Category: CMS

Changes to MACRA to Hopefully Lessen the Burdens

The Centers for Medicare & Medicaid Services (“CMS”) recently published a proposed rule, which included modifications to the final rule that implemented the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”) in 2017.  Some of the changes are detailed in this blog post.

The proposed rule increases the required participation threshold for providers from Medicare Part B annual charges of $30,000 to $90,000 and 100 or less Medicare patients annually to 200 or less Medicare patients annually.

CMS also finally provided proposed guidance on how to participate in virtual groups.  A virtual group is a combination of two or more federal tax identification numbers (“TIN”), with each TIN consisting of ten or fewer eligible clinicians.  The virtual group must form itself and provide written notice of this election to CMS by December 1 of the calendar year preceding the performance period.  Clinicians can only participate in one virtual group.  All eligible clinicians in a TIN must participate in the virtual group except for those who participate in the Alternative Payment Model (“APM”) scoring.  Virtual groups can opt to receive a determination as to whether the participants qualify to form a virtual group and will then be required to establish a formal agreement amongst the members.  Virtual groups will be subject to the same reporting and performance standards as non-virtual Merit-Based Incentive Payment System (“MIPS”) track groups.

Another part of the proposed rule is the creation of a new partial group reporting option.  Under this option, some clinicians under a TIN could use the APM reporting standard while the remaining participants would collectively report under MIPS.

CMS also proposed a Facility Based Measurement for the 2018 MIPS performance year.  Facility-based clinicians who have at least seventy-five percent of their professional services furnished in the emergency department or other hospital inpatient setting would qualify for this option.  The hospital Total Performance Score from the facility where the clinician treats the highest number of Medicare beneficiaries during the measurement period would be converted into the MIPS quality performance category and cost performance category score.

By proposing these changes and others, CMS has indicated a willingness to continually examine the impact of MACRA on providers and make adjustments to help with compliance while preserving the goals of the program. While 2017 is the transition year, 2018 is fast approaching, and providers need to be prepared for a full year of MACRA implementation.  Providers of all sizes, including institutional providers that employ clinicians, should continue to ramp up their readiness for full MACRA performance.

Say Goodnight To The Two Midnight Rule’s Payment Reductions

The Two Midnight Rule, which was introduced as part of CMS’ FY 2014 Inpatient Prospective Payment System (“IPPS”) rule, dictates that when a physician expects a beneficiary to require care that crosses two midnights and admits the beneficiary based on that expectation, Medicare Part A payment is generally appropriate.  Conversely, if the beneficiary’s hospital stay is expected to be less than a period spanning two midnights, payment under Medicare Part A is generally inappropriate.

Because CMS anticipated significant increases in expenditures as a result of the Two Midnight Rule, CMS exercised the Secretary’s “broad authority” under 42 U.S.C. 11395ww(d)(5)(I)(i) to impose a 0.2% reduction to the national capital federal rate in FY 2014 to offset the anticipated increase in expenditures.  That same reduction was applied to the national capital federal rate in FY 2015 and FY 2016 as well.

In connection with the adoption of the Two Midnight Rule numerous commenters questioned the validity of the Secretary’s prediction of increased expenditures, upon which the decision to reduce rates was based. However, CMS never addressed these comments in detail when adopting its final rule except to say that the reductions were an appropriate use of the Secretary’s statutory exceptions and adjustments authority.

Having not received an adequate response to their comments during the rule making process, numerous hospitals filed suit challenging the 0.2% reduction. Several of those suits were consolidated before the United States District Court for the District of Columbia under the caption Shands Jacksonville Medical Center, et al. v. Burwell, Consolidated Civil Case Nos. 14-263, 14-503, 14-536, 14-607, 14-976, 14-1477 (the “Shands Litigation”).

On September 21, 2015 the Court in the Shands Litigation found that the Secretary’s failure to disclose critical assumptions made by the actuaries who calculated the alleged increase in expenditures, which was relied upon to impose the 0.2% reduction, failed to meet the standards of the Administrative Procedures Act by depriving the public of a meaningful opportunity to comment on the proposed rule. As a result, the Court remanded the matter back to the agency for further proceedings regarding the adequacy of the 0.2% reduction.

After remand, CMS issued public notice of the basis for the 0.2% reduction and its underlying assumptions.  As a result of the comments received to that public notice, CMS eliminated the 0.2% reduction for FY 2017 in connection with the FY 2017 IPPS final rule.  Additionally, CMS adjusted the FY 2017 capital IPPS rate to effectively eliminate the impact of the 0.2% reduction to rates in previous years by implementing a one-time prospective adjustment of 1.006 in FY 2017 to the national capital Federal rate.

Despite implementing this adjustment, CMS denies any error and continues to maintain that “the assumptions underlying the 0.2% reduction to the rates put in place beginning in FY 2014 were reasonable at the time we made them in 2013.”  Nevertheless, whether CMS recognized its error, or felt compelled to make this change as a result of the Shands Litigation, the end result is the same for hospitals throughout the country.  They have been relieved of the burden imposed by the 0.2% reduction associated with the adoption of the Two Midnight Rule.

 

CMS to Propose Revisions to the Safe Harbors under the Anti-Kickback Statute, and to the Civil Monetary Penalty Rules Regarding Beneficiary Inducements and Gainsharing

It is anticipated that today the Center for Medicare and Medicaid Services (“CMS”) will publish in the Federal Register a set of proposed rules that would amend the safe harbors to the anti-kickback statute and the civil monetary penalty (“CMP”) rules under the authority of the Office of Inspector General.

The proposed rules will seek to add new safe harbors consistent with statutory provisions of the Medicare Prescription Drug, Improvement and Modernization Care Act, Pub. L. No. 111-148, and the Patient Protection and Affordable Care Act, Pub. L. No. 111-152.  In particular, CMS seeks to amend 42 C.F.R. 1001.952 to make the following changes:

  • a technical correction to the existing safe harbor for referral services;
  • protection for certain cost-sharing waivers, including: pharmacy waivers of cost-sharing for financially needy Medicare Part D beneficiaries; and waivers of cost-sharing for emergency ambulance services furnished by State- or municipality owned ambulance services;
  • protection for certain remuneration between Medicare Advantage organizations and federally qualified health centers;
  • protection for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and
  • protection for free or discounted local transportation services that meet specified criteria.

Additionally, CMS seeks to amend the definition of “remuneration” under the CMP regulations at 42 C.F.R. 1003 by adding certain exceptions for:

  • copayment reductions for certain hospital outpatient department services;
  • certain remuneration that poses a low risk of harm and promotes access to care;
  • coupons, rebates, or other retailer reward programs that meet specified requirements;
  • certain remuneration to financially needy individuals; and
  • copayment waivers for the first fill of generic drugs.

CMS also propose to codify the gainsharing CMP set forth in section 1128A(b) of the Social Security Act.

For further information please refer to the Proposed Rule which is available here and which it is anticipated will be officially published to the Federal Register on October 3, 2014. Comments on the proposed amendments will be due within 60 days of the publication of the proposed rules.

The Affordable Care Act – Proof of Eligibility

One of the most significant provisions in the Patient Protection and Affordable Care Act (a/k/a “Obamacare”) is the requirement that every citizen or legal resident of the United States, with few exceptions, have suitable health coverage. For persons not covered by employer-provided healthcare, coverage can be obtained from the Health Benefit Exchange in their state of residence, primarily through HealthCare.gov.

As everyone knows, HealthCare.gov suffered numerous technical difficulties during the initial 90 days of operation. Certain problems continue including the ability to verify whether a person is eligible to obtain coverage from a Health Benefit Exchange. When the initial enrollment period ended in April 2014, approximately 1,000,000 people had insurance applications with inconsistencies.

Many of these cases have been resolved, but a significant number of persons have not responded to requests for documents to verify their eligibility. On August 12, 2014, letters were mailed to 310,000 persons by the Center for Medicare and Medicaid Services (“CMS”) requesting documentation by September 5. Officials at CMS stated that beginning on September 30, CMS would start to notify insurers to discontinue the policies of persons who fail to provide the requested documentation. With the passage of today’s deadline the coming weeks will tell whether CMS carries out their threat and begins contacting insurers to discontinue policies.

 

Medicare Part B Inappropriately Paid $6.7 Billion for E/M Services in 2010

In a recent report, the Department of Health and Human Services (DHSS) Office of Inspector General (OIG) examined whether or not Medicare Part B management (“E/M”) services in 2010 were incorrectly coded and/or lacking overall documentation.

This is the third in a series of reviews by the OIG concerning E/M services.  The first study found that from 2001 to 2010, physicians increased their billing of higher level E/M services in all visit types, and that in 2010, over 1,600 physicians consistently billed for the two highest level codes for E/M services.  The second study looked at the adoption of electronic health record (EHR) technology, finding that 57 percent of all physicians providing E/M services in 2010 used EHR technology at their primary practice location in 2011.

This most recent analysis determined that in 2010, approximately $6.7 billion in Medicare Part B claims, representing some 55 percent of claims submitted by physicians and non-physician practitioners, were incorrectly coded and/or so lacking documentation that payment should have been denied.  This sum represents over a fifth of all Medicare payments for evaluation and management (E/M) services in 2010.

Over a quarter of all claims surveyed were “upcoded,” i.e., the correct code for the services provided was lower than the code originally billed for, while nearly another 20 percent were either insufficiently documented or undocumented altogether.   In the aggregate, over 45 percent of E/M claims reviewed were either upcoded or unsupported by the medical records.  Most miscoded claims (79 percent) were upcoded or downcoded by one level; in addition, 17 percent and 4 percent of claims were upcoded and downcoded, respectively, by two levels.

In its study, the OIG identified “high-coding physicians” as those whose average code level was in the top 1 percent of their specialty and billed for the two highest E/M level codes at least 95 percent of the time.  Claims by these physicians were more likely than not to be incorrectly coded or insufficiently documented compared to physicians outside of this classification.  The overwhelming amount of coding errors (99 percent) were in the form of upcoding, resulting in an average of $15,594 inappropriately paid to each physician.

OIG made three recommendations as result of this study:  first, increased physician education concerning proper E/M coding; second, contractor encouragement to review E/M services billed by high-coding physicians; and third, follow up on claims that were paid in error that have resulted in overpayments or underpayments.

CMS agreed with the first recommendation to increase physician education on this topic.  However, it did not concur with OIG’s second recommendation based on negative return on investment after previously directing a medical review contractor to review claims by high-coding physicians.  CMS also partially agreed with OIG’s third recommendation to pursue overpayment recoveries beyond a certain threshold and to implement remedial educational requirements for physicians below this threshold.

CMS and its contractors clearly have the resources and incentive to seek recovery of overpayments.  Even though Medicare payment rates for individual E/M services are small (approximately $100 on average), the volume of claims is enormous:  physicians billed for some 370 million E/M services in 2010 that accounted for nearly 30 percent ($32.3 billion) of all Part B payments that year.

Given the substantial spending on E/M services and prevalence of error (56 percent of E/M claims by high-coding physicians, and 42 percent of E/M claims for all other physicians) it can be readily expected that physicians who regularly provide E/M services under Part B will face increased audit risk from CMS and its contractors.

Down With the Two-Midnight Rule

On April 14, 2014, the American Hospital Association, New Jersey Hospital Association, and other hospital associations and systems (“Plaintiffs”) filed a federal lawsuit in the United States District Court for the District of Columbia, case 1:14-cv-00609, against Kathleen Sebelius as Secretary of Health and Human Services (“HHS”) challenging three “unlawful” Medicare policies.[1] One of these policies is known as the two-midnight rule and involves Medicare Part A reimbursement.[2]  This involves reimbursement for “inpatient” hospital services.

Neither HHS nor its administrative agency, the Centers for Medicare and Medicaid Services (“CMS”), has ever formally defined “inpatient.” CMS has recognized that the decision to admit a patient is a “complex judgment” call involving various factors including medical history, current medical needs, severity of signs and symptoms, types of facilities available, hospital by-laws and admissions policies, the medical predictability of something adverse happening to the patient, and the relative appropriateness of the treatment.  Medicare Benefit Policy Manual  Ch. 1 §10.  Indeed, hospitals and physicians have been instructed by CMS that “generally, a patient is considered an inpatient if formally admitted as [such] with the expectation that he or she will remain at least overnight, and occupy a bed even though it later develops that the patient can be discharged or transferred to another hospital and not actually use a bed overnight.”  Id. According to CMS, a physician should “use a 24-hour period as a benchmark; i.e., [physicians] should order admission for patients who are expected to need hospital care for 24 hours or more.” Id.

Despite its own guidance, CMS published a final rule in August 2013 that a Medicare beneficiary is not an “inpatient” unless the admitting physician expects the patient to require care in the hospital spanning two midnights (admitted on Day 1 and discharged on Day 3).  Thus, CMS will not pay for an inpatient stay that spans less than two midnights (regardless of level of care, i.e., intensive care unit).  Instead, that patient stay will be converted to an outpatient stay and one reimbursed under Medicare Part B.

The Plaintiffs allege this CMS rule is “arbitrary and capricious” and undoes decades of Medicare Policy.  The Plaintiffs find it “unwise” to supplant physician judgment with a government rule.  It “defies common sense” for “inpatient” to mean “a person who stays in the hospital until Day 3.”

This, allege the Plaintiffs, is contrary to the Administrative Procedures Act (“APA”).  The policy deprives hospitals of reimbursement to which they are entitled and forces them to spend an exorbitant amount of money and time and change their medical records systems, admissions policies and procedures and documentation protocols to comply with the rule.  It further redirects resources that would otherwise be invested in patient care.  Thus, request the Plaintiffs, the policy must be set aside.

As of May 14, 2014 an Answer by the Government has not been filed.


 

[1] A second federal lawsuit was also filed contending that the 0.2 percent Medicare payment based on CMS’ expectation of more patients being admitted for a two-midnight stay is unlawful.

[2] The other two policies being challenged are (1) requiring rebilling of denied claims within one year of service when many claims are at least a year old when audited and (2) expecting that physicians certify at admission that a Medicare patient is expected to need treatment for a period spanning two midnights.