On May 3, 2021, the Centers for Medicare & Medicaid Services (CMS) published an 81-page final rule to both extend and change the Comprehensive Care for Joint Replacement (CJR) model. We previously reported on the proposed rule here. The CJR model was initially implemented by way of notice-and-comment rulemaking in April 2016; the recent

The Medicare Payment Advisory Commission (MedPAC) released its 2021 Medicare provider rate update recommendations on March 13, 2020 – the same day President Trump declared a national emergency due to COVID-19.  MedPAC’s recommendations were based on an assessment of various Medicare “payment adequacy indicators” that are unlikely to reflect the state of the health

The Trump Administration’s proposed fiscal year (FY) 2021 budget calls for significant cuts to federal health spending, including a 10% decrease in Department of Health and Human Services (HHS) discretionary spending in FY 2021 and a $1.6 trillion net reduction in health entitlements over the next decade.  House Budget Committee leaders have blasted the HHS provisions, and the package as a whole is unlikely to be advanced by Congress.  Nevertheless, the document reflects the Administration’s current Medicare and Medicaid priorities, some of which are administrative and could be advanced without Congress.  Furthermore, Medicare provider/supplier cost-saving recommendations could be incorporated into future budget agreements or potentially other entitlement reform efforts down the road.

Highlights of the Trump Administration’s major Medicare and Medicaid budget proposals are presented below.

Medicare Payment Policies

The Administration estimates that its proposed Medicare legislative package would result in $756 billion in Medicare Trust Fund savings over 10 years (net impact after offsets of $450 billion/10 years).  Many of the legislative recommendations have been made in previous budget proposals.  Budget provisions that would result in significant net Medicare savings include the following (net savings figures are over the 10-year period of FYs 2021-2030):  

  • Elimination of the Medicare Advantage (MA) benchmark cap and quality “double bonus” for plans in eligible counties [$1.2 billion].
  • Reform of hospital uncompensated care payments, including basing payments on a hospital’s share of charity care and non-Medicare bad debt [$87.9 billion].
  • Establishment of site neutral payments between on-campus hospital outpatient departments and physician offices for certain services (e.g., clinic visits) [$2 billion] and payment for all off-campus hospital outpatient departments under the physician fee schedule [$47.2 billion].
  • Adoption of a unified post-acute care system for skilled nursing facilities (SNFs), home health agencies, inpatient rehabilitation facilities, and long-term care hospitals (LTCHs) beginning in FY 2026, with reduced annual Medicare payment updates from FYs 2021-2025 [$101.5 billion].
  • Elimination of Medicare reimbursement for disproportionate share hospital (DSH) bad debt, with an exemption for rural hospitals [$33.6 billion].
  • Reduced Medicare payment for hospice services under the SNF routine home care level of care. [$4.5 billion].
  • An increase in the intensive care unit minimum stay threshold from three days to eight days to qualify for LTCH prospective payment system payment [$9.4 billion].
  • Expansion of the durable medical equipment (DME), prosthetics, orthotics, and supplies competitive bidding program to all geographic areas and to inhalation drugs, payment of contract suppliers based on their own bids, and elimination of the surety bid bond requirement [$7.73 billion Medicare savings, $435 million in Medicaid savings]. Separate from the bidding program, the Centers for Medicare & Medicaid Services (CMS) would be authorized to update DME rates based on retail prices through rulemaking, without using the inherent reasonableness process [$1.6 billion Medicare savings, $85 million in Medicaid savings].

Other legislative proposals are intended to promote value-based care; in some cases, these proposals also would result in cost savings.  For instance, the budget proposes the following:

  • Basing Medicare beneficiary accountable care organization assignment on a broader set of non-physician primary care providers [$80 million].
  • Consolidation of the four Medicare inpatient hospital quality programs into a single hospital quality payment program [budget neutral].
  • Implementation of hospital outpatient department and ambulatory surgical center (ASC) value-based programs, with 2% of payments linked to quality/outcomes performance. Payment would be risk adjusted based on patient diagnosis severity to promote site neutrality [budget neutral].
  • Creation of a risk-adjusted monthly Medicare Priority Care payment for providers eligible to bill for evaluation and management (E/M) services who provide ongoing primary care to beneficiaries. The payment would be funded by a 5% annual cut in valuations of non-E/M services [budget neutral].

Medicare Transparency, Quality, Coverage, and Benefits

The budget includes a series of proposals intended to increase access to price and quality information and/or clarify Medicare coverage and payment processes.  For instance, the budget would:
Continue Reading Medicare/Medicaid Policy Provisions in Trump Administration’s FY 2021 Budget Proposal

The Centers for Medicare & Medicaid Services (CMS) has published its final rule to update the Medicare inpatient rehabilitation facility (IRF) prospective payment system (PPS) for fiscal year (FY) 2020.  CMS expects IRF PPS payments to increase by $210 million – or 2.5% – relative to FY 2019 payments under the final rule, due to

The Centers for Medicare & Medicaid Services (CMS) has released its proposed rule to update the Medicare inpatient rehabilitation facility (IRF) prospective payment system (PPS) for fiscal year (FY) 2020.  CMS projects that IRF PPS payments would rise by $195 million under the proposed rule.  Specifically, CMS proposes a 2.5% increase factor, based on an

The Trump Administration’s proposed fiscal year (FY) 2020 budget includes extensive health policy provisions – as evidenced by the 162-page Department of Health and Human Services (HHS) “Budget in Brief.”  This summary focuses on the major Medicare and Medicaid proposals most directly impacting providers and suppliers; note that we discuss the Administration’s proposed prescription drug reimbursement provisions in a separate blog post.

Medicare, Value-Based, and Related Reforms

The Administration estimates that its Medicare policy reforms would save approximately $811 billion over 10 years.  The Administration states that these proposals are “designed to improve value-based systems of care, exercise fiscal integrity, promote competition, reduce provider burdens, improve the appeals system, and address high drug prices.”  Budget provisions that would result in significant Medicare savings include the following (savings are over the 10-year period of FYs 2020-2029): 

  • A new process to distribute uncompensated care payments to hospitals based on share of charity care and non-Medicare bad debt. [$98.0 billion net]
  • Site neutral payments between on-campus hospital outpatient departments and physician offices for certain services (e.g., clinic visits). [$131.4 billion]
  • Payment for all off-campus hospital outpatient departments under the physician fee schedule (PFS) effective CY 2020. [$28.7 billion]
  • A unified post-acute care system for skilled nursing facilities, home health agencies, inpatient rehabilitation facilities, and long-term care hospitals (LTCHs) beginning in 2025. [$101.2 billion]
  • An increase in the intensive care unit minimum stay threshold from three days to eight days in order to qualify for payment under the LTCH prospective payment system. [$10.0 billion]
  • A reduction in Medicare reimbursement of bad debt from 65% to 25% over three years beginning in FY 2020. [$38.5 billion]
  • Expansion of the durable medical equipment (DME), prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program to all areas of the country. The proposal also would reimburse contract suppliers based on their own bids rather than a single payment amount.  [$7.1 billion]
  • Consolidation of federal spending for graduate medical education (GME) programs. [$211.8 billion in Medicare savings].

Other legislative proposals intended to promote value-based care that are not expected to have a budget impact include the following:
Continue Reading Trump Administration Calls for Medicare/Medicaid Cuts, Program Reforms in FY 2020 Budget Proposal

The Medicare Payment Advisory Commission (MedPAC) has issued its annual report to Congress with recommendations for updates to Medicare fee-for-service rates for 2020.

With regard to hospital services, MedPAC recommends that Congress update Medicare inpatient and outpatient prospective payment system (PPS) rates by 2% in 2020.  MedPAC also proposes a new hospital value incentive program (HVIP) to replace Medicare’s current inpatient hospital quality programs.[1]  In short, the HVIP would include a small set of population-based outcome, patient experience, and value measures; score all hospitals based on the same prospectively-set performance targets; and account for social risk factors by distributing payment adjustments through peer grouping.  MedPAC believes the HVIP “will be simpler and will produce more equitable results compared with existing quality payment programs.”

MedPAC recommends no change to Medicare physician fee schedule rates in 2020, in accordance with the Medicare Access and CHIP Reauthorization Act of 2015.  MedPAC reiterates its criticism of current Merit-based Incentive Payment System measures, stating that they “are neither effective in assessing true clinician quality nor appropriate for Medicare’s value-based purchasing programs.”

MedPAC continues to call for implementation of a unified PPS for post-acute care (PAC) providers, including skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs).   Acknowledging that implementation of a unified PAC PPS “is on a longer timetable,” MedPAC recommends the following setting-specific interim payment updates for 2020:
Continue Reading MedPAC Recommends Medicare Payment Updates for 2020

The Centers for Medicare & Medicaid Services (CMS) has finalized its annual update to Medicare skilled nursing facility (SNF) PPS rates and policies for fiscal year (FY) 2019, without significant changes to the rule as proposed.  Most notably, CMS adopted the Patient-Driven Payment Model (PDPM) case mix classification system.  The PDPM, which will replace the existing Resource Utilization Groups, Version IV (RUG–IV) model beginning in FY 2020 (effective October 1, 2019), focuses on a resident’s clinical condition and care needs, rather than the volume of care provided.  CMS characterizes PDPM as a value-based, unified post-acute care payment system that prioritizes the unique care needs of patients and reduces the administrative burden associated with the system.

With regard to the annual payment update, CMS (as proposed) increased rates by 2.4%, as mandated by the Bipartisan Budget Act of 2018; the annual market basket percentage is reduced by 2 percentage points for SNFs that fail to submit required quality data to CMS under the SNF Quality Reporting Program (QRP).  Based on this update, CMS estimates an increase of $820 million in Medicare payments to SNFs in FY 2019.  CMS also finalized various updates to the SNF Value-Based Purchasing Program (VBP), which adjusts a SNF’s payments up or down based on its performance on a 30-day hospital readmissions measure.

As we noted in our post on the proposed rule, CMS expressed concerns that its proposed change in how therapy services would be used to classify residents under the PDPM could incentivize the use of group and concurrent therapy rather than individual therapy. CMS finalized its proposal to establish a combined 25% limit on concurrent therapy and group therapy for each discipline of therapy provided.  CMS reiterated its position that individual therapy permits the greatest degree of interaction between the resident and therapist, and should therefore represent, at a minimum, the majority of therapy provided to an SNF resident.  While CMS finalized the proposed cap, it left room for future changes and stated that it will monitor whether group and concurrent therapy are being over- or underutilized and will consider revising the policy and undertaking enforcement efforts as necessary.
Continue Reading PDPM Activated:  CMS Finalizes FY 2019 SNF Rule Largely as Proposed

The Medicare Payment Advisory Commission (MedPAC) has released its annual report to Congress on “Medicare and the Health Care Delivery System.” This year’s report includes recommendations for changes to emergency department services policies, along with analyses of potential changes that would impact physicians, medical equipment suppliers, post-acute care providers, and others.  Highlights include the following:

The Medicare Payment Advisory Commission (MedPAC) has issued its annual recommendations to Congress on updates to Medicare fee-for-service payment system rates, many of which overlap recommendations made in previous years. For instance, MedPAC continues to call for implementation of a unified prospective payment system (PPS) for post-acute care (PAC) providers, including skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs), to be implemented beginning in 2021.  In the latest report, MedPAC recommends that Congress direct the Secretary of Health and Human Services to begin blending the relative weights of the setting-specific payment systems and the unified PAC PPS in 2019.  At the same time, MedPAC recommends that Congress modify the updates for the individual PAC systems by:

  • Reducing home health payment rates by 5% in 2019, rebasing payments beginning in 2020, and eliminating the use of the number of HHA therapy visits as a factor in payment determinations.
  • Reducing Medicare IRF PPS rates by 5% for FY 2019.
  • Eliminating the LTCH PPS update for FY 2019.
  • Eliminating SNF PPS market basket increases for fiscal years (FYs) 2019 and 2020, and implementing previous recommendations to reform SNF PPS payments in a way that shifts payments to medically-complex stays. MedPAC notes that it has endorsed SNF PPS reforms since 2008, and it “has grown increasingly frustrated with the lack of statutory and regulatory actions to lower the level of payments and implement a revised payment system.”

MedPAC also includes detailed discussions of Medicare payment for physician and other health professional services. MedPAC recommends increasing physician fee schedule rates in 2019 by the amount specified in current law (0.25%). MedPAC also offers extensive recommendations for revising the framework for updating Medicare physician payments established by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Most notably, MedPAC recommends eliminating the Merit-based Incentive Payment System (MIPS) and adopting a new voluntary value program under which: (1) clinicians can elect to be measured as part of a voluntary group; and (2) clinicians in voluntary groups can qualify for a value payment based on their group’s performance on a set of population-based measures. Additionally, MedPAC presents the findings of its Congressionally-mandated report on coverage of telehealth services.

With regard to other Medicare fee-for-service payment systems, MedPAC recommends:
Continue Reading MedPAC Calls for Medicare Post-Acute Care and Physician Payment Reforms, Recommends Medicare Payment Updates

The new Bipartisan Budget Act of 2018 (the Act), recently signed into law by President Trump, includes extensive Medicare, Medicaid, and other health policy and payment provisions.  Policy changes that will be welcome to health care providers and manufacturers include:  repeal of the Independent Payment Advisory Board (IPAB); elimination of the Medicare outpatient therapy caps;

The Trump Administration has released its fiscal year (FY) 2019 budget proposal, which includes extensive health policy provisions. While most of the President’s policy proposals for Department of Health and Human Services (HHS) programs would require Congressional approval, others are characterized as administrative proposals that presumably would not involve Congress.
Continue Reading Trump Administration’s Proposed FY 2019 Budget Targets Medicare, Medicaid for Savings, Seeks (Again) to Repeal/Replace ACA

On June 20, 2017, CMS is hosting a Special Open Door Forum conference call to discuss implementation of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). According to a CMS announcement, the call will cover the goals of the IMPACT Act, RAND contract activities (including upcoming national testing), and identify opportunities

Using unusually blunt language, the Medicare Payment Advisory Commission (MedPAC) recently noted that it “is increasingly frustrated with the lack of statutory or regulatory action” to lower Medicare skilled nursing facility (SNF) payments and revise the payment system to link payments to patients’ characteristics and costs of care.  It appears, however, that the Centers for

The Medicare Payment Advisory Commission (MedPAC) has released recommendations to Congress regarding how Medicare fee-for-service payment system rates should be adjusted in 2018. One of the focus areas for MedPAC is post-acute care (PAC), which includes skilled nursing facility (SNF), home health agency (HHA), inpatient rehabilitation facility (IRF), and long-term care hospital (LTCH) services.  According to MedPAC, the “unnecessarily high level of spending and the inequity of payments across different types of patients” necessitate changes to both payment levels and overall system design.  MedPAC therefore reiterates its previous recommendation for a uniform Medicare PAC prospective payment system (PPS) that bases payments on patient characteristics; MedPAC believes that transition to the PAC PPS could begin as early as 2021. In the meantime, MedPAC recommends that Congress:
Continue Reading Post-Acute Care Providers Targeted for Cuts in MedPAC’s Latest Report to Congress

MedPAC has released its June 2016 Report to the Congress on Medicare and the Health Care Delivery System. The report includes recommendations for a number of Medicare policy reforms and analyses of various health care market developments. Several chapters address Medicare drug policy, including a review of external factors that influence the prices Medicare pays for prescription drugs. With regard to Medicare Part B drug policy, MedPAC discusses potential modifications to Medicare Part B drug reimbursement, such as reducing dispensing and supplying fees, along with approaches to improving the quality and reducing the costs of oncology care (since more than half of Medicare Part B drug spending is associated with anticancer and related drugs). Likewise, MedPAC examines the Medicare Part D prescription drug program and offers recommendations for giving plan sponsors greater financial incentives and mechanisms to manage the benefits of high-cost enrollees; exclude manufacturer discounts on brand-name drugs from counting as enrollees’ true out-of-pocket spending; eliminate beneficiary cost sharing above the catastrophic cap; and increase financial incentives for low-income beneficiaries to use lower-cost drugs and biologicals.

MedPAC also discusses development of a unified Medicare payment system for post-acute care, including its unified prospective payment system (PPS) prototype that it believes accurately predicts resource needs for nearly all patient groups. MedPAC raises various implementation considerations, including the need to develop separate payment models for nontherapy ancillary services and the combination of routine and therapy services; adjustments to recognize lower costs in home health agencies compared to institutional settings; the need for outlier policies and labor cost adjustments; future adjustments to reward high-quality, efficient care; conforming regulatory reforms; and an appropriate transition period, among other policy provisions.

In addition, the report addresses:
Continue Reading MedPAC Issues Recommendations on Medicare Drug, Post-Acute Care, and Other Payment Policies

CMS has published its proposed rule to update Medicare skilled nursing facility (SNF) PPS rates and policies for FY 2017. CMS projects that the proposed rule would increase overall payments to SNFs by $800 million, or 2.1%, compared to FY 2016 levels. This projected update is based on a proposed 2.6% market basket increase that would be reduced by a 0.5 percentage multifactor productivity adjustment. CMS does not propose making a forecast error correction for FY 2017, since the difference between its FY 2015 estimated market basket index increase (2.5 percentage points) and the actual change in the market basket (2.3 percentage points) did not exceed the 0.5 percentage point threshold to trigger an adjustment.
Continue Reading CMS Releases Proposed Rule to Update SNF PPS Rates and Policies for FY 2017

On May 12, 2016, CMS will host a conference call on “Understanding the IMPACT Act-Patient and Family Focused for Informed Decision Making.” The call is intended to allow patients, families, caregivers, advocacy groups, and other consumers to ask questions regarding the Improving Medicare Post-Acute Care Transformation Act (IMPACT Act) and standardizing the assessment

On April 14, 2016, CMS will host a call on the “Data Element Library” that will facilitate exchange and use of post-acute care assessment data under the Improving Medicare Post-Acute Care Transformation (IMPACT) Act. The CMS call will provide an overview of the Data Element Library, discuss the type of information that could be publicly