Medicare Update

CBO Report Addresses Budget Options for Medicare Home Health Services

The Congressional Budget Office (CBO) recently released its February 2007 Budget Options report (Report).  The CBO issued the Report to inform federal lawmakers about the spending and revenue effects of the various policy options they may face in the 110th Congress.

In the Report, the CBO addresses over 250 policy options covering an array of government programs, including the Medicare program.  For home health agencies (HHAs) participating in the Medicare program, the Report addresses at least 2 policy options designed to reduce Medicare spending on home health services.

First, the Report presents the option of freezing the base payment for each home health episode at its calendar year 2007 level ($2,339) through 2012.  According to the Report, this option would reduce federal outlays by $300 million in 2008 and $8.5 billion over 5 years. 

As a rationale for freezing the base payment for each episode, the CBO points out that the Medicare Payment Advisory Commission calculated an aggregate Medicare margin of about 16 percent for free-standing HHAs in 2004, and suggests that margins are likely to remain high under current law.  However, the Report indicates that this option could reduce the number of HHAs participating in the Medicare program creating access issues for beneficiaries seeking home health services.  In the Report, the CBO also opines that lower payment rates could lead some HHAs to reduce the level or quality of their home health services.

Second, the Report addresses the option of charging beneficiaries a co-payment equal to 10 percent of the total cost of each home health episode covered by the Medicare program starting on January 1, 2008.  The Report indicates that this option would result in federal savings of $1.6 billion in 2008 and $12.9 billion over 5 years.

According to the Report, charging a co-payment would offset a portion of the Medicare program's home health outlays, encourage beneficiaries to be cost-conscious, and reduce the use of home health services.  However, the CBO reports that this option could increase the risk of significant out-of-pocket costs for beneficiaries with only fee-for-service coverage and reduce the use of services among a population that typically has lower incomes than beneficiaries with private supplemental insurance.  With this option, the CBO indicates that beneficiaries with individual medigap policies could face higher premiums, and the costs of employer-sponsored medigap policies could rise.  In the Report, the CBO suggests that this option could also result in increased Medicaid outlays for home health services.

House Ways and Means Health Subcommittee to Hold Hearing on MedPACs Annual March Report

On March 1, 2007, the House Ways and Means Subcommittee on Health will hold a hearing on the Medicare Payment Advisory Commission's (MedPAC) annual March report to Congress.  MedPAC is required to submit its advice and recommendations on Medicare payment policies to Congress by March 1 of each year.  The hearing will be held at 2:00 p.m. and include the testimony of MedPAC Chairman Glenn M. Hackbarth.  The Subcommittee on Health will be accepting written submissions for the hearing record.  A recently released Advisory from the Subcommittee on Health explains how to make such written submissions.

Subsequently, on March 6, 2007, the House Ways and Means Subcommittee on Health will also hold a hearing on MedPAC's mandated report on the Sustainable Growth Rate (SGR), and trends in Medicare spending for physician services in recent years.  During the hearing, MedPAC will reportedly review options for revising the SGR and discuss recommendations on physician payment reform.  The hearing will be held at 2:00 p.m.  The Subcommittee on Health will be accepting written submissions for the hearing record.  A recently released Advisory from the Subcommittee on Health explains how to make such written submissions.

CMS Extends the Premier Hospital Quality Incentive Demonstration

The Centers for Medicare & Medicaid Services (CMS) reports that it has approved a 3 year extension for the Premier Hospital Quality Incentive Demonstration (HQID).

As part of the HQID, over 250 participating hospitals have reported process and outcome measurements in the following 5 clinical areas during the first 2 years of the demonstration: acute myocardial infarction, heart failure, coronary artery bypass graft, pneumonia, and hip and knee replacement.  In a recent Press Release, CMS reported that the HQID resulted in a substantial improvement in the quality of patient care across those 5 clinical areas, with gains over the first 2 years of 11.8 percentage points.  Further, in the second year of the HQID, incentive payments totaled $8.7 million for 115 top-performing hospitals.

CMS reports that the 3 year extension will be used to test new incentive models and develop new ways to measure quality.  According to CMS, the extension will test the effectiveness of offering incentive payments to hospitals achieving a quality threshold, and to hospitals achieving the greatest improvement in quality that also achieve the quality threshold. 

During the 3 year extension, CMS reports that it will continue to track hospital performance in the 5 clinical areas.  However, CMS may add quality measures and clinical conditions in years 5 and 6 of the demonstration, including new mortality and patient safety measures.

CMS Rescinds Transmittal 187 on Independent Diagnostic Testing Facilities

The Centers for Medicare & Medicaid Services (CMS) recently rescinded Transmittal No. 187 , which addressed the implementation of certain new compliance standards for independent diagnostic testing facilities (IDTF).

For the most part, Transmittal No. 187 addressed the new compliance standards for IDTFs that CMS published in the Federal Register on December 1, 2006 as part of the Medicare Physician Fee Schedule final rule for calendar year 2007 (Final Rule).  However, Transmittal No. 187 also appeared to contain some controversial new standards not clearly reflected in the Final Rule.

For instance, as an enrollment standard, Transmittal No. 187 would have apparently prohibited an IDTF from sharing space with another active Medicare supplier (except for physicians owning an IDTF and sharing space) and prohibited an IDTF from sharing equipment with any other IDTF or supplier.  If implemented, such enrollment standards may have required changes to many current leasing arrangements.

Transmittal No. 187 was issued by CMS on January 26, 2007, would have revised the Medicare Program Integrity Manual (CMS Pub. 100-08), and was scheduled to take effect on February 26, 2007.

CMS to Host Physicians, Nurses & Allied Health Professionals Open Door Forum

The Centers for Medicare & Medicaid Services (CMS) will hold a Physicians, Nurses & Allied Health Professionals Open Door Forum (Forum) on March 6, 2007 at 2:00 p.m. (EST).

There are two ways to participate in the Forum.  To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 9400492.  To participate in person, one must RSVP to CMS PHYSICIANODF-L@cms.hhs.gov by 2:00 p.m. (EST) on March 2, 2007, and include the title "Physician ODF" in the subject line of the message, your first and last name, organization or representation, and telephone number. 

The Forum will be held at the Hubert H. Humphrey Building, 200 Independent Avenue S.W., Washington, DC.  CMS asks that attendees arrive no later than 1:30 p.m. (EST).

CMS Requests Comments on Advance Beneficiary Notice of Noncoverage

On February 23, 2007, the Centers for Medicare & Medicaid Services (CMS) published a pronouncement in the Federal Register proposing a new Advance Beneficiary Notice of Noncoverage (ABN).

According to CMS, the new ABN was created by combining the general use advance beneficiary notice (CMS-R-131-G) and an advance beneficiary notice used for physician-ordered laboratory tests (CMS-R-131-L) into a single notice.  In the pronouncement, CMS also proposes some changes to the new ABN, such as adding the 1-800-MEDICARE number, adding information about a beneficiary's right to demand that Medicare be billed, increasing the selection options to allow beneficiaries the right to pay out-of-pocket, including a place for other insurance information, and describing the significance of the signature on the form.

The new ABN is of significance because a provider or supplier participating in Medicare, or taking a claim on assignment, may bill Medicare for items or services usually covered by Medicare, but denied under specific statutory exclusions, if they inform the beneficiary, prior to furnishing the service, that Medicare is likely to deny payment.  Further, CMS reports that providers and suppliers already required to use advance beneficiary notices should continue to use the currently approved notice until the new ABN is finalized and adopted. 

CMS is accepting comments on the new ABN.  Comments must be received by 5:00 p.m. on April 24, 2007.  The February 23, 2007 pronouncement in the Federal Register explains how to submit comments to CMS. 

CMS to Host Second Listening Session on Medicare Hospital Value-Based Purchasing

On February 23, 2007, the Centers for Medicare & Medicaid Services (CMS) published a Notice in the Federal Register announcing that it will host a second Listening Session on the development of the Medicare Hospital Value-Based Purchasing Plan.  According to the Notice, the second Listening Session will be held on April 12, 2007 from 10:00 a.m. until 5:00 p.m. (EDT).

The purpose of the second Listening Session is to solicit comments on the Draft Plan.  In the Notice, CMS reports that it will post the Draft Plan no later than March 22, 2007 on the CMS website's Hospital Center page, under Spotlights.  CMS expects to make revisions to the Draft Plan so that a final Medicare Hospital Value-Based Purchasing Plan is completed by June 2007.

Persons interested in attending the second Listening Session or participating by telephone must register by completing an on-line registration.  The call-in number will be provided upon confirmation of registration.  An audio download of the second Listening Session will be available on the CMS website's Hospital Center page within 72 hours after the second Listening Session.

According to the Notice, CMS will also be accepting written comments on the Draft Plan.  Written comments must be received by 5:00 p.m. (EDT) on April 19, 2007.  The Notice explains how to submit written comments to CMS for consideration.

This second Listening Session follows a Listening Session that was held on January 17, 2007.  CMS has posted the agenda, slide presentations, an issues paper and an audio download of the January 17, 2007 Listening Session on the CMS website's Hospital Center page.

CMS Announces Additional Election Period for the 2007 Competitive Acquisition Program for Part B Drugs

On February 23, 2007, the Centers for Medicare & Medicaid Services (CMS) published a Notice (Notice) in the Federal Register announcing an additional election period for physicians who are not currently participating in the calendar year (CY) 2007 competitive acquisition program (CAP) for Medicare Part B drugs.

The additional election period for CY 2007 will begin on May 1, 2007 and end on June 15, 2007.  In the Notice, CMS indicates that the procedures and forms used for the regular, annual election period for CY 2007 will be used for this additional election period.  Further, physicians who elect to join the CAP during this additional election will participate in the CAP effective August 1, 2007, and will need to enter into a Physician Election Agreement effective August 1, 2007 through December 31, 2007.  However, CMS reports that participation in the CAP for CY 2008 will require a renewal election during the regular fall election period, which will run from October 1, 2007 to November 15, 2007.

For information on this additional election period for CY 2007 and a copy of the Physician Election Agreement, CMS suggests visiting the Information for Physicians section of the CMS website.

CMS Announces Next Hospital/Hospital Quality Open Door Forum

The Centers for Medicare & Medicaid Services (CMS) will hold the next Hospital/Hospital Quality Open Door Forum (Forum) at 2:00 p.m. (EST) on March 8, 2007.

There are two ways to participate in the Forum.  To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 9400677.  To participate in person, one must RSVP to CMS HOSPITALODF-L@cms.hhs.gov by 2:00 p.m. (EST) on March 6, 2007, and include "Hospital/Hospital Quality" in the subject line, your name, organization/representation and telephone number.

The Forum will be held at the Hubert H. Humphrey Building, 200 Independent Avenue S.W., Washington, DC.  CMS asks that attendees arrive no later than 1:30 p.m. (EST).

CMS Issues Advance Notice on CY 2008 Medicare Advantage Capitation Rates

In a February 16, 2007 memorandum  (Memorandum), the Centers for Medicare & Medicaid Services (CMS) issued an advance notice of proposed changes to the Medicare Advantage (MA) capitation rate methodology and risk adjustment methodology under the Medicare Part C program for calendar year (CY) 2008.

In Attachment I of the Memorandum, CMS indicates that the current estimate of the change in the national per capita MA growth percentage for aged and disabled enrollees combined is 4.1 percent for CY 2008.  According to CMS, this estimate reflects an underlying trend change in per capita costs of 3.4 percent for CY 2008, and adjustments to the estimates for aged and disabled growth percentages for CY 2004-2007.  In Attachment II of the Memorandum, CMS sets forth in detail the changes in payment methodology for MA organizations for CY 2008.

The final rates will be announced on April 2, 2007 in the Announcement of Calendar Year 2008 Medicare Advantage Capitation Rates and Payment Policies.  In order to be considered, comments must be received by 6:00 p.m. (EST) on March 2, 2007.  The Memorandum contains information regarding the submission of comments to CMS.