CMS finalizes several payment rules for 2012

CMS finalizes several payment rules for 2012

Baker & Hostetler LLP
Donna S. Clark, Lynn Sessions, Steven A. Eisenberg, John S. Mulhollan and David L. Schick
USA
November 10 2011

On November 1, 2011, the Centers for Medicare and Medicaid Services (CMS) issued its final rules related to the physician fee schedule, outpatient prospective payment system (PPS), home health PPS, and end-stage renal disease PPS for calendar year (CY) 2012. These payment and policy changes which are effective January 1, 2012, are discussed in turn.

Final Physician Fee Schedule Rule

CMS issued its final rule addressing changes to the physician fee schedule and other Medicare Part B payments for services to be furnished in CY 2012. CMS anticipates a 27.4 percent cut in payment rates in 2012 due to the sustainable growth rate formula. Historically, Congress has intervened and reversed these cuts, but with the congressional impasse earlier this year over budget cuts and the debt ceiling, CMS is concerned that Congress will not make this correction, and substantial reductions in physician reimbursement are possible.

The final rule addresses several additional payment issues, including the following:

Potentially Misvalued Services

CMS requests input from providers regarding the methodology to identify and review potentially misvalued codes. In the proposed rule, CMS had requested input from providers on data sources and methodology for developing a validation process for review of code values. In the final rule, CMS declined to establish the validation process and anticipates the process will be proposed in a future rule. CMS did adopt a proposed public nomination process for identification of potentially misvalued codes for annual review, including the requirement that there must be documentation to support a submission.

Multiple Procedure Payment Reduction

The final rule expands the multiple procedure payment reduction (MMPR) policy to include the professional component of advanced diagnostic imaging services when multiple procedures occur in the same session. The MMPR already applied to the technical component of these tests.

Additional Services

The final rule adds smoking cessation to covered Medicare telehealth services and creates new criteria for the health risk assessment to be utilized with the annual wellness visits mandated by the Patient Protection and Affordable Care Act (PPACA).

Physician Quality Reporting and Electronic Prescribing Initiatives

The final rule allows eligible providers and group practices who wish to voluntarily participate in the CY 2012 Physician Quality Reporting System (PQRS) to submit data by the following methods: (1) claims-based reporting mechanism, (2) registrybased reporting system, and (3) via an electronic health record-based reporting tool. CMS will include 26 new quality measures, including a core measure set on cardiovascular condition prevention. CMS finalized its proposal to consolidate the two current group practice reporting options and defined a "group practice" as one that has 25 or more eligible professionals. Eligible professionals and group practices that participate in the reporting system can qualify for an incentive payment equal to 0.5 percent of the total estimated allowed charges for covered services furnished by the group or eligible professional. The final rule similarly establishes incentives and criteria for providers to participate in e-prescribing. Providers wishing to participate in CY 2012 should self-nominate by January 31, 2012.

Comments to the final physician fee schedule rule are due January 31, 2012.

Final Outpatient PPS Rule

CMS issued its final rule for the Outpatient PPS (OPPS) for CY 2012. The rule generally was either positive or neutral news for hospitals. Highlights of the final rule include:

A fee schedule increase of 1.9 percent for hospitals that publicly report certain quality data. The change reflects a market basket increase of 3 percent, with a PPACA-mandated 1 percent productivity reduction and 0.1 percent market basket reduction. Ambulatory surgery center payment rates will increase by 1.6 percent in CY 2012.
PPACA mandated a study of costs for PPS-exempt cancer hospitals. As a result of the study, certain exempt cancer hospitals will receive an additional payment to equalize their payment-to-cost ratio to the weighted average of other hospitals. This will result in an increase of approximately $71 million, or 11.3 percent. When originally proposed, budget neutrality adjustments would have required a 0.7 percent decrease to hospitals’ outpatient reimbursements to offset the cancer hospital payment increase. However, due to certain adjustments by CMS, the reduction was only 0.2 percent in the final rule.
CMS finalized three additional quality measures out of the ten proposed for the Hospital Outpatient Quality Reporting program.
CMS also finalized the process by which physician-owned hospitals may request an exception to the prohibition on facility expansion under PPACA.
Finally, the committee that will review supervision requirements for outpatient therapeutic services was modified, indicating that it is likely new supervision requirements will be issued.
CMS will accept comments on issues open for comment if received by January 3, 2012, and will respond to them in the CY 2013 rule.

Final Home Health PPS Rule

CMS issued the final rule establishing the home health PPS rates (HH PPS) for CY 2012. Changes to the HH PPS rates, wage index and case-mix coding adjustments will result in a significant decrease in overall payments to home health agencies (HHAs) in CY 2012. The following paragraphs highlight the main features of the HH PPS changes.

PPACA Reduction to Home Health Payments for CY 2012

In a press release, CMS stated that the final rule reflects its efforts to maintain a balance between supporting Medicare beneficiary access to home health services and improving payment accuracy. A primary feature of the final rule is the one percent reduction to the CY 2012 home health market basket amount required under PPACA. As a result, the overall payment update for HHAs in CY 2012 is 1.4 percent. The HH PPS rates also were reduced to address continuing growth in the "nominal" aggregate case-mix, or that portion of growth in HH costs that are not related to changes in patients’ health status. The reduction in HH PPS rates resulting from nominal case-mix growth is 3.79 percent for CY 2012, with an additional reduction of 1.32 percent for CY 2013. Applying all market basket, wage index and case-mix adjustments will result in an estimated 2.3 percent, or $430 million, overall reduction in HH PPS payments for CY 2012.

Budget-Neutral Changes to Case-Mix Components and Weighting

In addition to payment updates, the final rule makes changes to the HH PPS methodology by removing two hypertension codes from the case-mix system, lowering payment for high therapy episodes, and recalibrating the case-mix weights to ensure that the changes result in a budget-neutral aggregate change.

Flexibility for Certifying Eligibility for Home Health Services

Current CMS policy requires a participating physician or permitted nonphysician practitioner (NPP) to have a face-to-face encounter with a patient prior to certifying the patient’s eligibility for the Medicare home health benefit. Under the HH PPS final rule, CMS will allow a physician who cared for a patient in an acute or post-acute facility to inform the certifying physician of his or her encounters with the patient, similar to that which is currently allowed for NPPs to satisfy the face-toface encounter requirement.

Changes to Quality Measures, OT Policy and Other Rates

The final rule for HH PPS in CY 2012 makes additional changes to the home health quality reporting measures, first required in 2007. Additionally, the rule provides further clarification of the occupational therapy (OT) policy regarding when OT is considered a dependent service versus a qualifying service under the Medicare home health benefit. Finally, the rule provides updates to the national standardized 60-day episode rates, national per-visit rates, low utilization payment amount and outlier payments.

Final ESRD PPS and Quality Rules

CMS issued the final rule that updates payment policies and rates for dialysis services furnished to Medicare beneficiaries under the end-stage renal disease PPS (ESRD PPS) during CY 2012. CMS is projecting that payment rates for dialysis treatments will increase by 2.1 percent, due to a market basket increase of 3 percent, reduced by a productivity adjustment of 0.9 percent. The final rule made changes and clarifications to the ESRD PPS outlier policy and low-volume policies, among other items. CMS projects that payments to ESRD facilities in 2012 will reach $8.3 billion.

The final rule also includes provisions to strengthen the ESRD Quality Incentive Program (QIP), by reducing payments to dialysis facilities if they do not achieve a threshold performance score on measures that assess the quality of dialysis care. Payments will be reduced on a sliding scale basis, up to a maximum of two percent, to ensure that reductions are proportionate to the extent a facility’s total performance score fails to meet the minimum total performance score needed to avoid a payment reduction.

CMS will measure facility performance on two measures for the payment year (PY) 2013 program -- an anemia management measure and a hemodialysis adequacy measure. The performance standard is the lesser of:

The facility’s own performance in the year that was selected for purposes of the ESRD PPS based on lowest per patient utilization (CY 2007); or
A standard based on the national performance rates in a selected period (CY 2009).
CMS will weight each of the measures at 50 percent and use CY 2011 as the performance period.

CMS also finalized three clinical measures and three reporting measures for the PY 2014 ESRD QIP. The three clinical measures are the anemia management measure, dialysis adequacy measure and the type of vascular access measure. The three reporting measures are whether a facility:

Reports dialysis infection events to the Centers for Disease Control and Prevention’s National Healthcare Safety Network;
Surveys patients to learn about their experience of care; and
Monitors patients for abnormalities in phosphorus and calcium levels.
CMS will score facilities on both achievement and improvement for each of the three clinical measures. A facility’s achievement score will be determined by comparing its score to facilities in the 15th to 90th percentiles during the baseline period. A facility’s improvement score will be based on where the facility’s performance falls on a scale ranging between the facility’s performance during the baseline period, and the 90th percentile (the national benchmark).

Scores from the three clinical measures will be weighted equally to make up 90 percent of the facility’s total performance score. Scores from the reporting measures will be weighted equally to make up the remaining ten percent of the facility’s total performance score. If a facility is eligible for only one type of measure, that measure will comprise 100 percent of the total performance score. The sliding scale analysis of performance scores discussed above will determine the PY 2014 reductions.

Moreover, facilities will be required to display certificates containing their performance scores prominently in the facility. ESRD QIP performance information also will be published online at CMS’ Dialysis Facility Compare website.

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