letter-iconOn May 1st, CMS issued a letter to Medicare Advantage Organizations (MAOs) and others regarding the effect of the 2% reduction from sequestration.  The letter contains very important information for providers, especially regarding their relationships with MAOs.  Most importantly (for purposes of this short article) is the section entitled “Reducing Payments to Contracted Providers” which states (in essence) that MAOs are to follow the terms of their contracts for contracted providers.  The trouble is that some MAOs are using the letter as a basis for an across the board 2% payment reduction!  Most contracts don’t allow this.  Even more egregious is the fact that some commercial payers are following suit!  Providers faced with such reductions need to know their rights and need strong advocates to push back.

Gift Giving and the Anti Kickback Law

Even though the holiday season is long gone Healthcare Providers need to pay attention to the value of gifts they give or receive to avoid violating the Anti Kickback Laws. Providers may not accept any one gift with a value of more than approximately $30.00 or gifts worth more than $350.00 annually. The Government is concerned that gifts may cause billing for unnecessary services or may affect the referral of patients. Providers as well as their employees must not solicit gifts either. When a gift is given or received it must not be based upon either the volume or value of any referrals. Gifts that are given frequently after referrals or after any specific successful referral are red flags for violations of the law. In fact the Sunshine Act now requires pharmaceutical companies and durable medical equipment companies to report gifts to providers with a value over $25.00. Continue reading

CMS Issues Final Rules Updating Medicaid & Medicare Payments For 2013 & 2014

Repost Via and Kristen A. Larremore & Sarah K. Baker — On November 1, 2012, the Centers for Medicare and Medicaid (“CMS”) issued three final rules, to be effective January 1, 2013, that implement a number of Medicare and Medicaid payment changes for 2013 and 2014.

Medicare and Medicaid Programs: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Electronic Reporting Pilot; Inpatient Rehabilitation Facilities Quality Reporting Program; Revision to Quality Improvement Organization Regulations

The hospital outpatient prospective payment and ambulatory surgery center (“ASC”) final rule with comment period updates the payment policies and payment rates for services furnished to Medicare beneficiaries in hospital outpatient departments and ASCs. This final rule changes certain amounts and factors used to determine the payment rates for Medicare services paid under the Medicare hospital outpatient prospective payment system (“OPPS”) and the Medicare ASC payment system.

According to CMS estimates, payments to hospitals under the OPPS for 2013 will be approximately $48.1 billion (an increase of $4.6 billion compared to 2012) and payments to ASCs for 2013 will be approximately $4.07 billion.

OPPS payment rates are being increased for 2013 by an outpatient department fee schedule increase factor of 1.8 percent. Additionally, the final rule continues to implement the statutory 2.0 percent reduction in payments for hospitals failing to meet the hospital outpatient quality reporting requirements, by applying a reporting factor of 0.980 to the OPPS payments and copayments for all applicable services. The final rule further modifies OPPS payments by basing future determinations of relative payment weights on geometric mean costs rather than median costs (which has been utilized in determining OPPS payments since the inception of the OPPS).

Payment rates for ASCs are being increased for 2013 by 0.6 percent (less than the 1.3 percent update included in the proposed rule).

Additionally, this final rule updates and implements new requirements under the Hospital Outpatient Quality Reporting (“OQR”) Program, the ASC Quality Reporting (“ASCQR”) Program, and the Inpatient Rehabilitation Facility (“IRF”) Quality Reporting Program. The final rule also (1) continues the electronic reporting pilot for the Electronic Health Record (“EHR”) Incentive Program, as finalized for 2012 through 2013, and (2) revises the various regulations governing Quality Improvement Organizations (“QIOs”), including (a) granting QIOs the authority to send and receive secure transmissions of electronic versions of medical information, (b) providing more detailed and improved procedures for completing Medicare beneficiary complaint reviews and general quality-of-care reviews (including a new alternative dispute resolution process called “immediate advocacy”), (c) increasing information beneficiaries receive in response to QIO review activities, (d) conveying to beneficiaries the right to authorize the release of confidential information by QIOs, and (e) making other technical corrections.

In addition to the foregoing modifications and payment updates reflected in the final rule, the following briefly lists certain additional changes implemented therein:

  • Continuation of a 7.1 percent adjustment to OPPS payments to certain rural hospitals, including sole community hospitals and critical access hospitals (applicable to all services paid under the OPPS, excluding separately payable drugs and biological, devices paid under the pass-through payment policy, and items paid at charges reduced to cost);
  • Continuation of the cancer hospital payment adjustment with a target payment-to-cost ratio of 0.91 for determining the 2013 cancer hospital payment adjustment to be paid at cost report settlement (intended to cause cancer hospital payments to equal the weighted average payment-to-cost ratio for other OPPS hospitals);
  • Adjustment of payments to cover the marginal cost of hospital conversion to the use of non-highly enriched uranium (“non-HEU”) sources of radio-isotopes used in medical imaging (intended to reduce US reliance on reactors outside of the US);
  • Setting the payment for the acquisition and pharmacy overhead costs of separately payable drugs and biological that do not have pass-through status at the statutory default of average sales price plus 6 percent;
  • Clarification of the application of the supervision regulations to physical therapy, speech-language pathology, and occupational therapy services that are furnished in OPPS hospitals and critical access hospitals;
  • Updates to the Part A to Part B Rebilling Demonstration that is in effect for 2012 to extend it through 2014; this extension is designed to address increased length-of-stay times for outpatients receiving observation services as well as Medicare Part A to Part B rebilling policies when a hospital inpatient claim is denied because the inpatient admission was not medically necessary;
  • Revisions to regulations governing payments for new technology intraocular lenses (§§ 416.196(a0(2) and 416.195(a)(4)) with regard to labeling, requiring the inclusion of a claim of a specific clinical benefit therein and demonstration of evidence that the intraocular lenses result in a measurable, clinically meaningful, improved outcome; and
  • Adoption of measures for the Inpatient Rehabilitation Facility Quality Reporting Program that will affect annual prospective payment amounts for 2014 as well as the adoption of new pressure ulcer measures.

Medicaid Program; Payment for Services Furnished by Certain Primary Care Physicians and Charges for Vaccine Administration under the Vaccines for Children Program

The Medicaid final rule requires State Medicaid agencies to pay at least the Medicare rates in effect under the Medicare physician fee schedule rate in 2013 and 2014 or, if higher, the rate using the calendar year 2009 conversion factor for primary care services furnished by physicians practicing within the scope of practice of medicine or osteopathy with a specialty designation of family medicine, general internal medicine or pediatric medicine, or a subspecialty within those specialties (as recognized by the American Board of Medical Specialties, American Osteopathic Association, or the American Board of Physician Specialties). Physicians are required to self attest for purposes of inclusion as a “primary care physician” that they are either Board-certified in family medicine, general internal medicine, or pediatric medicine or a subspecialty related to those specialties; or that 60 percent of all Medicaid services billed by such physician or provided in a managed care environment are for the specified evaluation and management (“E&M”) and vaccine administration codes. This payment requirement applies to primary care services paid on a fee-for-service basis as well as those paid on a capitalized or other basis by Medicaid managed care plans.

However, the final rule also requires a 100 percent federal match for any increase in payment above the amounts due for such services under the applicable Medicaid State plan rate as of July 1, 2009, such that no additional costs accrue to states for payments above the rates in effect under the 2009 Medicaid State plan methodology. Accordingly, unless a state has reduced its Medicaid rates since 2009, it will be fully reimbursed by the federal government for any increased payments. In order to claim such enhanced federal match, states must be able to document the difference between the July 1, 2009, Medicaid rate and the applicable Medicare rate for specified providers that is claimable at the 100 percent matching rate. States are given flexibility in determining whether and how often to update rates to conform to changes in the Medicare Part B Fee Schedule, if the 2013 and 2014 rates are applicable, since such scheduled rates are subject to periodic adjustments or updates through the calendar year.

Primary care physicians are targeted by these payment changes in part due to their ability to perform the vital function of coordinating patient care, including specialty care, but also due to the need for a sufficient number of primary care physicians to be participating in the Medicaid program prior to the expansion of Medicaid eligibility in 2014. Primary care services are defined under the Patient Protection and Affordable Care Act (“ACA”) (Section 1902(jj)) to include certain specified procedure codes for E&M (codes 99201 through 99499, to the extent covered by the approved Medicaid State plan or included in a managed care contract) as well as certain vaccine administration codes. Additionally, the higher payment rates are applicable to services provided under the personal supervision of eligible physicians by all advanced practice clinicians. Physicians delivering primary care services in a Federally Qualified Health Center or Rural Health Clinic are not eligible for increased payments under this final rule due to the view that these physicians are already reimbursed at the appropriate rate under the Medicaid statute.

Additionally, the final rule updates the regional maximum fees that providers may charge for administration of pediatric vaccines to federally vaccine-eligible children under the Pediatric Immunization Distribution Program (more commonly known as the Vaccines for Children program) by adding 42 C.F.R. Part 441, Subpart L. Under this program, each state is required to establish a Vaccines for Children program under which certain specified groups of children are entitled to receive qualified pediatric immunizations without charge for the cost of the vaccine. This program permits providers to impose a fee for the administration of such a vaccine, as long as the fee does not exceed the costs of such administration, without permitting the provider the ability to deny administration of the vaccine due to the inability of the child’s parents or guardian to pay the administration fee.

The explicitly stated, expected, overall benefit from the Medicaid final rule is increased provider participation by primary care physicians, resulting in better access to primary and preventive health services by Medicaid beneficiaries. However, skeptics have questioned the ability of the final rule to generate such increased participation due to the fact that the increased rates are only in place for a 2-year period, 2013 and 2014. Currently under the final rule, states are required to collect and report data to CMS on the impact of the higher rates on physician participation. That data will assist Congress in determining whether or not to extend the provisions of the final rule beyond the end of 2014.

Medicare Program; Revisions to Payment Policies under the Physician Fee Schedule, DME Face-to-Face Encounters, Elimination of the Requirement for Termination of Non-Random Prepayment Complex Medical Review and Other Revisions to Part B for CY 2013

In conjunction with implementing the foregoing Medicaid payment increases, CMS also released a Medicare final rule with comment period that includes a statutorily required 26.5 percent across-the-board reduction to Medicare payment rates for more than 1 million physicians and non-physician practitioners under the Balanced Budget Act of 1997’s Sustainable Growth Rate (“SGR”) methodology. While Congress has overridden the required reduction every year since 2003, currently no such action has been taken.

Additionally, the Medicare final rule establishes payment rates for 2013 for the physician fee schedule, payments for Part B drugs, and other Medicare Part B payment policies to ensure that the payment system is updated to reflect changes in medical practice and in the relative value of services. It also includes a new policy to pay a patient’s physician or practitioner to coordinate the patient’s care in the 30 days following a hospital or skilled-nursing-facility stay. The changes in care coordination payment and other changes in the rule are expected to increase payment to family practitioners by 7 percent, and other primary care practitioners between 3 and 5 percent, if Congress averts the statutorily required reduction in Medicare’s physician fee schedule.

The Medicare final rule also includes the implementation of the physician value-based payment modifier under the ACA. Under the ACA, this new system is required to apply to all doctors by the start of 2017, and is one of the trickiest and most politically loaded parts of Medicare’s effort to shift away from paying for the volume of services and toward the quality of care.

The value-based payment modifier is the percentage by which amounts paid to a physician group under the Medicare physician fee schedule are adjusted based upon a comparison of the quality of care furnished to cost of care. The payment modifier provides for differential payment starting in 2015, based on performance in the 2013 calendar year. CMS originally planned to apply the modifier to medical groups of 25 or more professionals; however, in the final rule CMS changed the plan to only include medical groups of 100 or more practitioners. This change was adopted to gain experience with the methodology and approach before expanding to smaller groups—which CMS emphasizes will occur in future rulemaking.

In general, physicians with higher quality and lower costs will be paid more, and those with lower quality and higher costs will be paid less. The final rule provides an option for these groups of physicians to choose how the value modifier is calculated based on whether they participate in the Physician Quality Reporting System (“PQRS”). The PQRS is a voluntary program that allows physicians and other healthcare professionals to report information to Medicare about the quality of care they provide to people with Medicare who have certain medical conditions. All of the quality measures for which groups of physicians are eligible to report under the PQRS starting in 2013 are used to calculate the value-based payment modifier to the extent the group submits such data. Note, however, that the final rule also makes minor changes to the PQRS. Additional quality measures for those not participating in the PQRS are composites of rates of potentially preventable hospital admissions or readmissions.

Among other changes, the final rule also implements provisions of the ACA by removing certain regulations regarding termination of non-random prepayment review. Medical review is the process performed by Medicare contractors to ensure that billed items or services are covered and are reasonable and necessary. As a result of this final rule, contractors are not required to terminate non-random prepayment medical review by a prescribed time, but instead must terminate each medical review when the provider or supplier has met all Medicare billing requirements as evidenced by an acceptable error rate as determined by the contractor.

Finally, the rule implements provisions of the ACA by establishing a face-to-face encounter with a beneficiary as a condition of payment for certain durable medical equipment items such as prosthetic devices, orthotics, and prosthetics. The encounter must occur during the six months prior to the written order for each item or during such reasonable timeframe as provided by the Secretary.

Overall, this Medicare final rule continues efforts by CMS to align quality reporting across programs to reduce burden and complexity, and emphasizes paying for the quality of care as opposed to volume of services provided.

CMS Clarifies Place of Service (POS) Coding Requirements

Billing Medicare for services requires the correct POS code on the claim form. Improper use of the POS code has been a problem, especially when services are provided in out-patient hospitals and surgery centers. The OIG has found many circumstances where such services were provided in those facilities were billed as though services were provided in the physician office. The POS code is intended to identify where the physician is physically present and has a face to face encounter with a Medicare patient when covered services are provided.

CMS has issues revised and clarified POS coding instructions. They give multiple examples, including one where a Medicare patient receives MRI services at a hospital. The hospital bills the technical component . The physician is to submit a claim showing the professional component POS as his/her office (code 22), since that is where the physician performed the covered service, not the MRI center at the hospital. The Instructions describe the proper use of POS modifiers and are invaluable in avoiding liability to Medicare.

CMS Issues Final Rule on E-Prescribing

By Emily P. Walker, Washington Correspondent, MedPage Today
Published: September 06, 2011 WASHINGTON — Doctors now have an extra month to apply for a hardship waiver to avoid being penalized for not adopting electronic prescribing in their practices, according to a final rule issued by the Centers for Medicare and Medicaid Services (CMS).

Physicians who use a qualified e-prescribing system are eligible for an additional 1% in Medicare Part B payments in 2011 and 2012, and a 0.5% increase in 2013. Providers who fail to complete at least 10 paperless prescriptions using a qualified e-prescribing system between Jan. 1 and June 30, 2011, will receive a 1% cut in Medicare reimbursements in 2012, a 1.5% cut in 2013, and a 2% cut in 2014.

In a proposed rule from May, CMS said doctors who are unable to e-prescribe should apply for a “hardship exemption” before Oct. 1. In the final rule issued Sept. 1, CMS announced doctors now have until Nov. 1 to apply for an exemption.

Continue reading

Avoiding the 2012 eRx Payment Adjustment


An eligible professional can avoid the 2012 eRx Payment Adjustment if he or she: Is not a physician (MD, DO, or podiatrist), Nurse Practitioner, or Physician Assistant as of June 30, 2011, based on primary taxonomy code in the National Plan and Provider Enumeration System (NPPES); Does not have prescribing privileges and reports G-code G8644 (defined as not having prescribing privileges) at least one time on an eligible claim prior to June 30, 2011; Does not have at least 100 cases containing an encounter code in the measure’s denominator; Becomes a successful electronic prescriber (submits required number of electronic prescriptions (10 for individual) via claims and reports this to CMS before June 30, 2011); or Claims a hardship as described below. A group practice that is participating in eRx GPRO I or GPRO II during 2011: MUST become a successful electronic prescriber (submit required number of electronic prescriptions via claims before June 30, 2011); (Depending on the group’s size, the group practice must report the eRx measure for 75-2,500 unique eRx events via claims for patients in the denominator of the measure). If an eligible professional or selected group practice wishes to request an exemption to the eRx Incentive Program and the payment adjustment, there are two “hardship codes” that can be reported via claims if one of the following situations apply: G8642 – The eligible professional practices in a rural area without sufficient high speed internet access and requests a hardship exemption from the application of the payment adjustment under section 1848(a)(5)(A) of the Social Security Act. G8643 – The eligible professional practices in an area without sufficient available pharmacies for electronic prescribing and requests a hardship exemption from the application of the payment adjustment under section 1848(a)(5)(A) of the Social Security Act.

For additional information, please visit the “How to Get Started” and “Payment Adjustment Information” sections at on the CMS website.

ACOs: The Interview We Want to See