Baker Tilly healthcare update November 10, 2014

On the Hill

Republicans won a Senate majority in this year’s mid-term elections which means both the House and the Senate will be under Republican control beginning in January 2015. Even with control of both the House and the Senate, Republicans will not be able to repeal the entire Affordable Care Act. They may, however, push to repeal or improve parts of it as soon as January when the new 114th Congress begins its first session. 

At the agencies

On November 4, the Internal Revenue Service (IRS) issued a notice regarding health insurance plans and their coverage of inpatient hospital stays, and said that it planned to issue regulations on the matter.  The Department of Health and Human Services (HHS) and the Department of Treasury were made aware that some employers were offering plans that do not cover inpatient hospitalizations. HHS and Treasury have determined that these plans do not meet the qualifications for minimum value as mandated by the Affordable Care Act (ACA). According to the notice, employers that do not offer inpatient hospitalization in their plans to employees may be subject to tax penalties in 2015.  

CMS released final payment rules outlining how Medicare will pay major healthcare providers and suppliers in 2015, including home health agencies, physicians, hospital outpatient services, ambulatory surgical centers, and end stage renal disease providers.

Under the physician fee schedule final rule, Medicare payments to physicians will be reduced by 21.2 percent after March 2015, as required under the sustainable growth rate (SGR) formula. Legislation passed last April provided for no cuts to physician payments between January and March 2015.  Congress has repeatedly overturned cuts resulting from the SGR formula and in the final rule, CMS wrote that it will continue to work with Congress to fix this “untenable” situation. The rule also finalizes a separate chronic care management payment of $40.39 per month for physicians that manage care of beneficiaries with two or more chronic conditions. The agency also finalized a new process that will be fully implemented in 2017 that will allow for greater public comment prior to setting payment rates. Lastly, the agency finalized requirements related to its quality reporting initiatives.

Under the home health final rule, CMS finalized a 0.3 percent payment cut to home health agencies for 2015, an approximately $60 million reduction in payments. The rule also finalizes the elimination of the physician face-to-face narrative requirement, modifies therapy reassessment policies, formalizes the program integrity reform included in the proposed rule, and continues to implement ACA rebasing policy (though CMS notes that it plans to evaluate claims data for CY 2014 when it is available and will provide an update on the impact of these cuts).

Under the end stage renal disease (ESRD) final rule, CMS will increase overall payments to dialysis facilities by an average 0.3 percent for 2015. Separately, payments to hospital based ESRD facilities are expected to increase by 0.5 percent, and payments to freestanding facilities will increase by 0.3 percent.  The agency also finalized payment adjustments to durable medical equipment providers.

Under the outpatient payment final rule, CMS will increase overall payments by 2.2 percent for 2015. The agency also finalized plans for bundling payments for certain primary procedures and finalized payment rates for Part B outpatient drugs. For ambulatory surgical centers, payment rates will be increased under the ASC payment system by 1.4 percent. Finally, the rule establishes a process for CMS to recover overpayments made to Medicare Advantage and Medicare Part D plans.

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