The meaningful use program is on the cusp of major changes, the Centers for Medicare and Medicaid Services Acting Administrator Andy Slavitt said late Monday, adding that 2016 would likely see the end of the program altogether.
The Medicare Access & CHIP Reauthorization Act of 2015, with its emphasis on a new Merit-Based Incentive Payment System and alternative payment models, demands a new streamlined regulatory approach, he said, speaking at the J.P. Morgan Healthcare Conference in San Francisco.
While offering few details, Slavitt pointed to March 25 as “an important date” for these new initiatives, according to a report from Internal Medicine News – which quoted him as saying that “We have to get the hearts and minds of physicians back. I think we’ve lost them.”
That’s been the feeling for some time, especially from the perspective of groups such as the American Medical Association.
Despite less than a year ago describing Stage 3 as “what everybody will be doing … in 2018 and beyond,” and declaring, as recently as this past October, that Stage 3 would proceed as planned, CMS looks to be changing its tune.
Beth Israel Deaconess Medical Center CIO John Halamka, MD, said in a blog post a few months back that meaningful use has served its purpose.
“Stage 1 created a foundation of functionality for everyone. That was good,” he wrote. “Stage 2 tried to change too much too fast and required an ecosystem of applications and infrastructure that did not exist. Clinicians struggled to engage patients and exchange data because they could send payloads but there were few who could receive them. Stage 3 makes many of the same mistakes as Stage 2, trying to do too much too soon.”
Especially with so many new regulations coming from CMS, now could be good time to reconsider a the six-year-old program, he suggested.
“The layers of requirements in Meaningful Use, the HIPAA Omnibus Rule, the Affordable Care Act, ICD-10 and (MACRA) are so complex and confusing that even government experts struggle to understand the implementation details,” Halamka wrote. “Each of the regulations leads to various audits. My experience is that even the auditors do not understand the regulatory intent and ask for documentation that far exceeds the capabilities of existing technology.”
The Department of Health and Human Services intends to shift Medicare payments from volume to value—tying 30 percent of traditional Medicare payments to alternative payment models and tying 85 percent of all traditional Medicare payments to quality or value—by the end of 2016. But, are providers ready to participate in value-based payment models?
It’s a question the Healthcare Information and Management Systems Society is attempting to answer with its new HIMSS Cost Accounting Survey. In the survey, which can be taken online through Dec. 31, providers are asked to rate their readiness to transition from a fee-based to a value-based payment model and identify what they need from an industry perspective to make this transition successful.
Paying providers based on quality rather than the quantity of care is no trivial pursuit. It marks the first time in the history of the Medicare program that HHS has set explicit goals for alternative payment models and value-based payments.
“We need to begin thinking about how the industry can support providers in making the transition to value-based payment in a meaningful and widespread way,” said Pamela Jodock, HIMSS senior director, health business solutions. “From a health IT perspective, what infrastructure do we need to have in place for a successful transition? The survey is intended to help us start that conversation.”
The Centers for Medicare and Medicaid Services last week released its 2016 CMS Quality Strategy in support of Medicare’s shift from volume to value, which the agency states will require “better organization and use of data and health information, including the use of electronic health records and other health IT resources” as well as paying providers to incentivize quality instead of quantity. “Smarter payments will help cut down on inefficiencies and the overuse of costly tests and other diagnostics,” states the document. To achieve those goals, CMS said it will measure and publicly report providers’ quality performance and cost of services provided.
In this regard, the HIMSS survey asks providers to answer questions about the importance their organizations place on price transparency and whether or not they currently publish or plan to publish their prices. The survey also asks providers what kinds of processes, automated abilities or cost accounting systems they use to determine costs, as well as what factors they use to determine price and the relative importance they place on these factors.
According to Jodock, in a value-based payment environment providers must understand the true costs of delivering care and how to price services to be financially viable, which will most likely require cost assessment and revenue cycle management tools allowing them to accurately capture or predict a wide range of factors influencing their clinical and operational costs.
Providers can take the HIMSS Cost Accounting Survey here. Survey results will be released and presented at the 2016 HIMSS Conference being held Feb. 29-March 4, 2016 in Las Vegas.
On Monday, CMS finalized a new Medicare payment model for hip and knee replacements that grants more flexibility in the use of telehealth services, AHA News reports (AHA News, 11/16).
Medicare will only reimburse for telehealth services under certain conditions. For example:
- Office visits and consultations must be provided using an interactive, two-way telecommunications system with real-time audio and video;
- The originating site (where the patient is) must be in a Health Professional Shortage Area or in a county that is outside of any Metropolitan Statistical Area; and
- The originating site must be a medical facility, not the patient’s home (Infantino, iHealthBeat, 9/21).
Details of Final Rule
In the final rule, CMS waives the geographic and originating site requirements that limit telehealth payments (AHA News, 11/16).
CMS wrote, “Any service on the list of Medicare approved telehealth services and reported on a claim” using an accurate ICD-10 code “could be furnished to a [joint replacement] beneficiary, regardless of the beneficiary’s geographic location.”
CMS wrote that waiving the requirements will “allow the greatest degree of efficiency and communication between providers and suppliers and beneficiaries by allowing beneficiaries to receive telehealth services at their home or place of residence” (CMS final rule, 11/16).
Overall, the final rule aims to encourage hospitals to improve quality and lower costs. Under the rule providers will receive one flat fee for the procedures instead of multiple payments for each individual service they provide related to the replacements.
Hospitals that meet certain benchmarks for quality and cost measures will receive a bonus payment. Starting in year two of the program, hospitals can be penalized for a portion of their spending above a set target (CMS fact sheet, 11/16).
Lawmakers have until Dec. 11 to pass an omnibus bill for fiscal 2016, and with extra money made possible by last month’s budget deal, HHS and the National Institutes of Health could see extra funding.
If they cannot get an omnibus passed, there could be another continuing resolution agreement to keep funding for a period of time. Otherwise, the government will shut down.
Analysts said lawmakers will add riders to the bill that will be the focus of negotiations and familiar disagreements and could impede a final agreement.
The budget deal raised the sequester caps by $80 billion in the next two fiscal years. For fiscal 2016, $50 billion of that is available and half will go to defense spending.
David Reich, senior policy consultant with the Center for Budget and Policy Priorities, said a shutdown is possible but an omnibus agreement is also not an unreasonable hope. A continuing resolution wouldn’t solve much.
“It’s a problem for agency operations to not know what their budget is well into the fiscal year,” he said.
Ellie Dehoney, vice president of policy for Research America, said a path to repealing the medical device tax, although it has received some bipartisan support, has not been forged.
It could be tied in with efforts to repeal the “Cadillac” tax on high-end health insurance plans but nothing concrete is in the works for that yet either, she said.
Reich said the extra money could go to departments throughout HHS, but lawmakers may get stuck on issues such as financing for the Affordable Care Act, some research agencies and Planned Parenthood.
The House appropriations bill calls for rescinding past funding of the ACA and eliminating most new spending. It would get rid of Title X family planning funds and also essentially eliminates the Agency for Healthcare Research and Quality and the Center for Medicare and Medicaid Innovation, he said.
Those provisions would be mostly unpalatable for Democrats and the White House, Reich said.
Dehoney said the NIH is likely to get more money than in previous years and it will probably not be earmarked but be used to bolster ongoing research.
“I think it will lift all boats,” she said
The original House Labor, Health and Human Services Funding Bill would allocate $71.3 billion to HHS, which is a slight increase from the year before but about $4 billion below the president’s budget request for the agency.
It would also give $31.2 billion to the NIH, $7 billion to the Centers for Disease Control and Prevention and $6 billion to the Health Resources and Services Administration. It would provide $3.3 billion for the CMS, which is nearly $1 million below the president’s request.
Dehoney said the budget deal has changed the game, however.
“They’re definitely renegotiating all of this because they have extra money,” she said.
In 2013, a government shutdown over implementation of the ACA stalled medical research and FDA drug approvals.
Providers and policy experts say that while doctors and hospitals are facing some cuts in the proposed two-year $80 billion budget deal being negotiated on the Hill, the industry largely dodged a bullet.
The not-yet-finalized plan announced Tuesday would include continued sequester spending cuts and limit future payment rates for hospitals that set up or buy off-campus facilities. It would also raise the federal borrowing limit and prevent a looming spike in premiums for about 30% of Medicare Part B beneficiaries.
Eric Zimmerman, a healthcare lobbyist and principal with McDermott + Consulting, said the budget deal would reduce incentives for hospitals to buy doctors’ practices, which has been a popular move to expand their networks and meet the Affordable Care Act’s push to coordinate care.
“This will definitely affect hospitals’ physician-alignment strategies,” he said, as the financial benefits will be fewer.
And although the sequestration will continue to be a drag on provider budgets, the healthcare industry in general seems OK with this agreement, he said. Still, the pay-for isn’t certain to remain the same and further negotiations this week will hash out details, Zimmerman added.
Chip Kahn, CEO of the Federation of American Hospitals, said cuts are always concerning, but the debt limit had to be raised and he applauds Congress for minimizing the effects to hospitals.
The change to the payment model for hospital outpatient departments, called OPDs, has been much discussed but wasn’t necessarily expected this year. It’s helpful to apply the change only to new outpatient departments set up by hospitals and to delay any implementation until 2017, Kahn said.
“It would have created an incredible mess if people had to figure out how to get into compliance,” he said.
The continuation of sequestration cuts to Medicare is also disappointing, but it’s an extension of the status quo. Kahn is glad to see no cuts to reimbursement of bad debt or enforcement of site-neutral post-acute care payments for inpatient rehabilitation facilities.
“That’s what’s really important here—what’s not here,” he said.
Stephen Zuckerman, co-director of the health policy institute at the Urban Institute, said the change in payment method to hospital OPDs is reasonable.
“I think it was sort of a flaw in the payment method that was being exploited,” he said.
Zuckerman said it’s not entirely clear how the budget deal would align with the permanent deal earlier this year that ended the need for an annual “doc fix” to increase physician payments.
The deal called for a 0.5% increase in payments for each of the next four years. With continued sequestration, however, it appears that doctors face a net decrease in compensation, he said.
“It’s a little surprising,” he said. “I’m not sure people have thought this through.”
Thomas Nickels, executive vice president of government relations and public policy for the American Hospital Association, called the Medicare cuts in the deal irresponsible and urged lawmakers to strike the site-neutral provision for outpatient payments.
“This untested idea may endanger patient access to care, especially among patients who are sicker, the poor, minorities and seniors who often receive care in hospital outpatient departments,” he said.
Medicare payments to OPDs have been a concern for years as prices for outpatient procedures continue to rise faster than other services.
A 2013 report from the Medicare Payment Advisory Commission found that Medicare was paying 141% more for a Level 2 echocardiogram in an outpatient setting as opposed to one performed in a physician’s office.
“Payment variations across settings urgently need to be addressed because many services have been migrating from physicians’ offices to the usually higher paid OPD setting, as hospital employment of physicians has grown,” the authors wrote. “This shift toward OPDs has resulted in higher program spending and beneficiary cost-sharing without significant changes in patient care.”
Maggie Elehwany, vice president of government affairs and policy for the National Rural Health Association, said the Medicare cuts are particularly harmful for already struggling rural hospitals.
“Nationwide we are experiencing an alarming and escalating number of rural hospital closures, which is creating a patient-access-to-care crisis,” she said. “To propose further cuts is unthinkable and will certainly mean more rural hospital closures.”
Another part of the proposal would extend the Medicare drug rebate program, in which manufacturers provide an additional generic drug rebate when a drug’s cost rises faster than inflation.
Also, a large increase in premiums for the 30% of Medicare Part B beneficiaries who are not “held harmless” to rate increases higher than the cost of living adjustment would be avoided. The plan would create a new premium for those beneficiaries of $120, an increase of about $15 a month, which would be the amount paid by all beneficiaries if none were held harmless.
House Speaker John Boehner worked out this proposed budget privately with other congressional leaders, saying he wanted to push an agreement through before leaving the speakership Friday. Rep. Paul Ryan (R-Wis.), who is expected to take up the gavel, did not participate in the talks.
Hard-line House Republicans complained about being left out of the negotiations and said they may oppose the deal, but other conservatives and some Democrats voiced their overall approval.
“The bipartisan budget package unveiled last night represents real progress for hard-working families across the country,” said House Minority Leader Nancy Pelosi of California.
The budget side of the deal is aimed at undoing automatic spending cuts that are a byproduct of a 2011 budget and debt agreement, and the failure of Washington to subsequently tackle the government’s fiscal woes.
The legislation would suspend the current $18.1 trillion debt limit through March 2017. The budget portion would increase the current “caps” on total agency spending by $50 billion in 2016 and $30 billion in 2017, offset by savings elsewhere in the budget. And it would permit about $16 billion to be added on top of that in 2016, classified as war funding, with a comparable boost in 2017.
GOP defense hawks are intent on reversing the automatic cuts and getting more money for the military. A key priority for Democrats is to boost domestic programs.
Millennium Health, a San Diego based lab company, will pay the government $256 million to settle allegations it billed the government for medically unnecessary urine, drug and genetic testing and gave free drug cup tests to physicians in exchange for referrals.
U.S. Justice Department’s announcement of the settlement Monday came days after the company it had reached an agreement with a majority of equity holders, the CMS and the Justice Department on the terms of a plan to financially restructure the company. Millennium CEO Brock Hardaway said the agreement would help the laboratory reduce its debt and pay the settlement.
“While Millennium may debate some of the merits of the DOJ’s allegations, we respect the government’s role in healthcare oversight and enforcement,” Hardaway said in the statement issued Oct. 16. “At the end of the day, it was time to bring closure to an investigation that began nearly four years ago. Millennium Health is currently a very different organization than we were in the past.”
Millennium said it plans to begin soliciting formal votes on a restructuring plan from its lenders in coming weeks. The agreement allows Millennium to restructure through a Chapter 11 bankruptcy proceeding or outside of court.
A Millennium spokeswoman declined to comment further Monday.
The government alleged that Millennium prompted doctors to order excessive numbers of urine drug tests without individualized assessments of patients in violation of federal healthcare program rules. It also alleged that Millennium gave free urine drug testing cups to doctors on the condition that the physicians would return the urine to Millennium for hundreds of dollars of additional testing in violation of the Stark Law and anti-kickback statute.
Millennium also submitted false claims to federal health programs for genetic testing performed without individualized assessments of need, the government alleged.
Clinton Mikel, a partner with the Health Law Partners, called the $256 million settlement one of the larger ones he’s seen outside of those with pharmaceutical and medical device companies.
“I think it will send a message certainly,” Mikel said. “The government is cracking down on labs.”
Another lab company, Health Diagnostic Laboratory, recently filed for bankruptcy after agreeing to pay nearly $50 million to resolve allegations that it improperly paid doctors for blood samples. HDL denied wrongdoing as part of that settlement.
Federal investigators signaled their interest in Medicare payments to lab companies last year. A special fraud alert issued by HHS’ Office of Inspector General warned that certain types of lab payments to referring physicians for blood specimen collection, processing and packaging could be illegal.
“There just has been increased scrutiny of labs and many other areas of healthcare as well,” said Sarah Coyne, a partner with the law firm Quarles and Brady.
One reason the government is going after labs in particular is the large amount of money Medicare spends on them, Mikel said. From 2005 to 2010, Part B spending for lab services increased 29%, to $8.2 billion, even though enrollment increased just 10%, according to a 2014 OIG report.
“They’ve identified an industry that they think is taking more than its share of the pie,” Mikel said, adding that he often encounters anecdotal evidence that some players are taking their share through questionable means.
“We represent several national labs, and probably on a weekly basis they’re saying, ‘This is what our competitor is doing. Is this OK?’” Mikel said.
The allegations against Millennium were originally brought in several whistle-blower complaints. Under the False Claims Act, the whistle-blowers will share nearly $32 million from the government’s settlement.
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