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16, 2015, President Barack Obama signed into law the Medicare Access and CHIP Reauthorization Act of 2015 and thereby repealed the sustainable growth rate (“SGR”) Medicare Part B provider reimbursement methodology, represented by the Physician Fee Schedule that had been in place for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stop-gap measures ended on April 16, 2015 when, in an uncharacteristically bipartisan move, Congress permanently repealed and replaced the SGR.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.
On August 29, 2014, the Centers for Medicare and Medicaid Services (“CMS”) released the final version of the new Medicare cost report, Form CMS 1984-14, applicable to freestanding hospice providers. Freestanding hospice providers must use the new form for cost-reporting periods beginning on or after October 1, 2014. It is anticipated that similar rules for provider-based hospices will follow. A copy of the new form and instructions for completing the same are available here:
The revised cost reporting form is substantially expanded, and requires, among other changes, that providers report direct patient care costs based on the level of care that was provided. In order to comply with these new reporting requirements, hospices will need to modify their existing chart of accounts. One such modification is to ensure that all costs associated with each of the four different levels of care be kept in separate general ledger accounts. This represents a substantial expansion of hospices’ obligations to document costs in their accounting records. However, this practice will facilitate completion of the following new worksheets: (A) A-1: Continuous Home Care; (B) A-2: Routine Home Care; (C) A-3: Inpatient Respite Care; (D) A-4: General Inpatient Care.
The forms and instructions were revised in accordance with the statutory requirement for hospice payment reform, as required under the Patient Protection and Affordable Act, and to incorporate data previously reported on Form CMS-339, the Provider Cost Report Reimbursement Questionnaire. The expanded data captured by the new cost report will be used in future years to facilitate payment reform.
For more information on new hospice cost report, or related Medicare reimbursement issues, please feel free to contact Dan O’Brien or any member of our health care practice group for a further discussion.
The Department of Justice (“DOJ”) announced another multi-million dollar settlement of alleged False Claims Act violations on March 11, 2014. Specifically, Halifax Hospital Medical Center and Halifax Staffing, Inc. agreed to settle various issues with the DOJ for $85 million in order to resolve allegations that they violated the False Claims Act (“FCA”) by submitting claims to Medicare that violated the federal prohibition on physician self-referrals, 42 USC §1395nn (the “Stark Law”). United States ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, et al., No. 09-cv-1002 (M.D. Fla.).
The Stark Law and the Bona Fide Employment Exception
The Stark Law prohibits a physician from referring a patient for certain designated health services (“DHS”) to an entity in which the physician, or an immediate family member, has a financial interest, such as an ownership or investment interest in the entity or a compensation arrangement with the entity. Certain exceptions for arrangements are permitted under Stark. However, because the Stark Law is a strict liability statute, the arrangement must fit completely within the criteria of the exception in order not to violate the statute. At issue in Halifax, as explained below, is the bona fide employment exception, Continue reading
Posted in Acute Care, Civil Litigation, Corporate Integrity Agreements, DHHS, Florida, Fraud and Abuse, Health Care, Health Care Providers, Hospital, Medicare, OIG, Physicians, Regulatory Compliance, Reimbursement, Self-Referral, Settlements
Tagged Neurosurgery, Oncology, Stark Law
This article represents another installment of a series of articles that will outline the OIG’s activities, as discussed in the 2014 work plan, for a specific industry sector – hospice.
For 2014, the OIG’s activities relating to hospices are focused on the provision of hospice services in assisted living facilities, and quality of care.
Hospice in Assisted Living Facilities
Pursuant to the Affordable Care Act, CMS is required to reform the hospice payment system, collect data relevant to revising hospice payments, and develop quality measures for hospices. Hospice care is currently provided in a variety of settings, including private residences, skilled nursing facilities, and assisted living facilities. Continue reading