CMS finalizes hospitals outpatient and ambulatory surgical center prospective payment system

In the agencies

On Nov. 1, the Centers for Medicare and Medicaid Services (CMS) released its updated payment rates and policy changes to the Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System for 2017. CMS estimates the new rule will increase OPPS payment rates by 1.7 percent and ASC rates by 1.9 percent in 2017. The rule would also address physicians’ concerns regarding pain management and patient surveys. CMS is implementing section 603 of the Bipartisan Budget Act of 2015 which removes certain items and services furnished by off-campus hospital outpatient departments. Because of the higher rates available if services are offered at a hospital outpatient department rather than a physician’s office, the act created an incentive for hospitals to acquire physicians’ offices. The difference in rates also increased costs for the Medicare program and raised the cost-sharing liability for beneficiaries.

The final OPPS and ASC rule includes proposed changes that would affect the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs. It would, for eligible hospitals, eliminate the Clinical Decision Support (CDS) and Computerized Order Entry (CPOE) objectives and measures beginning in 2017. Additionally, returning participants in the EHR Incentive Program will report on a 90-day EHR reporting period in 2016 and 2017, and there will be a new application process for a one-time significant hardship exception to the Medicare EHR Incentive Program for certain eligible professionals in 2017 who are transitioning into the Merit-based Incentive Payment System (MIPS).

Also on Nov. 1, CMS released a final rule reducing Medicare payment rates to home health agencies by 0.7 percent in 2017. The rule is roughly a $130 million payment reduction for around 11,400 home health agencies in the coming year. CMS had originally proposed a higher cut at one percent or $180 million cut to Medicare payments to home health providers. This is the last year of CMS’ four-year phased adjustment to the home health system. The rule additionally adds four measures to the home health quality reporting program that will determine payments beginning in 2018 per the Improving Medicare Post-Acute Care Transformation Act of 2014.

On Nov. 1, CMS announced that most hospitals participating in the Hospital Value-Based Purchasing program will see payments rise for 2017. Around 1,600 of the 3,000 hospitals that reward participants for improving the quality and cost effectiveness of care will have higher payments. Reimbursement changes for participating hospitals will be small. It is expected that half of the hospitals will see adjustments between -0.5 percent and 0.5 percent. The largest reward for a top performer will be just 4 percent, while poor performers will see a 1.83 percent net reduction.

In the courts

On Nov. 4, Pennsylvania Attorney General Bruce Beemer filed a lawsuit against Grane Healthcare accusing the company of violating state consumer protection law and falsifying billing information. The company allegedly misled consumers regarding its ratio of staff to patients, and the lower than advertised certified nursing assistants on duty resulted in subpar care for patients. The suit additionally claims that Grane consistently billed consumers and the state for services that were not provided.

Grane Healthcare operates twelve nursing homes in Pennsylvania, and eleven of these facilities are targeted by the lawsuit. The suit aims to bar Grane from deceptive marketing practices and provide restitution to consumers and the state. The suit also seeks to have Grane pay statutory penalties of $1,000 for each violation of the consumer protection law and $3,000 for each violation where the patient was sixty years old or above.

On Nov. 7, a U.S. District Court halted implementation of a new CMS rule banning mandatory arbitration in nursing home agreements citing serious legal questions about the power federal agencies wield. Judge Michael Mills questioned CMS’s authority to enact “sweeping restrictions” on facilities that receive federal funding, and granted a preliminary injunction preventing the ban from going into effect until a broader suit can be resolved. Five nursing homes have filed a suit suing CMS over the rule. Judge Mills cited concerns of “incremental creep of federal agencies beyond that envisioned by the Constitution.” The rule was intended to go into effect on Nov. 28.

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