Washington Report – December, 2012
Bill Finerfrock, Pam Jackson, Zhaneta Mansaku, Kristen Metzger and Jessica Harrington
Lame Ducks & Fiscal Cliffs – The Last Shall Be First
Health Care Reform – It’s not just for individuals and small businesses
GAO looks at Medicare Contractors
HHS Approves Exchanges in 12 States
HBMA Asked to Serve on CMS Workgroup
Deloitte: Healthcare Costs Higher than Government Estimates
Many will Apply but Few Will be Chosen
MedPAC calls for modest 1% hospital pay bump
Five Biggest Issues Facing Physicians in 2013?
CMS Transmittals
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Lame Ducks & Fiscal Cliffs – The Last Shall Be First
The December Washington Report covers information and stories that occurred during the month of December. And, while most of the post-election lame duck session of Congress and the “Fiscal Cliff” debate occurred during December, technically it wasn’t until January that the final steps were taken to address the fiscal cliff and close out the 112th Congress.
So, despite the fact that the calendar may have changed, we’ve made an editorial decision to cover the Congressional actions of early January in the December Washington Report. Much of this information appeared in special Regulatory Alerts distributed by HBMA, but we felt the information was important enough to warrant repeating in the Washington Report.
On Wednesday, January 2, 2013, President Obama signed into law H.R. 8, the American Taxpayer Relief Act of 2012.
This law prevents the 26.5% SGR-related payment cut that was scheduled to take effect on January 1, 2013. In lieu of a cut, the law provides for a zero percent update for such services provided through December 31, 2013.
In addition, the new law extends several Medicare-related provisions of the Middle Class Tax Relief and the Job Creation Act of 2012.
Specifically, the following Medicare fee-for-service policies have been extended:
Medicare Physician Payment Update – As indicated, the new law provides for a zero percent update for claims with dates of service on or after January 1, 2013, through December 31, 2013.The 2013 conversion factor is $34.0230 per RVU.
Because of the late date for enactment of this change, CMS has instructed its contractors that they MAY hold MPFS claims with January 2013 dates of service for up to 10 business days (i.e., through January 15, 2013). CMS expects these claims to be released into processing no later than January 16, 2013.
You should see specific guidance from your MAC posted on their websites no later than January 23, 2013.
The 2013 Annual Participation Enrollment Program allows providers an opportunity to change their participation status. CMS is extending the 2013 annual participation enrollment period through February 15, 2013. This will allow additional time for providers to determine whether they wish to continue to participate in the Medicare program.
Other Changes of Note:
Extension of Medicare Physician Work Geographic Adjustment Floor - The 2012 1.0 floor on the physician work geographic practice cost index is extended through December 31, 2013. As with the physician payment update, this extension will be reflected in the revised 2013 MPFS.
Extension Related to Payments for Medicare Outpatient Therapy Services – H.R. 8 extends the exceptions process for outpatient therapy caps through December 31, 2013. Providers of outpatient therapy services are required to submit the KX modifier on their therapy claims, when an exception to the cap is requested for medically necessary services furnished through December 31, 2013.
In addition, the new law extends the cap to therapy services furnished in a hospital outpatient department (OPD), and counts outpatient therapy services furnished in a Critical Access Hospital towards the cap and threshold. It you need additional information about the Exceptions Process, go to http://www.cms.gov/manuals/downloads/clm104c05.pdf.
Extension of Ambulance Add-On Payments – the new law extends three expiring ambulance payment provisions:
(1) The 3 % increase in the ambulance fee schedule amounts for covered ground ambulance transports that originate in rural areas and the 2 percent increase for covered ground ambulance transports that originate in urban areas is extended through December 31, 2013;
(2) The provision relating to air ambulance services that continues to treat as rural any area that was designated as rural on December 31, 2006, for purposes of payment under the ambulance fee schedule, is extended through June 30, 2013; and,
(3) The provision relating to payment for ground ambulance services that increases the base rate for transports originating in an area that is within the lowest 25th percentile of all rural areas arrayed by population density (known as the “super rural” bonus) is extended through December 31, 2013.
CMS reports that they are currently revising the 2013 Medicare Ambulance Fee Schedule to reflect the new law’s requirements. In order to allow sufficient time to develop, test, and implement the revised MAFS, Medicare claims administration contractors have been informed that they may hold ambulance claims with January 2013 dates of service for up to 10 business days (i.e., through January 15, 2013).
CMS expects these claims to be released into processing no later than January 16, 2013.
Because the SGR fix enacted by Congress results in higher than budgeted Medicare expenditures, it was necessary for Congress to make cuts elsewhere in the Medicare program to offset the cost of the one-year SGR fix. The following payment reductions were approved as part of H.R. 8:
Documentation and Coding (DCI) adjustment. This provision will phase in the recoupment of past overpayments to hospitals made as a result of the transition to Medicare Severity Diagnosis Related Groups (MS-DRGs). Savings: $10.5 billion.
Rebase End Stage Renal Disease (ESRD) payments. This provision incorporates recommendations from the General Accountability Office (GAO) by re-pricing the bundled payment to take into account changes in behavior and utilization of drugs for dialysis.
Therapy Multiple Procedure Payment reduction. This provision further reduces payment for
subsequent therapies when therapies are provided on the same day.
Payment for Certain Radiology Services. This provision would equalize payments for stereotactic radiosurgery services provided under Medicare hospital outpatient payment system.
Adjustment of Equipment Utilization Rate for Advance Imagining Services. This policy would increase the utilization factor used in the setting of payment for imaging services in Medicare from 75% to 90%.
Adjust Payment Adjustment for Non-Emergency Ambulance Transports For ESRD Beneficiaries. This provision reduces the payment rates for ambulance services by 10% for individuals with ESRD obtaining non-emergency basic life support services involving transport, based on a recent GAO report.
Increase statute of limitations for recovering overpayments. This provision increases the statute of limitations to recover overpayments from three to five years, based on recommendations from the Office of Inspector General at the Department of Health and Human Services.
Repeal of Class Program. H.R. 8 repeals the Community Living Assistance Services and Supports (CLASS) program established by the Affordable Care Act (ACA). The Obama Administration had previously suspended work on this initiative determining that establishment of a cost-effective long-term care program, as mandated by the ACA, was not possible at this time. This provision removes the statutory authority to establish the CLASS program.
Coding Intensity Adjustment. Under current law, Medicare Advantage plans receive risk-adjustment payments that are further adjusted to reflect differences in coding practices between Medicare fee-for- service and Medicare Advantage. This provision increases this coding intensity adjustment.
Consumer Operated and Oriented Plan (CO-OP). This provision will rescind all unobligated CO-OP funds under Section 1332(g) of the Affordable Care Act. This provision also creates a contingency fund of 10% of the current unobligated funds to be used to further assist currently approved co-ops that have already been created. The provision does not take away any obligated CO-OP funds.
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Health Care Reform – It’s not just for individuals and small businesses
Beginning January 1, 2014, any large employer who fails to meet the shared employer responsibility requirements of the Affordable Care Act (ACA) may be subject to a penalty payment if at least one full-time employee receives a “premium tax credit” for purchasing individual coverage at a Health Insurance Exchange. On December 28th, the IRS released proposed rules on how large employers will demonstrate compliance with the law. Individuals or companies wishing to comment on the proposed rules must submit their comments by March 18, 2013. Instructions for submitting comments are included in the proposed rule (link above).
To be subject to these Employer Shared Responsibility provisions, an employer must have at least 50 full-time employees or a combination of full-time and part-time employees that is equivalent to at least 50 full-time employees (for example, 100 half-time employees equals 50 full-time employees). Employer with at least 50 full-time employees (or equivalents) will not be subject to an Employer Shared Responsibility payment if the employer offers affordable health coverage that provides a minimum level of coverage to its full-time employees.
The IRS has prepared a Frequently Asked Questions section on their website where individuals and employers with questions about the ACA requirements can get answers.
In general, the new rules will require that large employers must:
(1) Offer full-time employees (and their dependents) the opportunity to enroll in a minimum essential coverage (MEC) health plan under an eligible employer-sponsored plan; or
(2) Offer its full-time employees (and their dependents) the opportunity to enroll in a MEC health plan under an eligible employer-sponsored plan.
Generally, a liability (payment penalty) will arise for an employer because the employer’s coverage is not “affordable” for the employee or the employer does not provide a health plan that meets the “minimum value” criteria.
In order for a plan to have “minimum value” the employer’s share of the total cost of benefits (i.e. the premium) provided under the plan must cover at least 60 percent of those costs. In order for a plan to be “affordable”, the employee's contribution for self-only coverage cannot exceed 9.5% of the employee's household income for the taxable year.
It should be noted that for purposes of determining whether an employer employs 50 or more people, the employer will only take into account work performed in the United States. Employees working abroad, whether U.S. citizens or not, will not be taken into account for purposes of determining whether an employer meets the 50 full-time employee (or equivalents) threshold.
Because health plans do not necessarily run on a calendar year basis, the IRS is proposing some latitude for employers that offer health coverage as of December 27, 2012 through a plan that operates on a fiscal year.
The IRS proposes that for any employees who are eligible to participate in the plan under its terms as of December 27, 2012 (whether or not they take the coverage), the employer will not be subject to a potential payment until the first day of the plan year starting in 2014. Second, if the plan was offered to at least one-third of the employer’s employees (full-time and part-time) at the most recent open season or the plan covered at least one quarter of the employer’s employees, then the employer also will not be subject to penalty payments until the first day of the plan year starting in 2014.
The IRS provides the following example:
If during the most recent open season preceding December 27, 2012, an employer offered coverage under a fiscal year plan with a plan year starting on July 1, 2013 to at least one-third of its employees (meeting the threshold for the additional relief), the employer could avoid liability for a payment if, by July 1, 2014, it expanded the plan to offer coverage satisfying the Employer Shared Responsibility provisions to the full-time employees who had not been offered coverage. For purposes of determining whether the plan covers at least one quarter of the employer’s employees, an employer may look at any day between October 31, 2012 and December 27, 2012.
Again, these proposed rules are open for public comment until March 18, 2013. If you have questions, comments or concerns, you are encouraged to submit those to the IRS during this comment period.
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GAO looks at Medicare Contractors
According to a recently released GAO report, the agency’s auditors found that most Medicare payments made to providers assigned to Jurisdiction 4 (Texas, New Mexico, Oklahoma and Colorado) for full vials of Herceptin were incorrect. Herceptin is a drug used to treat breast cancer that has spread to other parts of the body.
Specifically, GAO auditors determined that of the 1,701 selected line items, 79 percent were incorrect and included overpayments. The total value of the overpayments was more than $1.8 million. The providers had not identified or refunded these overpayments by the beginning of the GAO audit. However, according to CMS, “Prior to the conclusion of this audit, TrailBlazers processed all 1,349 claim lines requiring adjustment and recovered the $1,777,877 due the Medicare program.”
Providers attributed the incorrect payments to clerical errors, charge master errors, or inadvertently billing for drug waste because they did not identify the drug as a multiuse-vial drug.
GAO concluded that Trailblazers, the MAC at the time, made these incorrect payments because neither the Fiscal Intermediary Standard System nor the Common Working File had sufficient edits in place during the audit period to prevent or detect the overpayments.
It should be noted that shortly after the GAO completed their audit, CMS announced they were moving ahead with the A/B MAC consolidation of Jurisdiction 4 and 7 into a single MAC (Jurisdiction H) and that the work was being reassigned to Highmark (aka Novitas Solutions). It is not clear whether the GAO findings had any bearing on the CMS decision to award the Jurisdiction H contract to Highmark.
To review the full GAO report, go to: http://go.usa.gov/gmbd
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HHS Approves Exchanges in 12 States
A key component of the Patient Protection and Affordable Care Act was the establishment of state-based Affordable Insurance Exchanges, also known as Health Insurance Exchanges. Exchanges are market places where individuals and small employers (< 50 FTEs) will shop for health insurance. Under the federal law, states would have the ability to set up the Exchanges as state run entities or, if the state did not wish to establish an Exchange, the federal government would set one up and operate the Exchange in those states.