The monthly healthcare wrap-up: August 2018

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Post-acute care providers set to receive more than $900 million in raises

The Centers for Medicare & Medicaid Services (CMS) is moving forward with many of its spring proposals to raise payment rates for skilled nursing facilities (SNFs), inpatient psychiatric facilities (IPFs) and inpatient rehab facilities (IRFs). These groups will collectively see a $975 million raise as well as changes in quality measures and coverage criteria.

  • SNFs would receive a 2.4 percent raise in payments—or $820 million more—which will be linked with patient conditions and care needs in a new Patient-Driven Patient Model (PDPM). This model also reduces patient assessment documentation standards, saving SNFs about $2 billion over a 10-year period
  • IPFs are looking at a $50 million increase, up from $45 million last year. The agency also removed five quality measures for the facilities, including those tracking patients’ use of tobacco and alcohol as well as their flu vaccination rates
  • IRFs will receive a 1.3 percent increase next year, or $105 million. This is a jump from the $75 million raise they received last year. CMS is also revising coverage criteria for the facilities, including counting post-admission physician evaluation as a face-to-face physician visit as well as allowing the rehabilitation physician to meet with interdisciplinary team members remotely without additional documentation requirements

Hospices will also receive a bump in payments next year to the tune of 1.8 percent, or $340 million. That is up from the 1 percent hike they received last year. The agency will also eliminate some measures by weighing the cost associated with each measure against its benefit. CMS also plans to revamp the Hospice Compare policies site.

CMS proposes equalized payment structure; academic and rural hospitals could see cuts

CMS proposed a new payment structure that equalizes payment for several billing codes, instead of paying more for complex cases and less for simpler cases. An analysis by Moody’s Investors Service found this proposal could reduce reimbursement for academic medical centers and rural hospitals, which tend to employ more specialists and see sicker patients.

  • CMS estimates a 3 percent payment cut for cardiologists, oncologists and neurologists, a 6 percent cut for rheumatologists and an 8 percent cut for endocrinologists if the proposed rule is finalized
  • The agency also proposed combining level 2 through level 5 office codes for evaluation and management services into single payment rates for new and established patients. For example, CMS currently reimburses $148 for level 5 visits and $45 for level 2 visits; these would both change to $93 should the proposed rule be finalized
  • The Moody’s analysis found the proposal could incentivize specialists to seek hospital employment rather than pursue independent practice

The agency will accept public comments on this proposed rule until Sept. 10.

CMS releases its IPPS Final Rule, eliminates 25 percent rule for LTCHs

Earlier in the month, CMS released the FY 2019 Inpatient Prospective Payment System (IPPS) Final Rule and agreed to abolish the 25 percent rule for long-term care hospitals (LTCHs), which would reduce Medicare reimbursement rates for LTCHs that receive more than a quarter of their patients from one acute care hospital. Introduced in 2004, the 25 percent rule was routinely delayed by both CMS and Congress, and was set to kick in Oct. 1.

The rule also outlined other changes, including (but not limited to):

  • Requiring hospitals to publish a list of standard charges online starting Jan. 1, and updating said list annually
  • Planning to distribute $8.3 billion in uncompensated care payments for FY 2019, a $1.5 billion increase from FY 2018
  • Overhauling the meaningful use program and encouraging providers to use application programming interfaces to grant patients easier access to health data and promote interoperability across the care continuum
  • Eliminating 18 quality measures and saving hospitals $72 million in reporting costs

Uncompensated care audits set to start come fall

In fall 2018, CMS will begin its three-year phase-in of its new policy regarding the use of hospitals’ charity care and bad debt to determine their disproportionate-share hospital (DSH) payments. These payments were previously based primarily on the number of Medicaid, dual-eligible and disabled patients hospitals saw; however, the Affordable Care Act (ACA) made the change assuming Medicaid and subsidized plan coverage would expand.

  • The American Hospital Association (AHA) voiced concerns that hospitals may inaccurately report uncompensated care due to unclear instructions. The association asked CMS to use the S-10 worksheet to determine DSH payments in FY 2019, and to establish a stop-loss policy to help the estimated 18 percent of hospitals set to lose more than 10 percent of their DSH payments due to the change. CMS declined both proposals
  • Starting Oct. 1, CMS will require hospitals to submit records for each patient encounter that contributes to the uncompensated care amount reported on their S-10 worksheets

Providers increasingly use digital tools to engage behavioral health patients

Nearly one-fifth of adults in the United States have a mental illness, according to the National Institute of Mental Health. However, reaching and successfully engaging those patients can be difficult. Providers are increasingly turning to digital tools such as apps, fitness trackers and telemedicine consults to increase patient interaction and improve outcomes overall. Providers and health system representatives have offered several tips to better engage behavioral health patients:

  • Integrate behavioral health into patients’ physical healthcare. Mental health specialists recommend working with patients’ primary care physician to encourage a holistic treatment plan, and using digital platforms to encourage communication between providers
  • Increase accessibility through digital cognitive behavioral therapy. Virtual therapy can change behavioral and thinking patterns without requiring patients to travel to an office
  • Use technology to collect data and better track improvement. By collecting patient data between office visits, providers can gain insight into the patient’s overall progress, medication adherence and even sleeping patterns

CMS proposes reimbursement cuts in HOPPS proposed rule

After a slight delay, CMS released its Hospital Outpatient Prospective Payment System (HOPPS) proposed rule, which aims to curb surging hospital outpatient department (HOPD) spending. Some key changes included in the proposed rule are as follows:

  • Routine clinic visits and expanded services at excepted off-campus HOPDs would see a 60 percent payment cut. Medicare would spend $610 million less on visits under the G0463 code in calendar year (CY) 2019, with reimbursement rates going from $116 per visit to $46. Co-pays are also expected to drop to $9 from their current $23
  • 115 340B eligible off-campus HOPDs would see a 28.5 percent cut in reimbursements in CY 2019. The Centers for Medicare and Medicaid Innovation (CMMI) is requesting feedback regarding a potential drug purchasing plan that would allow providers to work with approved private vendors who would negotiate lower drug costs from manufacturers
  • Two procedures would be removed from the Inpatient Only (IPO) list— CPT code 31241 (sinus/nasal endoscopy) and 01402 (anesthesia for total knee arthroplasty). The agency also proposed expanding the definition of “surgery” to include more “surgery-like services” when it comes to ambulatory surgical centers’ (ASC) Covered Procedures List, as well as adding 12 cardiac catheterization procedures to the ASC List

A report by Moody's Investors Service found, if finalized, these changes would add to hospitals’ increasing list of revenue and margin pressures. The report noted the change with the most significant impact on hospital margins would be moving 12 cardiac procedures to the ASC setting, which would subsequently be reimbursed less. While hospitals argue higher reimbursement rates pay for 24-hour service and specialized equipment, industry experts advise hospital executives to adjust their acquisition strategies and focus on reducing overhead costs.


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