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CMS proposes changes for 2019 Medicare physician payments, Quality Payment Program
Earlier in the month, the Centers for Medicare & Medicaid Services (CMS) proposed major changes to the Medicare Physician Fee Schedule and the Quality Payment Program (QPP) that focus on streamlining billing processes to further reduce administrative burdens and expanding access to care. Here are just a few key highlights from the agency’s proposal:
- Reduced clinician burdens: CMS proposes offering more flexible documentation requirements for Evaluation and Management (E&M) visits, as well as easing unnecessary physician supervision of radiologist assistants for diagnostic tests and eliminating complex functional status reporting requirements for outpatient therapy
- Increased access through virtual care: The proposed FY 2019 Physician Fee Schedule would pay providers for engaging in virtual check-ins and evaluating photos submitted by patients, and would include prolonged preventative services in Medicare-covered telehealth services
- Greater price transparency: The agency is asking whether providers can and should inform patients about the price of healthcare services and out-of-pocket costs, as well as which data points would be most useful to encourage price shopping
The agency also proposed changes to the QPP, including removing Merit-based Incentive Payment System (MIPS) process-based quality measures that providers have reported as low-value or low-priority, as well as conducting an overhaul of the MIPS “Promoting Interoperability” category to encourage electronic health record (EHR) interoperability and grant patients improved access to their health information.
Public comments on the proposed rules are due by September 10, 2018. To learn more about these and other proposed changes, click here to view the agency’s press release and a link to the full proposal.
Increase in uncompensated care continues to strain health systems, providers
A recent report by TransUnion Healthcare noted that the trend of increased patient responsibility when it comes to healthcare bills shows no sign of slowing; hospital revenue attributed to patient balance after insurance increased by 88 percent between 2012 and 2017.
- Administrative and technology costs continue to rise, leading to increased healthcare costs that often translate to bills patients argue they can’t afford
- Meanwhile, payers have become more selective regarding what they cover, as more and more patients opt out of employer-sponsored health insurance that often features high-deductible plans
- The American Hospital Association (AHA) found that uncompensated care leapt by $2.6 billion in one year alone, from $35.7 billion to $38.3 billion in 2016
- CMS data indicate Medicare bad debt—the result of beneficiaries failing to pay their deductibles and co-insurance—saw a 17 percent increase, from $3.14 billion in 2012 to $3.69 billion in 2016
- The TransUnion Healthcare report recommended engaging patients earlier in the process to better determine their level of coverage and financial situation; providers can also invest in their revenue cycle management to lead to quick return and more efficient processes
340B drug program faces potential changes; federal court rejects AHA appeal
The 340B drug discount program remained in headlines this month as lawmakers, hospitals and even federal courts weigh in on the program. Midway through the month, a U.S. Court of Appeals sided with the Department of Health and Human Services (HHS) and rejected the AHA’s efforts to block $1.6 billion in Medicare 340B reimbursement cuts. The court affirmed the lower court’s decision that the association filed the lawsuit prematurely, as hospitals were not yet experiencing the cuts at the time of the filing. An AHA spokesperson indicated the association would continue to push back on the reimbursement cuts through legal action.
The 340B drug program was also the topic of meetings and hearings on the Hill this month:
- HHS Secretary Alex Azar proposed reducing the discount 340B providers receive to 20 percent of the drugs’ list price in a private meeting with lawmakers
- The House Energy and Commerce Committee held a hearing to consider numerous 340B-related proposals, which include (but are not limited to):
- Defining which patients should qualify for the drug discount
- Requiring hospitals and other clinics to report their estimated savings, payer mix and uncompensated care costs
- Requiring some 340B hospitals to pass on their savings from the program’s discounts to low-income patients
- Halting the rule that cut Medicare Part B reimbursements for 340B hospitals by $1.6 billion annually, and clarifying the goals of the program
- Defining how drug makers should determine the ceiling price for the drugs included in the program, and require HHS to share the 340B ceiling prices with providers
We will include any further updates regarding decisions on these measures in our next monthly wrap-up.
Hospital inpatient volume shows no sign of rebounding
A recent survey of hospital executives by investment bank Leerink Partners found that inpatient utilization increased just 0.7 percent in the second quarter of 2018, down from 1 percent in the second quarter of 2017. Survey administrators suggested that the recent trend of moving ever more procedures to an outpatient setting is largely to blame for the lag in inpatient volume growth.
- Respondents predicted an increase in hip procedures moving to an outpatient setting in the coming year, as well as urological, gynecological, spine and knee procedures
- 9 percent of heart surgeries were conducted in an outpatient setting in the past year according to survey respondents, who expect that number to climb to 12 percent next year
- 45 percent of respondents chose baby boomers aging into Medicare as having the most significant impact on utilization; 15 percent selected instead the effects of the Affordable Care Act (ACA), including an increase in insured individuals
The AHA takes issue with CMS’ proposal to tie SNF payments to patient conditions
The AHA this month voiced its reservations regarding the Patient Driven Payment Model (PDPM) CMS proposed this spring, which would reimburse skilled nursing facilities (SNFs) based on patient conditions. Although the AHA did applaud the agency’s attempt to create an alternative to the current case-mix Medicare reimbursement system, it had some concerns regarding the PDPM and its implementation. Specifically, the association noted that:
- The PDPM does not effectively recognize a change in clinical status; the agency proposed that following an interim payment assessment (IPA), a patient’s variable payment schedule would continue on the existing schedule without taking into account the change in clinical status that led to the IPA. The AHA indicated this could result in higher cost IPA adjustments being underpaid
- The PDPM places too much significance on the five-day assessment; while the current system requires frequent patient assessments, the PDPM would reduce that requirement to just one assessment after five days in a SNF. That assessment would then decide a patient’s classification and per-diem payment for the duration of the SNF stay
- The PDPM requires SNFs to use ICD-10 codes; SNFs have not had to use these codes within other Medicare reimbursement models, and the association argues it may not be worth the time and cost associated with learning and implementing the coding system
The AHA also expressed concern over CMS’ proposed changes to inpatient rehabilitation facilities’ (IRF) patient assessment process and case-mix system. The association specifically opposes the proposed replacement of current Functional Independence Measure (FIM) items and modifiers with quality indicators, as these indicators use different point scales, definitions and data structures. It also noted that some of the Section GG quality indicators CMS proposed to use in determining payments appear to inappropriately raise overall functional status, thereby reducing IRF resource allocation.
We will announce any updates regarding these proposals in our next monthly wrap-up.
CMS resumes ACA’s risk adjustment payment program
Toward the end of the month, CMS released a final rule that reinstates $10.4 billion in risk adjustment payments to exchange insurers after halting the program earlier this month due to a court decision.
- Formed under the ACA, the risk-adjustment program redistributes funds from exchange insurers with lower-risk enrollees to those with higher-risk enrollees to promote the enrollment of both healthy and sick consumers
- Earlier this year, a federal judge in New Mexico ruled the program’s payment formula was flawed and that HHS had not sufficiently explained its methodology. Subsequently, CMS halted billions in risk adjustment payments earlier this month
- On July 24, CMS announced its final rule—which aims to resume payments in October—and claimed it provides further explanation regarding the risk adjustment methodology
- The agency also said it may request comments regarding how it should calculate 2018 risk adjustment payments
CMS releases 2019 Medicare OPPS proposed rule; hospital groups oppose site neutral payments
CMS recently released its proposed rule for the 2019 Medicare outpatient prospective payment system (OPPS), which includes an already controversial proposal to implement site neutral payments for clinic visits, the most common service billed under the OPPS.
- The agency often pays more for this type of visit in the hospital outpatient setting than in the physician office setting, and argued the switch would save patients roughly $150 million in lower copayments
- Hospital groups, however, are already pushing back. Nonprofit organization Essentia Hospitals estimated this change would cut $610 million in payments to outpatient off-campus hospital clinics, reducing their rate to 40 percent of their current reimbursement
- AHA Executive Vice President Tom Nickels stated, “CMS has once again showed a lack of understanding about the reality in which hospitals and health systems operate daily to serve the needs of their communities…CMS's proposal…will instead impede access to care for the most vulnerable patients”
The agency’s proposed rule also included numerous other changes, including but not limited to:
- Increase the number of procedures payable at ambulatory surgical centers (ASCs) to ensure payments for procedures involving specific, high-cost devices parallel payments to hospital outpatient departments
- Solicit public comment on how to leverage the Competitive Acquisition Program to get a better deal for beneficiaries and reduce prescription drug costs
- Remove questions regarding pain communication from hospital patient experience surveys
Several for-profit hospital chains report positive Q2 earnings, bump in share prices
Many of the country’s largest for-profit hospital systems reported positive Q2 earnings and a lift in share prices toward the close of the month.
- Pennsylvania-based hospital chain Universal Health Services reported a quarterly net income of $226.1 million, a 22 percent increase from last year. Its revenue totaled $2.68 billion, up 2.6 percent from the same period in 2017
- The share price of HCA Healthcare, based in Nashville, closed up over 5 percent after its net income jumped 25 percent from the prior year quarter, from $657 million to $820 million. Although emergency department visits were slightly lower than anticipated, overall volume remained strong, with a 7.4 percent increase in revenue to $11.5 billion, up from $10.7 billion in 2017
- Another Tennessee-based health system, Community Health Systems (CHS), saw its share price close up by 7.5 percent after using a series of bond exchanges to eliminate $92 million from its total debt
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