CMS Proposes Cancellation of Medicare Cardiac/Hip Fracture Episode Payment Models, Scale-Back of Mandatory CJR Participation

Signals Trump Administration’s About-Face on Obama-Era Mandatory Innovation Models

The Centers for Medicare & Medicaid Services (CMS) has just released a proposed rule to cancel a significant — but still-pending — Obama Administration program that would require certain hospitals to participate in Medicare episode payment models (EPMs) for acute myocardial infarction (AMI), coronary artery bypass graft (CABG), and surgical hip/femur fracture treatment (SHFFT) procedures furnished in designated areas of the country. Perhaps more surprisingly, CMS also would dramatically scale back mandatory participation in the ongoing Comprehensive Care for Joint Replacement (CJR) program, with an option for participating hospitals in about half of the current CJR locations to shift to voluntary participation.

As previously reported, the EPM and CJR programs were part of the Obama Administration’s high-profile efforts to move the Medicare system away from fee-for-service (FFS) payments and towards alternative payment models (APMs) that reward quality of care rather than volume of services. Although early APMs (e.g., the Bundled Payment for Care Initiative) were voluntary, CMS eventually shifted attention to mandatory models in order to broaden participation. President Trump’s Secretary of Health and Human Services, Tom Price, M.D., has long been critical of mandatory Medicare payment innovation models and has been contemplating changes to these programs.  It is now clear that the Trump Administration is reversing course and pulling back from mandatory models.  In fact, CMS stated in an announcement that it “expects to increase opportunities for providers to participate in voluntary initiatives rather than large mandatory episode payment model efforts” in the future.

EPM/CR Models Slated for Cancellation

CMS published a final rule in early 2017 to establish a mandatory EPM program for AMI and CABG cases in 98 metropolitan statistical areas (MSA), along with a mandatory EPM program for SHFFT procedures in 67 MSAs covered by the CJR program. In short, CMS planned to provide a bundled payment to hospitals in selected geographic areas for individual episodes, covering all services provided during the inpatient admission through 90 days post-discharge.  In such cases, the hospital would be held accountable for spending during the episode of care.  The bundled payment to the hospital would be paid retrospectively through a reconciliation process (hospitals and other providers and suppliers would continue to submit claims and receive payment via the usual Medicare FFS payment systems).  A participant hospital would receive a “reconciliation payment” if its actual episode payments (combined Medicare Part A and B claims payments for services furnished to the beneficiary during the episode) were below the target price for the episode, and certain quality thresholds were met.  Beginning with the second performance year, affected hospitals would be required to repay Medicare for a portion of spending that exceeded the target price (with limits on upward and downward adjustment). The rule also included provisions intended to promote the use of cardiac rehabilitation services through a Cardiac Rehabilitation (CR) Incentive Payment Model. Continue Reading

CMS Boosts Medicare Inpatient Psychiatric Facility Rates by $45 Million for FY 2018

CMS has published a notice with comment period updating prospective payment system (PPS) rates for Medicare services furnished by inpatient psychiatric facilities (IPFs) during fiscal year (FY) 2018.  CMS estimates that its policies will increase payments by $45 million (0.99%) compared to FY 2017 levels.  This increase is based on 1.25% payment rate update, offset by a 0.26 percentage point reduction due to the outlier fixed-dollar loss threshold adjustment.  The FY 2018 IPF PPS per diem will rise from $761.37 in FY 2017 to $771.35 in FY 2018; providers that fail to meet quality data reporting requirements will receive a FY 2018 per diem rate of $756.11.  The fixed dollar loss threshold amount also will increase, from $10,120 in FY 2017 to $11,425 in FY 2018.  The notice does not include substantive changes in policy.

As it has in other recent Medicare payment rulemaking, CMS solicits comments on ways the agency can “increase quality of care, lower costs improve program integrity, and make the health care system more effective, simple and accessible.” CMS will accept comments until October 6, 2017.

CMS Again Extends HHA/Ambulance Enrollment Moratoria in Selected States to “Prevent and Combat Fraud, Waste, and Abuse”

The Centers for Medicare & Medicaid Services (CMS) has once again extended for six months its “temporary” moratoria on the Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) enrollment of new nonemergency ground ambulance suppliers and home health agencies (HHAs) in selected states, effective July 29, 2017. The moratoria on new HHA enrollment (including new subunits and branch locations) applies to Florida, Illinois, Michigan, and Texas, while the moratoria on enrollment of non-emergency ground ambulance providers and suppliers applies to New Jersey, Pennsylvania, and Texas.  According to CMS, the “circumstances warranting the imposition of the moratoria have not yet abated,” and the moratoria are still needed as it monitors indicators and continues taking administrative actions (e.g., payment suspensions and revocations of provider/supplier numbers).  Since CMS imposed the moratoria on July 31, 2013, the agency has denied enrollment to 1184 HHAs and 23 ambulance companies in the affected geographic areas.

CMS Finalizes 1% Update to Medicare IRF Rates for FY 2018; Payments to Rise by $75 Million

CMS has finalized Medicare prospective payment system (PPS) rates for inpatient rehabilitation facility (IRF) services for fiscal year (FY) 2018, which begins October 1, 2017. CMS estimates that IRF PPS payments will increase by 0.9% overall ($75 million) under the final rule compared to FY 2017 levels.  As mandated by the  Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), CMS adopted a 1.0% increase factor for FY 2018 (note that an IRF that does not submit required quality data is subject to a 2.0 percentage point decrease in its annual update).  The final FY 2018 standard payment conversion factor is $15,838, compared to $15,708 for FY 2017.  The final FY 2018 outlier threshold for high-cost cases is $8,679, compared to $7,984 in FY 2017 (which has the effect of decreasing aggregate payments by about 0.1%).  CMS also updated the IRF wage index and case-mix group relative weights in a budget-neutral manner.  CMS did not revise facility-level adjustment factors; CMS will continue to monitor the effects of FY 2014 adjustments.

In the final rule, CMS revised the lists of ICD–10–CM diagnosis codes that are used to determine presumptive compliance with the patient classification requirement that at least 60% of a facility’s patient population have one of 13 qualifying conditions. In addition, CMS adopted its proposed subregulatory process for adopting changes to the ICD–10–CM medical code data set for the presumptive methodology lists.  CMS also summarized responses to its solicitation of comments on potential reforms to the 60% rule, which CMS intends to consider as it explores “ways to modernize the Medicare program.”

Furthermore, CMS adopted its proposal to eliminate the 25% payment penalty that applies to late IRF patient assessment instrument (IRF-PAI) submissions and remove the voluntary swallowing status item from the IRF PAI. CMS also revised and updated quality measures and reporting requirements under the IRF quality reporting program.

CMS Issues Final FY 2018 SNF PPS Update; Rates to Increase by 1%

CMS has released its final rule to update Medicare skilled nursing facility (SNF) prospective payment system (PPS) rates and policies for FY 2018, which begins October 1, 2017. The final rule incorporates a 1% increase to SNF PPS rates as mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA); in the absence of MACRA, the update would have been 2%.  CMS estimates that the final rule will increase overall payments to SNFs by $370 million compared to FY 2017 levels (note that in the proposed rule, CMS forecast that the 1% increase would result in a $390 million increase, but CMS scaled back its estimate due to an updated baseline spending figure). A 2% reduction is applied to the update for SNFs that fail to submit required quality measures data.

The final rule also addresses a variety of other SNF PPS policies. Among other things, the rule:  revises and rebases the SNF market basket index; revises quality measures and reporting requirements for the SNF Quality Reporting Program (QRP); finalizes requirements for the SNF Value Based Purchasing Program (which applies to services furnished on or after October 1, 2018); and revises the regulatory requirements for survey team composition for the purposes of investigating a complaint and on-site monitoring of compliance.

As previously reported, CMS is contemplating more significant reforms of the SNF PPS methodology (the Resident Classification System or RCS) to begin as early as FY 2019. Those reforms have not yet been formally proposed, and CMS does not substantively discuss the potential RSC framework in the final FY 2018 rule.

GOP Drive to Repeal ACA Stalls in the Senate

A multi-year Republican drive to repeal the Affordable Care Act (ACA) hit a significant roadblock in the early hours of July 28, 2017 when the Senate was unable to muster the votes to pass any form of ACA repeal or repeal/replace legislation – even a stripped down, so-called “skinny” version of HR 1628 offered by Senate Majority Leader Mitch McConnell.  McConnell’s plan, which essentially would have served as a placeholder to keep the legislative process moving, would have eliminated the penalties associated with the mandates that most individuals purchase insurance and certain employers offer insurance, extended the medical device tax moratorium, and made other very limited changes to the law. While House Speaker Paul Ryan expressed a willingness to give the Senate an opportunity to conference with the House on additional modifications to the bill, it was not enough to secure passage, and the McConnell amendment failed on a 49-51 vote.

The path ahead is uncertain at this point, given the deep policy divisions within the Republican Party regarding the nature of changes that should be made to the ACA (and given the unanimous Democratic opposition to the ACA repeal/reform bills advanced by Republican leaders to date). While revisions to the ACA – even bipartisan improvements considered through the committee process – could be considered in the future, right now there does not appear to be a clear way forward for ACA reform. The first test may be whether Republicans will accept Senate Minority Leader Charles Schumer’s request that a bipartisan effort be made to strengthen insurance markets.

CMS Proposes Methodology to Implement Statutory Medicaid DSH Reductions

CMS has issued a proposed rule establishing a methodology to reduce state Medicaid disproportionate share hospital (DSH) allotments annually beginning with fiscal year (FY) 2018, as mandated by the Affordable Care Act (and modified in subsequent legislation). CMS estimates that the rule would reduce state DSH allotments/payments by $43 billion for the period of FY 2018 through FY 2025, and the agency anticipates that the rule would reduce total federal financial participation claimed by states by similar amounts.  CMS will accept comments on the proposed rule until August 28, 2017.

CMS Proposes $80 Million Cut in Home Health PPS Payments for 2018, Additional Significant Reforms for 2019

CMS is proposing to cut CY 2018 Medicare home health prospective payment system (HH PPS) payments by 0.4% — or $80 million overall — compared to 2017 rates under a proposed rule published on July 28, 2017. Furthermore, the agency plans major revisions to the HH PPS case-mix methodology for 2019 that potentially could cut payments by as much as $950 million (-4.3%) in 2019. CMS will accept comments on the proposed rule until September 25, 2017.

With regard to 2018 payments, CMS is proposing a 1% update percentage as mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) for those home health agencies (HHAs) that report required quality data (otherwise the update is decreased by 2 percentage points). The update percentage is more than offset by other policies in the proposed rule, however, including a 0.5% reduction due to the sunset of the rural add-on provision and a – 0.97% adjustment for nominal case-mix coding intensity growth (the last year of a three-year phase in period). The proposed CY 2018 national, standardized 60-day episode payment rate would be $3,038.43, compared to $2,989.97 for 2017; the rate for an HHA that does not submit required quality data would be $2,978.26. CMS also proposes to, among other things: recalibrate HH PPS case-mix weights; update the home health wage index; update measures included in the Home Health Quality Reporting Program; remove or modify 35 current Outcome and Assessment Information Set (OASIS) items effective January 1, 2019; and refine requirements under the Home Health Value-Based Purchasing Model.

Looking ahead to 2019, CMS is proposing to adopt case-mix methodology refinements through implementation of a Home Health Groupings Model (HHGM), which CMS believes classifies care “in a manner consistent with how clinicians differentiate between patients and the primary reason for needing home health care.” The HHGM uses 30-day periods of care rather than the 60-day episode now used. According to CMS, the HHGM eliminates the use of the number of therapy visits provided to determine payment, relying more heavily on clinical characteristics and other patient information (e.g., diagnosis, functional level, comorbid conditions, admission source) to place patients into one of 144 payment groups. CMS would use a Cost-Per-Minute plus Non-Routine Supplies approach to measure costs, using information from the Medicare cost report (rather than current weighted minutes of care using Bureau of Labor Statistics data). CMS seeks comments on all aspects of the proposed HHGM, including whether CMS should: Continue Reading

CMS Proposes Medicare Physician Fee Schedule Update for 2018

Rule Would Delay Appropriate Use Criteria Requirement until 2019, Cut Rates for Off-Campus Hospital Departments

The Centers for Medicare & Medicaid Services (CMS) has published its proposed rule to update the Medicare physician fee schedule (PFS) for calendar year (CY) 2018. The proposed rule addresses numerous Medicare policies, including:  implementation of appropriate use criteria (AUC) for advanced diagnostic imaging services; a deep reduction in reimbursement for off-campus hospital outpatient departments; and consideration of potentially misvalued codes, among many others.  Highlights of the proposed rule include the following: 

  • Under the proposed rule, the 2018 MPFS conversion factor (CF) would be $35.9903, up slightly from the 2017 CF of $35.8887. This update reflects a 0.5% update factor specified under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which is partially offset by a -0.03% relative value unit (RVU) budget neutrality adjustment and a -0.19% “target recapture amount” (since savings from proposed revisions to the RVUs of misvalued codes would not meet a statutory-0.5% target).
  • CMS proposes to revise a policy adopted in the final 2017 Medicare Hospital Outpatient Prospective Payment System (OPPS) rule to implement Section 603 of the Bipartisan Budget Act of 2015, which establishes a site-neutral payment policy for certain newly-acquired, provider-based, off-campus hospital outpatient departments (which CMS calls “off-campus provider-based departments” or “off-campus PBDs”). Effective for services provided on or after January 1, 2017, off-campus PBDs are paid under the PFS in most cases, rather than the generally higher-paying OPPS (with certain exceptions). In the 2017 rule, CMS established new PFS site-of-service payment rates to pay non-excepted off-campus PBDs for the technical component of non-excepted services; these rates generally are based on OPPS payments scaled downward by 50% (called the PFS Relativity Adjuster). For CY 2018, CMS is proposing to reduce the Relativity Adjuster by 50%; that is, the technical component rates for these services would be reduced from 50% of the OPPS rate to 25% of the OPPS rate. CMS invites comments on whether a different PFS Relatively Adjuster would be appropriate.

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With All Eyes on Senate ACA-Repeal Debate, House Passes Bill to Tweak Stark Law and Other Medicare Part B Policies

While the Capitol Hill spotlight is focused on the Senate debate on legislation to repeal or revise the Affordable Care Act, the House of Representatives quietly approved by voice vote HR 3178, the Medicare Part B Improvement Act of 2017. The bipartisan bill would impact a number of Medicare policies, including the Stark physician self-referral law, home infusion therapy and dialysis service policies, and documentation requirements for orthotics and prosthetics. In particular, the bill would: Continue Reading

CMS Proposes Medicare OPPS, ASC Update for CY 2018

CMS has published its proposed rule to update Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) payment system rates and policies for calendar year (CY) 2018. In addition to proposing rate updates for the two payment systems, CMS solicits comments on a wide range of topics, including, among others:  deep OPPS reimbursement cuts for drugs obtained through the 340B drug discount program; a new OPPS drug administration packaging proposal along with a broader query regarding the need for packaging policy reforms; a proposal to allow total knee replacement procedures to be performed on an outpatient basis; and potential changes to the way CMS calculates the ASC payment update.  CMS will accept comments on the proposed rule until September 11, 2017.

With regard to OPPS payments, CMS proposes a 1.75% update for 2018, reflecting a 2.9% market basket increase, which is partly offset by a 0.75 percentage point reduction and a 0.4% multi-factor productivity (MFP) reduction. CMS expects that overall OPPS payments would increase by 2% ($897 million) compared to 2017 levels (although this estimate does not include the effects its 340B drug proposal, discussed below).  The update for hospitals that fail to meet the Hospital Outpatient Quality Reporting (OQR) Program reporting requirements is reduced by 2.0 percentage points.  Rate updates for individual procedures vary based on changes in ambulatory payment classification (APC) assignments and other proposed policies.

Other major provisions of the proposed rule include the following:   Continue Reading

No IPAB Medicare Cuts Triggered for 2019, CMS Actuary Rules

The CMS Chief Actuary has officially determined that the projected Medicare per capita growth rate will not exceed the target that would require the Independent Payment Advisory Board (IPAB) to submit plans to reduce 2019 Medicare per-capita spending. Under the Affordable Care Act, if the threshold is breached, IPAB must submit detailed Medicare spending cut proposals to Congress and the President; IPAB’s proposals would go into effect automatically unless Congress enacts alternative legislation to achieve the required savings (with certain exceptions).  The IPAB spending control mechanism is deeply unpopular, even though the Board has never been formally constituted nor has the savings target ever been triggered.  There have been numerous legislative attempts to repeal the IPAB authority, and President Trump has called for repeal of IPAB in his FY 2018 budget proposal.


CMS Issues Corrections to Medicare/Medicaid LTC Conditions of Participation

CMS has made numerous technical and typographical corrections to its October 4, 2016 final rule revising the requirements that long-term care facilities must meet to participate in the Medicare and Medicaid programs. CMS notes that the corrections are consistent with the policy discussion in the final rule and do not result in substantive policy changes.  The corrections are effective July 13, 2017.

CMS Summit on Potential Behavioral Health Innovative Payment Model (Sept. 8, 2017)

The CMS Center for Medicare and Medicaid Innovation is holding a public summit on September 8, 2017 to explore creating a behavioral health innovative payment model intended to improve health care quality and access, while lowering the cost of care for Medicare, Medicaid, or Children’s Health Insurance Program (CHIP) beneficiaries with behavioral health conditions. The meeting will feature four panel sessions on the following topics:  substance use disorders; mental health in the presence of co-occurring conditions; Alzheimer’s disease and related dementias; and behavioral health workforce development.  Registration is required to participate in the meeting. CMS also will accept written statements or questions until August 25, 2017.

House Committees Examine Health Care Policy Issues

Recent House of Representatives committee hearings have focused on a variety of health care policy issues, including the following:

  • Energy and Commerce Committee hearings on: the growth and oversight of the 340B drug discount program; drug and device company communications, including clinical/economic data; state efforts to address the opioid crisis; and extension of safety net health programs (the Children’s Health Insurance Program, Federally Qualified Health Centers, and the Community Health Center Fund). The Committee also has scheduled a July 26 hearing to examine extending Medicare Advantage Special Needs Plans (SNPs).
  • A House Ways and Means Committee hearing on efforts to control Medicare waste, fraud, and abuse.
  • A House Small Business Committee hearing on how telehealth can help rural communities.


CMS Delays Deadline for HHA Conditions of Participation Compliance

CMS is delaying the effective date of its January 13, 2017 final home health agency (HHA) conditions of participation (CoP) rule for six months, until January 13, 2018. While CMS is not making any other substantive changes to the rule’s requirements., the agency is making two other conforming date changes:  (1) CMS is giving HHAs until July 13, 2018 to implement data-driven performance improvement projects; and (2) CMS is extending the “administrator personnel standard” grandfathering provision for an additional six months (to January 13, 2018).

CMS Proposes Changes to for Second Year of Medicare Physician Quality Payment Program

CMS has proposed new regulations to continue implementing the “Quality Payment Program” (QPP) — the new Medicare physician fee schedule (MPFS) update framework mandated by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). As previously reported, starting in 2017, physicians will be paid under the Merit-based Incentive Payment System (MIPS) or the Advanced Alternative Payment Model (APM).

For the second year of the QPP, CMS is proposing to continue a number of transition policies established for 2017 while “ramping up to full implementation.” Notably, with regard to the MIPS track, CMS proposes to:

  • Establish a Virtual Groups participation option. Virtual groups would be comprised of solo practitioners and groups of 10 or fewer eligible clinicians who come together “virtually” with at least 1 other such solo practitioner/group to participate in MIPS for a one year performance period.
  • Increase the low-volume threshold to exempt more small practices and clinicians in rural and Health Professional Shortage Areas.
  • Add bonus points under the scoring methodology to account for (1) caring for complex patients, and (2) using 2015 Edition Certified Electronic Health Record Technology (CEHRT) exclusively.
  • Incorporate performance improvement in quality and cost performance scoring.
  • Implement an optional facility-based scoring mechanism for facility-based clinicians.
  • Create an Advancing Care Information performance category hardship exemption for small practices and add bonus points to the final score of clinicians in small practices.
  • Add a new improvement activity for clinicians who attest to using Appropriate Use Criteria through a qualified clinical decision support mechanism for all advanced diagnostic imaging services ordered.

CMS also proposes various policies applicable to APM participation.  For instance, CMS propose to:

  • Extend the current revenue-based nominal amount standard through performance year 2020 (which allows an APM to meet the Advanced APM financial risk criterion if participants are required to bear total risk of at least 8% of their Medicare Parts A and B revenue).
  • Modify policies regarding the timeframe for making qualifying APM participant determinations.
  • Modify All-Payer Combination Option policies, which will be available beginning in performance year 2019.
  • Revise the nominal amount standard for Medical Home Models.

CMS will accept comments on the proposed rule until August 21, 2017.

CMS Proposes Update to Medicare ESRD PPS Payments for 2018

The Centers for Medicare & Medicaid Services (CMS) has published a proposed rule to update the Medicare end-stage renal disease (ESRD) prospective payment system (PPS) for calendar year (CY) 2018. CMS anticipates that the proposed rule would increase total Medicare payments to ESRD facilities by 0.8% in 2018, with hospital-based ESRD facilities having an estimated 1.0% increase and freestanding facilities having an estimated 0.8% increase.  CMS proposes a 0.7% rate update, which reflects a projected 2.2% market basket increase that is offset by a 1% reduction under the Protecting Access to Medicare Act (PAMA) and a 0.5% multifactor productivity reduction.  Based on this update, the proposed CY 2018 ESRD PPS base rate would be $233.31, up slightly from the 2017 base rate of $231.55.

The proposed rule also would, among other things: update outlier fixed dollar loss amounts and Medicare Allowable Payments; allow the use of any pricing methodology under section 1847A of the Social Security Act to determine the cost of drugs and biologicals when average sales price (ASP) data is not available for outlier payment purposes; and set the acute kidney injury (AKI) dialysis rate to equal the proposed ESRD PPS base rate.  Furthermore, CMS proposes changes in ESRD Quality Incentive Program (QIP) quality measures and methodologies for payment years 2019 – 2021.  CMS also solicits comments on the treatment of AKI patients under the ESRD QIP and whether CMS should account for social risk factors under the ESRD QIP.

Finally, as in other recent proposed Medicare payment rules, CMS includes a “Request for Information on Medicare Flexibilities and Efficiencies” that invites suggestions for ways to “increase quality of care, lower costs, improve program integrity, and make the health care system more effective, simple and accessible.”

CMS will accept comments on the proposed rule until August 28, 2017.

CMS Finalizes Changes to Payment Error Rate Measurement (PERM) & Medicaid Eligibility Quality Control (MEQC) Programs

CMS has published a final rule that modifies PERM and MEQC regulations to align with changes to how states adjudicate Medicaid and CHIP eligibility under the Affordable Care Act (ACA). According to CMS, the policy revisions are intended to “reduce state burden, improve program integrity, and promote state accountability.” Among other things, the rule changes the eligibility measurement component of the PERM program with regard to review periods, payment sample sizes, and state corrective actions.  It also restructures the MEQC program to complement the PERM program and provide states with additional flexibility.  The rule is effective August 4, 2017.

OIG Targets Additional Medicare/Medicaid Policy Areas for Review

The OIG has added 18 reviews to its FY 2017 Work Plan – most of which target CMS programs, with a particular emphasis on prescription drug policies. For instance, the OIG now intends to examine the following Medicare and Medicaid topics (among others):

  • Excessive Use of Opioids in Medicare Part D
  • Including Non-Covered Versions When Setting Payment Amounts for Part B Drugs
  • FDA Approval Status of Drugs in the Medicaid Drug Rebate Program
  • Accuracy of Drug Classification Data Used to Collect Medicaid Rebates
  • Reasonable Assumptions in Manufacturer AMP Reporting
  • Review of Quality Measures Data Reported by Accountable Care Organizations in the Medicare Shared Savings Program
  • Trends in Hospice Deficiencies and Complaints

Additional information about each of the new reviews is available on the OIG website.