Medicare and Medicaid beneficiaries avoid premium hikes due to budget deal

On November 10, 2015, the Centers for Medicare and Medicaid Services (CMS) announced the 2016 Medicare Part B premiums.  Although a large number of beneficiaries were facing a large premium hike, the budget deal signed into law the previous week contained provisions that managed to prevent the increases.  Without the budget deal, beneficiaries facing the premium increase would have seen their monthly bills increase by nearly 50 percent.  Due to the provisions in the budget deal, now only five percent of beneficiaries, those with incomes over $85,000, will pay the higher premium rates.

On October 30, 2015, the CMS released its 2016 hospital Medicare payment rule. One of the key aspects of the rule was CMS’s final determination regarding the admissions policy known as the “two-midnight” rule. At one point CMS had proposed that patients could only be considered inpatient if they stayed overnight for at least two nights. On Friday, CMS finalized a less stringent version of the rule in which physicians can determine an inpatient status due to “rare and unusual” circumstances. In these cases, physicians will have to ensure that they have thorough documentation to justify the inpatient rate for those patients not staying more than two midnights. 

The payment rule also included a 0.4 percent cut, roughly $133 million, to the Medicare payment rates for outpatient services at hospitals. This is a bigger reduction than CMS had indicated in the proposed rule. This final payment rule also marks the first of its kind since Congress officially repealed the sustainable growth rate formula under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MACRA mandated that CMS implement the Merit-Based Incentive Payment System, which will now officially begin under this final rule.  

On October 30, 2015, CMS released a final rule regarding revisions to the Medicare Physician Fee Schedule, and specific policy changes related to Medicare Part B payments. A notable part of this final rule is that CMS will now reimburse providers for the conversations they have with Medicare beneficiaries about end-of-life planning.

On October 29, 2015, CMS released a final rule that will change the CY 2016 Medicare and Medicaid Home Health Prospective Payment System payment rates and policies. Overall, home health providers can expect a 1.4 percent cut to payments in 2016 relative to 2015 payments, which is less of a reduction than the July proposed cut of 1.8 percent. Furthermore, CMS will start the proposed home health value-based purchasing pilot program in several states in January 2016.  Beginning in 2018, up to 3 percent of a home health agency’s total payments will be withheld for either incentives or penalties, with the percentages of payments withheld through this model increasing over the next 5 years. Lastly, the final rule adds one new quality measure to the home health quality reporting system.

On October 26, 2015, CMS announced that a slim majority of hospitals participating in the Hospital Value-Based Purchasing program will see an increase in their payments. Of the roughly 3,500 hospitals that participate in the program, 1,800 will see increases while 1,200 will experience decreases. Although most hospitals will see only a small change, between 0.4 percent decrease to a 0.4 percent increase, the best performing hospitals will see a 3 percent increase in payments.  The worst performing hospitals will receive the maximum decrease of 1.75 percent. 

On October 29, 2015, CMS released a proposed rule that is intended to reduce readmission rates in hospitals (including critical access and long-term care hospitals), rehabilitation facilities, inpatient rehabilitation facilities, and home health agencies. Under the rule, these facilities will now have to develop a written discharge plan for every inpatient. The rule also requires discharge plans for some outpatients as well. The rule is estimated to cost providers $454 million in its first year of implementation, with home health agencies seeing the largest financial cost of $283 million annually.  

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