FY 2013 Final Medicare Payment Rules for Inpatient Acute Care Hospitals – On August 1, 2012, CMS issued the final rule on Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs of acute care hospitals for FY 2013. Under the final rule, payment rates to general acute care hospitals will increase by 2.8 percent in FY 2013. The 2.8 percent is a net update after the market basket update, improvements in productivity, a statutory adjustment factor, and adjustments for hospital documentation and coding changes.
The significant changes in the final rule, include among others things:
- Market Basket Update - The net market basket update is 1.8 percent. The most recent estimate of the IPPS market basket is 2.6 percent. The net market basket update incorporates an Affordable Care Act reduction (ACA) of 0.1 percent and a productivity adjustment reduction of 0.7 percent.
- Provisions Promoting Improved Patient Care - The final rule implements significant elements of the ACA’s hospital value-based purchasing (VBP) and hospital readmissions reductions programs. The VBP program will adjust hospital payments beginning in FY 2013 and annually thereafter based on how well hospitals perform or improve their performance on a set of quality measures. The Inpatient Quality Reporting (IQR) program is also strengthened under the final rule. In particular, CMS includes measures related to whether a hospital uses surgery checklists and measures associated with perinatal care and readmissions, incorporating overall readmissions and readmissions relating to hip and knee replacement procedures. The final rule also increases the number of quality measures hospitals would need to report to 59 in FY 2013.
- Documentation and Coding - CMS is completing the documentation and coding adjustments for FY 2008 and FY 2009 as required by the Transitional Medical Assistance, Abstinence Education, and Qualifying Individuals Programs Extension Act of 2007. The final documentation and coding adjustments net effect for FY 2013 is an aggregate increase of 1.0 percent, a 0.8 percentage point increase from the proposed rule.
- Labor and Delivery Bed Days Included in DSH and IME - Labor and delivery days will be included in the count of available beds for purposes of both the Medicare disproportionate share hospital (DSH) and indirect medical education adjustments. This provision of the final rule was adopted without modification from the proposed rule, which raised significant questions. CMS asserts that the final rule will align the CMS policy adopted in FY 2010 to include labor and delivery days in the patient count for the Medicare DSH adjustment.
- GME/IME Payments - CMS is implementing changes relating to determining a hospital’s full-time equivalent (FTE) resident cap in connection with graduate medical education (GME) and indirect medical education (IME) payments. In particular, with respect to GME, CMS is finalizing the proposal to increase the cap-building period from three years to five years and also sets forth the factors for adjusting a cap for new teaching hospitals.
- Low-Volume Hospital Adjustment - Under the final rule, the preexisting low-volume hospital qualifying criteria and payment adjustment, as implemented in FY 2005, will resume. As such, in order to qualify for the adjustment, a subsection (d) hospital must be more than 25 road miles from another subsection (d) hospital and have fewer than 200 discharges. The modified definition of a low-volume hospital and the methodology for calculating the payment adjustment for low-volume hospitals, effective only for discharges occurring during FYs 2011 and 2012, will no longer be applied to payments for a hospital’s discharges beginning on or after October 1, 2012. By September 1, 2012, a hospital must make its request in writing to its MAC or fiscal intermediary for low-volume hospital status in order to receive the 25 percent low-volume add-on payment.
The final rule applies to discharges occurring on or after October 1, 2012, and the financial impact is projected to expand overall Medicare operating payments to hospitals by 2.3 percent or $2 billion in FY 2013 as compared with FY 2012 payments.
The final rule is scheduled to be published in the August 31, 2012 Federal Register and is available here. CMS’s press release discussing the final rule is available here. King & Spalding is in the process of scheduling a Healthcare Roundtable Webinar with a more detailed analysis of the IPPS Final Rule and will provide more information about this educational opportunity in the near future.
Reporter, Juliet M. McBride, Houston, +1 713 276 7448, firstname.lastname@example.org.
DOJ Announces New Barrier-Free Health Care Initiative Targeting Disability Discrimination – On July 26, 2012, the U.S. Department of Justice (DOJ) Civil Rights Division, in partnership with United States Attorneys’ offices nationwide, introduced the “Barrier-Free Health Care Initiative.” This initiative seeks to enforce the Americans with Disabilities Act (ADA) within the healthcare industry. The initial focus of this multi-phase plan is to ensure that people who are deaf or hard of hearing have access to medical information and that such information is presented in a manner understandable to them. Another goal of the initiative is enforcement of ADA rules regarding physical access to medical facilities.
The ADA prohibits discrimination against the disabled in “place[s] of public accommodation,” which generally include professional offices of healthcare providers. Among other detailed requirements, the ADA and its implementing regulations generally require a public accommodation to furnish “appropriate auxiliary aids and services where necessary to ensure effective communication with individuals with disabilities.” A comprehensive list of auxiliary aids and services required by the ADA is set forth in regulations, and includes, for deaf and hard of hearing individuals: qualified interpreters on-site or through video remote interpreting services; notetakers; real-time computer-aided transcription services; written materials; exchange of written notes; telephone handset amplifiers; assistive listening devices and systems; telephones compatible with hearing aids; closed caption decoders; open and closed captioning, including real-time captioning; voice, text, and video-based telecommunications products and systems, including text telephones, videophones, and captioned telephones, or equally effective telecommunications devices; videotext displays; accessible electronic and information technology; or other effective methods of making aurally delivered information available to individuals who are deaf or hard of hearing.
A public accommodation may avoid provision of an auxiliary aid only if it can demonstrate that provision of the aid would fundamentally alter the nature of the service, or would constitute an undue burden or expense. If the public accommodation is able to demonstrate that there is a fundamental alteration or an undue burden in the provision of a particular auxiliary aid it must, however, be prepared to provide an alternative auxiliary aid, where one exists.
The Barrier-Free Health Care Initiative arrives on the heels of several recent settlement agreements entered into by the DOJ and U.S. Attorneys’ offices with various physicians, hospitals and health systems. The settlement agreements arose from complaints or lawsuits filed by patients alleging failure of the defendants to provide effective communication as required by the ADA. Some of the settlements resulted in the imposition of additional requirements relating to the accommodation of deaf and hard of hearing patients.
Providers should take this opportunity to make sure they are in compliance with ADA’s requirements, particularly given that increased enforcement efforts likely will result from this new initiative. For more information, the DOJ’s press release can be found here, and links to the settlement agreements can be found here.
Reporter, Jennifer Simmen Lewin, Atlanta, + 1 404 572 3569, email@example.com.
CMS Releases Medicare Inpatient Psychiatric Prospective Payment Rates for FY 2013 – On August 2, 2012, CMS issued a notice setting out FY 2013 Medicare prospective payment rates for services provided by inpatient psychiatric facilities (IPFs). The updated rates will apply to discharges from IPFs on or after October 1, 2012, and will remain in effect through September 30, 2013. According to the notice, CMS will increase the IPF Federal per diem base rate to $698.51—from the $685.01 FY 2012 base rate. To arrive at the FY 2013 base rate, CMS applied, among other things, a 1.9 percent net market basket adjustment to the FY 2012 base rate. That adjustment reflects the FY 2008-based Rehabilitation, Psychiatric, and Long Term Care market basket rate of 2.7 percent, a 0.1 percent market basket reduction, and a 0.7 percent productivity reduction. The market basket and productivity reductions are both required under the Affordable Care Act.
CMS also states in the notice that it will raise the high-cost outlier threshold from $7,340 in FY 2012 to $11,600 in FY 2013. CMS explains that this adjustment is necessary to maintain outlier payments at 2 percent of total payments to IPFs in FY 2013.
CMS estimates that the overall economic impact of the notice will be approximately $36 million in increased Medicare payments to IPFs during FY 2013.
In addition, CMS notes that it now has enough data to begin analyzing whether and to what extent it will make refinements to the IPF prospective payment system. CMS says that it expects to provide its analysis and any proposed refinements in FY 2014 rulemaking.
Click here to view the notice, which will be published in the Federal Register on August 7, 2012.
Reporter, Greg Sicilian, Atlanta, +1 404 572 2810, firstname.lastname@example.org.
OIG Report: Medicare Inappropriately Paid $5 Million for Home Health Services in 2010 – On August 2, 2012, the Department of Health and Human Services Office of Inspector (OIG) released a report examining inappropriate and questionable billing in the home health industry. OIG states in the report that it analyzed 2010 Medicare claims data from home health agencies (HHAs) to determine whether and to what extent inappropriate payments had been made. The report notes that in 2010, Medicare paid $19.5 billion to HHAs for services provided to 3.4 million beneficiaries, and that recent investigations and other OIG studies have indicated that home health services are vulnerable to fraud, waste and abuse.
According to the report, OIG found that in 2010, Medicare inappropriately paid $5 million for home health claims. OIG states that these inappropriate payments were the result of three specific errors: an overlap between inpatient hospital stays and home health services; an overlap between skilled nursing facility stays and home health services; and billing for home health services after a beneficiary’s death. Further, OIG found that approximately one in every four HHAs exceeded the threshold indicating unusually high billing for at least one of OIG’s six measures of questionable billing. These measures include, among other things, average Medicare payment amount per beneficiary and average number of visits per beneficiary. (OIG notes, however, that while exceeding the measure thresholds might indicate potential fraud, there may be legitimate reasons for doing so.) OIG also found that HHAs with questionable billing tended to be located in California, Florida, Michigan and Texas.
In light of its findings, OIG has made the following recommendations to CMS:
- Implement claims processing edits or improve existing edits;
- Increase monitoring of billing for home health services;
- Enforce and reevaluate the 10 percent cap on total outlier payments that an HHA is permitted to receive each year;
- Consider implementing a temporary HHA enrollment moratorium in Florida and Texas; and
- Take appropriate action regarding inappropriate payments and HHAs with questionable billing.
To view OIG’s report, click here.
Reporter, Greg Sicilian, Atlanta, +1 404 572 2810, email@example.com.
Healthcare Roundtable on Recent Medicaid Developments Resulting from the Implementation of and the Supreme Court's Ruling on PPACA, Enforcement Actions, and Other Medicaid Reforms – On Friday, August 24, 2012 at 1:00 - 2:30 P.M. Eastern Time, King & Spalding will host an Atlanta-based Roundtable focused on recent Medicaid developments.
The Roundtable will include the following topics:
- Status of PPACA Medicaid Expansion After Supreme Court’s Decision
- Medicaid Contractor Developments Including MIC Reports and Medicaid RAC Initiative
- Implementation of Health Reform Programs Affecting Medicaid
- Medicaid Supplemental Payment and 1115 Waiver Developments
- Medicaid Enforcement Update
You can register to attend in person or by Webinar by visiting http://www.kslaw.com/HealthcareRoundtable. If you are attending in person, lunch will be provided between 12:00 p.m. and 1:00 p.m. if you would like to arrive early for that.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.
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