Medicare Update

CMS Publishes RY 2009 Payment and Policy Changes for Long-Term Care Hospitals

On May 9, 2008, the Centers for Medicare & Medicaid Services (CMS) published a Final Rule in the Federal Register establishing rate year (RY) 2009 payment rates and policies for the Medicare prospective payment system (PPS) for inpatient hospital services provided by long-term care hospitals (LTCH).

According to CMS, the Final Rule will increase the standard Federal rate for LTCHs by 2.7 percent and establish a standard Federal rate for the 2009 LTCH PPS rate year of $39,114.36 for discharges occurring during the 15 month period from July 1, 2008 through September 30. 2009.  Under the Final Rule, CMS estimates that aggregate LTCH PPS payments for RY 2009 to be approximately $4.47 billion. CMS reports that this is an increase of approximately $110 million (or 2.5 percent) over estimated payments in RY 2008.

CMS to Host Special Open Door Forum on Wage Index Reform

The Centers for Medicare & Medicaid Services (CMS) recently announced that it will hold a Special Open Door Forum on wage index reform from 2:00 p.m. - 4:00 p.m. (ET) on May 20, 2008. 

CMS reports that the Special Open Door Forum will provide the public with an opportunity to discuss and share their opinions, suggestions and expertise on the wage index and alternative models for computing the wage index.  Specifically, participants in the Special Open Door Forum will be asked to comment on the 9 factors that the Tax Relief and Health Care Act of 2006 (TRHCA) requires that CMS consider in proposals to revise the Medicare hospital wage index classification system, the Medicare Payment Advisory Commission's recommendations for alternatives for computing the wage index, and CMS's proposals in the FY 2009 hospital inpatient prospective payment system Proposed Rule.  The 9 TRHCA factors include:

• Problems associated with the definition of labor markets for purposes of the wage index adjustment.
• The modification or elimination of geographic reclassifications and other adjustments.
• The use of Bureau of Labor Statistics data, or other data or methodologies, to calculate relative wages for each geographic area involved.
• Minimizing variations in wage index adjustments between and within Metropolitan Statistical Areas and statewide rural areas.
• The feasibility of applying all components of the proposal to other settings, including home health agencies and skilled nursing facilities.
• Methods to minimize the volatility of wage index adjustments, while maintaining the principle of budget neutrality in applying such adjustments.
• The effect that the implementation of the proposal would have on health care providers and on each region of the country.
• Methods for implementing the proposal, including methods to phase-in such implementation.
• Issues relating to occupational mix, such as staffing practices and any evidence on the effect on quality of care and patient safety and any recommendations for alternative calculations.

To participate in the Special Open Door Forum, one must dial 1-800-837-1935 and reference conference ID 46680542. CMS reports that if participants are unable to present their comments during the Special Open Door Forum, CMS will accept comments after the Special Open Door Forum via email at CMS_Wage_Index_ODF@cms.hhs.gov. However, CMS points out that the submission of comments via email will not replace the formal comment submission process listed in the Federal Register. CMS also intends to post an audio recording of the call on the Special Open Door Forum page of the CMS website that will be accessible beginning May 28, 2008.

CMS Releases Proposed IPPS Rule for Fiscal Year 2009

The Centers for Medicare & Medicaid Services (CMS) recently released a display copy of a proposed rule (Proposed Rule) that would make payment and policy changes to the Medicare hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2009. In brief, the proposed changes include:

• Market Basket Update.  For FY 2009, CMS projects that the market basket update will be 3.0 percent. However, hospitals that do not successfully report on the quality measures in FY 2009 would receive a market basket update of 1.0 percent.
• Quality Measures.  CMS proposes to add 43 new measures, and retire 1 measure, for the FY 2009 reporting period.  If adopted, the total number of measures for reporting for the FY 2010 update would be 72.  CMS has released a Fact Sheet on these proposed changes.
  
• Hospital Acquired Conditions.  CMS proposes to add additional categories of conditions that when acquired in the hospital will no longer lead to higher Medicare payment, including at least 1 from the National Quality Forum "never events" list that is associated with hypoglycemia.  CMS has released a Fact Sheet on these proposed changes.
• Relative Weights.  As part of the 3-year transition to cost-based weights, CMS proposes to base relative weights 100 percent on costs in FY 2009.  CMS also proposes to add a cost center to the cost report to allow costs and charges for relatively inexpensive medical supplies to be reported separately from the costs and charges of more expensive devices.
• Behavioral Offset.  Pursuant to the TMA, Abstinence Education and QI Programs Extension Act of 2007, CMS proposes to reduce the payment rates by -0.9 percent for FY 2009.
• MS-DRG Classifications.  CMS proposes changes to certain MS-DRG classifications for FY 2009, including MS-DRG 245 (AICD Lead and Generator Procedures).
• Outlier Threshold.  Based on current data, CMS proposes an outlier threshold of $21,025 for FY 2009, which would be lower than the threshold for FY 2008 ($22,185).
• Post-Acute Transfer Policy.  For FY 2009, CMS would apply the post-acute transfer policy to 273 MS-DRGs.
• New Technology Add-On Payments. Among other things, CMS would set July 1 of each year as the deadline by which new technology applicants must receive FDA approval or clearance to allow CMS enough time to fully consider all new technology add-on criteria in time for publication of the annual IPPS final rule.
• Wage Index and Data.  For FY 2009, CMS proposes a national average hourly wage of $32.2252, which would be an increase of 4.2 percent over the figure for FY 2008.  CMS also proposes to apply a statewide (rather than a nationwide) rural and imputed floor budget neutrality adjustment to the wage index beginning in FY 2009. CMS has released a background document addresses some of these changes.
• Geographic Reclassification.  CMS proposes to change the average hourly wage (AHW) comparison criteria that a hospital must satisfy for the Medicare Geographic Classification Review Board to approve a geographic reclassification.  For instance, CMS proposes that an urban hospital seeking reclassification have an AHW of at least 88 percent (rather than 84 percent) of the AHW for the area to which it seeks reclassification.
• EMTALA.  CMS proposes changes to the Emergency Medical Treatment and Labor Act (EMTALA) requirements, including changes that would allow hospitals to comply with the on-call list requirement by participating in a formal community call plan.  CMS also proposes to clarify the EMTALA obligations of hospitals with specialized capabilities.

In the Proposed Rule, CMS proposes to modify the physician self-referral "stand in the shoes" provisions to accommodate certain financial transactions between physicians and academic medical centers or integrated healthcare delivery systems.  CMS also solicits public comment on gainsharing arrangements and on a mandatory "Disclosure of Financial Relationships Report" that would collect information about the financial relationships between hospitals and physicians. 

The proposed IPPS changes would be applicable to discharges occurring on or after October 1, 2008.  With CMS' release of the display copy of the Proposed Rule, CMS also released a Fact Sheet addressing some of the proposed IPPS payment and policy changes for FY 2009.  The Proposed Rule is scheduled to appear in the Federal Register on April 30, 2008.

CMS to Host 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. (EDT) on April 24, 2008.

There are 2 ways to participate in the Forum.  To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 37603711.  To participate in person, one must RSVP to CMS HOSPITALODF-L@cms.hhs.gov by 2:00 p.m. (EDT) on April 22, 2008, 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. 

Beginning April 28, 2008, CMS will also make an audio recording of the Forum available.  To access the audio recording, one must dial 1-800-642-1687 and reference the conference ID.  The audio recording will be available for 3 business days.

CMS Enhances Hospital Compare Website

On March 28, 2008, the Department of Health and Human Services (HHS) issued a Press Release announcing that the Centers for Medicare & Medicaid Services (CMS) has posted new survey information on the Hospital Compare website. 

According to the Press Release, the patient experience of care information that CMS added to the Hospital Compare site is part of the Consumer Assessment of Healthcare Providers and Systems Hospital Survey (HCAHPS).  HCAHPS is a national, standardized survey of patient perspectives on the care they experience during a hospital stay. In addition to adding new patient hospital stay information, HHS reports that CMS has added certain pricing and volume information to the Hospital Compare site that includes the acute care hospital payments Medicare made for the treatment of certain illnesses.

HHS Secretary Michael Leavitt believes that "[b]y enhancing these resources, Medicare is strengthening its commitment to use the transparency of quality information to help give consumers more choice about the quality of their health care and how they may be able to lower their health care costs."  According to the Press Release, the enhancements also serve to implement President Bush's Executive Order 13410, which is intended to promote value drive health care by ensuring transparent quality and price information, interoperable health information technology and incentives for high-quality, efficient health care delivery.

For more information, visit the CMS website where CMS has posted a Fact Sheet on the Medicare payment and volume information for consumers and a Fact Sheet on HCAHPS.

CMS to Host 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. (EDT) on March 13, 2008.

There are 2 ways to participate in the Forum.  To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 33267865.  To participate in person, one must RSVP to CMS HOSPITALODF-L@cms.hhs.gov by 2:00 p.m. (EDT) on March 11, 2008, 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. (EDT).

Beginning March 17, 2008, CMS will also make an audio recording of the Forum available.  To access the audio recording, one must dial 1-800-642-1687 and reference the conference ID.  The audio recording will be available for 3 business days. 

Senate Finance Committee Hosts Roundtable Discussion on Hospital Value Based Purchasing

The Senate Finance Committee recently announced in a Press Release that it will hold a roundtable discussion at 2:00 p.m. on March 6, 2008 to discuss ideas for implementing a Medicare value-based purchasing program for hospital care. 

According to the Press Release, 22 health care organizations will take part in the roundtable discussion.  During the discussion, the Centers for Medicare & Medicaid Services (CMS) will present an overview of its November 21, 2007 Report to Congress: Plan to Implement a Medicare Hospital Value-Based Purchasing Program (Report).  The Report discusses options for a plan to implement a Medicare hospital value-based purchasing (VBP) program beginning in fiscal year 2009.

As reflected in the agenda, the roundtable discussion is expected to involve a discussion of key issues concerning performance standards, incentives, quality measures, and the implementation of the VBP program.

MedPAC Releases Medicare Payment Policy Report for 2009

On February 29, 2008, the Medicare Payment Advisory Commission (MedPAC) issued a News Release announcing the release of its Report to Congress: Medicare Payment Policy for 2009 (Report).  In the Report, MedPAC makes updates and policy recommendations for certain Medicare fee-for-service payment systems for 2009.  In brief, MedPAC recommends the following updates:

• Hospital Inpatient & Outpatient Services. MedPAC recommends that Congress increase payment rates in 2009 by the projected rate of increase in the hospital market basket index, concurrent with implementation of a quality incentive payment program.  The Centers for Medicare & Medicaid Services' (CMS) current projection of the market basket increase for fiscal year 2009 is 3.0 percent.  MedPAC also recommends that Congress reduce the indirect medical education adjustment by 1 percent to 4.5 percent per 10 percent increment in the resident-to-bed ratio. 
• Physician Services. MedPAC recommends that Congress increase the physician fee schedule conversion factor by the projected change in input prices less MedPAC's adjustment for productivity growth.  With the current estimate of input cost changes in 2009 of 2.6 percent and MedPAC's productivity adjustment of 1.5 percent, MedPAC's recommended 2009 update would be 1.1 percent.  MedPAC also recommends that Congress enact legislation requiring that CMS establish a process for measuring and reporting physician resource use on a confidential basis for a period of 2 years.
• Outpatient Dialysis Services. MedPAC recommends that Congress update the composite rate in calendar year 2009 by the projected rate of increase in the end-stage renal disease market basket index (2.5 percent) less MedPAC's adjustment for productivity growth (1.5 percent).  This would update the composite rate by 1 percent.  MedPAC also recommends that Congress implement a quality incentive program for physicians and facilities that treat dialysis patients.
  
• Skilled Nursing Facility Services. MedPAC recommends that Congress eliminate the update to payment rates for skilled nursing facility (SNF) services for fiscal year 2009 and that Congress establish a quality incentive payment policy for SNFs.  Further, to improve quality measurement for SNFs, MedPAC recommends that CMS:
  • add the risk-adjusted rates of potentially avoidable rehospitalizations and community discharge to its publicly reported post-acute care quality measures;
  • revise the pain, pressure ulcer, and delirium measures currently reported on CMS' Nursing Home Compare website; and
  • require SNFs to conduct patient assessments at admission and discharge.
• Home Health Services. MedPAC recommends that Congress eliminate the update to payment rates for home health care services for calendar year 2009. 
• Inpatient Rehabilitation Facility Services. MedPAC recommends that the update to the payment rates for inpatient rehabilitation facility services be eliminated for fiscal year 2009.
• Long-Term Care Hospital Services.  MedPAC recommends that the payment rates for long-term care hospital (LTCH) services be updated by the market basket index less MedPAC's adjustment for productivity growth (1.5 percent).  MedPAC reports that, under current market basket assumptions, this recommendation would update LTCH payment rates by 1.6 percent.

MedPAC is an independent Congressional agency established by the Balanced Budget Act of 1997 to advise Congress on issues affecting the Medicare program.  MedPAC meets publicly to discuss policy issues and formulate its recommendations to Congress.  Two reports, issued in March and June each year, are the primary outlets for MedPAC's recommendations.

Senators Baucus and Grassley Comment on Specialty Hospital Article

On February 21, 2008, Senate Finance Committee Chairman Max Baucus and Ranking Member Charles Grassley released a statement regarding a recent story on specialty hospitals at Forbes.com. 

The Forbes.com story praises physician-owned specialty hospitals for their safety and quality of care, and states that "the hospital industry, through legally questionable bullying tactics and arduous lobbying, has all but stamped out expansion of the specialty hospital sector, the only real competitive threat it has ever faced."

However, in the statement, Senators Baucus and Grassley assert that the Forbes.com story fails to mention any of the shortcomings of specialty hospitals.  In fact, the Senators assert that the story "misses the central point of the debate because it fails to mention the wealth of available evidence recognizing that these physician-owned limited service facilities are far less likely to treat the sickest of the sick." 

The Senators also assert that specialty hospitals often cherry pick the more profitable, healthier patients while sending the uninsured, underinsured or high risk patients elsewhere.  Further, the Senators claim that the "potential for more profits often induces the physician investor to order more procedures than are needed, which puts patients at increased risk and unnecessarily drives up health care costs." 

Senators Introduce Medicare Fraud Prevention Act of 2008

On February 6, 2008, Senators Mel Martinez and John Cornyn, and several other Senators, introduced the Medicare Fraud Prevention Act of 2008 (S. 2603). 

If enacted, the Medicare Fraud Prevention Act of 2008 (Act) would double the civil monetary penalties associated with improperly filed claims and payments to induce the reduction or limitation of services. The Act would also quadruple certain criminal fines, including the criminal fines associated with false statements and violations of the Federal anti-kickback provisions.  In addition, the Act would increase the maximum criminal sentence for certain violations. For example, the Act would increase the Federal anti-kickback provision's maximum criminal sentence from 5 to 10 years.

The Act would also amend the Federal statutory provisions establishing a $50,000 surety bond requirement for suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS).  The Act would increase that surety bond amount to $500,000.  On August 1, 2007, the Centers for Medicare & Medicaid Services (CMS) published a Proposed Rule that would require DMEPOS suppliers to obtain and furnish a surety bond to the National Supplier Clearinghouse in the amount of at least $65,000. In the Proposed Rule, CMS arrived at the $65,000 surety bond amount by adjusting the $50,000 statutory surety bond amount by the Consumer Price Index.

The Medicare Fraud Prevention Act of 2008 (S. 2603) has been referred to the Senate Finance Committee.