Washington Update - August 2013

House to Take Up Bill to Replace SGR With Alternative Pay Protocol

Among the bills the House of Representatives will take up when it returns to the Capitol in September is proposed legislation to replace Medicare’s problematic Sustainable Growth Rate (SGR) formula with a viable alternative. In a 51-to-0 voice vote in late July, the House Energy and Commerce Committee approved the bill, the Medicare Patient Access and Quality Improvement Act of 2013.

Key elements of the bill have yet to be ironed out, and some provisions have raised concerns. Before heading home for their summer break, however, lawmakers said they would work to reach consensus.

The act would repeal the SGR in 2014 and guarantee physicians (and other healthcare providers paid according to Medicare’s physician fee schedule) 5 years of stable payments with reimbursements increasing 0.5% each year. Then, starting in 2019, the bill would peg Medicare payments to the quality of care each physician provides, as measured by a new reporting system. Physicians would also have the option of participating in an alternative model, such as a patient-centered medical home, or an accountable care organization.

Healthcare Providers Face Reform Challenges

Hospitals and healthcare providers are confronting significant changes as healthcare reforms take effect, according to news outlets. New policies designed to lower hospital readmissions by fining facilities with rates that exceed thresholds can be challenging. So can imperatives to reduce hospital-acquired infections, and calls for greater cost-efficiency.

Among other things, roughly 1200 hospitals will lose a total of $280 million in Medicare funding over the next 12 months starting in October–because too many of their patients are being readmitted too soon after discharge. “The penalties authorized by the 2010 healthcare law are part of a multipronged effort by Medicare to use its financial muscle to force improvements in hospital quality,” notes Kaiser Health News. For their part, hospitals argue that Medicare is holding them accountable even when patients return for reasons that are not within their control.

The average monthly premium for Medicare drug plans will increase just $1—reaching $31 in 2014—after 3 years without increases, the Obama administration announced in late July. According to officials, the slight increase indicates that competition among insurers is keeping costs down.

This was the case even though seven of the 10 largest Medicare plans increased their premiums by double-digit percentages last year. “By shopping around, seniors helped keep the average premium paid from going up,” the Associated Press reported. Medicare officials urge beneficiaries to shop around for the best deals during Medicare’s open enrollment period, which begins October 15 and ends December 7.

The Centers for Medicare & Medicaid Services’ (CMS) proposed 2014 Medicare Physician Fee Schedule, released in mid-July, would effect a wide range of changes. Among others, the fee schedule calls for the following:

•   Starting in 2015, CMS will establish a separate payment for physicians who provide complex, ongoing, non–face-to-face care management services to beneficiaries with two or more complex chronic conditions.

•   CMS will both add transitional care management services to the list of eligible Medicare telehealth services, and modify regulations describing eligible telehealth originating sites to improve access to these services in shortage areas.

•   The agency will revise payments under the Practice Expense Geographic Adjustment to reflect local differences in practice costs. CMS is changing the weight assigned to geographic practice cost indices (GPCIs) consistent with the recommendations of the Medicare Economic Index (MEI) Technical Advisor Panel.

•   CMS will revise the calculation of the MEI, the price index used to update physician payments for inflation. The proposed rule calls for changes in the relative value units and GPCI weights assigned to work and practice expense so that weight in the payment calculation can continue to mirror those in the MEI if the proposed revisions are adopted. The proposal is designed to distribute some payment to work from practice expense.

•   The agency will continue efforts, dating back several years, to identify and review potentially misvalued codes and make adjustments where needed.

The proposed rule does not specify what the Sustainable Growth Rate mandate for 2014 will be, because these calculations are made in November. Estimates of the cut, however, come to 24.4%. The fee schedule proposal appeared in the July 19 issue of the Federal Register, and CMS will accept comments regarding it through September 6. The American Geriatrics Society is carefully reviewing the 2014 schedule and will be submitting its comments and recommendations. CMS will respond, in the Federal Register, with a final rule on or about November 1. For more information, visit the Federal Register  Website at www.federalregister.gov.

The Centers for Medicare & Medicaid Services (CMS) proposed a new rule in late June that would reduce payments to home health agencies by 1.5% starting in 2014. “The proposed decrease reflects the effects of the 2.4% home health payment update percentage ($460 million increase), the rebasing adjustments to the national, standardized 60-day episode payment rate, the national per-visit payment rates, and the non-routine medical supplies conversion factor ($650 million decrease),” as well as the discontinuation of two categories of ICD-9-CM codes and their replacement with alternatives, according to CMS. “In addition, the rule proposes routine updates to the Home Health Prospective Payment System (HH PPS) payment rates, such as updating the payment rates by the HH PPS payment update percentage and updating the home health wage index for 2014.” The proposal is available at https://bit.ly/FederalRegister_HomeHealth.