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May 2015

SGR Physician Payment Fix Signed Into Law; CMS Announces Some Claims May be Reprocessed:

On April 16, President Obama signed into law legislation that permanently replaces the controversial and flawed sustainable growth rate (SGR) formula for calculating physician payment under the Medicare program. The legislation (H.R. 2), which had broad bipartisan support, passed the House on March 26th and the Senate on April 14th. The law also extends funding for the Children’s Health Insurance Program (CHIP) for two more years. CMS had instituted a 10 -business day hold on processing of claims for services on or after April 1, 2015 while Congress finished its deliberations. However, some claims were paid during this period at the reduced rate. CMS has announced that those claims will be automatically reprocessed by the Medicare Administrative Contractors.

SGR Bill Eases Gainsharing Rules; Delays Two Midnight Policy:

The SGR legislation amends the civil monetary penalties (CMPs) law that prohibits the offering or accepting of inducements to reduce or limit services to Medicare or Medicaid beneficiaries to state that such inducements would be permissible provided the services being limited are not “medically necessary.” This will make it easier for physicians and hospitals to engage in certain “gainsharing” arrangements in which hospitals offer physicians a percentage share of any reduction in the hospital’s costs for patient care attributable in part to the physician’s efforts. The legislation also requires OIG and HHS to report to Congress, within a year, on options for further amending the Medicare and Medicaid fraud and abuse laws and regulations to allow for additional gainsharing arrangements that would otherwise be subject to CMPs. The legislation also delays the two-midnight rule until September 30, 2015. The two-midnight rule targets short-stays by providing that a hospital admission that does not encompass at least two midnights will be treated as outpatient observation care and will not be reimbursed at the higher inpatient DRG rates. The hospital community has been strongly opposed to this rule.

ACO Report Shows Modest Savings:

The New England Journal of Medicine recently released a study, Performance Differences in Year 1 of Pioneer Accountable Care Organizations, analyzing the cost savings results from the first year of the Pioneer ACO program. Under the Pioneer program, ACOs share in savings with Medicare if spending for attributed patient populations falls below a financial benchmark and incur losses if spending exceeds the benchmark. Overall, the study found that the program resulted in a reduction of 1.2% in spending on Medicare patients in its first year. Despite the modest savings, 13 of the original 32 enrolled provider organizations withdrew from the Pioneer program due to the unsustainability of the financial model for already efficient organizations and concerns that savings determined by CMS in comparison with benchmarks may underestimate the actual savings achieved by ACOs. Overall, one of the main conclusions from the study is that sustaining or expanding participation in a Pioneer-like ACO program will probably require greater and more reliable rewards for ACOs that reduce spending than those currently in place.

Supreme Court Holds Providers Cannot Bring Suit Over Low Medicaid Rates:

In a 5-4 decision issued on March 31, 2015, the Supreme Court, in Armstrong v. Exceptional Child Center, held that Medicaid providers may not sue state officials over the adequacy of Medicaid rates. The Medicaid Act’s “equal access” provision requires states to use rate methodologies that assure Medicaid payments are sufficient to enlist enough providers so that care and services are as available to Medicaid beneficiaries as they are to the general population in the same area. The Court held that Medicaid providers are not the intended beneficiaries of the Act and have no right to bring sue to enforce the Act.

Florida to sue CMS for allegedly trying to force the state to expand Medicaid:

Florida Governor Rick Scott indicated in a statement on April 16 that he plans to take legal action against CMS on the grounds that the agency under the leadership of President Obama has cut off Low Income Pool (LIP) healthcare funds to Florida to force the state to expand Medicaid under the Affordable Care Act. Governor Scott argued that this move by the Obama administration is contrary to the Supreme Court’s decision in National Federation of Independent Business v. Sebelius. This announcement occurs after CMS indicated last February that it would not renew Florida’s Medicaid waiver “in its present form.” Governor Scott had previously sent a letter to President Obama asking him to come to an agreement on a version of the LIP program that would work for both Florida and CMS going forward. The LIP program provides additional federal funding to Florida hospitals that provide a large amount of care to poor and uninsured patients. The funding expires at the end of June.

EHR Interoperability:

Government identifies blocking of the exchange of health information as a major concern; sets goal for interoperability across the United States by 2017: On August 10, 2015 the Office of the National Coordinator for Health Information Technology (ONC) submitted a report to Congress on “health information blocking” defined as “when persons or entities knowingly and unreasonably interfere with the exchange or use of electronic health information.” It could include, for example, IT developers charging fees to send, receive, or export electronic health information stored in an EHR. Since the passage of the HITECH Act, the government has invested over $28 billion to move the adoption of health IT forward and create an “interoperable learning health system.” According to the ONC, “health information blocking” interferes with the goals of the HITECH Act and health reform and that addressing information blocking “will likely require congressional intervention.” The ONC had previously released a “Nationwide Interoperability Roadmap” on January 30 that sets a goal for nationwide interoperability for “a majority of individuals and providers” by 2017.

CMS proposes to simplify meaningful use program and realign its objectives and measures:

On April 10, 2015, CMS introduced a second proposed rule to realign Stage 1 and Stage 2 of the meaningful use of EHR program with Stage 3 and to simplify meaningful use reporting requirements. CMS had previously introduced the Stage 3 proposed rule on March 30, 2015. The new rule would streamline reporting requirements by reducing the total number of objectives under the meaningful use rule, removing redundant measures, and realigning the reporting period as of 2015 to the calendar year as opposed to the fiscal year. The reporting period for 2015 has also been reduced to any 90-day period within the calendar year to give providers time to accommodate these changes. Like the ONC, CMS has also emphasized interoperability of electronic health record technology as part of its announcement of this proposed rule.

CMS Issues Proposed Hospital Inpatient Rates for FY 2016; Hospital Payments Increase By Only 1.1%:

On April 17, CMS released a proposed rule on the 2016 hospital inpatient prospective system rates. The proposed rule increases Medicare payments to hospitals by 1.1%, or $120 million. In order to receive the 1.1% payment increase, general acute hospitals must participate in the Hospital Inpatient Quality Reporting Program and be meaningful users of the electronic health record. Long-term care hospital payments are proposed to decrease by 4.6% or approximately $250 million.

Uninsured Rate In Medicaid Expansion States Dropped by Half:

The two-year Health Reform Monitoring Survey conducted by the Urban Institute showed that the number of uninsured individuals dropped by half in the 29 states with Medicaid expansion. Specifically, the percentage of uninsured dropped from 15.8% before the Marketplace opened in September 2013 to 7.5% in these states. The number of uninsured dropped by 30% in the 31 states without Medicaid expansion, from 20.7% uninsured in September 2013 to 14.4% uninsured in March 2015. The survey studied changes in insurance coverage for non-elderly adults from the first quarter of 2013 through the first quarter of 2015, which covered the first two Marketplace open enrollment periods. The largest coverage gains in coverage were from population subgroups that had low insurance coverage levels before the Affordable Care Act, such as young adults and those from racial and ethnic minority groups.

CMS Administrator Slavitt Outlines Priorities for CMS As ACA Turns Five Years Old:

On April 14, 2015, Andy Slavitt, the Acting Administrator of CMS, spoke at a Brookings Institution event on the five-year anniversary of the Affordable Care Act. Mr. Slavitt stated that CMS’ priorities should be focused on meeting consumers’ evolving needs and continuing to work with providers to improve cost and quality outcomes. Specifically, he mentioned the need to help newly insured individuals understand their benefits and highlighted the “From Coverage to Care” program which provides information to consumers and providers. He also stated that the delivery system needs to be better aligned with patient primary care and chronic care needs and providers must work to provide more appropriate and higher-quality care in order to receive higher Medicare payments. Finally, he summarized the achievements of the Affordable Care Act thus far, such as the reduction in the uninsured rate, cost containment, and improved health care quality.