Medicare Update

CMS Releases Proposed Home Health Prospective Payment Rule for CY2008

On April 27, 2007, the Centers for Medicare & Medicaid Services (CMS) posted a display copy of a Proposed Rule on the CMS website, which would make changes to the Medicare Home Health Prospective Payment System (HH PPS) for calendar year (CY) 2008.  CMS has also released a Fact Sheet comparing the changes in the Proposed Rule to the current HH PPS payment system.

According to CMS, the Proposed Rule is designed to ensure more appropriate payments for Medicare home health care services, while establishing incentives for more efficient care.  The Proposed Rule reflects a proposed home health market basket increase of 2.9 percent for CY 2008, and proposes to reduce the national standardized 60-day episode payment rate by 2.75% per year for 3 years beginning in CY 2008. CMS estimates that the net impact of the Proposed Rule is an additional $140 million in payments to Medicare home health agencies in CY 2008.

The Proposed Rule is scheduled to be published in the Federal Register on May 4, 2007.  According to CMS, the comment period will close on June 26, 2007.  The Proposed Rule will explain how to submit comments for consideration. 

CMS Posts Webcast for DMEPOS Competitive Bidding Program

On April 10, 2007, the Centers for Medicare & Medicaid Services (CMS) published the Final Rule establishing the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program.

To implement the DMEPOS competitive bidding program, CMS has contracted with Palmetto GBA to serve as the Competitive Bidding Implementation Contractor (CBIC). CMS has also established a CBIC website with information and guidance on the DMEPOS competitive bidding program, including a bid application tool kit, frequently asked questions, and other information. 

Most recently, CMS posted an educational webcast on the CBIC website.  The webcast is designed to assist suppliers that intend to participate in the DMEPOS competitive bidding program.  The webcast highlights key bidding dates, provides an overview of the DMEPOS competitive bidding program, and guides bidders through required application forms.  The webcast can be viewed at any time and suppliers are able to submit questions at the conclusion of the webcast presentation. 

OIG Releases Report on Hospice Certifications and CMS Oversight

On April 24, 2007, the Department of Health and Human Services' Office of Inspector General (OIG) released a report entitled Medicare Hospices: Certification and Centers for Medicare & Medicaid Services Oversight (Report). 

The Report contains the findings of an OIG evaluation of the timeliness and results of hospice certification surveys performed by State agencies, and the extent of the Centers for Medicare & Medicaid Services (CMS) oversight of the Medicare hospice program.

In the Report, the OIG indicates that 86 percent of hospices were certified within 6 years (as required), while 14 percent of hospices averaged 3 years past due.  The OIG also found that health deficiencies were cited for 46 percent of the hospices surveyed, and for 26 percent of the hospices investigated for complaints.  In fact, the most frequently cited health deficiencies centered on patient care planning and quality.  In the Report, the OIG also found that CMS and State agencies rarely use methods other than certification surveys and complaint investigations to monitor and enforce hospice performance.

Based on its findings, the OIG made recommendations to CMS, including:

• providing guidance to State agencies and CMS regional offices regarding analysis of existing data and identification of at-risk hospices;
• including hospices in Federal comparative surveys and annual State performance reviews;
• seeking regulatory changes to establish specific requirements for the frequency of hospice certifications; and
• seeking legislation to establish additional enforcement remedies for poor hospice performance.

Medicare Trustees Issue Annual Report and Second Funding Warning

On April 23, 2007, the Centers for Medicare & Medicaid Services (CMS) issued a Press Release announcing the release of the 2007 Medicare Trustees Report (Report).   

In the Report, the Board of Trustees (Trustees) indicates that the financial outlook for the Medicare program continues to raise serious concerns.  According to the Report, total Medicare expenditures were $408 billion in 2006 and are expected to increase in future years at a faster pace than workers' earnings or the overall economy.  The Report also shows that, as a percentage of Gross Domestic Product, expenditures are projected to increase from 3.1 percent in 2006 to 11.3 percent in 2081.  The Trustees believe that "[g]rowth of this magnitude...would substantially increase the strain on the nation's workers, Medicare beneficiaries, and the Federal budget."

As part of the Report, the Trustees also issued a second Medicare funding warning.  Under the Medicare Prescription Drug, Improvement and Modernization Act of 2003, this second Medicare funding warning requires that President Bush propose Medicare legislation, within 15 days after the release of the Fiscal Year 2009 Budget, to keep general revenue spending below 45 percent of total Medicare spending. 

CMS to Hold Home Health, Hospice & DME Open Door Forum

The Centers for Medicare & Medicaid Services (CMS) will hold the next Home Health, Hospice & DME Open Door Forum (Forum) at 2:00 p.m. (EDT) on April 25, 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 8470822.  To participate in person, one must RSVP to HOMEHEALTH_HOSPICE_DMEODF-L@cms.hhs.gov by 2:00 p.m. (EDT) on April 23, 2007, and include the words "Home Health" in the subject line, your name, organization or representation, and telephone number.

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

House Ways and Means Health Subcommittee Announces Hearing on 2007 Medicare Trustees Report

On April 18, 2007, the House Ways and Means Health Subcommittee announced in an Advisory that the Subcommittee will hold a hearing on the 2007 Medicare Trustees Report.  The hearing will be held at 2:00 p.m. on April 25, 2007.

According to the Advisory, the 2007 Medicare Trustees Report is scheduled to be released on April 23, 2007.  In the 2007 Medicare Trustees Report, the Board of Trustees (Trustees) is expected to issue a Medicare funding warning as required by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA).

As part of the MMA, Congress required that the Trustees include a finding in their annual report whenever they project that general revenues will make up more than 45 percent of total Medicare funding within 7 years.  If the Trustees make this determination for 2 consecutive years, a Medicare funding warning is triggered requiring the President to propose policies in the following year's budget to reduce general revenues as a share of Medicare costs.

In the 2006 Medicare Trustees Report, the Trustees issued the first official Medicare funding warning.  If the 2007 Medicare Trustees Report contains the second consecutive warning, President Bush will be required to propose Medicare changes as part of next year's budget to keep general revenue spending below the 45 percent threshold.

Senate Blocks Medicare Prescription Drug Price Negotiation Act of 2007

On April 18, 2007, Senators supporting the Medicare Prescription Drug Price Negotiation Act of 2007 (S.3) failed to obtain the 60 vote majority needed to start debate on the measure.  Following the 55-42 cloture vote, Senate Finance Committee Chairman Max Baucus issued a News Release condemning the Senate's failure to act on S.3.  Among other things, S.3 would repeal the non-interference clause of the Social Security Act, permitting the Secretary of the Department of Health and Human Services to negotiate Medicare Part D prescription drug prices on behalf of Medicare beneficiaries. 

CMS Posts PowerPoint Presentation for Conference Call on Physician Quality Reporting Initiative

The Centers for Medicare & Medicaid Services (CMS) has posted the PowerPoint presentation, for the second national provider call on the 2007 Physician Quality Reporting Initiative (PQRI), on the Educational Resources page of the CMS website.

During the conference call, CMS will provide more detailed information on provider selection of quality measures, and the recently posted measure specifications, incorporating PQRI into the care delivery process, and successful reporting.  The conference call will take place from 1:00 p.m. - 3:00 p.m. (EDT) on April 19, 2007. Due to an overwhelming response, CMS reports that registration for the conference call is now closed. 

However, shortly after the conference call, CMS will make an audio replay of the call available for 7 days.   To access the audio replay, one must dial 1-888-348-4629 and use passcode 364849.  CMS will also post a written transcript of the conference call on the PQRI page of the CMS website.

CMS Announces Special Open Door Forum on Physician Quality Reporting Initiative

Today, the Centers for Medicare & Medicaid Services (CMS) announced that it will hold a Special Open Door Forum (Forum) on the use of registries for reporting data on quality measures to the Physician Quality Reporting Initiative (PQRI). 

The Forum will take place from 1:00 p.m. - 5:00 p.m. (EDT) on May 14, 2007.  To participate in the Forum (in person or by telephone), registration is required.  According to CMS, registration will close at 4:00 p.m. (EDT) on May 9, 2007.   Beginning on May 18, 2007, an audio download of the Forum will also be made available on the CMS website and be accessible for 3 days. 

Section 101(b) of the Tax Relief and Health Care Act of 2006 provided for eligible professionals to provide data on quality measures through appropriate medical registries (e.g., the Society of Thoracic Surgeons National Database).  During the Forum, CMS is expected to give providers and organizations that use or produce registries, and members of the public, an opportunity to discuss the potential use of registries for reporting data on quality measures to PQRI.

Final Rule for DMEPOS Competitive Bidding Establishes Special Rules for Small Suppliers

On April 10, 2007, the Centers for Medicare & Medicaid Services (CMS) published the Final Rule establishing the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program.

In implementing the DMEPOS competitive bidding program, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 requires that CMS take appropriate steps to ensure that small DMEPOS suppliers have an opportunity to participate in the program.  In the Final Rule, CMS attempts to fulfill that objective.

For instance, CMS revised the definition of a "small supplier" to mean a supplier that generates gross revenues of $3.5 million or less in annual receipts (including Medicare and non-Medicare revenue).  In the proposed rule, CMS proposed using the Small Business Administration's definition of small businesses, which would have defined a small supplier as having less than $6.5 million in annual receipts.

Further, CMS will establish a target number for small supplier participation.  The target number will be determined by multiplying 30 percent times the number of qualifying suppliers whose composite bids are at or below the pivotal bid for each product category in each competitive bidding area (CBA).  Then, CMS will determine whether the number of suppliers whose composite bids are at or below the pivotal bid is equal to or greater than the target number computed for that product category.

If the number of suppliers is lower than the target number, CMS will give the small supplier, whose composite bid is above the pivotal bid but closest to it (of the small suppliers whose composite bids are above the pivotal bid for the product category), the option of accepting a contract to furnish the product category at the single payment amounts.  If the target number is still not met, CMS will offer a contract to the small supplier whose composite bid is the next closest, but above, the pivotal bid.  CMS will use this methodology until it reaches the target number or there are no additional small suppliers that submitted a bid for the product category.

CMS will also allow small suppliers to form networks for bidding purposes.  According to the Final Rule, a network must be comprised of at least 2 but not more than 20 small suppliers.  Further, the Final Rule establishes specific requirements or rules for networks seeking contracts under the DMEPOS competitive bidding program, including:

• Each network must form a single legal entity that acts as the bidder and submits bids;
• Any agreement entered into for purposes of forming a network must be submitted to CMS;
• Each network must identify itself as a network and identify all of its members;
• Each member of the network must satisfy the basic eligibility, quality, accreditation and  financial standards of the DMEPOS competitive bidding program;
• A small supplier may join one or more networks but cannot submit an individual bid to furnish the same product category in the same CBA as any network in which it is a member;
• A small supplier may not be a member of more than one network if those networks submit bids to furnish the same product category in the same CBA;
• The network cannot be anti-competitive;
• A bid submitted by a network must include a statement from each member certifying that it joined the network because it is unable to independently furnish all of the items, in the product category for which the network is submitting a bid, to beneficiaries throughout the entire geographic area of the CBA;
• At the time that a network submits a bid, the network's total market share for each product category, that is the subject of the network's bid, cannot exceed 20 percent of the Medicare demand for that product category in the CBA; and
• If a network is awarded a contract, each supplier must submit its own claims and receive payment directly from Medicare for the items that it furnishes under the DMEPOS competitive bidding program.