Baker Tilly’s The pulse of healthcare for April 24, 2015


At the agencies

On April 17, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that would change the FY 2016 Medicare payment rates and policies of the payment systems for acute-care hospitals and long-term care hospitals (LTCHs). Acute-care facilities that are successful participants in the Hospital Inpatient Quality Reporting (IQR) Program and are also meaningful users of Electronic Health Records (EHRs) can expect a 1.1 percent increase in payment rates beginning in October 2016. However, hospitals that do not participate in one or both of the aforementioned programs will have lower payment increases. Overall, it is expected that these payment rate changes will result in a 0.3 percent increase, or roughly $120 million, to acute-care hospitals in the coming year. This proposed rule has more substantial ramifications for LTCHs, as the changes proposed for them are estimated to reduce their payments by 4.6 percent, approximately $250 million, in the coming year. These reductions are expected primarily due to the many patient cases expected to be classified as site neutral, and therefore subject to lower payment rates. Although this proposed rule did not include any changes to the two-midnight rule as some had expected, the agency did indicate that it is continuing to look into the issue and that it would provide additional information on any changes to the issue in future proposed rules set to come out this summer. Overall, the proposed rule is further evidence of CMS’ shift towards paying providers based on the quality of care provided versus the quantity of services.

On April 15, the CMS also released a proposed rule governing payment rates and some policy changes for skilled nursing facilities (SNFs). The proposed rule projects that payment rates for SNFs will increase by 1.4 percent in 2016. The proposed rule also includes guidelines for the new quality reporting system for SNFs that was established by the “Improving Medicare Post-Acute Care Transformation Act of 2014.” CMS proposed that the reporting system for SNFs will include quality measurements of skin integrity in patients, the incidence of major falls, and patient cognitive function ability, and CMS says it will propose additional quality measures in future rulemaking. Starting in FY 2018, SNFs will have to submit quality of care data to this system or face a 2 percent cut to their annual payment rates. The proposed rule also includes guidelines for the value-based purchasing program for SNFs created by last year’s “Protecting Access to Medicare Law Act.” CMS proposed the adoption of the 30-day All-Cause Readmission measure, which measures unplanned readmission to acute care within 30 days of discharge from a hospitalization, as one of the factors that will be used to determine payments.  Additionally, long-term care facilities will also have to meet new requirements to be considered a SNF, as proposed by this rule.

On April 10, CMS released a proposed rule regarding the meaningful use program for EHRs.  The central component of the proposed rule is CMS’s move to shorten the reporting period for the EHR program to 90 days in 2015, a move preferred by both lawmakers and providers. This proposed rule would also remove any measures that they have determined are redundant and routine. The proposed rule would also change a requirement regarding patient views, downloads, and transmittals of their EHRs from a 5 percent overall patient requirement of these activities to providers just being able to report that one patient conducted these activities over a given reporting period.

On April 16, CMS posted its first Hospital Compare Star Ratings. The agency had previously posted star ratings for nursing homes, physicians, and Medicare advantage plans. These five-star ratings systems are intended to be utilized by consumers to inform them of the performance and quality of the providers and medical plans that are available to them. For the Hospital Compare Star Ratings, CMS used 11 measures that evaluated the communication between nurses and doctors and their patients, the cleanliness and measured sound levels of hospitals, and the level of follow-up care preparation that patients receive before their release. This information is available via the CMS website and will be updated quarterly.


On the Hill

On April 13, the Senate overwhelmingly passed the long-awaited bill repealing the Medicare Sustainable Growth Rate (SGR) formula in a late-night, 92-8 vote. This bill ended the decade-long cycle of payment patches to providers just hours before a substantial payment cut to physicians would have gone into effect. The SGR repeal bill is a definite move away from the fee-for-service model of repayment, and towards a value-based model, by replacing the SGR formula with one that will increase payments by 0.5 percent annually. Before the bill’s passage, six amendments to the bill were voted on and failed to pass, including one that would have permanently ended Medicare repayment caps to outpatient rehabilitation service providers. The House had passed the bill with bipartisan support before the recess; the Senate approved the House version without changes, thereby avoiding sending the bill back to the House which many feared would not have passed again.

Along with the repeal of the SGR, this bill’s passage has several provisions that impact providers. The Medicare repayment cap to therapy and other outpatient service providers exemption was extended for two years, and a Medicare reduction in payments to surgeons for surgical bundles was blocked, both of which reaffirm Congress’ support of the value-based repayment model. The bill also included key payment provisions including a 1 percent increase in base pay rates beginning in 2018 for long-term care, skilled nursing facilities, home health, hospice, and inpatient rehabilitation facilities, which is about half of what these facilities were expected to receive, and instead of the one-time 3.2 percent increase in base payment rates for hospitals slated for 2018, this increase in payment rates for hospitals will be phased in. Additionally, both the Qualifying Individual program and Transitional Medical Assistance program were made permanent by this legislation, which may result in increased coverage for families on Medicaid and low-income seniors, respectively. The bill was sent to President Obama and on Thursday, he signed the bill into law. 

Although CMS had placed a 10-day hold on provider claims since April 1 in hope of the law’s passage, it announced on April 15 that a small number of providers’ claims will be processed by Medicare Administrative Contractors (MAC) using the reduced SGR rate. However, CMS has instructed MACs to automatically reprocess any impacted claims, meaning providers need not take any action on this matter.   


In the courts

On April 6, ten leading Republican congressional members, including Senate Majority Leader Mitch McConnell, filed a brief asking the Washington, DC Circuit Court to support a previous federal court decision allowing employers to claim minimum wage or overtime exemptions for “companionship services” and “live-in” home healthcare workers. In December and January, responding to a lawsuit brought against the US Department of Labor (DOL) by the Home Care Association of America (HCAA), the US District Court overturned the DOL’s decision to make these types of home health aides non-exempt from minimum wage or overtime pay rules, and to prevent home care companies from claiming these exemptions for their employees. The DOL is appealing the federal court’s rulings, but this brief filed by congressional Republicans effectively states their strong support of the HCAA’s argument that the DOL’s decision would place a significant financial burden on home healthcare companies.  Oral arguments for the case are set for May 7.

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