News & Insights

Newsletter

July 13, 2020

Health Headlines – July 13, 2020


HHS Announces Over $4 Billion in Additional Payments to Hospitals Impacted by the Coronavirus Pandemic On July 10, 2020, HHS announced over $4 billion in additional relief funding for certain hospitals impacted by the COVID-19 pandemic. The new round includes payments of approximately $3 billion to safety net hospitals and approximately $1 billion to specialty rural hospitals, urban hospitals with certain rural Medicare designations, and hospitals in small metropolitan areas.

Additional $3 Billion to Safety Net Hospitals

HHS announced that it is expanding the criterion for relief payment qualification to safety net hospitals after learning some acute care hospitals did not qualify for the initial funding of $10 billion to safety net hospitals announced on June 9, 2020. HHS is expanding the payment criterion so that certain acute care hospitals meeting the revised profitability threshold of less than three percent averaged consecutively over two or more of the last five cost reporting periods – as reported to CMS in cost report filings – will now be eligible for payment. HHS expects to distribute over $3 billion across 215 acute care hospitals. Click here to see the state-by-state breakdown released by HHS.

Additional $1 Billion to Certain Rural Hospitals and Hospitals in Small Metropolitan Areas

Following its initial funding of $10 billion to rural providers announced on May 1, 2020, HHS is now expanding the existing payment formula to include “certain special rural Medicare designation hospitals in urban areas as well as others who provide care in smaller non-rural communities.” HHS noted that these may include certain suburban hospitals that are not considered rural but serve rural populations and operate with smaller profit margins more limited resources than larger hospitals. HHS estimates that the new funding will provide relief of over $1 billion to 500 of these hospitals. Click here to see the state-by-state breakdown released by HHS.

A copy of HHS’s July 10, 2020 press release is available here.

Reporter, John Whittaker, Sacramento, +1 916 321 4808, jwhittaker@kslaw.com.

CMS Issues Proposed Rule for ESRD Prospective Payment System – On July 6, 2020, CMS issued a proposed rule under the End Stage Renal Disease (ESRD) Prospective Payment System (PPS). The rule proposes to update payment policies and rates for renal dialysis services furnished to beneficiaries starting in CY 2021 and further proposes updates to the acute kidney injury (AKI) dialysis payment rate for renal dialysis services furnished by ESRD facilities. It further proposes changes to the ESRD Quality Incentive Program (QIP). In addition to the annual technical updates, CMS also proposes several other changes. The proposed rule was published in the Federal Register today.  CMS is accepting comments until September 4, 2020.

Update to the ESRD PPS Base Rate

The proposed CY 2021 ESRD PPS base rate is $255.59, an increase of $16.26 to the current base rate. This reflects the application of the proposed wage index budget-neutrality adjustment factor (.998652), the proposed addition to the base rate of $12.06 to include calcimimetics, and a proposed productivity-adjusted market basket increase as required by section 1881(b)(14)(F)(i)(I) of the Social Security Act (1.8 percent), equaling $255.59.

Low-Volume Eligibility Criteria and Attestation Requirement

CMS is proposing to hold harmless ESRD facilities that would otherwise qualify for the Low Volume Payment Adjustment (LVPA) but for a temporary increase in dialysis treatments furnished in 2020 due to the public health emergency (PHE) for the COVID-19 pandemic. CMS is proposing that, for purposes of determining LVPA eligibility for payment years 2021, 2022, and 2023, ESRD facilities would attest that their total dialysis treatments for any 6 months (consecutive or non-consecutive) of their cost-reporting period ending in 2020 is less than 2,000 and that, although the total number of treatments furnished in the entire year otherwise exceeded the LVPA threshold, the excess treatments furnished were due to temporary patient shifting resulting from the COVID-19 PHE. Medicare Administrative Contractors (MACs) would then annualize the number of treatments reported for those six months by multiplying the number of treatments by two. In addition, CMS determined that the COVID-19 pandemic justifies an exception to the November 1, 2020 attestation deadline. Therefore, for payment year 2021, CMS is proposing to allow more time for ESRD facilities to submit attestations by moving the deadline to December 31, 2020.

New OMB Delineations and 2-Year Transition Policy

CMS proposes adopting the OMB delineations as described in the September 14, 2018 OMB Bulletin No. 18-04, beginning with the CY 2021 ESRD PPS wage index. In addition, CMS is proposing to apply a 5-percent cap on any decrease in an ESRD facility’s wage index from the ESRD facility’s wage index from the prior calendar year. This transition would be phased in over two years, such that the estimated reduction in an ESRD facility’s wage index would be capped at five percent in CY 2021, and no cap would be applied to the reduction in the wage index for the second year, CY 2022.

Changes to the Eligibility Criteria and Determination Process Deadlines for the Transitional Add-On Payment for New and Innovative Equipment and Supplies (TPNIES)

CMS is proposing changes to the TPNIES eligibility criteria in light of the changes implemented in CY 2020 to provide bi-annual coding cycles for code applications for new Healthcare Common Procedure Coding System (HCPCS) Level II codes for durable medical equipment, orthotics, prosthetics and supplies (DMEPOS) items and services. For purposes of eligibility for the TPNIES, CMS proposes that the HCPCS code application must be submitted by the HCPCS Level II code application deadline for biannual Coding Cycle 2 for DMEPOS items and services as specified in the HCPCS Level II coding guidance on the CMS website. In addition, the Food and Drug Administration (FDA) marketing authorization must be submitted to CMS by the HCPCS Level II code application deadline for the equipment or supply to be eligible for the TPNIES the following year. CMS defines “new” for purposes of the TPNIES policy as three years beginning on the date of the FDA marketing authorization.

Inclusion of Calcimimetics in the ESRD PPS Base Rate

CMS is proposing the methodology for modifying the ESRD PPS base rate to include calcimimetics in the ESRD PPS bundled payment. Using the proposed methodology based on the latest available data, CMS is proposing to add $12.06 to the ESRD PPS base rate beginning in CY 2021.

Impact Analysis

CMS projects that the updates for CY 2021 will increase the total payments to all ESRD facilities by 1.6 percent compared with CY 2020. For hospital based ESRD facilities, CMS projects a decrease in total payments of 0.4 percent, while for freestanding facilities, the projected increase in total payments is 1.6 percent.

Furthermore, there are proposed changes to the payment for renal dialysis services furnished to individuals with AKI. As required by section 1834(r) of the Social Security Act, CMS is proposing to update the AKI dialysis payment rate for CY 2021 by the payment rate update factor (1.8 percent), the proposed wage index budget neutrality factor (.998652), and the proposed addition to the ESRD PPS base rate to include calcimimetics. The proposed CY 2021 payment rate is $255.59, which is the same as the base rate proposed under the ESRD PPS for CY 2021.

Finally, there are proposed changes to the ESRD QIP, under which CMS assesses the total performance of each facility on measures specified for a payment year and applies an appropriate payment reduction to each facility that does not meet a minimum total performance score, and publicly reports the results.

If finalized, the changes will take effect for services rendered after January 1, 2021.

The proposed rule can be viewed here.   The CMS fact sheet can be viewed here.

Reporter, Yujin Chun, Los Angeles, ‪+1 213 443 4322, ychun@kslaw.com.

ALSO IN THE NEWS

CMS Announces Updates to Nursing Home Rating System and Staff Counts – On July 9, 2020, CMS revised its April 24, 2020 memorandum regarding nursing home guidelines during the COVID-19 pandemic. The revisions include a reminder to nursing home facilities that providing ombudsman access to residents is required per 42 C.F.R. § 483.10(f)(4)(i) and per the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). CMS also noted that each facility must comply with federal disability rights laws, such as the Americans with Disabilities Act, which would include granting a translator access to a nursing home facility for those residents who need one. The remainder of the April 24, 2020 memorandum remains in effect.

The revised memorandum can be viewed here.