Inpatient Facility Coding & Compliance Alert

Now you have a mixed bag of surprises to wade through to conclude the SGR impasse.

This April just changed the way you get paid, forever. The Senate approved the Medicare Reform Legislation, “Medicare Access and CHIP Reauthorization Act ” on April 15, thereby averting the 21 percent pay reduction for providers, and laid to rest the annual “Doc Fix” deadline drama. Here is all you need to know about the new law.

Why Was The Fix Necessary?

For years, the imposition of the SGR payment formula threatened to produce unsustainable reductions in Medicare payment levels for all Medicare providers. The SGR formula had no incentives for individual performance and made the payments amounts uncertain year after year. “If the SGR had been fastidiously applied from the time of its development, only then it would have had a chance to work,” says Duane C. Abbey, PhD, president of Abbey and Abbey Consultants Inc., in Ames, IA.

Know What Went Into the Making

In late March, the House of Representatives passed Medicare reform legislation designed to permanently solve the SGR problem. There was an April 1 deadline for potential reimbursement rate reductions for providers, for which the Centers for Medicare and Medicaid Services (CMS) announced its intent to hold all Medicare claims and halt processing for the first two weeks of April. Finally, after a lot of discussions, the bill was passed on April 15 with the painstaking efforts of the Republican House Speaker John Boehner and Democratic Minority Leader Nancy Pelosi, and signed into law by President Barack Obama.

“Not only does this legislation permanently fix payment to the doctors, but it also improves it,” the President said in an interview posted on The Washington Post’s website. “Because what it starts doing is encouraging payment based on quality and not the number of procedures that are applied, but whether or not people actually start feeling better.” 

Know the Key Features of the Bill 

Here is a quick scoop at the provisions that matter to you the most:

Provides relief from the impending 21 percent pay cut: Under current law, Medicare’s payment rates for services furnished by physicians were to be reduced by 21.2 percent on April 1, 2015. The new law would freeze those payment rates at current levels for 3 months and then increase them by 0.5 percent for services furnished during the last 6 months of calendar year 2015. Over the next several years, the bill would replace the SGR formula with new payment systems. 

Steady raise of 0.5 percent until 2019: All physicians would receive a 0.5 percent per year increase in payments over the coming four years, until 2019. 

Quality based reimbursement models from 2019: From 2019 onward, there will be a system of bonuses and penalties based on performance, an Alternative Payment Model (APM), or a Merit Based Incentive Payment System (MIPS). From 2019 to 2024, providers generating revenue from APM would get a 5 percent bonus, and those going by the MIPS would qualify for a portion of a $500 million pool allocated for providers with exceptional performance.

The inherent shortfall: Because the funds would not suffice after 2024, there would be two payment rates for services on the physician fee schedule for 2026 and subsequent years. Doctors on the alternative payment track would see annual payment hikes of 0.75 percent, three times that of other physicians. That is where the funds would not be able to sustain the erstwhile trends and would not be able to keep pace with inflation, according to CMS. 

“This is so far into the future that I almost hate to comment,” exclaims Abbey. “There are so many things that can, and probably will, change; the continued existence of these new approaches may be in question.”

What’s In It For You?

The new law encourages health care providers with an incentive for quality services.  Time to document well, and avail the rewards. “Physicians and clinics should follow the development of the rules and regulations in this area with care,” advises Abbey.

Mint money with quality care: The provision of interest is the Merit-Based Incentive Payment System (MIPS), following which one would qualify for a portion of $500 million pool allocated for providers with exceptional performance.

Currently, there are three existing quality incentive programs including:

• Physician Quality Reporting System (PQRS), 

• EHR Meaningful Use and the 

• Value-Based Modifier. 

Beginning in 2019, these will become one single program to ease reporting and shed the dispensable paperwork. So, get ready for adjustment in future payments based on your performance in four areas: 

• Quality 

• EHR meaningful use

• Resource use

• Clinical practice enhancement endeavors.

“The first order of business is to understand what is going on and what these incentive programs may have to offer,” says Abbey. “After a full understanding is achieved, the individual physicians and clinics can take any appropriate steps to participate in any increased reimbursement.”

Where Will the Money Come From?

Amongst the provisions to increase savings to the Medicare and Medicaid programs, some are: 

From the patients: Beginning in 2018, more beneficiaries would be subject to the income-related premiums due to a change in the indexing of the income thresholds. 

From you: Prepare yourself as the payment rate updates in 2018 for skilled nursing facilities, inpatient rehabilitation facilities, home health agencies, hospices, and long-term care hospitals would be limited to 1 percent. 

Presently, Medicaid’s disproportionate share hospital (DSH) payments increase each year based on the percent change in the consumer price index and subsequent adjustment by scheduled reductions. The new law would increase net allotments in 2017 through 2020 but would then decrease the net allotments in 2021 through 2025. 

Even more: Currently, the scheduled increase in payment rates for inpatient hospital services for 2018 is 3.2 percent. However, with the advent of the new regulations, expect this to be replaced with an annual increase of only 0.5 percent from 2018 to 2023.

Final takeaway: The new law comes as a mixed package, to help the U.S healthcare surpass the SGR impasse for some years to come. In the words of Rep. Michael Burgess (R-Texas) in an interview with Fox News, “If you don’t fix this formula, you almost can’t move on. This is the first step in this process. Perfect? No. A good step? Yes.”

Read more: Check out the entire bill at https://www.congress.gov/114/bills/hr2/BILLS-114hr2rds.pdf.