Various notices have been released recently by CMS that will affect upcoming payments and payment policy of several Medicare provider types. A brief recap and synopsis follows:
Skilled Nursing Facility (“SNF”) operators continue to be alarmed at the reduction of Medicare payments resulting from a final rulemaking notice1 containing the Medicare payment rates for SNFs for the 2009 - 2010 rate year. The final rule is only slightly different than the proposed rule of May 12th, with an MBI update per the final rule of 2.2% (vs. 2.1% as proposed) and the RY 2010 calibration of the case mix indices continues to result in a reduction of Medicare payments to nursing homes of about $1.050B - or 3.3%. The average net reduction of 1.1% is expected to decrease Medicare payments by ~$360MM compared to RY 2009 levels.
The labor and non-labor components of the RUG rates per the final rule changed slightly, generally less than $1.00 per RUG rate compared to those proposed. The RY 2010 wage indices were also updated, with such revisions appearing to be fairly minimal for most CBSAs. As in the past, the net 1.1% reduction is an aggregate payment variance, the true impact for an individual nursing home is influenced by both the wage index and average CMI (acuity). The final rule also establishes a revised CMI classification (RUG-IV) with an implementation schedule targeted for RY 2011. RUG-IV is to reflect the updated staff time measurement data derived from the recently completed Staff Time and Resource Intensity Verification ("STRIVE") project.
The American Health Care Association has estimated that the states of California, Florida, New York, Texas and Ohio will be particularly hard hit as a result of the 2010 recalibration adjustment. Although AHCA and other healthcare organizations and state associations are opposing the cuts, CMS believes the adjusted 2010 payment levels more accurately reflects the service needs and requisite resource consumption for rendering care to Medicare beneficiaries.
2010 IPPS Rates: The MS-DRG rates paid for Medicare services to hospitals reimbursed under the inpatient prospective payment system ("IPPS") will have their reimbursement rates adjusted by a 2.1% MBI factor for discharges on or after 10/1/09.2 This is considered a favorable event as CMS had proposed to reduce payments by a factor of approximately 1.9% to account for the effect of increases in hospital coding practices that do not reflect actual patient acuity hikes. In addition, CMS has decided not to curtail indirect medical education ("IME") payments for capital-related costs to teaching hospitals. Thus, teaching hospitals who qualify for IME reimbursement will receive the full capital IME adjustment in RY 2010.
A final rule notice3 will announce that Long Term Care Hospitals (“LTCHs”) will receive a 2.5% inflation update to payment rates for inpatient services effective 10/1/09. As above, no negative adjustments are being made for coding or documentation issues that occurred in 2008, but a 2007 adjustment of -0.5% will be applied to rates to account for the effect of changes that CMS deemed to have occurred in documentation and coding under the previous patient classification system. It is also noted that CMS is expanding the number of quality measures that hospitals must report in order to receive the full MBI update.
A final rule4 will affect Inpatient Rehabilitation Facility (“IRF”) payments and policy changes for discharges occurring on or after 10/1/09. A MBI factor of 2.5% will result in projected increases of Medicare payments to IRFs in 2010 by $145 million. The outlier threshold is set at $10,652 per discharge. Various other payment policy changes have been included in the final rule, most of which pertain to IRF coverage criteria, including patient assessment, treatment planning, and care provision.
The notice also retains the 60 Percent Rule, whereby a facility must demonstrate on an annual basis that at least 60% of its total patient population had either a principal or secondary diagnosis that falls within one or more of the designated qualifying conditions.
For Medicare certified Hospice providers, CMS announced in a final rule5 the 2010 payment updates for hospice prospective payments. The rates will be adjusted by a 2.1% MBI increase, offset by a 0.7% decrease in payments due to a revised policy by CMS in phasing out its wage index budget neutrality factor. The rule also adopts a MedPAC recommendation which requires physicians to complete a narrative on the certification and recert describing the clinical justification for a Hospice patient's terminal prognosis. The net 1.4% increase to rates, and other policy changes, will be effective 10/1/09.
Medicare prospective payments to Home Health Agencies (“HHAs”) will be increased for CY 2010 by a proposed 2.2% MBI increase. However, the proposed rule6 maintains current policy with a 2.75% reduction to the national standardized 60-day episodic payment rates (the third year of a four-year phase of downward adjustments to HHA prospective payment rates), CMS is also proposing to modify the HHA outlier payment policy for high cost cases, such that outlier payments would be capped at 2.5% of total HHA prospective payments - a decrease from the current threshold of 5%. With this reduction, CMS would increase HHA rates by 2.5%. It is also noted that the 2.71% reduction for the 4th year tentatively remains in place, and the MedPAC recommendation from earlier in the year to accelerate it to CY 2010 was not implemented per the proposed rule - although it could occur as part of the Obama health care reform initiatives (the House Democratic reform bill would adopt the MedPAC recommendation). Due to CMS’s concern over fraud and abuse in the home health sector, the rule proposes to add payment and enrollment safeguards to improve the enrollment process and the quality of care for Medicare rendered services to home health patients.
In addition to the rate modifications, a new version of the OASIS data set (required clinical and quality data that assists in determining the PPS rate), called OASIS-C, is proposed to be put into place effective 1/1/10. HHAs that do not report quality data will have their Medicare rates reduced by 200 basis points. CMS estimates that the overall impact of rate and policy changes will result in overall payments to HHAs in 2010 to be approximately 0.86% less than 2009, although payment variances will differ between urban and rural agencies based on the CMS impact study, and regions with substantial outlier payments such as the South Atlantic region that encompasses Florida plus eight other states and the District of Columbia could experience 12% average rate reductions in 2010, most of which is due to the outlier cap modification.
Proposed rulemaking notices for hospital services paid under the Outpatient Prospective Payment System (“OPPS”), Ambulatory Surgery Centers (“ASCs”), and Physician Services were issued in late July and key payment provisions, as proposed, include a 2.1% increase for OPPS departments (quite a bit less than the CY 09 update of 3.9%); a 0.6% conversion factor for ASC payments and adding 28 surgical procedures that Medicare will reimburse when performed in an ASC setting; and a 21.5% reduction in the physician fee schedule - all expected to become effective 1/1/10. Numerous policy changes affect each of these sectors and CMS is soliciting public comment on the proposed notices, so it is possible that modifications will be made prior to final notices.
As in the past, it is also likely that Congress will override the overall proposed reduction to the physician fee schedule, especially considering industry opposition to the Sustainable Growth Rate formula utilized in computing the recommended adjustment to fee-for-service physician payments.
1 Per the Federal Register dated 8/11/09.
2 Based on a CMS Press Release issued 7/31/09 (the Federal Register final rule issuance is
expected 8/27/09).
3 Based on a CMS Press Release issued 7/31/09 (the Federal Register final rule issuance is
expected 8/27/09).
4 Per the Federal Register dated 8/7/09.
5 Per the Federal Register dated 8/6/09.
6 Per the Federal Register dated 8/13/09.
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