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December 2014

Medicare Releases 2015 Physician Payment Rule; Changes for Global Surgery Services on the Horizon

  • In a final rule released on October 31, CMS announced that it will eliminate all 10-day global surgery codes by 2017 and all 90-day codes by 2018 and replace them with zero day codes. Thus, only services provided on the day of the procedure will be included in the code. Post-operative visits and other services will have to be billed separately. The impetus for this change was an OIG report finding many codes were over-valued and included more visits than were actually performed.
  • The final rule also establishes a new and more transparent policy for review of new and revised CPT Codes in which proposed RVUs will be included in the proposed rule for comment rather than being published for the first time in the final rule with no opportunity for comment. The new process will begin in 2016.
  • Physician fee schedule payments will remain stable through March 31 of 2015 with a conversion factor of $35.5018. This is due to the Protecting Access to Medicare Act (PAMA) passed by Congress last December that provided for a 0.5 percent update for 2014 and a zero percent update for services furnished in the first quarter of 2015. After March 31, by law, the conversion factor will drop by approximately 21.2 percent unless Congress takes action. As reported elsewhere in this issue, there is some momentum for SGR reform during the lame duck period.
  • The Value-Based Payment Modifier takes effect in 2017 for all physicians and will be based on their performance in 2015. Physicians could experience payment reductions of up to 4 percent if they do poorly under the quality tiering process that compares physicians to their peers based on quality and cost. However, CMS has stated that physicians in solo practice or in groups of nine or fewer who participate in PQRS will be held harmless from payment adjustments at least during 2017.
  • CMS will begin, in 2015, the tracking of claims submitted by off-campus, hospital-acquired practices.
  • In the meaningful use arena, CMS is eliminating the requirement that EPs who report clinical quality measures (“CQMs”) electronically utilize EHR technology that is recertified in CY 2015.

2015 Update for Hospital Outpatient and ASC Services

Medicare payments for hospital outpatient services will increase by 2.3% in 2015; ambulatory surgical center payment will increase by 1.4%. CMS also added a new outcome measure to the Hospital Outpatient Quality Reporting Program and the ASC Quality Reporting program for facility visits within 7 days of an outpatient colonoscopy, effective in 2018. Two measures related to prophylactic antibiotics for surgery patients were eliminated because compliance had topped out and they were no longer needed.

SGR Reform in the Lame Duck Period

National medical societies, Senate leaders, the GOP physicians’ caucus, and House Democrats are all calling for a repeal of the SGR in the lame duck session. While Congress is determining its respective leadership positions, committee assignments, and budget issues after the November elections, the pivotal question of how to pay for the repeal remains the greatest hurdle. After producing a substantive solution to the SGR earlier this year, Republicans advanced a delay in the individual mandate and Democrats sought to offset the cost of repeal by using costs savings from the overseas contingency fund. Neither option was palatable to the other party. On October 31, CMS issued a rule on the physician fee schedule noting that if Congress does not act to prevent the SGR cuts, physicians will face a 21.2% cut in Medicare reimbursement in April 2015, when the current patch expires. The Congressional Budget Office (CBO) determined on November 18 that the cost of repeal increased from $138 billion to $144 billion. A one year patch would cost $13.6 billion and a 2 year patch would cost $32 billion. The 2014 lame duck session remains the most attractive time to repeal the SGR given the expected increase in the cost to repeal it in 2015 and the stated interest of Republicans to “clear the decks” of pending legislation in anticipation of 2015 entitlement reforms going forward.

OIG Releases 2015 Work Plan

The HHS Office of Inspector General (OIG) has released its 2015 work plan. Targeted items include physician place of service coding errors, hospital compliance with the “two-midnight” rule, costs associated with defective medical devices, hospital privileging, and medical necessity of high-cost radiology tests.

CMS Begins New Round of Meaningful Use Attestation Audits

CMS has started the latest round of meaningful use program audits, which will continue into April 2015. Providers that have taken advantage of the Aug. 29 final rule allowing continued use of their 2011 edition-certified EHR to earn incentive payments should have documentation proving they were unable to upgrade their EHR systems to meet the latest federal standards for reasons beyond their control. Failing an audit could result in forfeiture of the entire year’s meaningful use incentive payments. Providers are able to appeal any unfavorable audits through a written application process.

Connecticut Supreme Court Recognizes Patient Right to Sue Under State Law for Federal HIPAA Violations

A Connecticut Supreme Court decision will allow a patient to bring suit under state tort law for a violation of HIPAA privacy rules. While it is a well-settled rule that HIPAA does not create a private right of action under federal law for individuals to sue their providers, a number of states are allowing cases to proceed under state law and using non-compliance with HIPAA as evidence of negligence. In the Connecticut case, a medical practice released a patient’s records in response to a subpoena in a paternity case without first notifying the patient, as required by HIPAA. The patient claimed that the practice violated state law by failing to use reasonable care in protecting her medical file, including disclosing the records in violation of the HIPAA Privacy Rule. Connecticut has now followed state court decisions in Missouri, West Virginia, and North Carolina, all of which have held that HIPAA can establish the standard of care in support of common law negligence claims.

CMS Will Refresh Sunshine Act Data by December 31, 2014

CMS has released, in beta form, its Sunshine Act Open Payments search tool, which is intended to facilitate public review of payments by drug and device manufacturers to medical providers. CMS will refresh the 2013 payment data system by December 31, 2014, and will include newly released data related to records that were in dispute as of September 11, 2014. Any records that were disputed after September 11 will not be refreshed until the next data publication in June 2015.

New States Expanding Medicaid Following the Mid-Term Elections?

The results of state gubernatorial elections from November of 2014 indicate that a rapid increase in Medicaid expansion under the Affordable Care Act is unlikely to happen anytime soon. Of 21 states that had previously chosen not to expand Medicaid, and two that were still debating the issue, fifteen had gubernatorial elections during the mid-terms. Fourteen of those states chose Republican governors. There are a few states, however, where Medicaid expansion is still on the table including Florida which, according to a Robert Wood Johnson Foundation Report, would stand to gain over $66 billion in federal Medicaid dollars if it expands. The election of a new Republican governor in Arkansas may throw into question that state’s continued participation in Medicaid expansion which, by law, must be reauthorized every year. Only in Alaska, where voters elected a third-party candidate in favor of Medicaid expansion, are we likely to see a state reconsider its decision not to expand Medicaid, at least for the next two years.

Supreme Court to take New Case challenging Affordable Care Act Subsidies

The Supreme Court granted review in early November of King v. Burwell, a case holding that the subsidy provisions of the Affordable Care Act (ACA) are available only to beneficiaries purchasing insurance through state-sponsored exchanges and not the federal exchange. The court took the case despite objections from the Obama administration, which wanted the Court to wait until lower courts had finished considering the issue. Currently, according to a Kaiser Family Foundation report, there are 27 exchanges fully operated by the federal government, seven exchanges operating under a federal/state partnership (under which beneficiaries enroll through the federal exchange but states may offer some consumer support), and three state-operated marketplaces where the state is using federal exchange technology. Should the court hold that subsidies cannot be offered to enrollees in the federally-operated exchanges, beneficiaries in up to 37 states, amounting to millions of people currently eligible for subsidies, could lose their federal support.