The pulse of healthcare: Baker Tilly healthcare update March 30, 2015

At the agencies 

On March 20, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that governs the third and final stage of the electronic health record (EHR) meaningful use program. The proposed rule would give providers an additional year to start stage three of the program; providers will now have the option to start stage three in 2018 as opposed to 2017. It would also make stage three of the EHR program the only stage in 2018. This would mean that all providers, regardless of whether or not they had already participated in the first and second stage of the program, would have to meet the EHR program’s requirements in 2018. According to CMS, the proposed rule is intended to simplify and create more flexibility in the meaningful use program. However, different types of providers will have to report on more measures than others. Other aspects of the proposed rule deal with the electronic transmission of prescriptions, aligning and streamlining the reporting period and data submission for all participants, protecting patient health information, the use of computers for ordering diagnostic tests, medication and labs, and ease of use for patients to be able to view their health records online. The CMS Office of the National Coordinator for Health Information Technology simultaneously released a proposed rule on the certification aspects for health IT products in the EHR program.

On March 10, CMS announced a new model for accountable care organizations (ACOs). This “next generation” of ACOs will take on increased risk compared to the current ACO models but with the intent of offering providers and beneficiaries more opportunities to coordinate care. Participants will also be able to use quality standards that better align with other Medicare programs, expand the use of telehealth services, and increase their communications with beneficiaries about their care choices. These new ACOs will be able to offer high-value services with lower or no cost co-pays to patients and will be able to take regional and local cost differences into account when determining their cost. Organizations that would like to participate in the first round of this new ACO model must submit a letter of intent to CMS by May 1, 2015 and then a full application by June 1, 2015.

On the Hill 

On March 26, the House passed a bill to permanently repeal the sustainable growth rate (SGR) formula for Medicare payments. The bill, which was crafted by bipartisan members and with agreement from Speaker John Boehner and Minority Leader Nancy Pelosi, would do away with the "doc fix" bills that Congress has had to pass 17 times to avoid extreme pay cuts to Medicare participating providers. The bill replaces the SGR formula with a plan to increase Medicare payments to physicians by 0.5 percent per year over the next five years. The bill also includes a provision to create one value-based performance program that would incorporate all of the existing separate value-based performance programs to improve quality of care while reducing costs. The bill would also encourage the use of "alternative payment models" by providing a five percent payment bonus to providers who receive a good portion of their revenue from these alternative models. Provisions of the bill that would pay for the SGR repeal include: a one percent increase in payments in 2018 for long-term care hospitals, nursing homes, inpatient rehabilitation facilities, home health, and hospice providers instead of a higher percentage market basket increase, and an incremental "phase-in" of the 3.2 percent increase that was slated for hospitals in 2018. The bill also funds the Children's Health Insurance Program (CHIP) for two years.

On March 27, Senate Majority Leader Mitch McConnell announced that the Senate would not vote on the SGR repeal bill until after they return from a two week recess.  Although the current "doc fix" patch expires on March 31, Senator McConnell has been assured by CMS that payments to physicians will not be decreased by 21 percent (which the current SGR creates) until April 14. The Senate is not scheduled to return from recess until April 13 which will give the Senate only one day to vote on the bill.

On March 16, the House passed two bills related to Medicare beneficiaries and durable medical equipment (DME). The “Medicare DMEPOS Competitive Improvement Act,” is intended to address “low-ball” bidding issues regarding DME suppliers. The “Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act,” is intended to protect Medicare beneficiaries from unwittingly being charged for nursing home or additional hospital costs. The NOTICE Act requires hospitals to notify these patients when they are not officially “admitted” but are actually placed under observation, thus leaving them vulnerable to the additional charges. Both bills will still need to be considered and voted on by the Senate. These bills may also be included in the final SGR repeal bill.

On March 13, the Medicare Payment Advisory Commission (MedPAC) released its March 2015 report to Congress which outlines its recommendations for 2016 regarding various Medicare policies. This report provides recommendations regarding payment rates for inpatient and outpatient hospitals, long-term care hospitals, skilled nursing facilities, ambulatory surgical centers, and inpatient rehabilitation facilities. The report also includes recommendations regarding the sustainable growth rate (SGR) formula and the Primary Care Incentive Program. Many of the recommendations made in this report have also been included in previous MedPAC reports to Congress. We will be providing information on the MedPAC’s recommendations in future updates.

In the courts 

On March 10, the US Court of Appeals issued a decision that will place further uncertainty on the recovery audit contractor (RAC) program administered through CMS. The decision, which sided with the complainant CGI Federal, Inc., stated that the new contingency fee payment provisions proposed by CMS in the latest recovery contractor bidding process were not consistent with standard commercial business practices. The new payment provision that CMS had proposed would require RACs to wait until a second level of appeals was conducted before they could collect their contingency fees. In its complaint, CGI stated that it currently takes an average of 41 days to receive their contingency fees and this new provision would require them and other RACs to wait 120 to 420 days to receive their fees. CMS has not provided guidance on how they will address the US Court of Appeals decision.


For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.