Regulatory Update: July 2016

July 2016

Calendar Year (CY) 2017 Home Health Prospective Payment System Rate Update

On July 5, the Centers for Medicare & Medicaid Services (CMS) published a proposed rule updating policy and payment rates for home health agencies (HHAs) for 2017. As proposed, several payment changes combine to reduce total payments to HHAs by 1.0 percent, or $180 million, compared to 2016. The rule also revises the quality measures, reporting requirements, and scoring methodology for the home health value-based purchasing (HHVBP) demonstration, which began January 1, 2016, for all HHAs participating in Medicare in MA, MD, NC, FL, WA, AZ, IA, NE and TN. Finally, the proposed rule updates the home health quality reporting program (HH QRP), including the addition of four new measures required by the IMPACT Act. Of note, the rule implements the final year of the extension of the 3% payment boost for rural home health providers, which will expire January 1, 2018, unless extended by Congress. For more information, see the CMS fact sheet on the proposed rule.

Comments on the proposed rule are due August 26.

Specifically, this year's proposed rule:

  • Decreases total payment to HHAs by 1.0%, or $180 million, compared to CY 2016, with rural HHAs losing 1.7% and urban HHAs losing 1.4%
  • Implements the final year of the ACA-mandated four-year phase-in of rebasing adjustments to HH PPS rates, which reduces overall payments for CY 2017 by 2.3%, or $420 million
  • Reduces the national 60-day episode payment rate by 0.97% in the second year of the three-year phase-in of reductions to account for "up-coding" between CYs 2012 and 2014, resulting in an overall payment reduction of 0.9%, or $160 million
  • Implements the final year of the extension of the 3% rural add-on, per MACRA
  • Changes the methodology for calculating high-cost outlier episodes and payments, using a cost-per-unit approach rather than cost-per-visit to disrupt the financial disincentive to treat medically complex beneficiaries who require longer visits
  • Increases the fixed dollar-loss amount to 0.56 such that high-cost outlier payments are no reduction of 0.1%, or $20 million
  • Revises requirements under the HH VBP
  • Combines the smaller-and larger-volume cohorts for five participating states (MA, MD, NC, TN, WA) when the smaller-volume cohort has fewer than eight HHAs, for the CY 2018 payment adjustment only
  • Calculates both the achievement threshold and benchmark separately for each state participating in the HHVBP model, but not separately for the smaller0and larger-volume cohorts within each state, perhaps subjecting rural HHAs to VBP values that are not representative of their performance or the performance of their peer agencies
  • Removes four measures for CY 2016, leaving 20 measures and HHCAHPS patient satisfaction survey results (14 outcome measures and 6 process measures) as the HHVBP measure set for the first two performance years (i.e., CYs 2016 and 2017)
  • Establishes procedures by which HHAs can review quarterly and annual reports of their performance on quality measures as well as their total performance score (TPS) and payment adjustment amount, including a two-step dispute resolution process by which competing HHAs can contest and appeal the calculation of their TPS and incentive payments through the duration of the HHVBP model
  • Solicits public comment on plans to begin public reporting of HHVBP performance data beginning no earlier than CY 2019, either on Home Health Compare or the CMMI website
  • Notes the implementation of a new version of the home health patient assessment instrument, OASIS-C2, effective January 1, 2017
  • Updates quality measures and administrative procedures under the HH ARP, including the suspension of 16 measures and retirement of 18 measures; the addition of four new measures required by the IMPACT Act in CY 2018, including MSPB, discharge to community, and potentially preventable re-hospitalizations; and the adoption of procedures by which HHAs can review and correct data prior to their public reporting

CY 2017 Hospital Outpatient Perspective Payment System Update

On July 14, CMS published the proposed rule that would revise the Medicare hospital outpatient prospective payment system (OPPS) and the Medicare ambulatory surgical center (ASC) payment system for CY 2017. Overall CMS proposes payment rates increases of approximately 1.6 percent for urban hospitals and 2.3 percent for rural hospitals.  

Significant proposals for rural providers include:

  • Continuing the adjustment of 7.1 percent to the OPPS payments to certain rural sole community hospitals (SCHs), including essential access community hospitals (EACHs
  • Implementing section 603 of the Bipartisan Budget Act of 2015, which provides that certain items and services provided by certain hospital off-campus provider based departments (PBDs) would no longer be paid under the OPPS beginning January 1, 2017
  • Critical access hospitals (CAHs) are exempted; however, all other rural hospitals may be subjected to policy changes
  • All hospitals with existing off-campus PBDs are currently exempt from this policy. However, hospitals could lose its exception status for off-campus PBDs if it expands services, relocate, or changes ownership
  • CMS proposes the Medicare Physician Fee Schedule (MPFS) as the payment system for the majority of the items and services furnished by off-campus PBDs that are not exempted from this policy change. Physicians furnishing services in these departments would be paid based on the professional claim and would be paid at the non-facility rate for services which they are permitted to bill
  • Removing the pain management dimension from the Hospital Value-Based Purchasing program to eliminate any potential financial pressure clinicians may feel to overprescribe pain medications

For more information, see the CMS fact sheet on the proposed rule. Comments are due by September 6.

CY 2017 Physician Fee Schedule Update

On July 15, CMS published the proposed rule that addresses changes to the physician fee schedule and other Medicare Part B payment policies. Significant proposals for rural providers include:

  • Changing supervision requirements from direct to general for auxiliary staff (i.e., nurse, medical assistant or other clinical staff) in Rural Health Clinics and Federally Qualified Health Centers for chronic care management and transitional care management services
  • Adding advance care planning to the list of telehealth services
  • Using a new telehealth place of service (POS)code for distant site practitioner claims 
  • Expanding Medicare payment for the Diabetes Prevention Program. CMS seeks comments on several provisions of the service (i.e., supplier enrollment, beneficiary eligibility and quality measurement and reporting)
  • Requiring all Medicare Advantage providers and suppliers to enroll in Medicare

For more information, a fact sheet for the proposed rule and the Diabetes Prevention Program are also available. Comments are due by September 6.