Category Archives: Medicare

CMS Proposed Stark Law Revisions

On July 15, 2015, the Centers for Medicare and Medicaid Services (“CMS”) published proposed revisions to the regulations implementing the physician self-referral law, or Stark Law.

The Stark Law is a key regulatory scheme in the healthcare industry that governs relationships between physicians and the providers to whom they refer certain designated health services. In order to receive Medicare reimbursement for these services, all financial relationships between providers and the referring physician must satisfy a statutory or regulatory exception to the Stark Law. These exceptions are complex and very technical, and providers who fail to fully comply with the Stark Law’s many requirements can be subjected to significant penalties and other sanctions.

Many of CMS’ proposed revisions appear designed to reduce the burden of some of these technical requirements. In addition, CMS is proposing several new exceptions. If enacted, these will be some of the most significant changes to the Stark Law in years.

Highlights of the proposed revisions include the following:

  • Contractual requirements. Many of the Stark Law exceptions require the relationship between the parties to be “set out in writing” or be pursuant to a “written agreement.” CMS is proposing to revise all exceptions to contain the same language, using the phrase “arrangement.” CMS has further clarified that the “arrangement” does not have to be a formal, written contract, and the exceptions can potentially be satisfied by multiple documents evidencing the course of conduct between the parties.
  • Recruitment of Nonphysician Practitioners (NPPs).   CMS is proposing a new exception that would allow hospitals and other providers to provide recruitment support for nurse practitioners and other NPPs. Previously, this support had only been allowed for physicians.
  • Timeshare Arrangements. CMS is proposing a new exception that would allow providers to enter into timeshare arrangements with physicians for the use of office space, equipment, personnel, supply and other services.
  • Standardized language. CMS is proposing to standardize the use of certain phrases throughout the regulations. As described above, various references to “contracts” or “writings” will now be uniformly replaced with the term “arrangement.” In addition, all references to the volume or value of referrals between parties will use the phrase “takes into account.”
  • Holdovers. Under the proposed regulations, parties may continue to provide services under leases and personal service agreements that have technically expired for an indefinite period without violating the Stark Law. Previously, providers could only do so for six months.
  • Signature Requirements. Under the proposed regulations, contracts could be signed up to 90 days after services started and be considered compliant with the Stark Law. Previously, the period was only 30 days in most circumstances.
  • Term Requirements. Many of the exceptions to the Stark Law require the parties to have an agreement for at least one year. CMS is clarifying that the contract or agreement between the parties does not have to have an explicit one-year term, so long as the relationship does in fact last one year.  CMS is continuing the requirement that if an agreement is terminated prior to the one year term, the parties cannot enter into a similar agreement until that one-year period is up.

Providers who may be impacted by these proposed changes are encouraged to submit comments to CMS. Comments may be submitted electronically here and should be received by September 8, 2015.

Benesch is preparing an in-depth client alert analyzing the potential impact of these regulations. If you have questions regarding the scope and impact of these proposed regulations in the mean time, please contact any member of the Benesch Health Law team.

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.

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.

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.