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CMS Proposes 2012 Payment Policy and Rate Changes

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  • July 15, 2011
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The Centers for Medicare & Medicaid Services (CMS) ran a triple play on July 1, issuing proposed rules that will affect physicians, hospital outpatient departments (HOPD), ambulatory surgical centers (ASC), and suppliers of renal dialysis services in the upcoming year. Most notable in all three proposed rules are the updates to payment policies and rates for 2012 and the steps being taken to further implement Affordable Care Act provisions intended to improve the quality of care beneficiaries receive and, at the same time, reduce government spending.

The Medicare Physician Fee Schedule (MPFS) 2012 Proposed Rule

Under current law, Medicare payment rates for physician services face a 29.5 percent reduction in 2012 based on the Sustainable Growth Rate (SGR) formula. CMS and others are advocating against this reduction, however, so the likelihood of physicians receiving such a drastic pay cut is slim.
CMS Administrator Donald Berwick, MD, wrote on, “Today, the Centers for Medicare & Medicaid Services (CMS) issued proposed rules that spell out how this cut is calculated and warned that if Congress does not act in time, doctor fees will be slashed come January 1. We cannot—and will not—let this happen.”
The 2012 MPFS proposed rule also would update a number of physician incentive programs including the Physician Quality Reporting System, the e-Prescribing Incentive Program, and the Electronic Health Records Incentive Program. A CMS Fact Sheet outlines the proposed changes to these physician incentive programs.
Also in the MPFS 2012 proposed rule, CMS would:

  • significantly expand its misvalued code initiative;
  • change how it adjusts payment for geographic variation in the cost of practice;
  • expand its multiple procedure payment reduction to the professional interpretation of advance imaging services to recognize the overlapping activities that go into valuing these services;
  • revise criteria for a health risk assessment (HRA) to be used in conjunction with annual wellness visits (AWVs);
  • expand the list of services that can be furnished through telehealth to include smoking cessation services;
  • revise quality and cost measures that would be used in establishing a new value-based modifier that would reward physicians for providing higher quality and more efficient care;
  • implement the third year of a four-year transition to new practice expense relative value units, based on data from the Physician Practice Information Survey that was adopted in the MPFS 2010 final rule;
  • and more.

The proposed rule and supporting documents provide complete details; you’ll find them in the Downloads section of the PFS Federal Regulation Notices page on the CMS website.

Proposed Changes for HOPDs and ASCs

In the 2012 proposed rule for HOPDs and ASCs, CMS is projecting a market basket update for 2012 of 1.5 percent for hospitals paid under the Outpatient Prospective Payment System (OPPS). This reflects a projected hospital inpatient market basket percentage increase of 2.8 percent minus a multifactor productivity adjustment estimated to be 1.2 percentage points and minus a 0.1 percentage point adjustment. The adjustments are in accordance with certain provisions of the Affordable Care Act.
CMS also is proposing a 0.6 percent reduction to the payment rates for non-cancer OPPS hospitals and a 0.2 percent estimated payment increase to all other hospitals in order to maintain OPPS budget neutrality. Taking into account all adjustments, the projected increase in payment rates for services in HOPDs, other than those of cancer hospitals, is 1.1 percent for 2012.
CMS also is proposing:

  • to pay for the acquisition and pharmacy overhead costs of separately payable drugs and biologicals without pass-through status at the average sales price (ASP) plus 4 percent;
  • to update four separate partial hospitalization program (PHP) APC per diem payment rates for each PHP provider type using its own data—two for freestanding community mental health center (CMHC) PHPs and two for hospital-based PHPs;
  • a process to consider requests for changes in the minimum required level of supervision for individual outpatient therapeutic services;
  • to add nine quality measures to the current list of 23 measures to be reported by HOPDs;
  • and more.

Meanwhile, CMS proposes to update the ASC PPS by an estimated consumer price index for all urban consumers (CPI-U) rate of 2.3 percent for 2012. After applying a projected productivity adjustment of 1.4 percent for 2012, CMS is proposing to apply a 0.9 percent update to ASC payments for 2012.
And for the first time, CMS is proposing to implement a quality reporting program for ASCs. CMS is proposing measures for three subsequent payment determinations. Eight quality measures would be reported by ASCs beginning in 2012 for 2014 payment determination. These measures include seven outcome and surgical infection control measures to be reported by ASCs on Medicare claims using quality data codes, and one health care associated infection measure reported through the National Healthcare Safety Network. For the 2015 payment determination, CMS also is proposing to add two structural measures, bringing to the total number of measures to 10 that would be reported for purposes of the 2015 payment determination. These new measures include safe surgical checklist use and ASC facility volume data on selected ASC surgical procedures. CMS also is proposing to add one measure on influenza vaccination coverage among health care personnel for reporting beginning in 2013 for the 2016 payment determination.
CMS also is proposing to expand the hospital Value-Based Purchasing (VBP) program in 2014 by retaining the 2013 clinical process and patient experience measures, adding one new clinical practice measure to guard against infections from urinary catheters to the 12 clinical measures added in April, and other changes.
A CMS Fact Sheet provides more details of changes proposed in the OPPS and ASC PPS 2012 proposed rule. AAPC News will report more on these changes as they are implemented.

Renal Disease Services

Under the End-Stage Renal Disease Prospective Payment System (ESRD PPS) 2012 proposed rule, CMS proposes to make a number of routine updates, implement the second year of the four-year transition to 50/50 blended payments for facilities that did not elect to be paid entirely under the new ESRD PPS, and make several policy and technical changes to the 2011 ESRD PPS final rule.
The proposed 2012 ESRD bundled (ESRDB) market basket increase is 3.0 percent, and the productivity offset (a provision of the Affordable Care Act) is 1.2 percent, yielding a proposed payment update of 1.8 percent. Applying a 1.8 percent increase to the 2011 ESRD PPS rate of $229.63 would result in a 2012 ESRD base rate of $233.76. However, CMS also is proposing to apply a wage index budget neutrality adjustment factor of 1.001126 to the 2012 ESRD PPS base rate, yielding a proposed 2012 ESRD PPS base payment of $234.02 per dialysis session.
CMS also is proposing to add the 2011 Part D per treatment payment amount of $0.49 (the first part of the transition budget-neutrality adjustment) to the  2012 composite rate portion of the blended rate. The addition of the $0.49 Part D payment amount to the 2011 composite rate portion of the blended rate and then applying the ESRDB update results in a proposed 2012 composite rate of $141.52 for those facilities that elected be paid the blended rate.
Also under the proposed rule, CMS would:

  • eliminate the 50 percent rule and exclude all panel tests from the definition of ESRD outlier services and the outlier computation;
  • exclude certain drugs that prevent clotting during a dialysis session in computing whether a facility is entitled to outlier payments, but to include certain drugs used for anemia management (for example, testosterone and anabolic steroids) in the computation;
  • use the latest national average (1.87) as the reference point for computing the body surface area (BSA) for both the ESRD PPS and the composite rate portion of the blended payment for facilities in transition to the PPS;
  • clarify low-volume policy;
  • and more.

For complete details, review the ESRD PPS 2012 proposed rule.
CMS will accept comments on these proposed rules until Aug. 30, 2011, and will review and respond to all comments in the final rules to be issued by Nov. 1, 2011.

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No Responses to “CMS Proposes 2012 Payment Policy and Rate Changes”

  1. Kelsey Vogel says:

    This article i basically discussing how there will be upcoming changes in Medicare and Medicaid dealing with Renal Disease Services. Physicians will be taking a 29% reduction in their services in the upcoming year of 2012, but the chances of this drastic change is slim. They are also utting costs in hospitals and even talking bout minimizing the required level of supervision for the therapuetic services. For the first time, CMS is implementing a qualaity reporting program for AMS and factoring eight quality measure that will be reported in 2012 for the 2014 payment reduction, becasue they are reviewing the coding for surgeries and procedures to minimze reductions. They also want to add measures for influenza vaccines. The overall increase for this budget would be 3% with a productivity of 1% and a proposed payment of 2%. They plan on eliminating certain drugs that prevent clotting during dialysis, but to include drugs used in anemia management. The plan is to make all of these budget cuts in the next couple years but the reality of it is it’s not likely going to happen because healthcare professionals are going to try to fight this until the end.