The Medicare Update. Larry Goldberg Larry Goldberg Consulting National Health Care Advisor, McGladrey LLP

Transcription

1 The Medicare Update Larry Goldberg Larry Goldberg Consulting National Health Care Advisor, McGladrey LLP

2 Agenda IPPS SNF IRF Hospice 2

3 IPPS Proposed FY 2104 Update 3

4 FY 2014 Proposed IPPS Posted on 4/26/13 Published in 5/10/13 Federal Register Tables on CMS website Copy at: /pdf/ pdf Tables at: Fee-for-Service- Payment/AcuteInpatientPPS/index.html 4

5 FY 2014 Proposed IPPS Comments due 6/25/13 Effective 10/1/13 5

6 FY 2014 Proposed IPPS Personal Comments Reg has become too long 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 have a decent executive summary 6

7 Update MB would be 2.5% (0.5% for non-quality providers) Offsets: (0.4%) for productivity (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 0.8% (-1.2% for non-quality providers) Increase in total payments would be $27 million 7

8 Update There are more offsets: Budget neutrality items Readmissions DSH Value-Based Purchasing ACA law said updates could be less than current may now become real Cancer or children s would receive full MB with no offsets 8

9 More Adjustments Budget neutrality 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 9

10 Update Revising the MB Would use 2010 data in lieu of 2004 Results in new labor-related share values Large Urban areas those with wage index greater than from 68.8 to 69.6 percent Other areas with wage index values equal to or less than would remain at 62.0 percent by law If no law, would be 63.2 percent 10

11 National Adjusted Operating Standardized Amounts 69.6 Percent Labor Share/30.4 Percent Non-Labor Wage Index Is Greater Than Proposed FY 2014 Full Update (1.8 percent) Proposed Reduced Update (minus 0.2 percent) Rates Currently in Effect Non-laborrelated Non-labor- Labor-related Labor-related related $3, $1, $3, $1, Full Update Non-laborrelated Labor-related Reduced Update Non-laborrelated Labor-related $3, $1, $3, $1,

12 National Adjusted Operating Standardized Amounts 62.0 Percent Labor Share/38.0Percent Non-Labor Wage Index Is Equal to or Less Than Proposed FY 2014 Full Update (1.8 percent) Labor-related Proposed Reduced Update (minus 0.2 percent) Labor-related $3, $2, $3, $2, Rates Currently in Effect Non-laborrelated Non-laborrelated Full Update Non-laborrelated Labor-related Reduced Update Non-laborrelated Labor-related $3, $2, $3, $1,

13 Rate Comparison (w/quality) FY 2013 Proposed FY 2014 Difference Large $3, $3, , , $5, $5, $27.28/ 0.51% Other $3, $3, , , $5, $5, $27.28/ 0.51% 13

14 Rate Comparison (w/o Quality) FY 2013 Proposed FY 2014 Difference Large $3, $3, , $5, $5, $26.75/ 0.51% Other $3, $3, , , $5, $5, $26.75/ 0.51% 14

15 Wage Index Not using the revised OMB CBSAs Released on 2/28/13 To be used for FY 2015 Copy at: b/bulletins/2013/b pdf Data is from FY 2010 CRPs (including OCC mix adjustment) 15

16 Wage Index No change to the statewide budget neutrality adjustment factor Massachusetts continues to be big winner 16

17 Wage Index Rural Floor Proposed 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 $86.40 Massachusetts $ Connecticut $75.00 New York ($46.50) Florida ($29.60) Illinois ($26.80) North Carolina ($15.20) Texas ($31.90) 17

18 More on Floors Frontier Floor Montana, North Dakota, South Dakota, and Wyoming, covering 46 providers, would receive a frontier floor value of Imputed Floor Benefits only New Jersey -- providers in New Jersey 18

19 Occupational Mix Proposed FY 2014 occupational mix adjusted national average hourly wage is $ Occupational Mix Nursing Subcategory Proposed Average Hourly Wage National RN National LPN and Surgical Technician National Nurse Aide, Orderly, and Attendant National Medical Assistant National Nurse Category

20 Reclassifications FY approved FY approved FY approved CMS says there are 773 hospitals reclassified for FY 2014 Have 45 days post this rule to revoke Applications to MGCRB due by September 3rd 20

21 Outliers Proposing an 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 $24,140 The current amount is $21,821 CMS currently estimates that actual outlier payments for FY 2013 will be approximately 5.17 percent of actual total MS-DRG payments, approximately 0.1 percentage points higher than the 5.1 percent projected when setting the outlier policies for FY

22 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 22

23 MDH/ Low-Volume Hospitals Both programs expire FY 2014 Low-Volume reverts to 200 discharges 23

24 Documentation & Coding Forget the past American Taxpayers Relief Act changes the game Requires CMS recoup $11 billion over 4 years starting in FY 2014 CMS proposes 0.8 percent reduction This amount would recover about $1 billion How do you get the remaining $10+ billion? Will this item ever be settled? 24

25 Documentation & Coding Compound the reductions; % = $1 billion = = $2 billion.992 X.992= $3 billion.984 X.992= $4 billion.976 X.992= Total $10 billion 25

26 Documentation & Coding CMS Addendum table Full Update (1.8 percent) Wage Index is greater than ; Labor/Non- Labor Share Percentage (69.6/30.4) Full Update (1.8 Percent) Wage index is less than or equal to ; Labor/Non -Labor Share Percentage (62/38) Reduced Update (-02 percent) Wage index is greater than ; Labor/Non- Labor Share Percentage (69.6/30.4) Reduced Update (-02 percent) Wage index is less than or equal to ; Labor/Non -Labor Share Percentage (62/38) 26

27 Documentation & Coding Full Update (1.8 percent) (69.6/30.4) Full Update (1.8 Percent) (62/38) Reduced Update (-02 percent) Reduced Update (-02 percent) FY 2013 Base Rate after removing: 1. FY 2013 Geographic Reclassification Budget Neutrality ( ) 2. FY 2013 Rural Community Hospital Demonstration Program Budget Neutrality ( ) 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 (0.9478) 4. FY 2013 Operating Outlier Offset ( ) Labor: $4, Nonlabor: $1, Labor: $3, Nonlabor: $2, Labor: $4, Nonlabor: $1, Labor: $3, Nonlabor: $2,

28 Documentation & Coding Full Update (1.8 percent) (69.6/30.4) Full Update (1.8 Percent) (62/38) Reduced Update (-02 percent) Reduced Update (-02 percent) Proposed FY 2014 Update Factor Proposed FY 2014 MS-DRG Recalibration and Wage Index Budget Neutrality Factor Proposed FY 2014 Reclassification Budget Neutrality Factor Proposed FY 2014 Rural Community Demonstration Program Budget Neutrality Factor Proposed FY 2014 Operating Outlier Factor Proposed Adjustment to Offset the Cost of the Policy Proposal on Admission and Medical Review Criteria for Hospital Inpatient Services under Medicare Part A

29 Documentation & Coding Full Update (1.8 percent) (69.6/30.4) Full Update (1.8 Percent) (62/38) Reduced Update (-02 percent) Reduced Update (-02 percent) 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 and Proposed Documentation and Coding Recoupment Adjustment as required under Section 631 of the American Taxpayer Relief Act of

30 Documentation & Coding Full Update (1.8 percent) (69.6/30.4) Full Update (1.8 Percent) (62/38) Reduced Update (-02 percent) Reduced Update (-02 percent) Proposed National Standardized Amount for FY 2014 Labor: $3, Nonlabor: $1, Labor: $3, Nonlabor: $2, Labor: $3, Nonlabor: $1, Labor: $3, Nonlabor: $2,

31 Capital Rate would increase from $ to $ Final FY 2013 Proposed FY 2014 Change Percent Change Update Factor GAF/DRG Adjustment Factor Outlier Adjustment Factor Adjustment for admission and medical review criteria 3 N/A Capital Federal Rate $ $

32 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 32

33 DRGs Would 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 Also supplemental table 5 showing weights if only15 CCRs used Allows comparison 33

34 DRGs MS-DRGS THAT WOULD EXPERIENCE THE LARGEST DECREASE IN RELATIVE WEIGHT Relative Weights with 19 Relative MS-DRG Type Title Weight with 15 CCRs CCRs Percentage Change 90 MED Concussion without CC/MCC % Traumatic Stupor & Coma, Coma 84 MED >1 Hour without CC/MCC % Traumatic Stupor & Coma, Coma 87 MED <1 Hour without % Other Multiple Significant Trauma 965 MED without CC/MCC % 185 MED Major Chest Trauma without CC/MCC % 89 MED Concussion with CC % 123 MED Neurological Eye Disorder % 343 SURG 53 MED 66 MED Appendectomy without Complicated Principal Diagnosis without CC/MCC % Spinal Disorders & Injuries without CC/MCC % Intracranial Hemorrhage or Cerebral Infarction without CC/MCC % 34

35 DRGs MS-DRGS THAT WOULD EXPERIENCE THE LARGEST INCREASE IN RELATIVE WEIGHT Weights with 19 CCRs MS-DRG Type Title Weight with 15 CCRs Percentage Change Combined Anterior/Posterior Spinal 454 SURG Fusion with CC % Combined Anterior/Posterior Spinal 455 SURG Fusion Without CC/MCC % 484 SURG 225 SURG 223 SURG Major Joint & Limb Reattachment Procedure of Upper Extremity without CC/MCC % Cardiac Defibrillator Implant with Cardiac Catheterization without AMI/HF/Shock without MCC % Cardiac Defibrillator Implant with Cardiac Catheterization with AMI/HF/Shock without MCC % Spinal Fusion Except Cervical with Spinal Curve/Malignant/Infection OR 9+ Fusion without CC/MCC % 458 SURG 245 SURG AICD Generator Procedures % 849 MED Radiotherapy % 946 MED Rehabilitation without CC/MCC % 227 SURG Cardiac Defibrillator Implant without Cardiac Catheterization without MCC % 35

36 DRGs Minor changes to specific coding procedures, etc 36

37 MS-DRG Description Proposed FY 2014 Weight FY 2013 Percentage Difference 65 Intracranial hemorrhage or cerebral infarction w CC % 189 Pulmonary Edema & Respiratory Failure % 190 Chronic obstructive pulmonary disease w MCC % 191 Chronic obstructive pulmonary disease w CC % 193 Simple pneumonia & pleurisy w MCC % 194 Simple pneumonia & pleurisy w CC % 247 Perc cardiovasc proc w drug-eluting stent w/o MCC % 287 Circulatory disorders except AMI, w card cath w/o MCC % 291 Heart failure & shock w MCC % 292 Heart failure & shock w CC % 309 Cardiac arrhythmia & conduction disorders W CC % 310 Cardiac arrhythmia & conduction disorders w/o CC/MCC % 312 Syncope & collapse % 313 Chest pain % 37

38 MS-DRG Description Proposed FY 2014 Weight FY 2013 Percentage Difference 378 G.I. hemorrhage w CC % Esophagitis, gastroent & misc digest disorders w/o MCC Major joint replacement or reattachment of lower extremity w/o MCC % % 603 Cellulitis w/o MCC % 641 Nutritional & misc metabolic disorders w/o MCC % 682 Renal Failure w MCC % 683 Renal Failure w CC % 690 Kidney & urinary tract infections w/o MCC % Septicemia or severe sepsis w/o MV 96+ hours w MCC Septicemia or severe sepsis w/o MV 96+ hours w/o MCC % % 38

39 New Technology Add-ons Continue for Voraxase, Dificid and Zenith 5 new applications for FY 2014 Kcentra Argus II Retinal Prosthesis System; Responsive Neurostimulator (RNS ) System Zilver PTX Drug Eluting Peripheral Stent MitraClip System All rejected/ not approved, so far Taking comments on these rejections 39

40 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 Proposing to include labor and delivery days as inpatient days in the Medicare utilization calculation, effective for cost reporting periods beginning on or after October 1,

41 New DSH Formula Mandated by Section 3133 of ACA Splits system 25 percent remains as old formula Rescrambles 75 percent Uses 3 factors 41

42 DSH Factor One Determines 75 percent of what would have been paid under the old methodology Using CMS actuary estimates from February 2013 Current estimate is $9.25 Billion 42

43 DSH Factor Two `Reduces Factor One amount by percentage reduction in uninsured from 2013 to 2014 Using CBO projections For 2013, March 2010 projection was 18 percent For 2014, February 2013 projection was 16 percent Using 2010/2011 cost report data 43

44 DSH Factor Two Formula 1 [( )/0.18] = = (88.9 percent) (88.9 percent) (0.1 percentage points) = (88.8 percent) = Factor 2 This results in a 11.2 percent reduction, or $8.2 Billion This is the new pie to be redistributed Loss of DSH is $1.05 Billion Expect average DSH reduction of 11.2 percent??? 44

45 DSH Factor Three Determining each hospital s percentage of the Factor Two pie Factor 3 is a hospital-specific value that expresses the proportion of the estimated uncompensated care amount for each subsection (d) hospital with the potential to receive DSH payments relative to the estimated uncompensated care amount for all hospitals estimated to receive DSH payments in the fiscal year for which the uncompensated care payment is to be made Based on each hospital s share of total uncompensated care costs across all PPS hospitals that received DSH payments So the numerator is all PPS hospitals, but denominator is just DSH hospitals 45

46 DSH Factor Three CMS proposes to use 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 (b)(4) and (b)(2)(i), respectively to determine Factor 3 From 2010/2011 cost reports 46

47 DSH Factor Three Definition of uncompensated care is bound to be controversial Tables are posted showing CMS estimate of each hospital s share Service-Payment/AcuteInpatientPPS/dsh.html 47

48 Readmissions Maximum reduction increases to 2 percent Proposing to expand conditions covered by this policy for FY 2015 COPD Total hip arthoplasty Total knee arthoplasty 48

49 Value Based Purchasing Withhold amount increases to 1.25 percent Total amount available for performance-based incentive payments for FY 2014 would be approximately $1.1 billion 49

50 Value Based Purchasing Proposing to remove measures AMI-8a, PN-3b, and HF-1 for FY 2016 Proposing to adopt three new measures for FY 2016 one new clinical process measure, influenza immunization two new healthcare-associated infection measures, Catheter-Associated Urinary Tract Infection (CAUTI) and Surgical Site Infection (SSI), the latter of which is stratified into two separate surgery sites 50

51 Value Based Purchasing Medicare Spending per Beneficiary will be implemented in FY

52 HAC Reduction Affects payment in FY 2015 Lowest-performing quartile get 1.0 percent reduction Proposed 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 52

53 HAC Reduction Would be risk-adjusted Process for hospitals to review and correct information Relevant time period is 7/1/11 to 6/30/13 Scoring is a mystery 53

54 Quality Reporting Proposing to remove 8 measures for FY 2016 Adding 5 for FY 2016 (outcome-focused) Cancer hospitals For FY 15 one new measure For FY new measures Psych hospitals For FY 16 three new measures 54

55 LTCHs Update of 1.8% (-0.2% for non-reports) MB of 2.5% Less PPACA offsets of (0.7%) Standardized amount adjustment Second-year of three-year adjustment period Results in proposed Federal rate of $40, Current is $40, Labor-related share is Current is Fixed-loss amount is $14,139 Current is $15,408 Update quality reporting 25% rule reinstated 55

56 SNF 56

57 SNF Posted on 5/1/13 Published in 5/6/13 Federal Register Tables on CMS website Copy at: 57

58 SNF Update Rates would increase by an estimated $500 million, or 1.4 percent, from payments in FY percent market basket increase, reduced by a 0.5 percentage point forecast error correction Further reduced by a 0.4 percentage point multifactor productivity adjustment required by the Affordable Care Act =1.4 58

59 SNF Update Proposing to rebase and revise the SNF market basket for FY 2014 Proposing to add an item to the Minimum Data Set (MDS) to record the number of distinct calendar days of therapy in order to ensure accuracy in case-mix assignment and payment 59

60 SNF Error Forecast SNF only PPS with a market basket forecast error adjustment Originally set at 0.25 percent Changed to 0.5 percent and in that year the error was 0.3 percent in favor of providers No adjustment made that year Adjustment is not cumulative This year error in 0.5 percent in CMS favor 60

61 SNF Update Revised market basket Changes labor-related share to , up from Area Wage Index At Service-Payment/SNFPPS/WageIndex.html The AWI budget neutrality factor for FY 2014 is

62 SNF Update Reporting of Distinct Therapy Days Adding item to the Minimum Data Set (MDS) to record the number of distinct calendar days of therapy provided by all the rehabilitation disciplines to a beneficiary over the seven-day look-back period 62

63 IRF 63

64 IRF Update Posted on 5/2/13 Published in 5/8/13 Federal Register Copy at: 64

65 IRF Update Market basket increase factor would be 2.5 percent Reduced by a productivity adjustment of 0.4 percent and an another 0.3 percentage point reduction, both required by the Affordable Care Act Labor-related share for FY 2014 would be

66 IRF Update Area wage index values at: 66

67 IRF Update Explanation for Adjustment Calculations Standard Payment Conversion Factor for FY 2013 $14,343 Market Basket Increase Factor for FY 2014 (2.5 percent), reduced by 0.3 percentage point in accordance with sections 1886(j)(3)(C) and (D) of the Act and a 0.4 percentage point reduction for the productivity adjustment as required by section 1886(j)(3)(C)(ii)(I) of the Act Budget Neutrality Factor for the Wage Index and Labor Related Share Budget Neutrality Factor for the Revisions to the CMG Relative Weights Budget Neutrality Factor for the Update to the Rural Adjustment Factor Budget Neutrality Factor for the Update to the low-income percentage (LIP) Adjustment Factor Budget Neutrality Factor for the Update to the Teaching Status Adjustment Factor Proposed FY 2014 Standard Payment Conversion Factor = $14,865 67

68 IRF Update High-Cost Outliers Under the IRF PPs CMS estimates that IRF outlier payments as a percentage of total estimated payments are approximately 2.8 percent in FY 2014 CMS proposes to update the outlier threshold amount to $10,111 to maintain estimated outlier payments at approximately 3.0 percent of total estimated aggregate IRF payment The current threshold is $10,

69 IRF 75 Percent Rule Discussing reverting from 75 percent rule to 60 percent Will require legislation Here we go, again 69

70 Hospice 70

71 Hospice Posted April 29th Published on May 10 Copy at: First time wage index and rates in same document 71

72 Hospice Market basket update of 2.5 percent Reduced by a multi productivity factor of 0.4 percent and an amount mandated by the Affordable Care Act of 0.3 percent for a net update of 1.8 percent Phase-out of the wage index budget neutrality adjustment factor with an additional 15 percent reduction for a total BNAF of 70 percent CMS says the increase will amount to $180 million. 72

73 Hospice Currently, the labor portion of the hospice payment rates are: for Routine Home Care, percent; for Continuous Home Care, percent; for General Inpatient Care, percent; and for Respite Care, percent. 73

74 Hospice Code Description FY 2013 Payment Rates Multiply by the FY 2014 proposed hospice payment update of 1.8 percent FY 2014 Proposed Payment Rate Labor Share of the proposed payment rate Non- Labor share of the proposed payment rate 651 Routine Home Care $ x1.018 $ $ $48.88 Continuous Home Care Full Rate = 24 hours of care $=37.99 hourly rate $ x1.018 $ $ $ Inpatient Respite Care $ x1.018 $ $87.46 $74.12 General Inpatient Care $ x1.018 $ $ $

75 Hospice Quality FY 2014 Hospice payment determinations CMS finalized a requirement that hospices report two measures: An NQF-endorsed measure that is related to pain management, NQF #0209 A structural measure that is not endorsed by NQF: Participation in a Quality Assessment and Performance Improvement (QAPI) program that includes at least three quality indicators related to patient care 75

76 Hospice Diagnosis & Coding CMS is saying that all providers should code and report the principal diagnosis as well as all coexisting and additional diagnoses related to the terminal condition or related conditions to more fully describe the Medicare patients they are treating 76

77 Questions 77