1 The FY 2014 Medicare Annual Update Larry Goldberg Larry Goldberg Consulting Larry A Oday Esq, PLLC October 16, 2013

1

The FY 2014 Medicare

Annual Update

Larry GoldbergLarry Goldberg Consulting

Larry A Oday Esq, PLLC

October 16, 2013

2

Agenda

Congressional Activity President’s Budget Sequester FY 2014 Final PPS Updates

IPPS SNF IRF IPF Hospice

3

Agenda

CY 2014 Proposed PPS Updates OPPS ESRD Physician Home Health

Proposed FQHC PPS

4

Congress

Politics have made it difficult if not impossible to enact all legislation

FY 2014 Budget seems unlikely Government shut down Republicans in House have tried 42 times to repeal the ACA

Nice but it “ain’t” going to happen unless they get veto proof margins in both chambers

Trying to stop by defunding – hasn’t worked so far??? Debt ceiling limits

5

President’s Budget

6

President’s FY 2014 Budget

2 months late Would avoid sequestration Comment

Going nowhere But do not ignore specifics Does NOT fix the physician payment problem Does suggest where Medicare is heading

7


Includes a package of Medicare legislative proposals that will “save” $371.0 billion over 10 years

Reduce Medicare Coverage of Bad Debts: Starting in 2014, this proposal would reduce bad debt payments to 25 percent over 3 years for all providers who receive bad debt payments [$25.5 billion in savings over 10 years]

Better Align Graduate Medical Education (GME) Payments with Patient Care Costs: Would reduce GME payments by 10 percent, beginning in 2014 [$11.0 billion in savings over 10 years]

8


Reduce Critical Access Hospital (CAHs) Reimbursements to 100% of Costs: Would reduce rate to 100 percent beginning in 2014. [$1.4 billion in savings over 10 years]

Prohibit Critical Access Hospital Designation for Facilities that are Less Than 10 Miles from the Nearest Hospital: Beginning in 2014. [$690 million in savings over 10 years]

9


Adjust Payment Updates for Certain Post-Acute Care Providers: Would gradually realign payments with costs by reducing the market basket updates for Inpatient Rehabilitation Facilities (IRFs), Long-Term Care Hospitals (LTCHs), SNFs and Home Health agencies, by 1.1 percentage points beginning in 2014 through 2023. Payment updates for these providers would not drop below zero under this provision. [$79.0 billion in savings over 10 years]

“Encourage” Appropriate Use of Inpatient Rehabilitation Facilities (IRFs): Beginning in 2014, this proposal would reinstitute the 75 percent standard. [$2.5 billion in savings over 10 years]

10


Equalize Payments for Certain Conditions Treated in Inpatient Rehabilitation Facilities and Skilled Nursing Facilities: Would adjust payments for three conditions involving hips, knees, and pulmonary conditions, as well as other conditions selected by the Secretary. Beginning in 2014, would reduce the disparity in Medicare payments between the settings. [$2.0 billion in savings over 10 years]

Adjust Skilled Nursing Facilities Payments to Reduce Hospital Readmissions: Would reduce payments by up to three percent for SNFs with high rates of care-sensitive, preventable hospital readmissions, beginning in 2017. [$2.2 billion in savings over 10 years]

11


Implement Bundled Payment for Post-Acute Care Providers: Beginning in 2018, this proposal would implement bundled payment for post-acute care providers, including LTCHs, IRFs, SNFs, and home health providers. [$8.2 billion in savings over 10 years]

Reduce Overpayment of Part B Drugs: Lowers reimbursement to 103 percent of ASP. [$4.5 billion in savings over 10 years]

Modernize Payments for Clinical Laboratory Services: Would lower the payment rates under the Clinical Laboratory Fee Schedule (CLFS) by -1.75 percent every year from 2016 through 2023 [$9.5 billion in savings over 10 years]

12


Introduce Home Health Copayments for New Beneficiaries: Would create a co-payment for new beneficiaries of $100 per home health episode, starting in 2017. [$730 million in savings over 10 years]

Align Medicare Drug Payments with Medicaid Policies for Low-Income Beneficiaries: Would require manufacturers to pay the difference between rebate levels they already provide Part D plans and the Medicaid rebate levels. [$123.2 billion in savings over 10 years]

13


Increase Income-Related Premiums under Medicare Part B and Part D: Would restructure income-related premiums under Medicare Parts B and D by increasing the lowest income-related premium five percentage points, from 35 percent to 40 percent, and also increasing other income brackets until capping the highest tier at 90 percent. The proposal maintains the income thresholds associated with these premiums until 25 percent of beneficiaries under Parts B and D are subject to these premiums. [$50.0 billion in savings over 10 years]

14

Final FY 2014 PPS Updates

IPPS SNF IRF IPF Hospice

15

IPPS Update for FY 2014

16

FY 2014 IPPS

Personal Comments Reg is simply too long Display copy is 2,225 pages Original law was only 138 pages Too much history Too much redundancy

• Supposedly for lawyers and to ward off law suits Hard to find changes being proposed Does not have clear final decision making summaries

17

FY 2014 IPPS

Posted on 8/2/2013 Published in 8/19/13 Federal Register Tables on CMS website Copy at:

http://www.gpo.gov/fdsys/pkg/FR-2013-08-19/pdf/2013-18956.pdf

Tables at: http://www.cms.hhs.gov/Medicare/medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html

Effective 10/1/13 Correction Notice published 10/3/13

http://www.cms.hhs.gov/Medicare/medicare-Fee-for-Service-Payment/AcuteInpatientPPS/index.html




18

IPPS Update

MB is 2.5 percent (0.5 percent for “non-quality” providers)( same as proposed)

Offsets: (0.5%) for productivity [up from proposed amount of

0.4] (0.3%) for ACA mandate (0.8%) for documentation & coding (per ATRA) (0.2%) for new policy proposal on I/P criteria

CMS says net Increase is 0.7% (-1.3% for non-quality providers)

Increase in total payments ??????

19

IPPS Update

There are more offsets: Budget neutrality items

• Readmissions (reductions increase to 2.0%)• DSH • Value-Based Purchasing (increases to 1.25%)

ACA law said updates could be less than current may now become “real”

Impact of sequester

20

IPPS Update

Revising the MB Using 2010 data in lieu of 2004

Results in new labor-related share values “Large” Urban areas – those with wage index greater

than 1.000 – from 68.8 to 69.6 percent “Other” areas with wage index values equal to or

less than 1.000 will remain at 62.0 percent by law• If no law, would be 63.2 percent

21

IPPS Budget Neutrality

Budget neutrality adjustments for: DRG recalibration Wage index changes Geographic reclassification Rural community hospital demonstration program Removing the FY 2013 outlier offset Documentation and coding to date Offsetting the cost of the policy proposal on admission

and medical review criteria

22

National Adjusted Operating Standardized Amounts69.6 Percent Labor Share/30.4 Percent Nonlabor

Wage Index Is Greater Than 1.0000 FY 2014 Full Update

1.7 percent Reduced Update minus 0.3 percent

Labor-related

Non-labor-related

Labor-related

Non-labor-related

$3,737.71 $1,632.57 $3,664.21 $1,600.46

Full Update Reduced Update

Labor-related Non-labor-related Labor-related Non-labor-

related

$3,679.95 $1,668.81 $3,607.65 $1,636.02

Rates Currently in Effect

23

National Adjusted Operating Standardized Amounts62 Percent Labor Share/38 Percent Nonlabor

Wage Index Equal to or Less Than 1.0000 FY 2014 Full Update

1.7 percentReduced Update minus 0.2 percent

Labor-related

Non-labor-related

Labor-related

Non-labor-related

$3,329.57 $2,040.71 $3,264.10 $2,000.57

Full Update Reduced Update

Labor-related Non-labor-related Labor-related Non-labor-

related

$3,316.23 $2,032.53 $3,251.08 $1,992.59

Rates Currently in Effect

24

IPPS Rate Comparison (w/Quality)

FY 2013 FY 2014 Difference Large $3,679.95 $3,737.71 1,668.81 1,632.57

$5,348.76 $5,370.28 $21.52/ 0.4%

Other $3,316.23 $3,329.57

2,032.53 2,040.71$5,348.76 $5,370.28 $21.52/ 0.4%

Proposed was an increase of $27.28

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IPPS Documentation & Coding

American Taxpayers Relief Act changes the game Requires CMS recoup $11 billion over 4 years starting in FY

2014 CMS will reduce payments by 0.8 percent reduction This amount will recover about $1 billion in FY 2014 How do you get the remaining $10+ billion? Will this item ever be settled?

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Documentation & Coding

Compound the reductions; 2014 0.8% = $1 billion = 1.0000-.008=0.992 2015 $2 billion .992 X .992= 0.984 2016 $3 billion .984 X .992= 0.976 2017 $4 billion .976 X .992= 0.968 Total $10 billion

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CMS’ Addendum tableFull Update

1.7Percent

Wage Index is greater

than 1.0000;

Labor/Non-Labor SharePercentage(69.6/30.4)

Full Update

1.7Percent

Wage

index is less than

or equal to1.0000;

Labor/Non-Labor Share

Percentage (62/38)

Reduced Update

(-0.3 percent)

Wage indexis greater

than 1.0000;

Labor/Non-Labor Share Percentage (69.6/30.4)

Reduced Update

(-0.3 percent)

Wage

index isless than

orequal to1.0000;

Labor/Non-Labor Share

Percentage (62/38)

28


FY 2013 Base Rate after removing: 1. FY 2013 Geographic Reclassification Budget Neutrality (0.991276) 2. FY 2013 Rural Community Hospital Demonstration Program Budget Neutrality (0.999677) 3. Cumulative FY 2008, FY 2009, FY 2012, FY 2013 Documentation and Coding Adjustment as Required under Sections 7(b)(1)(A) and 7(b)(1)(B) of Pub. L. 110-90 (0.9478) 4. FY 2013 Operating Outlier Offset (0.948999)

Labor: $4,176.63 Nonlabor: $1,824.27

Total$6,000.90

Labor: $3,720.56 Nonlabor: $2,280.34

Total$6000.90

Labor: $4,176.63 Nonlabor: $1,824.27

Total$6,000.90

Labor: $3,720.56 Nonlabor: $2,280.34

Total$6,000.90

Full Update 1.7 percent

(69.6/30.4)

Full Update1.7 Percent

(62/38)

Reduced Update

(-0.3 percent)

Reduced Update(-0.3

percent)

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FY 2014 Update Factor 1.017 1.017 0.997 0.997

FY 2014 MS-DRG Recalibration and Wage Index Budget Neutrality Factor 0.997936 0.997936 0.997936 0.997936FY 2014 Reclassification Budget Neutrality Factor 0.990718 0.990718 0.990718 0.990718

FY 2014 Rural Community Demonstration Program Budget Neutrality Factor 0.999415 0.999415 0.999415 0.999415

FY 2014 Operating Outlier Factor 0.948995 0.948995 0.948995 0.948995Adjustment to Offset the Cost of the Policy on Admission and Medical Review Criteria for Hospital Inpatient Services under Medicare Part A 0.998 0.998 0.998 0.998

Full Update (1.7percent)

(69.6/30.4)

Full Update(1.7

Percent)(62/38)

Reduced Update

(-03 percent)

Reduced Update

(-03 percent)

30


Cumulative Factor: FY 2008, FY 2009, FY 2012,and FY 2013 Documentation and Coding Adjustment as Required under Sections 7(b)(1)(A) and 7(b)(1)(B) of Pub. L. 110-90 and Proposed Documentation and Coding Recoupment Adjustment as required under Section 631 of the American Taxpayer Relief Act of 2012 0.9403 0.9403 0.9403 0.9403

Full Update (1.7

percent)

(69.6/30.4)

Full Update(1.7

Percent)(62/38)

Reduced Update

(-03 percent)

Reduced Update

(-03 percent)

31


Totals $5,370.28 $5,370.28 $5264.67 $5264.67

National Standardized Amount for FY 2014

Labor:$3,731.71

Labor:$3,329.57

Labor:$3,664.21

Labor:$3,264.10

Nonlabor: $1,632.57

Nonlabor: $2,040.71

Nonlabor: $1,600.46

Nonlabor: $2,000.57

Full Update (1.7 percent)

(69.6/30.4)

Full Update(1.7

Percent)(62/38)

Reduced Update

(-0.3percent)

Reduced Update

(-0.3 percent)

32


FY 2013 Documentation & Coding Adjustment was 0.9478 Multiply 0.9478 X 0.992 = 0.9402176 Cited FY 2014 adjustment = 0.9403* (Rounding??)

Next year 0.9403 X 0.992= 0.9328??

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Wage Index

Not using the revised OMB CBSAs released on 2/28/13 To be used for FY 2015 Copy at:

http://www.whitehouse.gov/sites/default/files/omb/bulletins/2013/b-13-01.pdf

Data is from FY 2010 CRPs (including OCC mix adjustment) Comment

CMS is changing (via an instruction) the wage index data corrections due date for FFY 2015. November 21st is now the due date when traditionally it was the first Monday in December

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Wage Index

No change to the statewide budget neutrality adjustment factor – federal versus state specific

Massachusetts continues to be “big” winner

35

Wage Index – Rural Floor

FY 2014 IPPS Estimated Payments Due to Rural Floor and Imputed Floor with National Budget Neutrality

State Number of Hospitals

Number of Hospitals Receiving

Rural Floor or Imputed Floor

Percent Change in Payments

Difference (in millions)

California 309 182 1.0 $94.1Massachusetts 61 60 5.5 $167.6Connecticut 32 19 4.2 $65.4Kentucky 65 1 -0.5 ($8.3)New York 166 0 -0.6 ($47.7)Florida 168 7 -0.4 ($29.7)Illinois 127 1 -0.6 ($27.4)North Carolina 87 0 -0.4 ($12.6)Missouri 77 0 -0.4 ($10.9)

36

More on Floors

Frontier Floor Montana, North Dakota, South Dakota, and Wyoming,

covering 46 providers, will receive a frontier floor value of 1.0000

Imputed Floor Extended till September 30, 2014 Benefits

• 25 providers in New Jersey• 4 providers in Rhode Island

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Occupational Mix

FY 2014 occupational mix adjusted national average hourly wage is $38.3698 [ Proposed at $38.2094]

Occupational Mix Nursing Subcategory Average Hourly Wage

National RN 37.430602011

National LPN and Surgical Technician 21.771626577

National Nurse Aide, Orderly, and Attendant 15.323325633

National Medical Assistant 17.20567090

National Nurse Category 31.80354668

38

Reclassifications

FY 2014 – 296 approved FY 2013 – 169 approved FY 2012 – 214 approved CMS says there are 679 hospitals reclassified for FY 2014

Applications to MGCRB due by September 3rd

There is a typo in the original display copy – 169 shown as 196. Has been corrected

39

Outliers

Outlier fixed-loss cost threshold for FY 2014 equal to the prospective payment rate for the DRG, plus any IME and DSH payments, and any add-on payments for new technology, plus $21,748 Proposed at $24,140

The current amount is $21,821

40

Outliers

CMS currently estimates that actual outlier payments for FY 2013 will be approximately 4.77 percent of actual total MS-DRG payments

The proposed estimated amount was 5.17 percent CMS continues to fail to recognize the amount it

underestimates for outlier payments

“No one seems to object” Why???

41

Redesignations

“Lugar” Hospitals – by statute List available on the CMS Web site.

Waiving Lugar for the Out-Migration Adjustment Becomes rural for all purposes

FY 2014 Wage Index Adjustment Based on Commuting Patterns of Hospital Employees Refer table 4J

42

MDH/ Low-Volume/ CAH Hospitals

MDH and Low-Volume Hospital programs expire FY 2014

Low-Volume reverts to 200 discharges CAHs must provide I/P care on-site

43

Capital

Rate will increase from $425.49 to $429.31

Final FY 2013 FY 2014Chang

ePercent Change

Update Factor 1.012 1.009 1.009 0.9

GAF/DRG Adjustment Factor 0.9998 0.9987 0.9987 -0.13

Outlier Adjustment Factor 0.9362 0.9393 1.0033 0.33

Adjustment for admission and medical review criteria3 N/A 0.998 0.998 -0.2

Capital Federal Rate $425.49 $429.31 1.0190 1.90

44

Excluded Hospitals

Rates will increase 2.5 percent Cancer and Children’s Hospitals

45

IME / GME

IME multiplier unchanged at 1.35 – by law Hospital cannot count a resident training at a CAH for either

IME or GME Revising yet again the policy concerning the counting of

labor / delivery room days Will include labor and delivery days as inpatient days in

the Medicare utilization calculation, effective for cost reporting periods beginning on or after October 1, 2013.

46

DRGs

Will use 4 new cost centers for calculating CCRs Implantable devices MRI CT scans Cardiac cath

There will now be 19 CCRs See Table 5 for new weights

47

DRGs

Minor changes to specific coding procedures, etc

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MS-DRG Description FY 2014

WeightFY

2013Percentage Difference

65 Intracranial hemorrhage or cerebral infarction w CC 1.0776 1.1345 -5.02%

189 Pulmonary Edema & Respiratory Failure 1.2184 1.2461 -2.22%

190 Chronic obstructive pulmonary disease w MCC 1.1708 1.1860 -1.28%

191 Chronic obstructive pulmonary disease w CC 0.9343 0.9521 -1.87%

193 Simple pneumonia & pleurisy w MCC 1.4550 1.4893 -2.30%194 Simple pneumonia & pleurisy w CC 0.9771 0.9996 -2.25%

247 Perc cardiovasc proc w drug-eluting stent w/o MCC 2.0408 1.9911 2.50%

287 Circulatory disorders except AMI, w card cath w/o MCC 1.0866 1.0709 1.47%

291 Heart failure & shock w MCC 1.5031 1.5174 -0.94%292 Heart failure & shock w CC 0.9938 1.0034 -0.96%

309 Cardiac arrhythmia & conduction disorders W CC 0.7867 0.8098 -2.85%

310 Cardiac arrhythmia & conduction disorders w/o CC/MCC 0.5512 0.5541 -0.52%

312 Syncope & collapse 0.7228 0.7339 -1.51%313 Chest pain 0.5992 0.5617 6.68%

49

MS-DRG Description FY 2014

WeightFY

2013Percentage Difference

378 G.I. hemorrhage w CC 1.0029 1.0168 -1.37%

392 Esophagitis, gastroent & misc digest disorders w/o MCC 0.7395 0.7375 -0.27%

470Major joint replacement or reattachment of lower extremity w/o MCC

2.1463 2.0953 2.43%

603 Cellulitis w/o MCC 0.8404 0.8392 0.14%

641 Nutritional & misc metabolic disorders w/o MCC 0.6992 0.6920 1.04%

682 Renal Failure w MCC 1.5401 1.5862 -2.91%

683 Renal Failure w CC 0.9655 0.9958 -3.04%

690 Kidney & urinary tract infections w/o MCC 0.7693 0.7810 -1.50%

871 Septicemia or severe sepsis w/o MV 96+ hours w MCC 1.8527 1.8803 -1.47%

872 Septicemia or severe sepsis w/o MV 96+ hours w/o MCC 1.0687 1.0988 -2.74%

50

New Technology Add-ons

For FY 2014 continuing 3: Voraxase® (max pay of $45,000) Dificid™ (max of $868) Zenith® AAA Graft (max of $8,171)

2 new for FY 2014 Argus® II Retinal Prosthesis System; Responsive

Neurostimulator (RNS®) System (max pay of $72,028) Zilver® PTX® Drug Eluting Peripheral Stent (max of

$1,705)

51

I/P Admissions

Creating a “two midnights” rule Longer than two midnights – will be deemed an I/P Shorter than two – O/P assumed

• Exception if good documentation• Supports admitting docs expectation that stay > 2

midnights Contractor can ignore if hospital suspected of abuse Applies to CAHs But not IRFs

52

IPPS DSH Formula

Mandated by Section 3133 of ACA Splits system

25 percent remains as old formula Rescrambles 75 percent Uses 3 factors

Revised by 10/3/13 correction notice Will NOT make payments based on FFY Will now compute on hospital CRP Revises Formula Values

53

IPPS DSH Formula

If a hospital is eligible for DSH on its cost report for the cost reporting period ending on December 31, 2013, it will receive a pro rata share of its FY 2014 uncompensated care payment. This pro rata share would be approximately three-twelfths (that is, the period of time from October 1, 2013 through December 31, 2013, divided by the period of time from January 1, 2013 through December 31, 2013) of the hospital’s FY 2014 uncompensated care payment.

If the hospital’s subsequent cost reporting period is January 1, 2014 through December 31, 2014, CMS also will reconcile the interim FY 2014 uncompensated care payments received for discharges from January 1, 2014 through September 30, 2014 on the hospital’s cost report for the cost reporting period beginning on January 1, 2014 against a pro rata share of its FY 2014 uncompensated care payment.

54

DSH Factor One

Determines 75 percent of what would have been paid under the old methodology

Excluded hospitals MD wavier SCHs paid on a hospital-specific basis 23 hospitals in Rural Community Demo

Using CMS actuary estimates from July 2013 Current DSH total estimate is $12.772 billion Current 25% estimate is $3.198 billion (revised) Current 75% estimate – Factor 1 is $9.593 billion

(revised)

55

DSH Factor Two

Reduces Factor One amount by percentage reduction in uninsured from 2013 to 2014

Using CBO “projections” CY 2013 rate of insurance coverage (May 2013 CBO

estimate): 80 percent CY 2014 rate of insurance coverage (May 2013 CBO

estimate, updated with July 2013 CBO estimate): 84 percent

FY 2014 rate of insurance coverage: (80 percent * .25) + (84 percent * .75) = 83 percent.

56

DSH Factor Two

Percent of individuals without insurance for 2013 (March 2010 CBO estimate): 18 Percent

Percent of individuals without insurance for FY 2014 (weighted average): 17 Percent

Formula; 1 – |[(0.17 - 0.18)/0.18]| = 1 - 0.056 = 0.944 (94.4

percent) 0.944 (94.4 percent) - 0.001 (0.1 percentage points) =

0.943 (94.3 percent) 0.943 = Factor 2

57

DSH Factor Two

For the purpose of this final rule, the amount available for uncompensated care payments for FY 2014 will be approximately $9.046 billion (0.943 times Factor 1 estimate of $9.593 billion)(Revised values) Impact of revised rule is an increase in payments of $15

million This represents a reduction of DSH of $546 $531 million

58

DSH Factor Three

Factor 3 is “equal to the percent, for each subsection (d) hospital, that represents the quotient of (i) the amount of uncompensated care

for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data (including, in the case where the Secretary determines alternative data is available which is a better proxy for the costs of subsection (d) hospitals for treating the uninsured, the use of such alternative data)); and (ii) the aggregate amount of uncompensated care for all subsection (d) hospitals that receive a payment under this subsection for such period (as so estimated, based on such data)”

Based on each hospital’s share of total uncompensated care costs across all PPS hospitals that received DSH payments• numerator is all PPS hospitals, but denominator is just DSH hospitals

59

DSH Factor Three

CMS is using the utilization of insured low-income patients defined as inpatient days of Medicaid patients plus inpatient days of Medicare SSI patients as defined in 42 CFR 412.106(b)(4) and 412.106(b)(2)(i), respectively to determine Factor 3 From 2010/2011 cost reports

60

DSH Factor Three

Definition of “uncompensated care” is bound to be controversial

Tables are posted showing CMS estimate of each hospital’s share http://www.cms.gov/Medicare/Medicare-Fee-for-Service-

Payment/AcuteInpatientPPS/dsh.html

61

DSH Eligibility

Can you obtain DSH if you did not have any in 2013 ????? So far there is no guidance

62

63

64

Readmissions

Maximum reduction increases to 2 percent – based on individual hospital ratio

2,225 hospitals expected to incur some loss 1,134 expected to be clear Is not budget neutral

65

Readmissions

FY 2014 uses 3 readmission measures Heart attack Heart failure pneumonia

Will expand conditions for FY 2015 COPD Total hip arthoplasty Total knee arthoplasty

Will reduce overall payments $227 million

66

Readmissions

Aggregate payments for excess readmissions = [sum of base operating DRG payments for AMI x (Excess Readmission Ratio for AMI-1)] + [sum of base operating DRG payments for HF x (Excess Readmission Ratio for HF-1)] +[sum of base operating DRG payments for PN x (Excess Readmission Ratio for PN-1)].

Aggregate payments for all discharges = sum of base operating DRG payments for all discharges.

67

Readmissions

Ratio = 1-(Aggregate payments for excess readmissions/Aggregate payments for all discharges)

Readmissions Adjustment Factor for FY 2014 is the higher of the ratio or 0.9800

Based on claims data from July 1, 2009 to June 30, 2012 for FY 2014

68

Value Based Purchasing

Withhold amount increases to 1.25 percent for all hospitals

Total amount available for performance-based incentive payments for FY 2014 will be approximately $1.1 billion

Supposed to be budget neutral

69


17 measures for FY 2014 AMI-7a, AMI-8a HF-1 PN-3b, PN-6 SCIP-INF-1; -2; -3; -4; -9 SCIP-Card-2 SCIP-VTE-1*, VTE-2 HCAHPS MORT-30 AMI; -HF; -PN

• *deleted for FY 2015

70


FY 2015 Adding

• AHRQ PSI Composite• CLASBI• MSPB-1 (Medicare spending per beneficiary)

Removing• SCIP-VTE-1

71


FY 2016 Removing

• AMI-8a• PN-3b• HF-1

Adding three new measures for FY 2016• IMM-2• CAUTI• Surgical Site Infection (SSI), the latter of which is stratified

into two separate surgery sites

72

HAC Reduction

Affects payment in FY 2015 Lowest-performing quartile get 1.0 percent reduction Two measures of two types (domains)

Each weighted equally First domain – six patient safety indicators

Pressure ulcers rate Foreign objects left in body percent Iatrogenic Pneumothorax rate Post-op physiologic / metabolic derangement rate Post-op pulmonary embolism / deep vein thrombosis rate

Second domain – two infection measures CLABSI CAUTI

73

Quality Reporting

59 measures for FY 2015 Removing 8 measures for FY 2016

AMI-2, AMI-10, PN-3b, HF-1, HF-3, SCIP-INF-10, IMM-1, Participation in a systematic clinical database registry for stroke care

Adding 5 for FY 2016 (outcome-focused)

74

Quality Reporting

LTCH Adding 5 For FY ‘18 adding 1

Cancer hospitals For FY ’15 – one new measure For FY ’16 – 13 new measures

Psych hospitals For FY ’16 – three new measures

75

LTCHs

Update of 1.7% (-0.3% for non-reports) MB of 2.5% Less PPACA offsets of (0.8%)

Standardized amount adjustment 0.98734 Second-year of three-year adjustment period

Results in Federal rate of $40,607.31 Current is $40,397.96

Labor-related share is 62.537 Current is 63.096

Fixed-loss amount is $13,314 Current is $15,408

Update quality reporting 25% rule reinstated

76

Skilled Nursing

77

Skilled Nursing

Published in Aug 6th Federal Register Tables on CMS website Copy at:


Tables at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html

Effective 10/1/13

78

SNF PPS Update

Market Basket Increase = 2.3 percent Less MB correction adjustment – -0.5 percent

Comment • Good vs Bad

Update = 1.8 percent Further reduced by MFP = -0.5 percent Net Update is 1.3 percent Labor Share increases to 69.545 AWI Budget neutrality factor 1.0006 CMS estimates payments to increase $470 million

79

SNF PPS Update

Reporting of Distinct Therapy Days CMS adding an item to the MDS item set (Item O 0420)

effective October 1, 2013, which will capture the number of distinct calendar days that the resident received therapy services during the assessment look-back period across all rehabilitation disciplines.

ICD-10-CM Item Effective with services furnished on or after October 1,

2014, the AIDS add-on will apply to beneficiaries with an ICD-10-CM diagnosis code of B20

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Inpatient Rehabilitation Facilities

81


Published in 8/6/13 Federal Register Tables on CMS website Copy at:.


Tables at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/

Effective 10/1/13

http://www.ofr.gov/OFRUpload/OFRData/2013-18956_PI.pdf

82


Market Basket Increase – 2.6 percent Further reduced by MPF = 0.5 percent Further reduced by ACA = 0.3 percent Update is 1.8 percent Change in Outlier payments to add 0.3 percent Labor Share increases to 69.494 AWI Budget neutrality factor 1.0010 CMS estimates payments to increase $170 million

83


84


Facility-level adjustment updates Rural adjustment of 14.9 percent Low Income Percentage adjustment factor of 0.3177 Teaching status adjustment factor of 1.0163 Will assign a value of “1” if the facility is a

freestanding IRF hospital and will assign a value of “0” if the facility is an IRF unit of an acute care hospital (or CAH) in regression analysis

85


“60-percent rule” presumptive methodology code list updates To qualify for IRF PPS - 60 percent of patients

require intensive inpatient rehabilitation services for one or more of 13 conditions specified in regulation

CMS removing codes from presumptive compliance List of ICD-9-CM codes to be removed from “ICD-9-

CM Codes That Meet Presumptive Compliance Criteria” in the rule’s Table 9

Will be effective for FY 2015

86


High-Cost Outliers Under the IRF PPS Paying only 2.5 of 3.0 for outliers Threshold amount decreases to $9,272 from $10,466

87


Quality Quality Measures for FY 2014

• CMS will continue to use the NQF-endorsed National Healthcare Safety Network (NHSN) Catheter-Associated Urinary Tract Infection (CAUTI) outcome measure

• CMS will adopt the NQF-endorsed version of the “Percent of Residents or Patients with Pressure Ulcers that are New or Worsened (Short Stay)” measure, and to stop using the non-risk adjusted version of this measure

88


Quality Measures Affecting the FY 2016 IRF PPS Annual Increase Factor Continued Measure Affecting FY 2015 Increase Factors:

• NQF #0138: National Health Safety Network (NHSN) Catheter-associated Urinary Tract

• Infection (CAUTI) Outcome Measure Continued Measure Affecting FY 2015 and FY 2016

Application of NQF #0678: Percent of Residents with Pressure Ulcers That are New or Worsened (Short-Stay)*

89


Quality Measures Affecting the FY 2016 IRF PPS Annual Increase Factor New IRF QRP Measure Affecting FY 2016

• NQF #0431: Influenza Vaccination Coverage among Healthcare Personnel

90


Quality Data Reporting Affecting FY 2017 and Subsequent Years (1) All-Cause Unplanned Readmission Measure for 30

Days Post Discharge from Inpatient Rehabilitation Facilities

(2) Percent of Residents or Patients Who Were Assessed and Appropriately Given the Seasonal Influenza Vaccine (Short-Stay) (NQF #0680)

Percent of Residents or Patients with Pressure Ulcers That Are New or Worsened (short-stay) (NQF #0678) with adoption of the NQF-endorsed version of this measure

91


IRF-Patient Assessment Instrument Revising to include data to accommodate risk

adjustment for pressure ulcer measure Will add new patient influenza vaccination data

elements

92

Inpatient Psychiatric Facilities

93


Published in Aug 1st Federal Register Copy at:


Tables are part of the rule Effective 10/1/13

94


Market Basket increase is 2.6 percent Reduced by a 0.5 percent multifactor productivity (MFP)

adjustment Reduced by a 0.1 percentage point reduction by the

ACA Net increase is 2.0 percent CMS estimates increase of $115 million Rule is a Notice – no proposed rulemaking – second

year in a row

95


Update MB of 2.0 percent AWI budget neutrality factor = 1.0010 FY 2013 Federal per diem base rate of $698.51 Yields Federal Per Diem Base Rate = $713.19

• Labor Share (0.69494) = $495.62• Non-Labor Share (0.30506) = $217.57

96


Electroconvulsive Therapy Rate (ECT) rate will be $307.04 Current amount is $300.72

Patient-Level Adjustments: Adjustment for MS-DRG Assignment that group to one

of 17 MS-IPF-DRGs Payment for Comorbid Conditions Patient Age Adjustments Variable Per Diem Adjustments

97


Facility-Level Adjustments For the wage index – 1.0010 IPFs located in rural areas – 17 percent Teaching IPFs = 0.5150 Cost of living adjustments for IPFs located in Alaska and

Hawaii IPFs with a qualifying emergency department (ED)

98


Outlier Payments FY 2014 $10,245 Current $11,600 Failed to pay the 2.0 percent outlier pool

99

Hospice

100

Hospice

Published in Aug 7th Federal Register Copy at:


Tables at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/Hospice/index.html

Effective 10/1/13

101

Hospice

Market Basket = 2.5 percent Reduced by MPF = 0.5 Percent Reduced by ACA = 0.3 percent Net increase 1.7 percent Labor portions

Routine Home Care 68.71 percent Continuous Home Care 68.71 General Inpatient Care 64.01 Respite Care 54.13

102

Hospice

103

Hospice

Fifth year of 7 year BNAF AWI Reduction Reduces 15 percent for a total of 70 percent

Coding Clarifying that non-specific diagnosis codes are

unacceptable Need to use principal diagnoses codes CMS will return claims beginning FY 2015

104

Hospice

Quality Reporting For FY 2014 – 2 measures

• NQF 0209/Pain Management• Structural measure

Eliminating for FY 2016 For FY 2016

• Adopting Hospice Item Set (HIS)

105

CY 2014 Proposed PPS

OPPS & ASC MPFS ESRD Home Health

106

CY 2014 OPPS & ASC Proposed

107

CY 2014 Proposed OPPS & ASC PPS

Published in July 19th Federal Register Copy at:


OPPS Tables at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/index.html

ASC Tables at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ASCPayment/index.html

Effective 1/1/2014 Correction notice in September 6th Federal Register

108

CY 2014 Proposed OPPS

Updates Disregard proposed updates Will follow IPPS increase of 1.7 percent

Conversion factor at $72.728 May be lower since IPPS increase is lower than

proposed OPPS Would maintain rural SCH and EACH 7.1 percent rural

adjustment Would maintain (11) cancer hospital adjustment

109


Labor Share would continue at 60 percent Part B drugs would be payable at ASP+6 percent, unless

packaged APC weights and rates in Addendum A & B Would expand CCR departments from 15 to 19 Outliers would be 1.75 times the APC payment amount and

exceeds the APC payment rate plus a $2,775 fixed-dollar threshold Corrected to $2,900

Outliers for CMHC would be 3.40 times the payment rate for APC 0173, calculated as 50 percent of the amount by which the cost exceeds 3.40 times the APC 0173 payment rate

110


Partial Hospitalization Program

111


Quality (OQR) Proposing five new measures affecting payment in CY

2016, with data collection beginning in CY 2014:• Influenza Vaccination Coverage among Healthcare Personnel• Complications within 30 Days Following Cataract Surgery Requiring

Additional Surgical Procedures (NQF #0564). • Endoscopy/Poly Surveillance: Appropriate follow-up interval for normal

colonoscopy in average-risk patients (NQF #0658).• Endoscopy/Poly Surveillance: Colonoscopy Interval for Patients with a

History of Adenomatous Polyps -- Avoidance of Inappropriate Use (NQF #0659).

• Cataracts -- Improvement in Patient’s Visual Function within 90 Days

Following Cataract Surgery (NQF #1536).

112


Quality (OQR) Proposing to delete 2 measures affecting payment in CY

2016• Transition Record with Specified Elements Received by

Discharged ED Patients (OP-19), because this measure cannot be implemented with the degree of specificity that would be needed to fully address safety concerns related to confidentiality without being overly burdensome.

• Cardiac Rehabilitation Measure: Patient Referral from an Outpatient Setting (OP-24)

113


Packaging Proposing to package 7 new categories

• (1) Drugs, biologicals, and radiopharmaceuticals that function as supplies when used in a diagnostic test or procedure;

• (2) Drugs and biologicals that function as supplies or devices when used in a surgical procedure;

• (3) Certain clinical diagnostic laboratory tests;• (4) Procedures described by add-on codes;• (5) Ancillary services, such as a chest x-ray, that are assigned status

indicator “X”;• (6) Diagnostic tests on the bypass list, and• (7) Device removal procedures.

114


Single Procedure APC Criteria–Based Costs Device Dependent APCs

• Proposing to define 29 device-dependent APCs associated with 136 HCPCS codes as single complete services and to assign them to comprehensive APCs that would provide all-inclusive payments for those services

Blood and Blood Products• Would continue current policy using blood and blood

product CCR methodology

115


Composite APC Criteria-Based Costs Proposing to continue composite policies for extended

assessment and management services, LDR prostate brachytherapy, cardiac electrophysiologic evaluation and ablation services, mental health services, and multiple imaging service

Proposing to continue to pay for all multiple imaging procedures within an imaging family performed on the same date of service using the multiple imaging composite APC payment methodology

116


Contains numerous additions and deletions of CPT and HCPCS codes

Contains adjustments to OPPS payment for full or partial credit devices

Identifies 15 drug and biologicals that will lose pass through status December 31, 2013

Identifies 18 drugs and biologicals that will continue pass through status

117


CMS is proposing to increase packaging items to $90 Rule’s table 25 contains list

118


Proposing to modify outpatient and clinic visits as follows:

119

CY 2014 Proposed ASC

Update For CY 2014, the CPI-U update is projected to be 1.4

percent The MFP adjustment is projected to be 0.5 percent Resulting in an MFP-adjusted CPI-U update of 0.9

percent for CY 2014

120


Update CMS is proposing to adjust the CY 2013 ASC conversion

factor ($42.917) by the wage adjustment for budget neutrality of 1.0004 in addition to the MFP-adjusted update factor of 0.9 percent results in a proposed CY 2014 ASC conversion factor of $43.321

Addenda AA and BB (which are available via the Internet on the CMS web site) display the proposed updated ASC payment rates for CY 2014 for covered surgical procedures and covered ancillary services, respectively

121


Quality CMS is proposing to adopt four measures for the ASCQR

Program • Complications within 30 Days following Cataract Surgery

Requiring Additional Surgical Procedures;• Endoscopy/Poly Surveillance: Appropriate follow-up interval for

normal colonoscopy in average risk patients (NQF #0658); • Endoscopy/Poly Surveillance: Colonoscopy Interval for Patients

with a History of Adenomatous Polyps – Avoidance of Inappropriate Use (NQF #0659); and

• Cataracts: Improvement in Patient’s Visual Function within 90 Days Following Cataract Surgery (NQF #1536)

122

CY 2014 Proposed MPFS

123




The PFS Addenda along with other supporting documents and tables referenced in the proposed rule at website at http://www.cms.gov/PhysicianFeeSched/

Effective 1/1/2014

124


Does NOT reflect SGR reduction under current law of -24.4 percent

Proposing new phased in over CY 2014 and CY 2015 The statutory work GPCI “floor” of 1.0 is scheduled to

expire under current law on December 31, 2013 The proposed GPCIs reflect the elimination of the work

“floor” and as a result 51 localities will have a work GPCI below 1.0

125


CMS is proposing to change the practice cost indicies Work from 48.266 percent to 50.866 percent Practice Expense from 47.439 percent to 44.839

percent The cost share weight for the MP GPCI (4.295 percent)

remains unchanged

126


Misvalued codes – CMS is proposing to adjust payment rates for more than 200 codes where Medicare pays more for services furnished in an office than in an outpatient hospital department or ASC

Application of Therapy Caps to Critical Access Hospitals – CMS proposes to apply the therapy cap limitations and related policies to outpatient therapy services furnished in a CAH beginning on January 1, 2014 to conform Medicare’s regulations to current law

127


Telehealth – Proposing to add CPT codes 99495 and 99496 to the list of telehealth services for CY 2014 on a category 1 basis

Complex Chronic Care Management Services – Proposing to establish a separate payment under the PFS for complex chronic care management services furnished to patients with multiple complex chronic conditions that are expected to last at least 12 months or until the death of the patient, and that place the patient at significant risk of death, acute exacerbation/decompensation, or functional decline

128


Proposed rule contains extensive discussion and measures for the Physician Quality Reporting System (PQRS)

129

CY 2014 Proposed ESRD

130




Tables at: http://www.cms.gov/ESRDPayment/PAY/list.asp Payments expected to decrease $970 million Effective 1/1/2014

131


Update The CY 2014 changes is projected to be a 9.4 percent

decrease in payments Current rate = $240.36 Market Basket would be 2.9 percent Reduced by productivity factor of 0.4 Net = 2.5 percent AWI budget neutrality factor = 1.000411 Results in a proposed amount of $246.47

132


Update ATRA requires CMS to reduce payments for changes

in drug utilization Reduction would be $29.52 Net = $246.47 - $29.52 = $216.95 Wage Index values on line Labor-related share is 41.737 percent

133


Outliers CMS is proposing to update the fixed dollar loss amounts

that are added to the predicted Medicare Allowable Payment (MAP) amounts per treatment to determine the outlier thresholds for CY 2014 from $110.22 to $94.26 for adult patients and from $47.32 to $54.23 for pediatric patients compared with CY 2013 amounts

Proposal provides crosswalks from ICD-9-CM to ICD-10-CM that will become effective 10/1/2014

134


Quality CMS is proposing to continue to use nine of the ten

measures for the PY 2016 ESRD QIP modifying three of the measures as follows:• ICH CAHPS (reporting measure): Expand• Mineral Metabolism (reporting measure): Revise• Anemia Management (reporting measure): Revise

135

CY 2014 Proposed Home Health

136


Published in July 3rd Federal Register Copy at:


Tables at: http://www.cms.gov/Medicare/Medicare-Feefor- Service-Payment/HomeHealthPPS/Home-Health-

Prospective-Payment-System-Regulations-and-Notices.html. Effective 1/1/2014

137


Update Market Basket = 2.4 percent There are no ACA offsets CMS proposes to reduce the average case-mix weight

for 2012 from 1.3517 to 1.0000• Would reduce rates by 3.5 percent each year – 2014,

2015, 2016 and 2017 Rural add-on continues

138


Update – Proposed 60 day national episode payment amount

139


Update – Proposed Per Visit Payment Amounts

140


Outliers No changes being proposed

Quality For 2014 – OASIS submission satisfies compliance For 2015 – Proposing 2 claims based measures

• (1) Rehospitalization during the first 30 days of HH; and • (2) Emergency Department Use without Hospital

Readmission during the first 30 days of HH

141

CY 2015 Proposed FQHC PPS

142


Published in September 23rd Federal Register Effective 10/1/2014

Payments must equal 100 percent of the estimated amount of reasonable costs without the application of the current system’s UPLs or productivity

Would increase payments to FQHCs by about 28 percent

143


Would remove the exception to the single encounter payment per day

The adjusted base payment that reflects the MEI historical updates and forecasted updates to the MEI would be $155.90

Would move update to CY basis in 2016 Tied to MPFS – use GPCIs instead of AWIs

144


The adjusted base payment that reflects the MEI historical updates and forecasted updates to the MEI would be $155.90

145

Questions

Documents

1 The FY 2014 Medicare Annual Update Larry Goldberg Larry Goldberg Consulting Larry A Oday Esq, PLLC October 16, 2013