Medicare Part B Reimbursement After the SGR Repeal

On April 16, 2015, President Barack Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 and thereby repealed the sustainable growth rate (“SGR”) Medicare Part B provider reimbursement methodology, represented by the Physician Fee Schedule that had been in place for nearly twenty years. SGR reimbursement was originally intended to control Medicare costs by keeping provider reimbursement proportionate to America’s overall economic growth. This was to be accomplished by setting reimbursement ceilings and then cutting reimbursement when those ceilings were exceeded in a given year. Historically, rather than instituting these cuts as planned, Congress repeatedly delayed the implementation of reimbursement reductions through the use of repeated short term legislative patches delaying any cutbacks

This pattern of emergency stop-gap measures ended on April 16, 2015 when, in an uncharacteristically bipartisan move, Congress permanently repealed and replaced the SGR. This revised reimbursement formula includes:

  • eliminating delayed reimbursement rate reductions under the SGR;
  • from 2015 – 19, increasing reimbursement rates by 0.5%;
  • from 2020 – 25, freezing reimbursement rates; and
  • from 2026 – forward, instituting annual reimbursement rate increases based upon provider participation in one of two provider risk-sharing arrangements: (1) the Merit-Based Incentive Payment System (“MIPS”) provides for a 0.25% annual increase; or (2) Alternative Payment Models (“AMP”) provides for a 0.75% annual increase.

Both incentive programs incorporate value-based payments beginning in 2019. First, MIPS combines and replaces existing incentive programs and provides a payment adjustment to fee-for-service reimbursement based upon a composite score made up of four categories: (1) Quality; (2) Resource Use; (3) Clinical Improvement; and (4) EHR Use. Second, AMP participants will receive a 5% of annual reimbursement bonus payment in exchange for generating sufficient revenue through qualified risk-sharing payment models, such as Accountable Care Organizations and Medical Homes.

The SGR repeal is funded by reductions in Medicare payments to hospitals and post-acute care providers, elimination of first-dollar Medigap coverage, and increases to Medicare premium cost-sharing for high income beneficiaries. Despite these cuts, the Congressional Budget Office estimates that the legislation will still add a grand total of $141 billion to the Federal deficit.

The elimination of the SGR provides some enduring stability following years of uncertainty.  After repeated, temporary SGR legislative fixes, the legislation eliminating the SGR and instituting the replacement reimbursement methodology represents a bipartisan effort to transition Federal health care program reimbursement away from traditional fee-for-service arrangements and into a new era of value-based payments. Consistent with trends in the health care industry at-large, and the Federal health care programs in particular, providers seeking meaningful reimbursement increases through Medicare Part B under the revised reimbursement methodology must meet quality metrics, whether through an incentivized fee-for-service model or through participation in alternative payment mechanisms.

For more information on health care reimbursement trends, please contact a member of Benesch’s health care team.

Guidance Released for Health Care Governing Boards

On April 20, 2015, the Office of Inspector General (the “OIG”) of the U.S. Department of Health and Human Services, the Association of Healthcare Internal Auditors, the American Health Lawyers Association, and the Health Care Compliance Association published a first-of-its-kind guide entitled “Practical Guidance for Health Care Governing Boards on Compliance Oversight.”

The guide is intended to assist governing boards of health care organizations (“Boards”) to create and carry out compliance programs. The guide addresses issues relating to a Board’s oversight and review of compliance program functions, including: (1) the roles of, and relationships between, the organization’s audit, compliance, and legal functions; (2) the mechanism and process for issue-reporting within an organization; (3) the approach to identifying regulatory risks; and (4) methods of encouraging organization-wide accountability for achievement of compliance goals and objectives.

The guide encourages Boards to create benchmarks using publicly available resources, such as the Federal Sentencing Guidelines, the OIG’s voluntary compliance program guidance, and OIG Corporate Integrity Agreements.  Although there is no such thing as a “one size fits all” compliance program, these resources can be helpful in creating a program tailored to each organization’s needs.

While recognizing that not all organizations will possess the resources to support the structure in its entirety, the guide recommends creating corporate charters that address the following functions: (1) compliance; (2) legal; (3) internal audit; (4) human resources; and (5) quality improvement. Boards should continuously evaluate the effectiveness of these charters.

The guide also encourages Boards to ensure proper reporting mechanisms are in place within the organization. If managers or other individuals within the organization are not held responsible for reporting compliance concerns to the Board, the Board will not have a complete picture of the adequacy and effectiveness of the organization’s compliance atmosphere. Therefore, Boards should consider scheduling regular sessions to hear from the organization’s management about the organization’s utilization of compliance, legal, internal audit, and quality functions.

Identifying risk areas is an integral part of any organization’s compliance program. Boards can identify high risk areas from internal and external sources. The guide recommends tracking industry trends to identify risk areas, as new payment models can lead to new incentives and new compliance concerns.

Finally, the guide recommends encouraging accountability within an organization along with compliance. Many organizations have tied an employee’s performance assessment and other incentives to adherence to the organization’s compliance program to emphasize and encourage individual accountability.

The entire guide is available on the OIG’s website. For more information on health care compliance programs, please contact any member of Benesch’s health care practice group.

2015 Phase Two HIPAA Audits – Delayed Again

Recently, the Director of the Department of Health and Human Services Office for Civil Rights (“OCR”) confirmed that OCR is still working to finalize the procedures for “Phase Two” HIPAA audits. OCR had initially planned to launch the Phase Two audits in the Fall of 2014. Apparently, the delay is the result of behind-schedule implementation of the technology that OCR will use to collect audit-related documentation from covered entities and business associates via a web portal. An official date for the launch of Phase Two audits has not yet been announced.

The HIPAA Audit Program is authorized under Section 13411 of the HITECH Act, and is designed to test entities compliance with the Privacy Rule, Security Rule, and Breach Notification Standards. If you are a covered entity or business associate, this delay in the launch of Phase Two audits provides a great opportunity to conduct a comprehensive assessment of your current HIPAA compliance program. This means doing much more than just checking boxes and having an old binder of policies and procedures on your shelf. Instead, covered entities and business associates need to take real action, such as reviewing the audit protocol from the pilot program and applying it to your organization, conducting a risk assessment, engaging a dialogue with your compliance officer, and reviewing/updating training materials, among others.

Being proactive now will go a long-way towards easing the burden of Phase Two audit, should your organization be selected. If you have any questions concerning Phase II HIPAA audits, or general HIPAA compliance, please do not hesitate to contact a member of Benesch’s Health Care Department.

What Makes A Five Star Hospital?

The Affordable Care Act includes many provisions aimed at improving the quality of care provided by different types of health care professionals and providers. Along these lines, the ACA expands the types of facilities and providers for which quality data will be publically available.  The Secretary of the United States Department of Health and Human Services was therefore directed to develop a Hospital Compare website (amongst other similar sites such as Physician Compare and Nursing Home Compare) that would allow Medicare enrollees to compare scientifically sound measures of physician quality and patient experience.

In accordance with these directives, on April 16, 2015 the Centers for Medicare and Medicaid Services (“CMS”) released the first ever Hospital Compare Star Ratings on its public information website.  The site is intended to make it easier for consumers to choose a hospital and understand the quality of care they deliver.  The data set from the website contains hospital-specific quality data for over 4,500 hospitals nationwide.  The ratings are based on the 11 publicly reported measures in the Hospital Consumer Assessment of Healthcare Providers and Systems (“HCAHPS”) survey, which assesses patient experiences.

The star ratings allow for an easy comparison using a five-star scale, with more stars indicating better quality care.  The quality data on Hospital Compare includes clinical process of care, patient outcomes and patient experience of care measures.  The national rankings are based on hospitals’ performance on the clinical process of care measures and a national survey of patients’ experience of care.  The hospitals’ ranks are combined into an overall, composite performance ranking, with process of care measures contributing 70% and patient experience of care measuring 30%.

However, just 251 out of 3,553 hospitals received the highest score in the rating system based on the experiences of patients who were admitted between July 2013 and June 2014.  Hospitals had an opportunity to preview the ratings in the fall and many have already expressed concern.  Hospitals question the methodology and whether the ratings reflect meaningful reflections of performance.  They also assert that the ratings are oversimplifying the hospital’s performance to a single score.

Notably, the patient experience star ratings are only based on the information on quality of care that is reported by patients.  The surveys are provided to a random sampling of patients within two days after discharge from a hospital and must be completed within 42 days.  Further, positive results may mean that the hospital is delivering good care.  However, these results are not taking into account other factors such as timely and efficient care and results or outcomes of care measures.  Moreover, the results places substantial reliance on patient review, which is just one measurement of hospital quality.  Lastly, if one does not review Hospital Compare extensively, information aside from the star ratings may easily be overlooked.  For example, the complete results for each HCAHPS measure can be found in the “Survey of Patients’ experiences” section.

On the other hand, supporters of Hospital Compare argue that while it’s not a perfect measurement system, it creates a healthy competition among hospitals.

For more information on Hospital Compare, other CMS initiatives or related issues, please feel free to contact Daniel Meier or any member of our health care practice group for a further discussion.

Supreme Court Blocks Provider Challenges to Medicaid Program

On March 31, 2015, the Supreme Court issued the first of several expected decisions that will impact the healthcare industry this year, ruling that Medicaid providers have no constitutional or statutory right to challenge a state’s Medicaid reimbursement rates. In Armstrong v. Exceptional Child Center, Inc., a group of Idaho Medicaid providers had challenged the states’ reimbursement rates as violating the federal laws that govern the program, commonly known as the Medicaid Act.

Under the Medicaid Act, both the federal government and the individual states fund and administer the Medicaid program. Each state establishes the rates and other parameters within its Medicaid program, subject to overall federal approval. Each state must submit a plan outlining its Medicaid program to the Department of Health and Human Services (HHS). The Plan, among other things, is supposed to meet the Medicaid Act’s requirements that payments are sufficient to enlist enough providers so that covered care and services are available to Medicaid beneficiaries.

A group of Idaho Medicaid providers challenged Idaho’s Medicaid rates as violating this provision of the Medicaid Act. The Idaho Department of Health and Welfare had proposed rate increases which had been approved by HHS as part of the state’s overall Medicaid plan. However, the increases were never funded by the Idaho state legislature and thus never implemented. The providers filed a lawsuit seeking to impose higher Medicaid reimbursement rates on the grounds that Idaho had failed to follow its approved plan and had set reimbursement rates so low that providers were unwilling to enroll in the Medicaid program, denying Medicaid beneficiaries access to effective care.

Two lower courts had ruled in favor of the providers. However, the Supreme Court ruled that only HHS is entitled to enforce the requirements of the Medicaid Act. It is important to note that the case was purely procedural. While the Supreme Court held that Medicaid providers did not have a constitutional or statutory right to challenge a state’s Medicaid reimbursement rates, it did not rule on whether or not Idaho’s Medicaid reimbursement actually complies with the Medicaid Act requirements.

The increasing downward pressure on Medicaid reimbursement shows no signs of stopping, even as the Affordable Care Act expands Medicaid enrollment in many states. This case is a reminder that providers seeking to increase Medicaid reimbursement will need to also focus on obtaining federal and state legislative, not just judicial, solutions.

CMS Releases the Civil Money Penalty Analytic Tool

The Centers for Medicare and Medicaid Services (“CMS”) recently released the civil money penalty (“CMP”) analytic tool used by CMS Regional Offices (“RO”) to review, approve or modify the proposed fines for nursing facilities (“NF”) and skilled nursing facilities (“SNF”)(collectively “NF”) (Link). Regulatory guidance CMS S&C 15-16-NH was released on December 19, 2014 and includes a description and the components of the analytic tool used by CMS since April, 2013 to determine the adequacy of the proposed CMPs for survey violations for NFs. The RO is required to review and either approve or modify the proposed CMPs issued by each State Agency based upon NF Medicare and Medicaid certification citations. Providers have often wondered about the actual calculation method being utilized by CMS and this analytic tool lays out the interpretation factors being used by CMS when applying the factors in the required by 42 CFR 488.404 for consideration when imposing a CMP on a facility as result of a single survey or for multiple surveys in a survey cycle.

CMPs and other enforcement remedies are required to be imposed based upon the scope and severity of the regulatory citations either for health deficiencies or life safety code deficiencies. CMS indicates that the analytic tool does not replace professional judgment but it to be used as a guideline in the CMP calculation process. The guidance states that the tool is “provide logic, structure, and defined factors for mandatory consideration in the determination of CMPs.” The analytic tool distinguishes between the use of Per Instance penalty use and a Per Day penalty use. A Per Instance penalty is a single defined fine amount between $1,000 and $10,000 for the survey cycle. The analytic tool indicates that a Per Day penalty is to be used unless the specific requirements are met for the Per Day penalty. A Per Instance penalty is often less costly to a provider than a Per Day penalty and is typically preferred by providers due to the certainty of the actual amount being imposed.

Per Instance penalties can only be applied if:
1. The facility is not a special focus facility;
2. Findings are no more than a G level (actual harm, isolated) or an F level (no actual harm, widespread with substandard care) and the facility has a good compliance history for the past 3 standard surveys; and
3. Findings of past noncompliance are not cited at a G level or an F level substandard care.

In addressing the discretion and professional judgment to be used by the RO personnel the guidance provides for a 35% increase or decrease in the CMP amount without CMS Central Office approval. If the RO proposes to increase or decrease the CMP amount by more than 35%, Central Office must provide approval of those changes. The stated purpose of the utilization of the analytic tool is to provide a more consistent application of enforcement remedies. The guidance also states that a Per Day CMP is to begin on the first day of noncompliance which may or may not be during the on-site survey. Also, the Per Day CMP is to start on the first day of identified noncompliance even if that date is prior to the survey. However, the CMP start date cannot be prior to the date of the last standard survey. This guidance reaffirms the imposition of CMPs that are applied retrospectively with a possibility that CMPs may be imposed as far back as 15 months. A retrospective CMP imposition can be in the hundreds of thousands of dollars for providers for an immediate jeopardy citation and can result in significant ramifications for providers.

A few of the factors that change the proposed amount of CMPs and are calculated with the tool include:
1. Scope and severity of the citations;
2. Number of citations;
3. Repeated citations;
4. Facility culpability; and
5. Facility financial condition.

The guidance provides some examples related to application of criteria for facility culpability based upon Departmental Appeals Board (“DAB”) cases. Those examples include repeated failure to follow or clarify doctor’s treatment orders; repeated failure to notify doctor of significant changes; repeated failure to supervise resident with a known history of elopement; staff failure to report physical, verbal or sexual abuse and egregious dignity issues.

Providers should carefully review this recently issued S&C guidance to have a clear understanding of how the CMPs are calculated by CMS and what factors can affect the increase or decrease of those CMPs. Understanding the factors related to fines and sanctions imposed by CMS and the amount of discretion that is allowed in the imposition of fines are important in the operation of NFs on an ongoing basis.

Palliative Care Services Increasing Across the U.S.

Palliative care services are now more accessible to patients with serious and chronic illnesses in the United States. The Mayo Clinic defines palliative care as offering pain and symptom management and emotional and spiritual support when a patient faces a chronic, debilitating or life-threatening illness. Increasingly offered to patients of any age with a range of chronic illnesses such as cancer, multiple sclerosis and Parkinson’s disease, palliative care may be provided at the same time as curative medical regimens to help patients tolerate side effects of disease and treatment, and proceed with everyday life. According to a recent December 22, 2014 Wall Street Journal article, palliative care programs have increased three fold over the past decade. Many hospitals have specialized palliative care programs and 80% of hospitals with 250 beds or more provide such a program.

The provision of palliative care with or without curative treatment can lead increased patient and health care provider satisfaction, equal or better symptom control, less anxiety and depression, less caregiver distress, and potential cost savings. A patient’s quality of life can be enhanced with active and effective pain and symptom management. The need for aggressive pain and symptom management often lead patients to seek out a palliative care program to manage their symptoms during a chronic or terminal illness. Some patients also choose to utilize hospice care towards the end of their life journey after receiving services from a palliative care program. With the better availability of palliative care, those patients seeking pain relief and symptom control at any stage of their chronic or terminal illness care are able to find the services to address their needs including assisting the patient and the family to navigate the often complicated medical system.