Washington Report – January 2013
Bill Finerfrock, Pam Jackson, Zhaneta Mansaku, Danny Randell
Fiscal Cliff avoided, now comes the Fiscal Cliff
How much is thatDebt Ceiling in the Window?
CMS announces Bundled Payment Initiative
CMS announces new ACO contracts
CMS Announces Enforcement Discretion for Eligibility and Claim Status Operating Rules
Right to Disclose
DeParle Announces Departure
IPAB weakened?
Support for Prohibiting SocialSecurity Numbers on Medicare ID Cards Grows
MedPAC meets, reviews Physician Payment Adequacy
HHS Issues New HIPAA Privacy Rules
Transmittals
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Fiscal Cliff avoided, now comes the Fiscal Cliff
In the early hours of the new year, the 112thCongress enacted the legislation necessary to avoid the tax and spending fiscal cliff that was about to descend upon the American people. The combination of massive tax increases and dramatic spending reductions all scheduled to take effect within a 48 hour time period led many economists to predict an economic collapse if Congress did not prevent these events from happening.
In dramatic “perils of Pauline” fashion, the Congress and the President negotiated an agreement to avoid the fiscal cliff. But in keeping with the Saturday serial movie tradition, the compromise the Congress and the President agreed toonly solved a part of the fiscal cliff problem. The compromise merely postponed most of the crucial spending decisions for a few months resulting in another “fiscal cliff” deadline in March.
On March 1, across-the-board reductions in spending for virtually all federal programs will take place unless Congress takes steps to intervene and prevent those cuts from occurring. For Medicare, sequestration means a 2% reduction in total Medicare spending, which, at press time, was expected to be passed along to ALL providers: hospitals, physicians, nursing homes, clinics, home health, DME, etc. in the form of reduced Medicare payments.
Medicaid, Social Security and certain Veterans programs are exempt from sequestration but all other entitlement programs, domestic discretionary spending and defense spending will see sequester related budget reductions.
While it is possible that Congress will enact legislation that would rescind the sequester related budget cuts and restore some or all of the funding, that is considered highly unlikely at this time. Because the budgetary “pain” is being felt by virtually all federal programs, rescinding the cuts for one set of programs at the expense of others is not an attractive option for most Members of Congress.
And, because the cuts are “automatic” (meaning the current Congress won’t have to vote to approve the cuts) many Members feel they can avoid political blame for any ill effects the cuts may bring because technically, they didn’t vote for the cuts.
HBMA will continue to monitor the budget situation and report any changes to the membership as quickly as possible.
Given that the sequester related cuts are going to happen, billing companies should advise their clients to prepare for cuts in Medicare payments of as much as 2% beginning in early March.
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How much is that Debt Ceiling in the Window?
In addition to the tax and spending issues confronting the new Congress, the Treasury Department was projecting that by the middle of February, the U.S. would once again reach the so-called “debt limit.” By law, the amount of money the U.S. can borrow at any one point in time is limited by Congress. Raising the debt limit allows the Treasury Department to borrow more money in order to meet the financial obligations of the federal government.
Failure to raise the debt limit could technically put the U.S. government into default. It is not exactly clear what would happen if Congress failed to increase the debt limit as it has never happened before. Economists appear split on this. Some economists predict a possible economic meltdown but then say, “on the other hand” there might be no adverse consequences (where’s a one-handed economist when you need one!).
Fortunately, Congress has taken another temporary step to prevent the U.S. from reaching the debt limit. At press time, both the House and Senate have passed a bill to extend the debt limit until early August. The bill goes to the President for his signature which he is expected to sign.
There was, however, an interesting twist in the legislation that went to the President.
House Republicans included a provision in the bill that stipulates that both the House and Senate MUST pass a Budget Resolution by April 15th or the pay for members of that chamber will be withhold. This provision is intended to enforce an existing law – the Budget Control Act of 1974 – which mandates that each house pass a budget for the federal government by April 15th. Because there is not enforcement mechanism for this requirement, the Senate has failed to adopt a budget for the federal government since 2009.
Because the Constitution prohibits the Executive Branch from withholding the pay of Members of Congress, the legislation provides for a temporary suspension of Members pay. The money will either be released by the Treasury when that chamber passes a budget OR the end of the Congress, whichever comes first.
In a related development, House and Senate Leaders have both stated that they intend to honor the April 15th deadline and adopt a budget resolution. It should be noted that the legislation does not require the House and Senate to agree on the same budget, but it at least forces the chambers to debate and adopt A budget. Baby steps, sometimes progress is measured in baby steps…
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CMS announces Bundled Payment Initiative
On January 31, 2013, the Centers for Medicare & Medicaid Services (CMS) announced the health care organizations selected to participate in the “Bundled Payments for Care Improvement” (BPCI) initiative. BPCI is one of the innovative payment models Congress authorized CMS to develop as part of the Patient Protection and Affordable Care Act (PPACA). Under BPCI, participating organizations will enter into payment arrangements that link payments to “episodes of care” rather than fee-for-service. Some have described the bundled payments as Super DRGs. The academicians who developed this initiative believe this payment model will lead to higher quality, more coordinated care.
The existing fee-for-service system has long been criticized for making separate payments to providers for each of the services furnished to beneficiaries during a single “episode of care.” Critics argued that this type of approach rewarded providers for the quantity of care provided and often resulted in fragmented care and limited or non-existent coordination across health care settings.
Proponents of “bundled payments” argue that they better align incentives for providers – hospitals, post-acute care providers, physicians, and other practitioners–to work closely together across all specialties and settings.
BPCI is actually four models that look at different ways to bundle payments.
The common factor in each model is that payments for multiple services are bundled together. However, what services are bundled, how long duration the bundled payment covers and whether the payment is prospective or retrospective varies from model to model.
Model 1: Retrospective Acute CareHospital Stay Only
Under Model 1, the episode of care is defined as the inpatient stay in the acute care hospital. Medicare will pay the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System used in the original Medicare program. Medicare will continue to pay physicians separately for their services under the Medicare Physician Fee Schedule. Under certain circumstances, hospitals and physicians will be permitted to share gains arising from the providers’ care redesign efforts. Participation will begin as early as April, 2013 and no later than January, 2014 and will include most Medicare fee-for-service discharges for the participating hospitals.
Model 2: Retrospective Acute CareHospital Stay plus Post-Acute Care
In Model 2, the episode of care will include the inpatient stay in the acute care hospital and all related services during the episode. The episode will end either 30, 60, or 90 days after hospital discharge. Participants can select up to 48 different clinical condition episodes.
Model 3: Retrospective Post-Acute Care Only
For Model 3, the episode of care will be triggered by an acute care hospital stay and will begin at initiation of post-acute care services with a participating skilled nursing facility, inpatient rehabilitation facility, long-term care hospital or home health agency. The post-acute care services included in the episode must begin within 30 days of discharge from the inpatient stay and will end either a minimum of 30, 60, or 90 days after the initiation of the episode. Participants can select up to 48 different clinical condition episodes.
Model 4: Acute CareHospital Stay Only
Under Model 4, CMS will make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians, and other practitioners. Physicians and other practitioners will submit “no-pay” claims to Medicare and will be paid by the hospital out of the bundled payment. Related readmissions for 30 days after hospital discharge will be included in the bundled payment amount. Participants can select up to 48 different clinical condition episodes.
In both Models 2 and 3, the bundle will include physicians’ services; care by post-acute providers; related readmissions, and other related Medicare Part B services included in the episode definition such as clinical laboratory services; durable medical equipment, prosthetics, orthotics and supplies; and Part B drugs.
Payments will be made at the usual fee-for-service payment rates, after which the aggregate Medicare payment for the episode will be reconciled against the target price. Any reduction in expenditures beyond the discount reflected in the target price will be paid to the participant and may be shared among their provider partners. Any expenditures that are above the target price will be repaid to Medicare by the participant.
For more information andon this project, go toBundledPayments for Care Improvement
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CMS announcesnew ACO contracts
The Centers for Medicare and Medicaid announced 106 new Accountable Care Organizations (ACO) in early January. This brings the total number of health care organizations participating in the ACO initiative to approximately 250. In terms of patients, nearly 4 Million Medicare beneficiaries are expected to receive care in 2013 from a provider affiliated with a Medicare approved ACO.
ACOs are organized delivery systems that offer inpatient and outpatient services under a coordinated care agreement. ACOs assume a certain amount of financial risk and agree to split any savings achieved through this care delivery model with the Medicare program.
Go to ACOs, for a list of the newly minted Medicare approved Accountable Care Organizations.
Accountable care seeks to more closely tie payment to performance, although many critics of the ACO initiative note that this goal seems eerily like the HMO goals of the early ‘90s.
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CMS Announces Enforcement Discretion for Eligibility and Claim Status Operating Rules
The Office of E-Health Standards and Services (OESS) announced that to “reduce the potential of significant disruption to the health care industry,” CMSwill not initiate enforcement action with respect to any HIPAA covered entity that is not in compliance with the health care claim status and health plan eligibility operating rules,until March 31, 2013.
Although OESS is establishing a 90 day grace period for enforcement of the new operating rules, the compliance date for using the operating rules remains January 1, 2013.
In making the announcement, CMS said that “Industry feedback suggests that HIPAA covered entities have not reached a threshold whereby a majority of covered entities would be able to be in compliance with the operating rules by January 1, 2013.”
During the grace period, OESS will accept and investigate complaints associated with compliance with the operating rules. If requested by OESS, covered entities that are the subject of complaints must produce evidence of either compliance or demonstrate they are making a good faith effort to become compliant with the operating rules during the 90-day period.
OESS is the federal agency responsible for enforcing compliance with the HIPAA mandated transaction and code set standards.
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Right to Disclose
A long established dictum in law and medicine has been the near absolute obligation of health care providers to protect confidential information about a patient from public disclosure, including disclosure of that information to law enforcement authorities.
In the wake of several mass shootings by individuals with suspected mental health issues who were under the care of a provider, HHS has issued a letter to providers clarifying their ability to pre-emptively disclose patient information in order to avert threats to the public’s health or safety. In the letter, Leon Rodriguez, the Director of the HHSOffice of Civil Rights, highlights the ability of health professionals to disclose information to law enforcement or family members of a patient, when they believe the patient “presents a threat of serious danger to himself or others.”
According to theDirector’s Letter, HIPAA’s Privacy Rule “allows the provider, consistent with applicable law and standards of ethical conduct, to alert those persons whom the provider believes are reasonably able to prevent or lessen the threat. Further, the provider is presumed to have had a good faith belief when his or her belief is based upon the provider’s actual knowledge (i.e., based on the provider’s own interaction with the patient) or in reliance on a credible representation by a person with apparent knowledge or authority.”
The letter goes on to state, “Under these provisions, a health care provider may disclose patient information, including information from mental health records, if necessary, to law enforcement, family members of the patient, or any other persons who may reasonably be able to prevent or lessen the risk of harm.”
You may wish to share this letter with your physician clients in the event they did not receive or see the Civil Rights Director’s communication.
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DeParle Announces Departure
In mid-January, long-time Obama Administration Health Policy Advisor Nancy Ann DeParle announced her plans to leave the Administration to take a position with the think tank, Brookings Institution. DeParle joined the Obama Administration as Director of the Office of Health Reform and after enactment of the Patient Protection and Affordable Care Act, was promoted to Deputy Chief of Staff.
Prior to joining the President Obama’s inner circle of advisors, DeParle served as Administrator of the Healthcare Financing Administration (HCFA) during Bill Clinton’s second term.
Her departure from the White House staff took many by surprise as the Obama Administration is entering the final stages of implementation of the Affordable Care Act and it was expected that DeParle, like HHS Secretary Sebelius, would remain on the President’s staff until the law was implemented.
DeParle’s announcement came just days after it was announced that White House Chief of Staff (COS) Jacob Lew was the President’s choice to be the next Treasury Secretary, replacing Tim Geitner. There was some speculation that in the days leading up to the Lew announcement, DeParle expressed interest in becoming Chief of Staff (COS) once Lew was confirmed as Treasury Secretary. When DeParle was politely informed that it was unlikely she would get the COS position she decided to accept a long-standing offer from Brooking to become a “visiting scholar.”
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IPAB weakened?
It is customary at the beginning of each Congress for the House and Senate to adopt procedural rules that will govern how legislation is considered during that Congress. The 113th Congress which was sworn in on January 3rd is no different.
But the newly adopted House rules include a new provision that has many in Washington scratching their heads.
It is generally acknowledged by the courts that each house of Congress can set the rules under which they operate. But generally, these are procedural in nature and rarely, if ever, seek to change or modify duly enacted laws.
As has been widely reported, the Patient Protection and Affordable Care Act authorizes the creation of an entity called the Independent Payment Advisory Board. The purpose of this Board is to make “recommendations” to Congress on policy changes aimed at controlling Medicare and Medicaid spending.