AHLA March Hospital IPPS Legislative and Regulatory Policy Update. John R. Hellow

Transcription

1 AHLA March 2013 Hospital IPPS Legislative and Regulatory Policy Update John R. Hellow Hooper, Lundy and Bookman, P.C. The statements and opinions contained herein represent only the views of John R. Hellow 1 2 1

2 Overview of Recent Developments 3 I. Budget Control Act of 2011(BCA) II. American Taxpayer Relief Act (ATRA) of 2012 III. Patient Protection & Accountable Care Act of ( ACA ), enacted March 23, 2010 IV. Health Care & Education Reconciliation Act of 2010 (HCERA) (ACA fix legislation) V. FY 2012 IPPS Final Rule VI. FY 2013 IPPS Final Rule VII. American Jobs and Closing Tax Loopholes Act of 2010, H.R VIII. Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010, Pub. L Components of FY 2014 IPPS Payment Changes A. Market Basket 1. Latest Market Basket Updates can be found on CMS Website at rketbasketdata.asp#topofpage 2. CMS rebases the market basket and labor share every four years; Last rebased for FY 2010; Next rebasing is FY FY 2013 Final Rule Used an Update of 2.6% 4 2

3 Market Basket cont d B. ACA Market Basket Adj. IPPS FYs Fiscal Year Market Basket - Adjustment % % % % % % % % 5 Similar if not identical market basket adjustments apply beginning in FY 2012 and thereafter for long term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals and outpatient hospital services. There is no cut to the overall SNF market basket. Changes Affecting Medicare Payments to Acute Care Hospitals, cont d 6 C. Productivity Adjustment 1. Applies Beginning in FY 2012, year moving average of changes in annual nonfarm productivity, as determined by the Secretary, 3. Negative adjustment of 1% for FY 2012 and has been decreasing to.7% in FY 2013, 4. Can result in a market basket increase of less than zero, 5. Payments in a current year may be less than the prior year, and 6. Applies to other provider types. 3

4 Changes Affecting Medicare Payments to Acute Care Hospitals, cont d 7 D. Documentation and Coding Adjustments 1. Section 7(b)(1)(A) of Pub. L a. Make an adjustment to the average standardized amounts in order to eliminate the full effect of the documentation and coding changes on future payments. b. Does not specify when CMS must apply the prospective adjustment, but merely requires CMS to make an appropriate adjustment. c. Full prospective adjustment of -3.9 percent remaining. 2. Section 7(b)(1)(B) of Pub. L a. Requires CMS to make an adjustment in FYs 2010, 2011, and/or 2012 b. Determined a total recoupment of -5.8 percentage points. c. FY 2011: Finalized an adjustment of -2.9 percentage points; half of the 5.8 percentage points. d. FY 2012: Still remaining an additional 2.9 percentage points for recoupment. Changes Affecting Medicare Payments to Acute Care Hospitals, cont d 3. ATRA Imposes an aggregate $11 billion recoupment of asserted coding overpayments in FYs a. Recoupment to take place over 4 years, FYs , b. Secretary has discretion on the timing and level of the recoupment over the period as long as the total is $11 billion, a. MedPAC has proposed equal reductions of between 2% and 2.4% as a decrease in the IPPS update for each year. b. MedPAC also has indicated hospitals need a 1% net increase in IPPS payments for FY 2014 and there is no way to achieve that with equal reductions. Adjustments would need to be back end loaded. 8 4

5 Example of Proposed Adjustments to IPPS Update for FY Based on CMS and CBO s February 2013 Baseline Est (CBO) Est (CMS Website; 2012 Q4 Forecast) Est (CBO) Est (CBO) Market Basket 2.3% 2.3% 3.2% 3.3% ACA Reductions Market Basket -0.3% -0.3% -0.2% -0.2% Productivity -.6% -0.4% -.5% -.6% Subtotal 1.4% 1.6% 2.5% 2.5% MS-DRG DCI Adjustments Prospective Reduction -0.8%? -0.8%? NA NA ATRA Reduction per MedPAC Midpoint Est. -2.2% -2.2% Sequester -2.0% -2.0% Net Update 1.4 to -3.6% 1.6 to -3.4% 2.5% 2.5% Disproportionate Share Hospital Payment Improvement? 10 F. Implementation of ACA 3133 Statute appears as new 42 U.S.C. 1395ww(r) Purpose - Reduce DSH payments and repurpose residual to reflect relative hospital cost of uncompensated care. Commencing October 1, 2013, traditional DSH paid at 25%, and remainder subject to Three Factors: Factor One 75% of estimated DSH payments set aside in pool, Factor Two Reduce pool by improvement in insured rates compared to 2010 Factor Three Distribute pool based on proportion of an individual hospital s cost of uncompensated care to all hospitals cost of uncompensated care 5

6 FACTOR ONE ESTIMATE DSH 11 The aggregate amount of DSH payments that would be made to all hospitals, minus The amount paid on account of subsection 1395ww(r)(1), 25% of empirically justified DSH payments per MedPAC s March 2007 Report to Congress at p. 77, equals An amount to be disbursed to DSH hospitals after adjustment in Factor Two and allocation in Factor Three. FACTOR TWO REDUCTION OF POOL TO ACCOUNT FOR GROWTH OF INSURED POPULATION For FFYs , the pool of funds is multiplied by 1 minus The percentage change in the uninsured under age 65, between 2013 (as determined by Secretary based on March 2010 estimates from OMB), and The current year uninsured rate (also from OMB?) Minus.1 percent for 2014 and.2 percent for

7 FACTOR TWO Cont d 2018 and After the pool of funds is multiplied by 1 minus The percentage change in the uninsured between 2013 (as determined by Secretary and certified by the actuary) and The current year uninsured rate (as determined above) Minus.2 percent for 2018 and thereafter. 13 FACTOR TWO Cont d 14 Issues With the Calculation FYs How tied is CMS to OMB s estimate for 2013? Does the statute require the use of OMB data for the current periods? CBO estimates that coverage expansion in 2014 and 2015 will lag prior estimates by 25%. FYs 2018 and thereafter Estimates now include all age groups including 65+ Do not rely on OMB data What data sources will CMS use to capture this information? Need to insure undocumented aliens are covered in the data. 7

8 FACTOR THREE DISTRIBUTING UNCOMPENSATED CARE FUNDS TO PROVIDERS 15 Distribution of the fund each year is made by establishing a quotient for each DSH hospital that equals An estimate of the amount of uncompensated care for a period selected by the Secretary for each hospital and The aggregate uncompensated care for all DSH hospitals for the period as above, and Secretary may use alternate data that is a better proxy for the cost of treating the uninsured. FACTOR THREE, Cont d 16 CMS January 8, 2013 National Call Solicit Provider Input on Factors Two and Three Strong Suggestion W/S S-10 data will be used First new W/S S-10s used in FY 2011 and have not been audited per 12/31/2012 HCRIS Data Many errors obvious in filed S-10 data that strongly suggests data is unreliable as a basis to determine relative share of uncompensated care costs Many hospitals did not report S-10 data at all, about 5% 14% had no total bad debt data, but 90% of that group reported Medicare bad debt data Some had a CCR of 1, many had CCRs above.6, a few had more gross charges on S-10 than on C. 8

9 FACTOR THREE, Cont d Unlikely S-10 data will be audited within 2 years of a year subject to the adjustment CMS is unlikely to allow appeals or audits to impact payment once it has occurred each change to a single hospital impacts all hospitals payments. Will CMS use lagging data, like wage index for this purpose, e.g., audited FFY 2011 W/S S-10 for FFY 2014 payments? Or will it rely on unaudited S-10 data? 17 FACTOR THREE, Cont d 18 Problems with W/S S-10 Definitional problems Uninsured vs. Charity Non means tested uninsured discounts likely not included in charity Charity must be determined during the cost reporting period Medicaid and other indigent program non-covered charges must be addressed in charity policy or excluded Non-Medicaid gov t indigent care program patients likely should be excluded, but unclear. Bad debt timing - written off or expected to be written off on balances owed by patients delivered during the cost reporting period. Accrual based account for bad debt should govern. 9

10 FACTOR THREE, Cont d Converting Charges to Costs Problem particularly acute with bad debt Hospitals may be grossing up charges to address copayment shortfalls should a hospital be allowed to claim a cost for a copayment that exceeds the actual copayment obligation? If the answer is yes, how do you standardize how that costs will be measured? 19 Here Come the NPRs! After a freeze on the issuance of NPRs for DSH hospitals since 2006, even after the Allina decision, CMS has instructed MACs to issue NPRs with Part C days in the Medicare Fraction. These new NPRs are accompanied by a reopening notice on DSH

11 Changes Affecting Medicare Payments to Acute Care Hospitals, cont d 21 G. Hospital Value-Based Purchasing ACA ACA Requirements a. Applies to discharges on and after 10/1/2012; b. Funded through base operating DRG reductions, 1 percent in 2013, 1.25 percent in 2014, 1.5 percent in 2015, 1.75 percent in 2016 and 2 percent thereafter; c. Incentive measures include ACI, HF, pneumonia, certain surgeries, patient experience of care (i.e., HCAHPS survey), healthcare acquired infections and spending per beneficiary; d. Incentives distributed by performance score and vary on score; e. Certain hospitals excluded cited for immediate jeopardy, or too few measures or cases; and f. New measure must be posted on Hospital Compare website 1 year prior to implementation. Value Based Purchasing, cont d April 29, 2011 Final and FY 2012 Final Rules a Final Rule set measures for 2013, discharges on and after 10/1/2012 and initial measure set for FY 2014 b Final Rule adds total spending per beneficiary efficiency measure to FY 2014 set with to begin measurement. 1) Equation used to measure efficiency has errors, but example is correct. 2) Spending per beneficiary will span 3 days prior to and 30 days after discharge c Final Rule adds FY 2015 program two additional outcome measures--an AHRQ Patient Safety Indicators composite measure and CLABSI: Central Line-Associated Blood Stream Infection measure. 11

12 Value Based Purchasing, cont d 3. Final Factors for FY 2013 a. Posted on CMS website in December 2012 (Table 16) Payment/AcuteInpatientPPS/FY-2013-IPPS-Final-Rule-Home-Page- Items/FY2013-Final-Rule-Tables.html b. CMS is reprocessing claims from Oct 1 since these claims were not originally processed with VBP adjustment factor c. Factors posted in December went until 9 decimals, should have displayed 10 decimals d. 10 decimal factors posted in March 2013 e. CMS is reprocessing claims up until March 2013 to ensure correct factor was applied by Medicare contractor 23 Changes Affecting Medicare Payments to Acute Care Hospitals, cont d 24 H. Payment Adjustment for HACS ACA Discharges on and after 10/1/2014 hospitals in top quartile of risk adjusted HAC measure receive only 99% of total PPS payments; 2. Public disclosure of HACs in such hospitals; 3. FY 2012 Rule: a. Adds 5 non-controversial ICD-9 codes to existing HACs, and b. Defers adding contrast induced acute kidney failure. 4. FY 2013 Rule: a. Eliminates 17 measures, including 16 claims based measure and 8 of original HAC measures for FY 2015 payment determinations b. Continuation into 2015 of suspension of data collection for 4 measures that were suspended commencing in 2014, c. 59 measures will be used for 2015, including hospital wide readmissions, d. Continued deferring contrast induced kidney failure. 12

13 Changes Affecting Medicare Payments to Acute Care Hospitals, cont d 25 I. Hospital Readmissions Reduction Program 1. ACA Provisions a. Fiscal years commencing and and after 10/1/2012; b. Conditions subject to measure are high value or high volume as selected by Secretary; c. Law compares risk adjusted actual and expected readmissions; d. Secretary can exclude planned readmissions and unrelated readmissions e. Adjustment factor is the greater of: (a) 1 minus the ratio of payments for excess aggregate readmissions for a condition to the aggregate payments for such condition (expected readmissions?) admissions, or (b) a floor adjustment of.99 for FY 2013,.98 for 2014, or.97 for FY 2015 and thereafter; f. Applies to base operating DRG. Hospital Readmissions Reduction Program, cont d 2. FY 2012 Final Rule a. Two part rulemaking this year focus is on conditions and readmissions for FY 2013, measures and methods to determine readmission rates and public reporting, FY 2013 rulemaking will focus on payment. b. Current Rulemaking 1) Conditions heart attack, heart failure and pneumonia 2) No additional modifications for unrelated readmissions or planned readmissions beyond what is in measure specifications CMS view is that this is statutory 26 13

14 Hospital Readmissions Reduction Program, cont d 27 3) Risk Adjustment Measures only include diagnosis, age and gender, CMS said no to including race and life circumstances 4) Minimum number of discharges per condition is 25 5) Performance Measurement Period Proposed 3 years July 1, 2008 to June 30, 2011 Industry wants shorter more current data and CMS is reviewing periods between 1 and 3 years. 3. FY 2013 Final Rule a. No distinction between readmissions related and unrelated to prior admissions b. Planned readmissions only from approved list Hospital Readmissions Reduction Program, cont d c. Definition of the base operating DRG payment amount 1) Excludes IME, DSH, outliers, low-volume adjustment, and additional payments made due to status as an SCH, but 2) Includes new technology payments, and will be 3) Adjusted to account for transfer cases 28 14

15 Changes Affecting Medicare Payments to Acute Care Hospitals, cont d 29 J. Hospital Wage Index ACA 3137 and Section 508 reclassifications extended to 9/30/2010; 2. Criteria used to determine geographic reclassifications must revert to the criteria that were in effect as of September 30, 2008, until 1 year after wage index reform report submitted by HHS; a) Geographic Reclass window closed before more lenient criteria restored b) CMS should reopen window only for newly qualified 3. Effective for discharges occurring on or after October 1, 2010, the wage index for hospitals located in frontier states shall not be lower than 1; and 4. Budget Neutrality calculated on national basis. Wage Index Changes, cont d Pension Costs FY 2012 Final Rule a. Wage Index Purposes 1) Must be funded 2) Contributions reported on cash basis 3) Use three year average for wage index in 2013 and beyond 4) Industry view is this favors underfunded plans vs overfunded plans b. Cost-Finding Purposes a. Same as above but not three year averaged, but b. Limited to 150% of consecutive 3-year average in 5 most recent c. Exception process for unusual situations on the 150% limit 6. Expiration of Imputed Rural Floor CMS extends for FY 2012 and 2013 in Response to Comments 15

16 Wage Index Changes, cont d 7. Adjustment Based on Commuting Patterns a. Outmigration calculated using FY 2005 Final Rule, plus b. Use of post reclassified wage indices 8. Revisions to CBSAs a. OMB bulletin ulletins/2013/b pdf 31 Extension of Temporary Increases of ACA K. MDH Program 1. Extended through 9/30/2012, ACA Extended through 9/30/2013, American Taxpayer Relief Act 606. L. Temporary Improvements Low Volume Hosp. 1. Extended through 9/30/2012, ACA Extended through 9/30/2013, American Taxpayer Relief Act 605. a) Within 15 versus 25 mile from nearest hosp., b) Less than 1600 Medicare discharges, previously Total 800 discharges, c) Percentage increase in payments from 25% to 0% based on decreasing scale from 200 to 1600 Medicare discharges, d) Hospitals with 201 to 300 Medicare discharges = add-on of %, and with 301 to 400 discharges = % 32 16

17 Changes Affecting Medicare Payments to Acute Care Hospitals, cont d 33 M. FY 2013 Operating Outlier Threshold 1. CMS proposed $27,425, representing a 22.5% increase from FY Industry proposed $23,195 a. CMS underestimated prior year underpayment b. CMS not correctly measuring CCR rate of change c. CMS including HMO days, and improper charges (e.g., clotting factor 3. CMS settled on $21,821, but did not make methodological changes FY 2013 Operating Outlier Threshold, cont d 34 17

18 Outlier Reconciliation Chapter 3 of the Claims Processing Manual Available on CMS website at Guidance/Guidance/Manuals/Downloads/clm104c0 3.pdf Outlines Guidelines for Medicare Contractors and Providers for Outlier Reconciliation for IPPS, IRF PPS, IPF PPS, LTCH PPS and OPPS 35 Hospital Services Furnished Under Arrangement FY2012 Rule Clarifies Under Arrangement for Routine Services 2. Routine Services cannot be provided under arrangement, only diagnostic or therapeutic services a. If provided in the hospital, they are considered to be provided by the hospital and subject to hospital quality controls b. If provided outside the hospital they are under arrangement and prohibited; c. If provided in another hospital the patient must be discharged to the other hospital 3. FY 2013 Final Rule delays implementation to cost reporting periods beginning in FY

19 Budget Control Act of 2011 A. Commences April 1, B. Established Sequestration Process By Amending Gramm-Rudman if Legislature Cannot agree on at least $ 1.2 Trillion in Additional Cuts by January 15, 2012; C. Sequestration Must Result in at least $1 Trillion of the $1.2 Trillion Required in Cuts; D. Medicare is Limited to a 2% Cut for Patient Care Services for Parts A and B and monthly contract amounts for Parts C and D per Gramm-Rudman Sec. 256(d); E. Anything not Covered by Section 256(d) is not Similarly Limited in the Size of Cuts; and 37 F. The 2% limit on Medicare is Expected to Save $48 Billion from FFY G. EHR Incentive Payments Subject to 2% Cut. 19