Our Three Big Take-Aways from the AMGA Annual Meeting

The Final Four wasn’t the only thing happening in Dallas last week.  The American Medical Group Association held its annual meeting in the Big D April 3-5.  

Several PYA principals attended the meeting.  After participating in several sessions and having numerous conversations with fellow attendees, we identified three big take-aways from this gathering of 1000+ healthcare professionals and executives.

Don’t expect a permanent SGR fix before the mid-term elections.  Not surprisingly, there was a great deal of buzz around the newly-sewn “doc patch” legislation, including the ICD-10 delay.  Those conversations, however, quickly turned to the fate of the permanent SGR fix legislation.  

There appears to be near unanimous support for the structure proposed in the legislation, including the Merit-Based Incentive Payment System.  MIPS would replace several existing Medicare incentive programs with a single, value-based purchasing metric.  

The sticking point is the “pay-for” – how to fund the bill’s $180 billion price tag.  The political professionals agree it is unlikely Congress will tackle this issue prior to the mid-term elections.  Everyone hopes these prognostications are wrong, but there is no way forward at this time.

The HIT space is getting really crowded.  Most of the vendors exhibiting at the conference were selling some form of health information technology (HIT):  electronic health records, health information exchanges, billing systems, data analytics, and patient engagement tools.  

We were reminded of the days before the dot-com bubble burst:  lots of energy, lots of opportunity, but not a lot of clarity.  Each technology solution sounds great in the abstract, but few have painted a picture of practicality.  

HIT companies (and their customers) would be well-served by taking a step back and asking two questions:  First, how exactly will a provider incorporate this technology into the provider’s day-to-day operations?  Second, what specific, measurable improvements will providers realize by using the technology?    

Like the dot-com bubble burst, there will be HIT survivors and HIT casualties.  We expect those companies that offer customers compelling answers to these questions will be the survivors.  Providers, therefore, should be asking these tough questions as they make investments in HIT infrastructure. 

Quality-based compensation models are catching fire.  Based on a very inexact survey, we estimate more than half of the sessions addressed in some way the need to infuse new incentives into physician compensation models.  While most acknowledge the need to tie some compensation to performance, no one claims to have found the magic formula.  

Big questions remain regarding the right measures to use.  There are many candidates - PQRS quality measures, patient satisfaction scores, good citizenship measures, just to name a few – but no apparent consensus.

Also up in the air is the percentage of total compensation that should be based on performance.  No one can say with authority what is necessary to incent certain physician behavior.  Finally, there’s the question of how to get physician trust and buy-in.  

But at least one question – and the one prefatory to all others – has been answered:  straight production-based compensation models are not consistent with emerging value-based payment and delivery models.  As we enter this period of experimentation, it will be critically important to remain informed about options and emerging trends and to engage physicians in the process.


Lessons from $4.1 Million Settlement in Medical Privacy Class Action Lawsuit

What Happened

Stanford Hospital and Clinics contracted with a business associate, Multi-Specialty Collection Services (MSCS), to perform a revenue cycle review.  Using data supplied by Stanford in an encrypted format, MSCS generated a spreadsheet listing the names, diagnosis codes, account numbers, admission and discharge dates, and billing charges for 20,000 patients seen at the hospital’s emergency room during a six-month period in 2009.

MSCS then contracted with Corcino & Associates, LLC, to convert the data into graphics.  Someone associated with Corcino then went looking for assistance with the project.  That individual posted an inquiry – along with the spreadsheet—to a now-defunct website called Student of Fortune, which allowed students to solicit paid assistance with schoolwork.

The spreadsheet remained posted on the website for more than a year until it was discovered by a patient who reported it to Stanford.  The hospital contacted the website owner and the spreadsheet was deleted immediately.  The website claimed it was previously unaware of the spreadsheet and could not identify the person who posted it from the user name.  

Stanford then investigated and reported the incident as required by HIPAA, including written notice to the patients whose information had been posted.  That notice, sent four days after Stanford learned about the spreadsheet’s posting, offered free identity theft protection services.  Stanford also terminated its business relationship with MSCS and received written certification that previous files would be destroyed or returned securely.

Stanford cooperated with state and federal government investigations of the incident.  Both concluded the hospital was without fault and no fines or penalties were issued.

The Class Action Lawsuit and Settlement

In most cases, this would be the end of the story, but not here.  In September 2011, just days after receiving the breach notice from Stanford, one of the patients filed a $20 million class action lawsuit against Stanford, MSCS, and Corcino.  She alleged violation of California's Confidentiality of Medical Information Act which, unlike HIPAA, allows private individuals to sue for damages caused by violations of the law.

After 2 ½ years of litigation, the parties last month reached a $4.125 million settlement.  Stanford denied any wrongdoing but agreed to participate to avoid ongoing costs of litigation.

MSCS and Corcino  will pay $3.3 million of that amount.  Stanford will pay $500,000 for a program to educate vendors on HIPAA requirements, as well as $250,000 to cover the administrative costs of the settlement.  Once all the details are finalized, each of the 20,000 patients will pocket a little more than $100.

Lessons Learned

1. The risks of private lawsuits are real.  The risks associated with privacy breaches include government fines, damage to reputation, and adverse licensure action.  Covered entities and business associates have worried less about lawsuits because HIPAA does not include a private cause of action.  

However, many states, like California, have privacy laws that allow a private individual to sue a party that violates that law.  Additionally, an individual can bring a common law claim for negligence, alleging a HIPAA breach violates the standard of care.

Now that HIPAA requires breach notification to patients (and big data breaches are getting more media attention), there are more opportunities for impacted patients (and their lawyers) to pursue private claims, especially as class action lawsuits.  Although the payout for a single patient may not be significant absent any identity theft, the opportunity to represent a large group of patients will be enticing to plaintiffs’ attorneys.  The Stanford case may open the litigation floodgates, or at least be the first in a steady stream of lawsuits.  

2. Two degrees of separation is not enough.  Looking at the facts as reported, it is hard to find anything Stanford did wrong:  it had an appropriate business associate agreement in place, it had no notice of any prior wrongdoing by MSCS, it encrypted the data sent to MSCS, and it met its obligations with respect to mitigation and breach notification once the posting was discovered.

In addition, Stanford was unaware of Corcino’s involvement, much less the person who actually posted the spreadsheet on the website.  So why is Stanford paying out $750,000?  Not only is Stanford its brother’s keeper, it is also its brother’s brother’s keeper.   

With the changes to the HIPAA rules last year, there now is a greater emphasis on the responsibility of business associates and subcontractors to protect patient privacy.  This translates into a greater demand on covered entities to properly vet those contractors with which it will share any protected health information.  While it is not required, a covered entity may consider imposing specific requirements and restrictions on business associates’ use of subcontractors.

For example, a covered entity may require a written representation that any and all persons who may have access to the covered entity’s PHI – whether working for a business associate or a subcontractor - have received appropriate training and signed confidentiality agreements.  Such a requirement may have prevented the still unknown individual from posting patient names on a public website.

PYA supports covered entities and business associates with HIPAA compliance, including policies and procedures; staff training; and management of business associate and subcontractor agreements.  For more information, please call Lori Foley or Martie Ross at PYA, (800) 270-9629.


ICD-10 Delay: So Now What?

The Secretary of Health and Human Services may not, prior to October 1, 2015, adopt ICD-10 code sets as the standard for code sets....”

This one little sentence – the sum and substance of Section 212 of HR 4302, Protecting Access to Medicare Act of 2014 – has thrown a hefty wrench into providers’ ICD-10 transition strategies.

Prior to this week, the Centers for Medicare & Medicaid Services (CMS) had been unequivocal in stating there would be no delay of the October 1, 2014, deadline for ICD-10 transition.  According to CMS, another one-year delay would likely cost the industry an additional $1 billion to $6.6 billion, on top of the costs incurred from the previous one-year delay (October 1, 2013, to October 1, 2014).

On Monday, however, HR 4302 passed the Senate, and the President is expected to sign it into law this week.  The bill avoids the nearly 24% cut in Medicare Physician Fee Schedule payments that was to take effect April 1.  But it also includes the ICD-10 delay, even though no Senator made mention of the delay during the four-hour floor debate on the legislation.
For now, CMS remains mum on the ICD-10 delay, but there are critical questions that need to be answered in short order:  

  • Will Oct. 1, 2015, become the new deadline?
  • Will CMS allow organizations that are ready to implement ICD-10 to do so voluntarily?
  • Will CMS scrap ICD-10 altogether and instead wait for ICD-11, which is due to be released in 2017?  

The College of Healthcare Information Management Executives (CHIME) was quick to state its disapproval of the delay:  “We understand the considerable hours, resources, and money CHIME members and their organizations have spent preparing for the transition. This pause in momentum discredits the significant work our industry has spent training staff, conducting testing, and converting systems; not to mention the hold on improving care quality and accuracy, advancing clinical reporting and research, and patient safety outcomes.”

The American Health Information Management Association (AHIMA) remains committed to moving forward:   “Since the transition to ICD-10 remains inevitable and time-sensitive because of the potential risk to public health and the need to track, identify and analyze new clinical services and treatments available for patients, AHIMA will continue to help lend technical assistance and training to stakeholders as they are forced to navigate the challenge of continuing to prepare for ICD-10 while still using ICD-9.”

The American Medical Association (AMA) opposed HR 4302, despite its support for delaying the ICD-10 implementation date.  The AMA promises to continue its efforts to ease the pain of the transition: “The AMA remains committed to relieving physicians of the crushing administrative burdens and practice disruptions that are anticipated during the scheduled transition to ICD-10.”

We will provide regular updates as CMS provides clarification and once the full impact of the delay becomes clear.   

In the face of uncertainty, however, one thing is clear:  providers should not mothball their clinical documentation improvement efforts.  Those efforts have been driven in part by the level of specificity required by ICD-10, but capturing complete and accurate clinical documentation of a patient’s condition has many more benefits.  In the face of aggressive payer audits, medical necessity for all services must be properly documented within the patient record.

Also, with Medicare and commercial payers moving to risk-sharing and risk-bearing contracts in the next few years, one critical success factor for providers will be the ability to accurately portray the level of risk within the provider’s patient population.  To paint this picture, providers must have available detailed documentation regarding patients’ histories and presenting conditions.  

PYA has extensive experience performing ICD-10 readiness assessments, conducting training and education, and developing and implementing effective clinical documentation improvement programs.  With our skills, experience, and AHIMA ICD-10 certified trainers, PYA consultants can be a resource to navigate your organization through this uncertain time.  

For more information, contact Denise Hall or Kristen Lilly at PYA, (800) 270-9629.


April 18 Deadline to Apply for Bundled Payment Program

Organizations interested in joining the Medicare Bundled Payments for Care Improvement Initiative (BPCI) under Models 2, 3, or 4 have until April 18 to submit a completed Open Period Intake Form to the Centers for Medicare & Medicaid Services (CMS).  CMS is not accepting applications for Model 1 at this time.

Submission of a completed Intake Form does not obligate an organization to participate in the BPCI.  Instead, it gives the organization access to historical claims data needed to develop a full application.  Even if an organization elects not to submit a full application, this data can be extremely valuable in identifying potential operational efficiencies.

Background on the BPCI

Since January 2013, CMS accepted more than 450 provider organizations into the BPCI.  Encouraged by initial results, CMS now wants to expand participation  to include new organizations.

Under the BPCI, a provider organization enters into a defined payment arrangement with CMS for one or more episodes of care.  The organization selects from a list of 48 different episodes which include a wide range of surgical procedures and medical conditions.  The list represents 70% of all possible episodes by Medicare volume and expenditure.

The bundled payment covers multiple services furnished by the hospital, physicians, and other providers during the chosen episode.  Under BPCI Models 2 and 3,  the bundle is a target price against which actual expenditures are reconciled.

Model 2 covers both inpatient admission and post-acute care, while Model 3 is limited to post-acute care.   If the total amount paid for the services is less than the target price, CMS pays the difference to the organization.  But if the total amount is more than the target price, the organization pays CMS the difference.

Under BPCI Model 4, CMS pays the organization a single prospective payment to cover all services during the episode of care.  Model 4 covers inpatient admission and any related readmissions.

Under all three models, it is up to the organization to divide up the payment (or, in Models 2 and 3, assess the loss) among the participating providers.

Application Process

The first step in the BPCI application process is submission of a completed  Intake Form, which is available hereAn organization that does not submit the completed form by April 18 will not be considered for participation and will not receive access to historical claims data.

On the other hand, the submission is non-binding; an organization can later decide not to participate in the BPCI without penalty.  Thus, if your organization has any interest in bundled payments or receiving claims data, now is the time to act.   

To complete the Intake Form, an organization must answer several narrative questions focused on care redesign and collaboration.  Also, the organization must complete a spreadsheet identifying participants and selecting specific episodes of care.

In July, CMS will contact those organizations that qualify for Phase I of the BPCI based on the agency’s review of the Intake Forms. To participate in Phase I, an organization must sign a Data Use Agreement with CMS to receive historical claims data relevant to its selected episodes.  During Phase I, which will continue through the fall, each organization will complete and submit its full application, including target pricing for its selected episodes.  An organization may elect not to submit an application without penalty.

In November, CMS will contact those organizations that qualify for Phase II based on the agency’s review of the full applications.  These organizations will be offered awardee agreements to participate in Phase II.  Again, an organization may elect not to sign the awardee agreement without penalty.

During Phase II, which will begin January 1, 2015, CMS will measure an organization’s performance on its approved episodes of care, making appropriate payment adjustments based on the terms of an organization’s awardee agreement.

How PYA Can Help

With our knowledge of the BPCI, PYA can assist your organization in evaluating the BPCI opportunity, selecting appropriate episodes, and completing the Intake Form by April 18.

For Phase I, PYA has broad experience in analyzing CMS data, detailing financial impact, and finalizing terms of the awardee agreement.

For Phase II, PYA’s consultants have proven success in facilitating clinical integration and provider alignment for care redesign.

To explore whether bundled payments are the right strategy for your organization, please contact David McMillan at PYA, (800) 270-9629.

"Doc Patch" Bill Passes Senate; Includes ICD-10 and Two-Midnight Rule Delays

The Senate voted Monday evening to approve HR 4302, Protecting Access to Medicare Act of 2014, more commonly known as the “doc patch.”  The bill averts a nearly 24% cut to Medicare physician payments that was set to take effect on April 1, 2014, and extends the 0.5% update for providers for the remainder of 2014. 

The vote followed a failed effort earlier in the day by Senate Finance Committee Chairman Ron Wyden (D-Ore.) to repeal the flawed SGR formula and replace it with a new value-based payment methodology.  That legislation, HR 4015, SGR Repeal and Medicare Provider Payment Modernization Act of 2014, more commonly known as “repeal-and-replace,” enjoys nearly universal support – except on the issue of how to pay for its $18 billion price tag.

In the end, Republicans and Democrats could not agree on the “pay for” for repeal-and-replace prior to the April 1 deadline, and thus another short-term fix – the seventeenth such fix since the SGR was enacted in 1997 – was the only alternative.  A long-term solution (or yet another fix) will be needed by April 1, 2015, when once again rates are projected to be cut by 24%.

The doc patch contains good news for hospitals:  unlike prior SGR fixes, the doc patch is not funded by immediate cuts to hospital reimbursement.   The doc patch’s $20 billion price tag is paid for with a number of new policies, including revaluing Medicare physician payments, establishing a new nursing home value-based payment program, imposing new market-based clinical laboratory payment rates, and making changes to Medicare sequestration in out years.

The doc patch also breathes another year of life into the Medicare extenders, a package of policies that fund rural hospitals, therapy services, and ambulance providers.

The following summarizes key provisions in the 122-page bill, which the President is expected to sign later this week:

Delay in Transition from ICD-9 to ICD-10 Code Sets – Requires the Secretary to establish a new compliance deadline no earlier than October 1, 2015.  Presumably, this provision was included to appease providers, but no industry group is claiming credit for having successfully championed it.   

Two-Midnight Policy – Delays Recovery Audit Contractor enforcement of the “two-midnight rule” through March 31, 2015, unless there is evidence of systematic gaming, fraud, abuse, or delays.  Allows CMS to continue use of the Medicare Administrative Contractor “probe and educate” program to assess provider understanding and compliance with the “two-midnight rule,” on a pre-payment basis, through March 31, 2015.  

Medicare Work Geographic Adjustment – Boosts payment for the work component of physician fees in areas where labor cost is lower than the national average.  Existing 1.0 floor on the “physician work” price index is extended through April 1, 2015.

Ensuring Accurate Valuation of Services Under the Physician Fee Schedule – Increases payment accuracy by improving the valuation of services under the physician fee schedule through the voluntary collection of information from professionals and other sources.  Establishes an annual target for the reduction of misvalued services in each of 2017-2020.  If the target (0.5% of the estimated amount of fee schedule expenditures) is met, the amount is redistributed to other services within the physician fee schedule.  If the target is not met, fee schedule payments for the year are reduced by the difference between the target and the amount of misvalued services identified in a given year.

Advanced Diagnostic Imaging Quality Incentives and Appropriate Use Criteria – Requires the Secretary to establish a program that promotes the use of appropriate use criteria (AUC) for advanced diagnostic imaging.  By April 1, 2016, the Secretary will publish a list of qualified clinical decision support (CDS) mechanisms.  Beginning January 1, 2017, payment will only be made to the furnishing professional for an applicable advanced diagnostic imaging service if the claim for such service includes certain representations regarding CDS consultation. 

Reduces payments (5% in 2016 and 15% thereafter) for specific hospital outpatient or physician office CT services that are furnished using equipment that does not meet dose optimization and management standards.

Medicare Dependent Hospitals – Extends through March 31, 2015, the special payments for rural hospitals (with no more than 100 beds) that serve a high percentage of Medicare beneficiaries.

Low-Volume Hospital Adjustment – Extends through March 31, 2015,  the current distance and volume requirements for low-volume hospitals to receive add-on payments based on the number of Medicare discharges. 

Extension of Therapy Cap Exceptions Process – Extends the therapy cap exceptions process that allows patients to exceed annual per-patient therapy expenditures based on medical necessity through March 31, 2015.

Medicare Ambulance Add-On Payments – Extends the add-on payment for ground ambulance services, including those in “super rural” areas, until April 1, 2015.

Skilled Nursing Facility (SNF) Value-Based Purchasing – Implements a new skilled nursing facility value-based purchasing program to begin in fiscal year 2019.  Facilities will face a 2% withhold of SNF payments.  SNFs will receive VBP incentive payments based on the higher of their performance or improvement on an SNF readmission measure. 

Improving Policies for Clinical Diagnostic Laboratory Tests – Bases Medicare clinical laboratory payments on private sector payment rates starting in 2017.

Medicaid DSH – Medicaid Disproportionate Share Hospital (DSH) payments provide additional funding to hospitals that serve a disproportionate number of low-income patients.  Currently, reductions in state DSH allotments are scheduled to begin in fiscal year 2016.  This policy would delay Medicaid DSH cuts until fiscal year 2017 and add another year of DSH cuts in 2024.  To offset the cost of the one-year delay, additional reductions are made in the out year allotments. 

Realignment of the Medicare Sequester for Fiscal Year 2024 – Changes the timing of the 2024 Medicare sequester so that there will be a 4.0% sequester for the first six months and a 0.0% sequester for the second six months, instead of a 2.0% sequester for the full twelve-month period.  While the overall amount of the 2024 sequester remains basically unchanged, this provision allows more of the sequestered amounts to be counted as savings in the ten-year budget window used for scoring the fiscal effects of this Act.

Elimination of Limitation of Deductibles for Employer-Sponsored Health Plans – Repeals sections of the Affordable Care Act which place limits on deductibles in employer-sponsored health plans in the small group market, subject to the law’s actuarial value requirements.  These limits on deductibles are not in effect for the 2014 and 2015 plan years.

Demonstration Programs to Improve Community Mental Health Services – Creates a new type of mental health provider called a “certified community behavioral health clinic,” which is intended to coordinate care across settings and providers to ensure seamless transitions for patients across the provision of acute, chronic, and behavioral health services.  Allows eight states to take part in a two-year demonstration program to receive enhanced Medicaid matching funds for mental health services provided by such clinics.

Medicare Advantage Special Needs Plans – Medicare Advantage special needs plans may limit enrollment to certain populations, such as dual eligibles.  This provision extends authority for these plans through 2016.

Extension of Qualifying Individual (QI) Program – Extends through March 31, 2015, the QI Program that assists Medicare beneficiaries with incomes between 120% and 135% of the federal poverty level (FPL) by covering the cost of their Medicare Part B premiums. 

Temporary Extension of Transitional Medical Assistance (TMA) – Extends through March 31, 2015, the program that provides Medicaid insurance coverage for families transitioning from welfare to work.

Extension of Medicaid and CHIP Express Lane Option – Extends through September 2015, Express Lane Eligibility (ELE), which allows states to rely on eligibility findings of other assistance programs to determine Medicaid and CHIP eligibility for children or adults.

Extension of Maternal, Infant, and Early Childhood Home Visiting Programs — Extends the program with $400 million in funding through March 31, 2015.

Extension of Health Workforce Demonstration Project for Low-Income Individuals – Extends this program for one year at the current funding level of $85 million, which provides funding to help low-income individuals obtain education and training in healthcare jobs.

Extension of Special Diabetes Program for Type 1 Diabetes and for Indians – Extends both the Type I Diabetes and Type II Indian Health Service programs through 2015 at $300 million total.

Extension of Abstinence Education – Extends abstinence-only programs and associated funding through 2015 at $50 million per year.

Extension of Personal Responsibility Education Program – Extends the PREP program for one year through fiscal year 2015 at $75 million.  PREP provides grants to implement evidence-based, or evidence-informed, innovative strategies for teen pregnancy and HIV/STD prevention, youth development, and adulthood preparation for young people.

If you have questions about any provisions of the “doc patch” bill, contact Martie Ross or Jeff Ellis at PYA, (800) 270-9629.

More Good News on Medicare Audits: CMS Rescinds Transmittal 505

Back on February 5, CMS released Transmittal 505 authorizing Medicare auditors to deny other related claims submitted before or after the specific claim under review.  With this new authority, an auditor could deny a claim for professional services based solely on the auditor’s conclusion that the related inpatient claim or diagnostic test claim was not reasonable and necessary.  

On March 19, however, CMS rescinded Transmittal 505 “due to the need to clarify CMS’s policy.”  CMS did not offer any timeline regarding when the clarification may be issued.

For now, an auditor cannot deny a claim for professional services unless and until the auditor requests and reviews the supporting medical record documentation.  If prior practice proves any indication, auditors are unlikely to pursue these claims.

Stay tuned --- it’s always something with CMS.

Medicare Audits: Good News, Bad News

There have been several announcements regarding Medicare audits in the last few weeks.  Here’s a brief recap of the good news and the not-so-good news out of the Centers for Medicare & Medicaid Services (CMS).

Good News:  Temporary Relief from RAC Audits.  On February 18, 2014, CMS called a temporary halt to Recovery Audit Contractors’ (RACs) post-payment reviews.  Noting it is now in the procurement process for the next round of RAC contracts, CMS explained this pause would permit the RACs to complete all outstanding claim reviews by the end date of the current contracts.     

Since February 21, the RACs have been prohibited from sending documentation requests to providers to initiate new post-payment reviews.  RACs can continue to initiate automated reviews (those not requiring medical record reviews) through June 1.  By that date, RACs must complete all pending post-payment reviews and submit payment adjustments to the Medicare Administrative Contractors (MACs).  

Good News:  Two-Midnight Rule Breathing Room.  CMS also has announced RACs will be permanently prohibited from reviewing patient status reviews for claims with dates of admission October 1, 2013, through October 1, 2014.  However, RACs still may review inpatient admissions for reasons other than compliance with the Two-Midnight Rule.   

On March 12, CMS once again updated its FAQs on the Two-Midnight Rule.   According to the revised FAQs, cancelled surgical procedures following an inpatient admission will be reviewed under the same benchmark standard:  whether, at the time of the admission, the physician reasonably expected the patient would require a two-midnight stay.  

Not-So-Good News:  Contractor Review of Related Claims.    On February 5, CMS released Transmittal 505 amending section 3.2.3 of the Program Integrity Manual.  Effective March 6, RACs, MACs, and Zone Program Integrity Contractors (ZPICs) can deny other related claims submitted before or after the specific claim under review.  

The revised manual provision offers two examples:

  • An inpatient claim and associated documentation is reviewed and determined to be not reasonable and necessary, and therefore the physician claim can be determined to be not reasonable and necessary.
  • A diagnostic test claim and associated documentation is reviewed and determined to be not reasonable and necessary, and therefore the professional component can be determined to be not reasonable and necessary.  

Before this change, auditors could not deny claims unless they gave appropriate consideration to actual claims and associated documentation.  As a general rule, auditors would not invest the resources to review physician claims.  

Now, an auditor may issue a denial of a related physician claim automatically when it issues a denial on a hospital claim.  As a result, physicians now have a vested interest in a hospital’s processes to ensure the validity of hospital claims.  And hospitals now have the opportunity to enlist physicians in support of these processes.     

If you have questions about the Two-Midnight Rule, coding and documentation, or reimbursement, contact Denise Hall or Martie Ross at PYA, (800) 270-9629.

The Evolving Role of the Compliance Officer In the Age of Accountable Care

Much has been written about new competencies physicians must develop in the face of payment and delivery system reform.   But providers are not the only ones seeing their roles change.  

Compliance officers, who serve as organizations’ internal police officers, will have many new challenges.  Having spent years mastering the maze of regulatory requirements that reign in fee-for-service reimbursement (fraud and abuse laws, billing and coding rules, etc.), compliance officers now must identify and minimize organizational risk associated with new payment models.

On Thursday, February 27, PYA Principal Martie Ross presented a national Health Care Compliance Association (HCCA) webinar entitled “The Evolving Role of the Compliance Officer In the Age of Accountable Care.” During this 90-minute webinar, Martie provided an overview of value-based purchasing and clinical integration models and then took a deep dive into new risk areas and strategies to manage them.  

For those who spend their days putting out fires, the discussion offered a chance to look over the horizon to see what’s coming next.  The PowerPoint presentation for the HCCA webinar is available below.

Key Take-Aways From February 4 Special Open Door Forum on Two-Midnight Rule

Earlier this month, the Centers for Medicare & Medicaid Services (CMS) hosted a follow-up Special Open Door Forum call to allow providers to post questions regarding the Two-Midnight Rule and related hospital admissions policies.  The following are our key takeaways from that call:  

  • Mid-level providers and residents can write admission orders so long as the physician co-signs or countersigns the order prior to discharge of the patient.
  • An ER bridge admission order will suffice as the admission order for billing purposes so long as the admitting physician co-signs the order.
  • A physician must certify in writing that an admission is medically necessary, i.e., the patient requires inpatient hospitalization. The certification can be made at admission or at discharge. 
  • At a minimum, the physician certification must state the physician expects the patient to remain in the hospital for at least two midnights.  The certification may be documented in the progress notes, plan of care, and/or order set.   
  • With regard to inpatient only surgeries, it is appropriate to rely on the physician’s pre-operative orders as the required certification.  The date of admission is the date the patient presents at the hospital for the surgery.  
  • CMS clarified the difference between “authenticated” and “countersigned”:
    • Authenticated – physician’s signature on an order made by the physician 
    • Countersigned – physician’s signature on an order made by another provider (e.g., mid-level practitioner, resident) 
  • More detailed instructions regarding the requirements for inpatient orders and certification may be found in the seven-page guidance issued by CMS on January 31.

This Thursday, February 27, CMS will host an MLN Connects National Provider Call on the Two-Midnight Rule from 2:30 to 4:00p.m ET. CMS promises to provide order and certification guidance, case examples, transfers, and questions from call participants.  Go here to register for the call.  

PYA will be listening in on the call, and will report key take-aways from this latest CMS education session on the Two-Midnight Rule. 

H.R. 4015, The SGR Repeal and Medicare Provider Payment Modernization Act of 2014: Out with the SGR, In With the MIPS

After a tumultuous week on Capitol Hill, a single bipartisan, bicameral “doc fix” bill emerged on Thursday, February 6.  H.R. 4015, The SGR Repeal and Medicare Provider Payment Modernization Act of 2014, is the latest Congressional attempt to define the future of Medicare Physician Fee Schedule (MPFS) payments.

H.R. 4015 takes the place of three competing bills previously reported out of the Senate Finance Committee and the House Ways and Means and Energy and Commerce Committees, respectively.  Having now agreed on the terms of the “doc fix,” Congressional leaders now only have to decide how to pay for it, which could be north of $130 billion.  (The Congressional Budget Office has not yet released its official cost estimates on H.R. 4015).    

The Basics

  1. The sustainable growth rate (SGR) formula now used to calculate MPFS rates is repealed effective April 1, 2014, avoiding the scheduled 23.7% reduction in those payments.
  2. Current MPFS rates will be increased by 0.5% on April 1, and each year thereafter through 2018.  (For now, the 2% reduction in all Medicare payments due to sequestration remains in effect through 2022.  FAQs on the impact of sequestration on those payments are available here.)  
  3. MPFS rates will remain constant at the 2018 rates through 2023.
  4. During that same period – 2018 to 2023 - providers will have the opportunity to earn bonus payments available through the new Merit-Based Incentive Payment System, or MIPS, discussed in greater detail below.
  5. After December 31, 2017, providers no longer will be subject to the penalties associated with the Physician Quality Reporting System (PQRS), the meaningful use program, or the physician value-based purchasing program.  Those programs for hospitals will remain in place.
  6. Beginning in 2024, and thereafter, the MPFS rates will be updated annually by 0.5%. However, providers who participate in approved alternative payment models (as discussed below) will receive an additional 0.5% increase, earning a total annual increase of 1.0%.

Merit-Based Incentive Payment System

So let’s talk MIPS.  This new version of physician value-based purchasing for the period 2018 to 2023 will be based on a provider’s score in four areas:  quality measures; efficiency measures; meaningful use of electronic health records; and clinical practice improvement activities.  While the legislation provides parameters for each category, the detail work is left to CMS.

Providers will receive a composite performance score of 1-100 based on their performance on the to-be-specifically-defined measures.  Providers whose scores improve year-to-year will receive extra credit, as a way to incentivize performance improvement.

Each year, CMS will establish a threshold score based on the median or mean composite performance scores of all providers measured during the previous performance period.  The threshold will be published at the beginning of each year, in advance of the performance period to be measured.

Providers scoring below the threshold will be subject to payment reductions.  These negative payment adjustments will be capped at 4% in 2018, 5% in 2019, 7% in 2020, and 9% in 2021 to 2023.  

Over time, the MIPS penalties become substantially greater than those contemplated in existing CMS programs.  This, coupled with the fact private payers are likely to piggy-back on the MIPS program, make the push for quality and efficiency simply too strong for providers to ignore.  

Providers scoring above the threshold will receive bonus payments.  Those providers with higher performance scores will receive proportionately larger payments, up to three times the annual penalty cap.  These payments will be funded by the penalties assessed against providers scoring below the threshold.  

In addition, the best-of-the-best – those who score above a “stretch” performance score established by CMS - will receive an additional bonus payment allocated from a $500 million annual pool.    These additional incentive payments will be allocated according to a linear distribution, with better performers receiving larger bonuses.

Providers who receive a significant percentage of their income through alternative payment mechanisms (APMs) that involve risk of financial losses and quality reporting requirements will have the option to opt out of MIPS, and instead receive an annual 5% bonus payment between 2018 and 2023.  Again, the legislation provides broad outlines, leaving it to CMS to define exactly what qualifies as an APM and what amounts to a significant percentage of income.    

The proposed legislation specifically provides that any standard established under any federal healthcare program cannot be used in a medical malpractice case as evidence of a standard or duty-of-care owed by a provider to a patient.  Thus, MIPS participation cannot be used in liability cases.  

And the Rest

H.R. 4015 covers additional ground beyond the SGR repeal-and-replace.  For example, it:

  • Requires CMS to publish a comprehensive quality measure development plan by May 1, 2015.
  • Establishes MPFS payment for chronic care management (consistent with what CMS now proposes for 2015).
  • Gives CMS additional authority to make adjustments for misvalued services under the MPFS.
  • Prohibits payment for advanced diagnostic imaging services after 2017 if the physician does not utilize approved clinical decision support tools when  ordering the service (with certain exceptions).
  • Expands information available for consumers on CMS’ Physician Compare website.
  • Allows qualified entities expanded access to CMS data.
  • Requires the Department of Health and Human Services to issue a report on how a permanent hospital-physician gainsharing program can best be established.
  • Directs the General Accounting Office to issue a report identifying and addressing barriers to expanded use of telemedicine and remote patient monitoring.

What’s Missing

Unlike its counterparts in the House committees, the proposed legislation from the Senate Finance Committee included funding for critical rural health programs.  These include the Medicare Dependent Hospital program and the Low-Volume Hospital adjustment, as well as programs aimed to protect rural EMS providers and rural physicians from geographic variation in Medicare payments.  The “extender” package in the Senate Finance Committee bill also included funding for therapy services and a program that allows low-income individuals to maintain Medicaid coverage as they transition into employment. 

The price tag for these “extenders” in the Senate Finance Committee bill was estimated at $33 billion.  For now, these provisions are not included in H.R. 4015, presumably to reduce the “pay for.”  Expect to see a flurry of lobbying efforts to include the “extenders” in H.R. 4015 as legislators now focus on the “pay for.”

PYA supports organizations as they develop transition strategies for value-based purchasing, such as the proposed MIPS program.  For more information, please contact David McMillan, Nancy McConnell, or Martie Ross at PYA, (800) 270-9629.