure of value-based payment adjustments and the sources of funding for the value-based bonus payments; and methods for the public disclosure of information on SNF performance.