Baker Tilly’s The pulse of healthcare for May 12, 2015


At the agencies

The Centers for Medicare and Medicaid Services (CMS) released a proposed rule on April 23 that would increase the Medicare payment rates for inpatient rehabilitation facilities (IRFs) by 1.7 percent, or $130 million, in 2016. This proposed rule also includes a market basket specific to IRFs based on 2012 data and using freestanding and hospital-based facilities, which if finalized would replace the current Rehabilitation, Psychiatric and Long-Term Care basket. Furthermore, the agency proposed the adoption of several quality measures in addition to the already standard post-acute care measures, to be recorded by IRFs as part of the requirements of the Improving Medicare Post-Acute Care Transformation Act. CMS estimated that it will cost hospitals $24 million to implement its new quality reporting standards. Lastly, this proposed rule also suggested the suspension of the agency’s previously finalized data validation policy that was scheduled to take effect in the fall of 2015; the suspension of this policy was suggested in part to decrease the burden on IRF providers. 

On April 30, CMS released a proposed rule that would update the FY 2016 Medicare payment rates for hospices and the hospice wage index. This rule would increase hospice pay rates 1.3 percent, roughly $200 million, next year, and attempts to align the wage index with visit intensity and the cost of providing care. The rule proposes both two pay rates for routine care (a rate for the first 60 days of care and a lower rate for following days), and also a “service intensity add-on payment.” This payment would be made in addition to the routine care rate for care provided during the last week of the patient’s life to account for the extra intensity of care often needed during this time. This rule further proposed that all of a patient’s diagnoses, even if not related to their terminal illness, be reported by hospices. Also on April 30, the CMS released the final rule on the FY 2015 hospice wage index and payment rate update, which only made clerical corrections to the proposed rule.


On the Hill

On April 21, several major healthcare providers groups wrote a letter to Congress urging them to strike a provision from a trade bill under consideration that would increase Medicare sequestration cuts by $700 million; this provision is not in the current version of the bill in the House but may be retained in the Senate bill.  A vote is likely in early May.

Also that day, the Senate Commerce committee held a hearing on “Advancing Telehealth Through Connectivity,” during which Sen. Roger Wicker stated his intent to re-introduce the Telehealth Enhancement Act later this year with Sen. Thad Cochran, which would improve Medicare reimbursement for telehealth services.

On April 28, the  Senate Committee on Finance held a hearing entitled, “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare.” A primary concern of the committee and Health and Human Services witnesses were the very high number of appeals being filed by roughly 5 percent of providers appealing Medicare denials. Among the possible remedies considered was a refundable filing fee for appealing denials.   


In the courts

On April 28, dozens of hospitals from more than 18 states sued the Department of Health and Human Services (HHS), challenging the agency’s low-income payment rule, “Center for Medicare and Medicaid Services’ 2010 Ruling 1498-R.” The hospitals in the lawsuit are claiming that they receive a disproportionate number of low-income patients, and that they have made appeals for higher reimbursement rates but their appeals have been rejected. The providers are arguing, among other things, that the Provider Reimbursement Review Board should be the ultimate arbiter of the disproportionate share hospital adjustment.


News to note

Two reports of note in the news that could affect providers’ future are the rising number of medical malpractice lawsuits involving errors in Electronic Health Records (EHRs), as well as the growing role of retail health clinics in the healthcare system. An uptick in the number of medical malpractice suits involving EHR issues is apparent, as reported by health writer Arthur Allen, and such issues include discrepancies and information gaps due to both software error and provider use error.

Additionally, a new report by the Robert Wood Johnson Foundation indicates that retail health clinics are able to provide care at cheaper rates for commercially insured patients than other types of providers including urgent care centers, hospital emergency rooms, and physicians’ offices.

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