December 2015 healthcare update: what you need to know

At the agencies

The Centers for Medicare and Medicaid Services (CMS) recently announced some changes to their recovery audit contractor (RAC) program intended to lessen the RAC program’s emphasis on hospitals and expand the program to include other types of providers such as home health and long-term care facilities. Two major changes – RAC auditors will not be able to request as many documents and a limitation on reviews of providers with good billing records – will be implemented along with other provisions beginning on January 1, 2016.

On November 16, CMS released a final rule regarding hip and knee surgeries in which it announced that it would delay implementation of the bundled payment program for these procedures. The program was set to begin on January 1, 2016, and has now been delayed until April 1, 2016. The final rule also revealed that CMS has decided to scale back aspects of the hip and knee surgery bundled payment program. Scaled back changes include: a slower phase-in of the program requirement that hospitals must reimburse CMS for overspending on these procedures; exempting hospitals that already participate in CMS’s other voluntary bundled payments program; waiving the requirement that a patient spend three days as an inpatient before being able to go to a nursing home; and allowing post hip fracture surgeries to be included in the program but with a different price point for those instances.

On November 30, CMS released a notice that more thoroughly explained their decision to cut hospital pay admissions by 0.2 percent, a cut that is intended to offset the rising costs that will occur as a result of modification to the “two-midnight” rule. The notice was posted on the Federal Register and was produced in response to a court decision that found that the agency failed to fully justify the reasoning for the pay cut. In the notice CMS explained its methodology behind the determination that the 0.2 percent cut was appropriate. The agency also stated that they may need to reevaluate how accurate their projections were for the increase in admissions and indicated that their initial estimates may be too low. CMS will release a finalized notice with updated estimates by March 18, 2016.

On the Hill

Paul Ryan’s (R-WI) appointment as Speaker of the House opened up some health-related congressional committee assignments, most notably the chairmanship of the powerful House Ways and Means Committee. Kevin Brady (R-TX), was the chairman of the House Ways and Means Subcommittee on Health, and was named full committee chairman after Paul Ryan’s departure. Pat Tiberi (R-OH) will take Kevin Brady’s position as chairman of the Health Subcommittee. Although Kevin Brady had championed Medicare reform as a central agenda item while he was chairman of the Health Subcommittee, he has moved Medicare reform to the bottom of his recently released list of agenda items. It is unclear if Pat Tiberi will have the same focus on Medicare reform during his tenure as the new Subcommittee on Health chairman. 

Another difference between the two lawmakers is regarding a site-neutral payment measure in the budget that would prevent physician practices and ambulatory care centers purchased by hospitals from receiving higher Medicare reimbursements, as is the current practice. Tiberi wants a technical correction to this measure that would allow some practices currently receiving these higher payments to continue receiving them, and would like that this year, whereas Brady has indicated he would like to incorporate this fix later in a hospital-reform package of legislation. 

In the courts

In documents released on November 30, the Department of Justice announced it has a case against five individuals for a $600 million fraudulent billing scheme involving spinal surgeries. The defendants include the former chief financial officer (CFO) of a Long Beach hospital and two orthopedic surgeons who were involved in an illegal referral scheme for thousands of spinal surgery patients at the Pacific Hospital of Long Beach. The investigation into this scheme, known as “Operation Spinal Cap,” was headed by the FBI and four other agencies. All of the defendants have agreed to cooperate with authorities, and the CFO in the case has pled guilty. He faces five years in prison and $20 million in restitution.

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