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Washington Outlook

June 25, 2010

The ping-pong match continued this week on the tax extenders bill, as the Senate yesterday rejected another in a series of modified versions that contains a reprieve for Medicare physician payment cuts and healthcare provisions that are important to hospitals. With the Medicare physician payment reductions hitting doctors this month, Congress approved and sent to the president a separate bill that will provide a modest increase to physicians for the next six months, funded by a cut to hospitals, among other provisions.

This week, President Obama celebrated the three-month anniversary of the Patient Protection and Affordable Care Act and the administration released rules on patients’ rights, restrictions on annual insurance benefit limits, and a new regulation on hospital visitation rights. Moving forward on implementation of delivery system reforms in the law—specifically accountable care organizations—the Centers for Medicare & Medicaid Services (CMS) held a special call to hear from stakeholders on the new program.

Also, CMS just moments put on public display the proposed calendar year (CY) 2011 Medicare physician fee schedule rule. Premier will provide more details of the proposed rule soon.

Looking to the week ahead, the administration is expected to issue both the electronic health records “Meaningful Use” final rule and the proposed CY 2011 Medicare outpatient prospective payment system rule. 

Obama signs temporary physician payment fix legislation

With efforts to pass a tax-extenders bill stalled, the House passed yesterday by a vote of 417-1 a stand-alone bill (H.R. 3962) that provides a 2.2 percent increase in Medicare physician payments for the next six months (through November 30) and partially funds the measure through a $4.2 billion cut to hospitals.  Representative George Miller (D-CA) cast the lone “no” vote due to concerns over the pension offset.  The Senate approved an identical bill last week by unanimous consent and the President signed the legislation this morning.

The $4.2 billion hospital payment reduction contained in the bill would be achieved by limiting the ability of hospitals to unbundle therapy-related services within 72 hours of an admission if those services are unrelated to the admission. Under current law, all outpatient diagnostic services related to an inpatient admission are included in the bundled diagnosis-related group (DRG) payment for that admission. This provision changes the three-day payment window rule to require all therapeutic services delivered in the outpatient department, except for ambulance and dialysis services, to be billed as part of the inpatient hospital’s DRG payment.  Hospitals would be prohibited from resubmitting any past claims where therapeutic services could have been unbundled.   

The bill also includes provisions allowing the Internal Revenue Service and the Centers for Medicare & Medicaid Services (CMS) to coordinate data-matching efforts with regard to delinquent tax debts owed by Medicare providers, and to take such information into account when releasing reimbursement payments and accepting new providers.  The Joint Committee on Taxation estimates this would save $425 million over 10 years. 

Another tax extenders package falters, leaving state Medicaid funds and other healthcare extenders hanging

Shortly before the House passed the physician payment fix legislation yesterday, the Senate failed, by a vote of 57-41, to limit debate on yet another revised tax extenders package, introduced by Senate Finance Committee Chairman Max Baucus (D-MT).  The bill contained a temporary physician payment fix, a phased-down extension of the enhanced state Medicaid funding, changes to the 340B drug pricing program, and an extension of Section 508 hospital reclassifications. 

Compared to earlier bills, the Baucus bill would have ratcheted down the increased Medicaid Federal Medical Assistance Percentage (FMAP), providing states with a 3.2 percent increase from January to March 2011 and a 1.2 percent increase from April to June 2011, instead of the full enhanced match provided in the Recovery Act.   

With the physician pay cut at least temporarily addressed, the fate of the remaining health provisions in the still pending extenders package is unclear at this time. Senate Majority Leader Harry Reid (D-NV) indicated that the Senate would now shift its focus to other matters and had no concrete plans to revisit the extenders legislation.

Premier submits comments on coding & documentation and quality proposals in proposed FY 2011 inpatient payment rule  

In comments submitted on June 18, Premier urged the Centers for Medicare & Medicaid Services (CMS) to revise its proposed documentation and coding incentive adjustment and offered recommendations on the quality provisions contained in the proposed fiscal year (FY) 2011 Medicare inpatient prospective payment system (IPPS) rule.  

In its letter, Premier expressed disappointment that CMS did not adopt the alliance’s previous recommendations to make allowances for real case-mix increase when estimating the adjustment applied to inpatient payments to account for alleged changes in documentation and coding. The proposed adjustment follows CMS’ change to Medicare-Severity Diagnosis-Related Groups (MS-DRGs).  CMS proposes a 2.9 percent cut—$3.7 billion—to recoup one-half of the remaining payments that resulted from changes that did not reflect real case-mix growth. Premier provided CMS with new evidence that the methodology is flawed because CMS does not account for the upward trend in real case-mix and offered an alternative approach to calculating the adjustment that reflects increasing patient severity. 

Premier also provided a framework to process, prioritize and implement quality measures based on the evolving landscape that incorporates “Meaningful Use” of electronic health records and new requirements related to quality in the healthcare reform law.  Addressing specific measures proposed by CMS, Premier strongly urged the agency to revise its proposal to require hospitals to participate in one of four private registries to publicly report quality measures.  Premier underscored that making hospitals pay to participate in a registry based on proprietary measures to receive their full Medicare payment will create government-sanctioned monopolies increase healthcare costs, reduce healthcare transparency, undermine uniform standards across measure sets and lead to proliferation of proprietary registries. Premier also provided recommendations in its comments on other quality measures that CMS proposes to adopt and retire.  

CMS holds Open Door Forum on accountable care organizations

In a Special Open Door Forum focusing on accountable care organizations (ACOs), the Centers for Medicare & Medicaid Services (CMS) solicited ideas from hospitals, physicians, patient advocacy groups and other stakeholders on how to move forward with implementing the ACOs that are established in the Patient Protection and Affordable Care Act.

Katherine Schneider, Vice President of Health Engagement for AtlantiCare, one of the health systems participating in Premier’s Accountable Care Organizations Collaboratives, offered a number of policy recommendations to CMS, underscoring the need for CMS to support multi-payer ACO initiatives.  Schneider described how the current fee-for-service environment does not provide sufficient margins to primary care providers to invest in the infrastructure needed to achieve the level of quality improvements that healthcare reform and providers seek and she called on CMS to incorporate other payment models in ACOs.  

Jonathan Blum, CMS Deputy Administrator and Director of the Center for Medicare, noted in opening remarks that a “tremendous opportunity” has been afforded to CMS to define ACOs and that the agency is seeking input from the public on a number of key issues as CMS works toward developing a notice of proposed rule-making (NPRM) delineating the key aspects of the program.  Blum reiterated during the call that he expects the agency to issue the NPRM this fall. 

CMS Acting Director of the Performance Based Payment Policy Staff, Dr. Terri Postma, briefly reviewed the purpose of ACOs and the eligibility criteria and requirements providers will have to meet to become ACOs and then opened it up for comments and questions to the more than 1,600 participants. 

During the call, a number of commenters encouraged CMS in its forthcoming NPRM to minimize the provider reporting requirements associated with their participation in such program (e.g., mainly around the quality measures) by, among other things, focusing at least initially on claims-based metrics.  In addition, as was echoed by several commenters, and in particular from those who referenced direct or indirect experience with participation in the Physician Group Practice (PGP) Demonstration, a number of individuals urged CMS to ensure that Medicare claims data and other tools by which participating ACOs use to measure their performance be provided to participating entities on a timely basis.  Others recommended that CMS work with relevant federal agencies, including the HHS Office of Inspector General (OIG) and the Federal Trade Commission (FTC) to ensure that there are no legal or regulatory impediments to participation.  Finally, one commenter encouraged CMS to consider the parallel attributes between the Medicaid Pediatric ACO Demonstration Project and that of the Medicare Shared Savings Program.    

CMS staff indicated that the agency expects to hold future forums on the issue, presumably in advance of the agency’s issuance of the NPRM.  In addition, CMS staff noted that the agency intends to set-up an email mailbox to solicit additional comments on the formation of the ACO Program and that a notification providing such instructions will be made available via a forthcoming CMS listserv notice. A recording of the call will be available on July 7 on the CMS Open Door Forum website.

Earlier this month, CMS released a preliminary question & answers (Q&As) document that provides an overview of ACOs.   

ONC issues final rule to establish the temporary certification program for electronic health record technology

The Office of the National Coordinator (ONC) for Health Information Technology on June 16 issued a final rule to establish a temporary certification program for electronic health record (EHR) technology. Providers must use “certified EHR technology” to be eligible to receive incentive payments under the Medicare and Medicaid Electronic Health Record Incentive program authorized under the American Recovery and Reinvestment Act. The temporary certification program establishes processes that organizations will need to follow to be authorized by the National Coordinator to test and certify EHR technology. The final rule was published in the June 24 Federal Register and went into effect that day.  Premier has prepared a detailed summary of the final rule. 

Under the temporary certification program, ONC will select one or more ONC-Authorized Testing and Certification Bodies (ONC-ATCBs) to both test and certify complete electronic health records (EHRs) and/or EHR Modules.  ONC now anticipates that five organizations will apply for ONC-ATCB status (compared to the three estimated in the proposed rule).  The temporary certification program will sunset on December 31, 2011, or if the permanent certification program is not fully constituted at that time, then upon a subsequent date that is determined to be appropriate by the National Coordinator. 

Important highlights for hospitals include:

For additional information about the temporary certification program and rule, please visit http://healthit.hhs.gov/certification.

CMS also announced this week that it has launched the official website for the Medicare & Medicaid EHR Incentive Programs that provides up to date information on the programs.

Premier leaders support Berwick nomination

Premier’s Board of Directors and members of the Quality Improvement Committee and Group Purchasing Member Relations Committee today urged the Senate to confirm Dr. Donald Berwick as Administrator of the Centers for Medicare & Medicaid Services (CMS), the agency charged with implementing healthcare reform over the next decade.

In a letter to the Senate, Premier leaders cited the respect and admiration Berwick has received from all sectors of healthcare for his ability to understand what drives errors and inefficiencies, challenge the status quo and overcome barriers to achieve continuous quality improvements.

“With this background, we are confident Dr. Berwick understands first-hand how difficult it will be to implement reforms of such significant scale and magnitude,” said the Premier members. “More importantly, we believe he has the vision and experience to overcome the challenges ahead to drive improvements in pragmatic, effective ways.”  

Nominated by President Obama in April, Berwick’s confirmation has come under heavy criticism from Republicans who have voiced concerns over past comments in support of Britain’s National Health Service. 

Berwick, a pediatrician by training, is currently the president and CEO of the Institute for Healthcare Improvement (IHI) and is a professor at Harvard Medical School and the Harvard School of Public Health.

Premier also joined the American Hospital Association, the Federation of American Hospitals and several other hospital organizations this week in sending a letter to healthcare committees urging them to quickly confirm Berwick as CMS Administrator.

CMS releases proposed rule on patients’ hospital visitation rights

The Centers for Medicare & Medicaid Services released a proposed rule on June 23 on the visitation rights of patients.  The proposed rule would require all hospitals, including critical access hospitals, that accept Medicare or Medicaid to allow patients to choose their visitors and explains that a patient’s visitors may include “a spouse, a domestic partner (including a same-sex domestic partner), another family member, or a friend.”  According to the proposed rule, hospitals must provide these inclusive visitation policies in writing and should permit “all visitors to enjoy visitation privileges that are no more restrictive than those that immediate family members would enjoy.”  The proposed rule is open for public comment until August 27.  Premier has prepared a summary of the proposed rule.

The rule relates to President Obama’s April 15 comments that addressed patients’ rights to choose their visitors regardless of relationship, explaining that gay and lesbian individuals are “uniquely affected” by hospitals’ visitation policies.  Obama noted that visitation policies that limit the visitors a patient may receive can deny doctors, nurses, and other medical providers important information about a patient’s medical history that is known by individuals other than immediate family members.

Lawmakers express concern with MedPAC GME recommendations

House members relayed this week serious concerns to the Chairman of the Medicare Payment Advisory Commission (MedPAC) on the advisory board’s recommendations relating to graduate medical education (GME).  At a June 23 House Energy and Commerce Health Subcommittee hearing, Chairman Frank Pallone (D-NJ) and other subcommittee members underscored the negative impact that the GME recommendation could have on teaching hospitals that rely heavily on these funds. 

In MedPAC’s June 2010 Report to Congress released last week, the commission recommended linking GME funding to quality improvement by October 2013, requiring institutions to meet new performance-based standards on practice-based learning and improvement, interpersonal and communication skills, professionalism and systems-based practices.  MedPAC based its recommendations on its analysis that assumed Medicare paid $3.5 billion more in GME payments in 2009 than the indirect clinical costs associated with teaching and on an assessment that the current GME system is not producing the types of physicians needed. 

“Can hospitals that operate on very slim margins or in the red, like those in my state of New Jersey, continue to operate and provide the same level of services if they begin to lose GME funding?,” asked Chairman Pallone.

In addition to GME, the MedPAC report examined ways to enhance Medicare’s ability to innovate, touching on potential changes to Medicare’s Quality Improvement Organizations (QIOs), which are charged with improving the effectiveness, efficiency, economy, and quality of services delivered to Medicare beneficiaries. MedPAC suggested that the QIO program could be enhanced to help hospitals, physicians and other providers overcome the barriers to enacting meaningful changes to improve the quality of patient care. Premier had previously commented to MedPAC in a letter that it strongly supports broadening the types of organizations that could provide assistance in this area and believes it would be beneficial to both the Medicare program and beneficiaries.

Healthcare reform moves forward with issuance of interim final rules on patient rights and “grandfathered” health plans

The Department of Health and Human Services (HHS) has issued two new regulations over the last several weeks implementing the Patient Protection and Affordable Care Act: 

Weekly legislative and regulatory round-up

The round-up for the week of June 19 - 25, 2010 is available here.

The round-up for the week of June 5 - 11, 2010 is available here.