Baker Tilly's The pulse of healthcare for May 27, 2015

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At the agencies

On May 4, CMS announced that it is going to expand its demonstration Pioneer Accountable Care Organization (ACO) Model by adding it to the Medicare Shared Savings Program. The Pioneer ACO model was created to give advanced healthcare systems the opportunity to participate in a model that more quickly moved towards quality based care vs. volume based care. The Department of Health and Human Services (HHS) released a report showing that since the program’s inception two years ago, it saved the Medicare program $384 million, roughly $300 per beneficiary.

On May 5, the Centers for Medicare and Medicaid Services issued a proposed rule on the Hospice Wage Index and Payment Rate Update for FY 2016, which, if implemented, would begin the final phase-out of the wage index budget neutrality adjustment factor (BNAF). Furthermore, it would align both the hospice aggregate cap and the inpatient cap accounting years with the federal fiscal year, starting in FY 2017, as mandated by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). Lastly, this proposed rule includes recent analysis and research conducted on hospice payment reforms, including the proposal to differentiate routine home care payments based upon the beneficiary’s length of stay, and the intensity of the care provided.

On May 11, it was reported that recent financial disclosure documents of the Hospital Corporation of America and Tenet Healthcare Corporation indicate that these two major hospital groups collectively received over $100 million from CMS as part of the agency’s appeals backlog settlement. In late 2014, in order to mitigate the overwhelming number of appeals backlogged at that time, CMS agreed to pay hospitals 68 percent of claims for inpatient care provided in the wrong setting. While the agency has not disclosed the total cost of these settlements, over 110,000 claims were expected to be removed from the backlog as a result of the decision.   

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On the Hill

On May 5, Rep. Phil Roe (R-TN) and Rep. Linda Sanchez (D-CA) noted that their legislation H.R. 1190 had obtained enough cosponsors – 222 – to ensure the bill would pass if put to a floor vote in the House. The bill, if passed, would repeal the Independent Payment Advisory Board, an action urged by over 500 providers, patient groups, and other organizations.

On May 13, the third draft of the 21st Century Cures bill was released, and it included a measure which would encourage improved Medicare reimbursement of telehealth services. Specifically, the provision requires both CMS and the Medicare Payment Advisory Commission to study how Medicare could expand telehealth reimbursement, and wants a report from both within 1 year of the law’s passage.  

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In the courts

On May 11, a lower-level Pennsylvania court ruled in favor of twelve hospitals against large health insurance group Highmark. During recent budget sequestration, Congress had reduced reimbursement rates to insurers by 2 percent, and in turn, Highmark had reduced their payments to hospitals. However, in Butler Healthcare Providers et al v. Highmark Inc., the ruling issued by Judge R. Stanton Wettick Jr. of the Allegheny County Court of Common Pleas was in favor of the providers, stating that Highmark Inc. had no legal right under the Medicare Advantage contracts between the insurer and providers to pass on these reductions in reimbursement. Given that many other insurers engaged in similar behavior during the budget sequestration, numerous lawsuits have sprung from this particular situation; Highmark’s spokesman indicated the group is evaluating their options for appeal.

For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.

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