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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
President’s FY 2014 Budget
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
President’s FY 2014 Budget
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
President’s FY 2014 Budget
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
President’s FY 2014 Budget
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
President’s FY 2014 Budget
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
President’s FY 2014 Budget
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
President’s FY 2014 Budget
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
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
25
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?
26
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
27
Documentation & Coding
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
Documentation & Coding
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)
29
Documentation & Coding
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
Documentation & Coding
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
Documentation & Coding
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
Documentation & Coding
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??
33
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
34
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
37
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
48
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
Value Based Purchasing
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
Value Based Purchasing
FY 2015 Adding
• AHRQ PSI Composite• CLASBI• MSPB-1 (Medicare spending per beneficiary)
Removing• SCIP-VTE-1
71
Value Based Purchasing
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:
http://www.gpo.gov/fdsys/pkg/FR-2013-08-06/pdf/2013-18770.pdf
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
80
Inpatient Rehabilitation Facilities
81
Inpatient Rehabilitation Facilities
Published in 8/6/13 Federal Register Tables on CMS website Copy at:.
http://www.gpo.gov/fdsys/pkg/FR-2013-08-06/pdf/2013-18770.pdf
Tables at: http://www.cms.hhs.gov/Medicare/Medicare-Fee-for-Service-Payment/InpatientRehabFacPPS/
Effective 10/1/13
82
Inpatient Rehabilitation Facilities
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
Inpatient Rehabilitation Facilities
84
Inpatient Rehabilitation Facilities
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
Inpatient Rehabilitation Facilities
“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
Inpatient Rehabilitation Facilities
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
Inpatient Rehabilitation Facilities
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
Inpatient Rehabilitation Facilities
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
Inpatient Rehabilitation Facilities
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
Inpatient Rehabilitation Facilities
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
Inpatient Rehabilitation Facilities
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
Inpatient Psychiatric Facilities
Published in Aug 1st Federal Register Copy at:
http://www.gpo.gov/fdsys/pkg/FR-2013-08-01/pdf/2013-18445.pdf
Tables are part of the rule Effective 10/1/13
94
Inpatient Psychiatric Facilities
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
Inpatient Psychiatric Facilities
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
Inpatient Psychiatric Facilities
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
Inpatient Psychiatric Facilities
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
Inpatient Psychiatric Facilities
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:
http://www.gpo.gov/fdsys/pkg/FR-2013-08-07/pdf/2013-18838.pdf
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:
http://www.gpo.gov/fdsys/pkg/FR-2013-07-19/pdf/2013-16555.pdf
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
CY 2014 Proposed OPPS
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
CY 2014 Proposed OPPS
Partial Hospitalization Program
111
CY 2014 Proposed OPPS
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
CY 2014 Proposed OPPS
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
CY 2014 Proposed OPPS
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
CY 2014 Proposed OPPS
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
CY 2014 Proposed OPPS
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
CY 2014 Proposed OPPS
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
CY 2014 Proposed OPPS
CMS is proposing to increase packaging items to $90 Rule’s table 25 contains list
118
CY 2014 Proposed OPPS
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
CY 2014 Proposed ASC
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
CY 2014 Proposed ASC
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
CY 2014 Proposed MPFS
Published in July 19th Federal Register Copy at:
http://www.gpo.gov/fdsys/pkg/FR-2013-07-19/pdf/2013-16547.pdf
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
CY 2014 Proposed MPFS
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
CY 2014 Proposed MPFS
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
CY 2014 Proposed MPFS
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
CY 2014 Proposed MPFS
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
CY 2014 Proposed MPFS
Proposed rule contains extensive discussion and measures for the Physician Quality Reporting System (PQRS)
129
CY 2014 Proposed ESRD
130
CY 2014 Proposed ESRD
Published in July 8th Federal Register Copy at:
http://www.gpo.gov/fdsys/pkg/FR-2013-07-08/pdf/2013-16107.pdf
Tables at: http://www.cms.gov/ESRDPayment/PAY/list.asp Payments expected to decrease $970 million Effective 1/1/2014
131
CY 2014 Proposed ESRD
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
CY 2014 Proposed ESRD
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
CY 2014 Proposed ESRD
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
CY 2014 Proposed ESRD
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
CY 2014 Proposed Home Health
Published in July 3rd Federal Register Copy at:
http://www.gpo.gov/fdsys/pkg/FR-2013-07-03/pdf/2013-15766.pdf
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
CY 2014 Proposed Home Health
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
CY 2014 Proposed Home Health
Update – Proposed 60 day national episode payment amount
139
CY 2014 Proposed Home Health
Update – Proposed Per Visit Payment Amounts
140
CY 2014 Proposed Home Health
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
CY 2015 Proposed FQHC PPS
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
CY 2015 Proposed FQHC PPS
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
CY 2015 Proposed FQHC PPS
The adjusted base payment that reflects the MEI historical updates and forecasted updates to the MEI would be $155.90
145
Questions