EisnerAmper Blog

An EisnerAmper Health Care Services Blog

Senate Repeals SGR Formula

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April 16, 2015

Clark_NancyBy Nancy Clark, CPC, CPC-H, CPB, CPMA, CPC-I

On April 14, the Senate voted to approve HR 2, the Medicare Access and CHIP Reauthorization Act.  The bill had passed the House of Representatives on March 26.  This legislation repeals the Medicare Sustainable Growth Rate (SGR) formula.  Following are highlights of the bill:

  • The law averts the 21% pay cut for providers that went into effect on April 1, 2015.  For the next 5 years, physicians will see annual increases of .5%.  The first increase will occur on July 1, 2015 and the next on January 1, 2016.  
  • The bill provides a 5% bonus for eligible professionals who receive a significant portion of their revenue from an alternate payment model from 2019 to 2024.
  • Implementation of the “2-Midnight Rule” is further delayed until September 2015.  Medicare administrative contractors are instructed to utilize the current “probe and educate” approach instead of allowing the recovery audit contractors to review claims.
  • Bundled payments for global surgical periods will stay intact.  However, the Centers for Medicare and Medicaid Services will be required to periodically collect information on the services that surgeons perform in the global period to ensure that payment amounts for these procedures are accurate.  
  • Physician Quality Reporting System, Meaningful Use and the Value-Based Payment Modifier programs will be combined into one Merit-based Incentive Payment System beginning in 2019.  
  • The bill also affects Medicare beneficiaries, implementing income-related premium adjustments for Parts B and D beginning in 2018.
  • There is no language directing any delay of ICD-10 implementation.  This indicates that ICD-10 is scheduled to be implemented on October 1, 2015.

The bill is now forwarded to President Obama for his approval.  The White House has indicated that the President will sign the bill into law.

Hospital Productivity Growth Spurt

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April 2, 2015

Bisciello_StevenBy Steven Bisciello, MBA, CMPE

The trend for the past few years continues to be the shift from inpatient care to outpatient care.  The continued result of this trend has been the rallying cries for accountable care, the sharing of responsibility for the control of costs, and the measurement and reporting of improved outcomes, all of which lead up to a large probability of reimbursement being based heavily on quality of care.  We have seen reports and read articles on the rising costs of health care as well as the financial burden in treating patients with recurring, severe illnesses such as diabetes and heart-disease and conditions such as obesity.  We have also read articles on the resulting legislation that has been proposed and implemented as a result of these rising costs and illnesses. 

Another question and request should be “how well are our country’s hospitals performing in the treatment of their patients?”  Recently, there was a refreshing article written in Health Affairs  which sheds some light on answers to the above question.

The article reports how a study was conducted on the productivity by hospitals in treating Medicare patients between the years of 2001-2011. These patients suffered from conditions such as heart failure and pneumonia.  The results show that “the rates of annual productivity growth were 0.78 percent for heart attack, 0.62 percent for heart failure, and 1.90 percent for pneumonia. However, unadjusted productivity growth appears to have been negative. These findings suggest that productivity growth in US health care could be better than is sometimes believed, and may help alleviate concerns about Medicare payment policy under the Affordable Care Act.” 

Health Care Industry Concerns Grow Regarding Federal Exchange Subsidies to Enrollees

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March 9, 2015

McLafferty_MikeBy Michael J. McLafferty, CPA, MBA, FACHE, FHFMA, FACMPE

The Supreme Court is scheduled in June to determine the legality of subsidies to federal exchange enrollees. The wording in the Affordable Care Act (“ACA”) suggests that subsidies can only be paid to enrollees from state-controlled exchanges. The implication of a negative ruling by the high court could place a number of enrollees in a position where they can no longer afford their health care premiums.

There are estimates from the Urban Institute suggesting that in 2016 total spending on hospital care could be reduced by $6.3 billion. The Administration and Congress has been approached regarding what is their “Plan B” if the Supreme Court rules against the subsidies. Neither party has come forward to discuss their Plan B.

A negative Supreme Court ruling will be financially significant for the hospital industry. There are a number of reasons for concern, including:

  • the Administration’s FY 2106 budget indicated material reductions in Medicare Reimbursement, 
  • States are suggesting they need to reduce their Charity Care payments to hospitals and 
  • new payment models that introduce quality metrics are being introduced to the industry.

Prepare Now for ICD-10 Implementation

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January 29, 2015

Clark_NancyBy Nancy Clark, CPC, CPC-H, CPB, CPMA, CPC-I

The Centers for Medicare and Medicaid Services (“CMS”) issued confirmation last week that the compliance date for ICD-10 is October 1, 2015.   CMS has posted ICD-10 timelines and is directing providers to begin or continue implementation efforts now.  Health care providers, payers, clearinghouses, and billing services must be prepared to comply with the transition to ICD-10.

ICD-10 will affect diagnosis and inpatient procedure coding for everyone covered by the Health Insurance Portability and Accountability Act (“HIPAA”). ICD-10 diagnosis codes must be used for all HIPAA entities in the United States, and ICD-10 procedure codes must be used for all hospital inpatient procedures. Claims with ICD-9 codes for services provided on or after the compliance deadline will not be paid by major insurance carriers.

Providers need to continue to work on their implementation strategy, including an assessment of the impact on their organization, a detailed timeline, and a budget.  It is important to check with their billing service, clearinghouse and practice management software vendor to ensure that they are currently testing submissions in both ICD-10 and ICD-9 formats.   Since claims may be submitted or appealed well after the date of service, both types of submissions will need to be available to providers for an extended period of time.

Most personnel will need some type of ICD-10 training.  Coders and billers need detailed code set training.  Office staff responsible for authorizations will need to understand the new code set in order to properly obtain preapproval for procedures.  Clinical personnel will need to be versed in the coding requirements in order to appropriately document services. 

Include staff members involved in medical records, coding, clinical functions, information technology and finance when coordinating transition efforts and training sessions.  Lack of preparation for ICD-10 implementation may result in lack of reimbursement for services rendered on or after October 1, 2015.  For more information on ICD-10 implementation, see the CMS website.

Physician Pay Fix Update

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January 26, 2015

Bisciello_StevenBy Steven Bisciello, MBA, CMPE

As far as health care reform goes, the only item unresolved longer than ICD-10 is the issue regarding the repeal of the sustainable growth (“SGR”) formula. This past week we saw the first efforts to either temporarily or permanently repeal the SGR formula used to calculate Medicare physician payments .

These efforts came in the form of a two-day hearing held by the House Energy and Commerce Health Subcommittee.  This first hearing was entitled “A Permanent Solution to the SGR: The Time Is Now.”

As we know, the current deadline set for the SGR to go forward is March 31.  From the first round of testimony, it was reported that there is an agreement that one of the greatest challenges Congress faces is how to pay for repeal of the SGR--and not with a new Medicare payment policy for physicians. Last year, the committees in charge agreed on a plan which would have instilled a legislative package that would repeal the SGR and replace it with stable rates which could also be altered based upon performance-based incentives. This plan passed the House but went no further due to a lack of consensus about how to offset the cost.

Some suggestions that were provided on how to appropriately pay for SGR reform included the implementation of the new physician incentive payments from 2023 to 2018, allowing non-physician providers to participate, and increasing deductibles.

Subcommittee Chairman Joe Pitts (R-PA) said House leadership has stated that “only an SGR bill that can be paid for will be considered and that efforts to move a bill that is unpaid for is unrealistic.” Other committee members argued that “offsets are not needed for repealing the SGR but that if offsets are used they should come from a combination of tax increases and unused funds from military operations, not from the Medicare program.”

In this first round of meeting, there was no discussion, however, about cutting non-physician Medicare providers although that remains a strong possibility. Some of the provider cuts Congress is considering currently are cuts to graduate medical education, critical access hospitals, inpatient rehabilitation facilities, skilled nursing facilities, long term care hospitals, home health, clinical lab services, Medicare bad debt, and durable medical equipment.

We will continue to stay tuned as the next rounds of talks are completed.

From Volume to Value

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January 12, 2015

Duchak, DougBy Douglas Duchak, MBA

Will 2015 be the year hospital executives begin to experience a significant shift from the traditional fee for service reimbursement to the various forms of risk-based reimbursement that has been talked about and modeled for years? The industry has been conflicted in recent years by the comfort and reality of the volume-driven fee-for-service system and the financial strategies that have evolved from it, and the risk models we all know are coming. Planning and executing strategy that prepares a hospital for the future often come at the expense (and bottom line) of the current period. For hospitals and physicians to aggressively reduce length of stay (patient days), re-admissions and levels of ancillary testing under the current fee-for-service environment not only requires significant behavioral changes, it undermines financial performance during a period where many hospitals can ill afford to do so.

Many executives, while privately acknowledging the need to prepare and create initiatives for the coming risk environment, will privately state they cannot ‘leave money on the table’ and continue to strategize for the three most important factors for financial success: volume, volume and volume.

In preparing for the coming risk environment, it is essential that hospitals and physicians shift their focus from quantity to quality and efficiency. Less admissions, patient days, ancillary tests, and patient encounters will drive financial incentives, while at the same time quality and patient outcomes need to remain the same or improve. The days of the hospital CFO walking through his high census and very busy hospital with a big smile will be replaced by concern and worries as to how to reduce the high activity level. Indeed, that same CFO may have that same smile a few years in the future when he is walking through his near empty hospital.

While still in the early years of formation, it is expected Accountable Care Organizations (ACOs) will be the vehicle by which the objective of less costly and higher quality health care is achieved. The U.S. health care industry continues to spend nearly twice as much (as a % of Gross National Product) as any other country in the world on its health care delivery. Meanwhile, Medicare, the insurance industry, and employers who often foot the bill for their employees’ health care are calling loudly for lower costs and more efficiency in the system. It is this call that is driving the changes from our current system to the ACO model now being developed. Hospitals and physicians know the change is coming--yet realize we’re not ready just yet. The challenge is to prepare for those changes while not harming the current operation.

PQRS Negative Payment Letters Sent

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December 17, 2014

By Nancy Clark, CPC, CPC-H, CPB, CPMA, CPC-I

Clark_NancyThe Centers for Medicare and Medicaid Services (“CMS”) recently sent letters to group practices and eligible professionals (“EPs”) who did not satisfactorily report PQRS quality data measures in 2013 and will receive a negative 1.5% payment adjustment on their Medicare Part B payments starting Jan. 1, 2015.

PQRS, the Physician Quality Reporting System, is a program that uses a combination of incentive payments and negative payment adjustments to promote reporting of quality information.  Calendar year 2015 will be the first in which a negative impact is noticed.  In 2016, the negative adjustment will be 2% of the allowed fee schedule.

PQRS has also offered incentives for participation, but these incentives are diminishing as the penalties are implemented.  Groups and EPs who believe they are inappropriately penalized have the option of appealing with CMS through an informal review process by Feb. 28, 2015. There’s more information on how to file for an informal review here.

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