Physician Reimbursement & Practice Management | American College of Osteopathic Internists

2015

RACs Identified Billions in Improper Payments (November 2015)
According to CMS, Recovery Audit Contractors (RACs) identified over one million claims for improper payments in fiscal year 2014. The claims identified represent a total of $2.57 billion in improper payments. Of these payments, $2.39 billion were overpayments and $173.1 million were underpayments. According to CMS, “After taking into consideration all costs of the program, including contingency fees, administrative costs, and amounts overturned on appeal, the Medicare Fee-for-Services Recovery Audit Program returned over $1.6 billion to the Medicare trust funds.”

Bill Introduced to Expand Open Payment Reporting Requirements (October 2015)
A bill was recently introduced in the Senate to expand reporting requirements under the Open Payments Program. The proposed legislation would expand the current reporting program to require applicable manufacturers to report payments made to physician assistants, nurse practitioners and other advanced practice nurses. The reporting program was created under the Physician Payment Sunshine Act, which was included in the Affordable Care Act (ACA) to promote transparency. According to CMS, under the current reporting program there were more than $6 billion in financial transactions between drug and device manufacturers, physicians and teaching hospitals in 2014. You can learn more about the Open Payments Program by visiting www.cms.gov/openpayments/.

New Data Released through Open Payments Program (August 2015)
According to new data released by CMS, there were $6.49 billion in financial transactions between drug and medical device makers, physicians and teaching hospitals in 2014. The data released by CMS shows that 607,000 physicians and 1,121 teaching hospitals received transfers of value in 2014. The Open Payments Program was created under the Physician Payment Sunshine Act included in the Affordable Care Act (ACA) to promote transparency. Concerns continue to be raised about the accuracy of the data made available to the public as well as the brief timeline in which reported entities have the opportunity to review and challenge reported data. Refinements to the program are almost certain to continue. Additional information about the Open Payments Program is available at https://www.cms.gov/openpayments/.

House Approves Repeal of IPAB (July2015)
The House approved legislation to repeal the provision of the Affordable Care Act establishing the Independent Payment Advisory Board (IPAB). The IPAB was created under the ACA to develop proposals to reduce the per-capita rate of growth in Medicare spending. While this section of the ACA has been subject to bi-partisan criticisms, as well as concerns raised by the physician community, the White House recently indicated that the President will veto the legislation if it presented to him for his signature. The bill approved by the House has been referred to the Senate Finance Committee where no action has been scheduled. The ACOI will continue to monitor this matter closely.

Physician Medicare Payment Data Released (July 2015)
CMS released hospital charge and physician payment data for 2013 on June 1. According to CMS, “Data transparency facilitates a vibrant healthcare data ecosystem, promotes innovation and leads to better informed and more engaged healthcare consumers.” CMS plans to continue to release data on an annual basis. The released information includes data on 950,000 distinct healthcare providers and represents $90 billion in Medicare payments. In an effort to allow for greater analysis of the data set, the 2013 data released includes separate totals for medical services and drug services in addition to totals for all services. Concerns continue to be raised about the possibility of errors in the data, the lack of risk adjustment, and the inability to account for patient mix and demographics, among other things.

Pioneer ACOs Show Early Promise (May 2015)
According to a report recently released by the Centers for Medicare and Medicaid Services (CMS), the Pioneer Accountable Care Organization (ACO) model showed both financial and quality improvement benefits over the first two years of the program for services provided to Medicare beneficiaries. With regard to savings over the first two years of the program, the increase in spending was $385 million less than spending for similar Medicare fee-for-service beneficiaries. According to the report, the savings equate to about $300 per beneficiary. The program also saw an increase in the quality of care provided. Pioneer ACOs improved their mean clinical quality scores from 70.8 percent to 84 percent over the same time period. The mean score improved for 28 of 33 quality measures. The report noted, “These results are encouraging, given how historically challenging it has been for physicians to achieve spending reductions in Medicare demonstration projects.” The Pioneer ACO model is the first to be certified by the CMS Office of the Actuary as meeting the criteria on quality and cost for potential future expansion into other Medicare programs.

Stage 3 EHR Meaningful Use Proposed Rules Released (April 2015)
CMS recently released proposed Stage 3 meaningful use requirements for the Medicare and Medicaid Electronic Health Record programs. Under the proposed rule, participation in Stage 3 would be optional in 2017. Beginning in 2018, regardless of past participation, eligible professionals, eligible hospitals and critical access hospitals would be required to report the same objectives and measures of meaningful use. The proposed rule is intended to align EHR incentive programs with other CMS quality reporting programs that use certified EHRs. The number of objectives will be decreased from 20 in Stage 2 to eight in Stage 3 under the proposed rule. However, higher compliance thresholds will be required to meet the Stage 3 meaningful use standards. The federal government is expected to spend about $3.7 billion between 2017 and 2020 on the meaningful use program. In concert with the release of the proposed Stage 3 rule, the Office of the National Coordinator for Health Information Technology (ONC) also released its proposed standards and certification criteria for EHR technology. According to an ONC document, “Together, these proposed rules focus on making the EHR incentive programs more flexible, simplifying and reducing the burden of providers participating in the program, driving the interoperability of health IT across systems and between providers and improving patient outcomes.

”Congress Approves Legislation to Repeal Medicare Physician Payment Formula (April 2015)
After years of effort and the enactment of 17 separate “patches,” the House and Senate overwhelmingly approved the bipartisan “Medicare Access and CHIP Reauthorization Act of 2015” (H.R. 2), which fundamentally alters the manner in which physicians are reimbursed under the Medicare program. The final vote in the Senate followed action by the House two weeks prior and occurred within hours of when the Centers for Medicare and Medicaid Services (CMS) would have begun processing Medicare claims at a 21 percent reduced rate.

The deal to repeal the flawed SGR formula used to calculate physician payment under Medicare was reached following extensive bipartisan negotiations and years of effort by the ACOI and other members of the physician community. Under the bill, physicians will receive a positive .5 percent update for five years beginning on July 1, followed by stable payments through 2025. In addition, the legislation consolidates existing physician quality programs into a new, streamlined Merit-Based Incentive Payment System (MIPS) providing physicians with the opportunity for bonus payments based on the efficiency and quality of the care provided. The newly-created MIPS will focus on quality, resource use, electronic health record meaningful use and clinical practice improvement activities

Approval of this legislation ensures that patients will have access to their physicians and allows physicians to practice in a more predictable environment. While the legislation is not perfect, it sets forth a path to provide much-needed stability and moves Medicare toward a system that better promotes efficiency and quality. Upon final approval of the legislation, the President released a statement saying, “I will be proud to sign it into law.” The ACOI will continue to provide updates as implementation of the “Medicare Access and Chip Reauthorization Act of 2015” gets underway.

CMS Extends Meaningful Use Attestation Deadline (March 2015)
The Centers for Medicare and Medicaid Services announced that it is extending the deadline for eligible professionals to attest to meaningful use under the Medicare Electronic Health Record (EHR) Incentive program to 11:59 Eastern Time on March 20, 2015. The original deadline was February 28. The Medicare deadline does not affect deadlines for the Medicaid EHR incentive program. Those who fail to attest to meaningful use in 2014 will see a reduction in reimbursement beginning January 1, 2016. The extension also applies to some of the EHR reporting option for the Physician Quality Reporting System

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New Report Shows Concern for Continued Physician Shortage (March 2015)
According to a report recently released by the Association of American Medical Colleges (AAMC), demand for physicians continues to grow faster than supply. With an aging and growing population and an increase in people receiving coverage under the ACA, it is estimated that there will be a shortfall of approximately 46,000 to 90,000 physicians by 2025. Specifically, the AAMC report finds that there will be a shortage of 12,500 to 31,100 primary care physicians and 28,200 to 63,700 non-primary care physicians. The report calls for a multi-pronged approach to address the physician shortage that includes innovation in delivery; greater use of technology; improved, efficient use of all health professionals on the care team; and an increase in federal support for residency training. The report’s findings are certain to be discussed by policy makers in Washington.

House Committee Approves Medicare Legislation (March 2015)
The House Committee on Ways and Means approved four bills addressing the Medicare program. One bill would require the removal of Social Security numbers from Medicare cards and require valid prescriber National Provider Identifiers on pharmacy claims. Another bill would require bid surety bonds and state licensure for entities submitting bids under the Medicare durable medical equipment, prosthetics, orthotics, and supplies competitive acquisition program. The third bill addresses certified EHRs in ambulatory surgical centers. Finally, the Committee approved legislation requiring hospitals to provide certain notifications to individuals who are classified as under observation status and not admitted as patients. It is not clear when the full House will act on these legislative packages.

House Committee Considers Medicare Physician Payment Reform (February 2015)
The House Energy and Commerce Health subcommittee recently conducted a hearing to examine efforts to reform the Medicare Sustainable Growth Rate (SGR) formula. Without congressional action, physicians face a nearly 21 percent reduction in Medicare reimbursements on April 1. The two-day hearing included testimony that looked at potential reforms, costs of the reforms and the need to end the annual threat of reductions in Medicare reimbursement. ACOI member Geraldine O’Shea, DO, provided testimony on the need for permanent reform and the importance of expanding coordinated care in the restructuring of the current payment model. Previously approved legislation was reviewed and identified as a solid foundation for future negotiations. While there was general agreement on the need to repeal and replace the SGR and address the annual threat of reductions in Medicare physician reimbursement, there was no agreement on how to pay for the approximate $140 billion cost. The same concerns derailed legislative progress in 2014.

CMS Announces Plan to Reform Medicare Payment Model (February 2015)
CMS has announced plans to shift traditional fee-for-service Medicare to one that pays for value and care coordination. According to a document released by CMS, the focus will be on the following three areas: improving the way providers are paid; improving and innovating in care delivery; and sharing information more broadly to providers, consumers and others to support better decisions while maintaining privacy. According to CMS, it intends to tie 30 percent of payments to quality and effectiveness by the end of 2016 and 50 percent by 2018. At present, about 20 percent of Medicare payments are paid through programs that expose providers to financial risk for their performance or at least require them to collect and report quality measures. With the Federal government paying $362 billion to Medicare providers in 2014, it is clear that it will continue to look for ways to increase efficiency in the dollars that are spent. With private providers often following the Government’s lead, the ACOI will continue to carefully monitor CMS’ efforts to implement these proposed changes.

CMS Announces Holding of Medicare Claims (January 2015)
In order to make technical corrections to the 2015 Medicare Physician Fee Schedule (MPFS) to ensure the proper processing of claims, Medicare Administrative Contractors will hold claims containing 2015 services paid under the MPFS for the first 14 calendar days of January 2015. The hold should have minimal impact on provider cash flow as, under current law, clean electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt. Claims for services provided on or before Dec. 31, 2014 are unaffected and will be paid under normal procedures and time frames.

Doctors See Cuts in Medicare Reimbursement (January 2015)
According to the Centers for Medicare and Medicaid Services (CMS), 257,000 doctors and 200 hospitals will see one percent reductions in reimbursements rates in 2015 as a result of failure to meet the requirements set forth under the meaningful use program. In addition, 28,000 doctors will see a two percent reduction in Medicare reimbursement for failing to meet the requirements of both the meaningful use and electronic prescribing requirements. According to CMS, more than $25 billion in Medicare and Medicaid incentives have been paid to hospitals and doctors since 2011. Application of the penalties for non-participation began on January 1. You can learn more about electronic health record incentive programs by visiting www.cms.gov.

2014

Final Medicare Physician Payment Rule Released (November 2014)
The Centers for Medicare and Medicaid Services (CMS) recently announced payment and policy changes under the Medicare Physician Fee Schedule for services furnished on or after January 1, 2015. Most notably under the rule, physicians will experience an average reduction of 21.2 percent effective April 1, 2015 unless Congress acts to prevent it. The reduction is delayed until April 1 due to the enactment of legislation approved earlier this year preventing a previously-scheduled reduction. The ACOI continues to work to advance legislation to permanently repeal Medicare Sustainable Growth Rate (SGR) formula, which is responsible for the annual threat of reduced reimbursement under the Medicare program.

The rule also makes changes in the Physician Quality Reporting System (PQRS), the Medicare Shared Savings Program, the Medicare Electronic Health Record Incentive Program, the Physician Compare website, and it addresses additional avenues for increased reimbursement. Specifically, the rule supports the delivery of chronic care management services beginning in 2015 by allowing for payment for these services provided to beneficiaries who have multiple significant chronic conditions (CPT code 99490). The services can be billed up to once per month per qualified patient. The rule also expands coverage for telehealth services by allowing payment for annual wellness visits (HCPCS G0438 and G0439), psychoanalysis (CPT 90845), family psychotherapy (CPT 90846 and 90847) and prolonged evaluation and management services (CPT 99345 and 99355. Additional information on the final rule and its impact is available at www.cms.gov.

CBO Lowers Medicare and Medicaid Spending Projections (September 2014)
The non-partisan Congressional Budget Office (CBO) recently released a new 10-year estimate for Medicare and Medicaid spending. According to the CBO, Medicare and Medicaid spending will decrease from its previous forecast by $89 billion during 2015-2024. It cites reduced labor and lower-than-anticipated prices for medical services for the reduction. It is important to note that the CBO is still projecting a net increase in the outlays for Medicare, Medicaid, the Children’s Health Insurance Program and federal insurance subsidies by more than 85 percent over 10 years. This is projected to grow the federal government’s healthcare spending from 4.9 percent to 5.9 percent of the Gross Domestic Product. Further, the estimates do not take into account potential congressional action on Medicare physician reimbursement. Simply maintaining the current payment levels under the Medicare program will cost an estimated $131 billion. Additional information is available at www.cbo.gov.

Official Deadline for ICD-10 Implementation Set (August 2014)
CMS released a final rule establishing October 1, 2015 as the official compliance deadline for implementation of the International Classification of Diseases, 10th Edition Diagnosis and Procedure Codes (ICD-10). The deadline was first extended by Congress earlier this year and made official through the recently-released final rule. The deadline will not be delayed further absent additional congressional action.

Central to the report’s recommendations is the need to reform the current GME system to better prepare physicians to practice in the ever-changing healthcare system. To this end, the report stated, “It is noteworthy that the accrediting bodies for both allopathic and osteopathic medicine--the Accreditation Counsel for Graduate Medical Education and the American Osteopathic Association, respectively--are currently remodeling their accreditation systems, in part to better care physicians for practice in the rapidly evolving US healthcare system.”

The report goes on to acknowledge that while most training currently takes place in, and is sponsored by, large institutions, health care services are increasingly provided in ambulatory and community-based settings. As such, the report highlights the need to produce physicians more prepared to practice in settings where services will be needed in the future by expanding training at non-hospital sites. The report concludes by stating that Medicare support of GME should be continued on its demonstrated value and contribution to the Nation’s health needs. The full report is available at www.iom.edu. The ACOI will continue to analyze the report and ensuing policy discussions.

Open Payments Database Taken Off-line (August 2014)
The Centers for Medicare and Medicaid Services (CMS) has announced a delay of a portion of the Open Payments program following efforts to investigate “a reported issue.” The Open Payments program was created by the ACA and requires applicable manufacturers of drugs, devices, biologicals or medical supplies to report annually certain payments or other transfers of value to physicians and teaching hospitals. As a result of the delay, physicians will not be able to review and dispute reported information about them until the issue is fixed. The required reporting is intended to promote transparency of financial relationships between the medical industry and healthcare providers on a publicly accessible website to help consumers make informed decisions.

According to CMS, “After an assessment of the data resulting from a complaint, we discovered that a limited number of physician payment records submitted by at least one manufacturer incorrectly contained information about other physicians.” While CMS has delayed the review and dispute stage of the program, it has not made clear whether it will delay the public launch of the website. Further, CMS has not indicated the expected duration of the delay. In a letter to CMS, the ACOI and others call for a delay in the program to address this and other issues. The ACOI will continue to closely monitor the situation.

MedPAC Releases Annual Report to Congress (July 2014)
The Medicare Payment Advisory Commission (MedPAC) recently released its congressionally-mandated annual report on Medicare and the healthcare delivery system. The report addresses the following areas: synchronizing Medicare policy across payment models; improving risk adjustment in the Medicare program; reevaluating current approaches to measuring the quality of care in Medicare, with a discussion of an alternative approach; aligning financial assistance policies for low-income beneficiaries; paying for primary care using a per-beneficiary payment; addressing Medicare payment differences across post-acute care settings and, measuring the effects of medication adherence on medical spending for the Medicare population and its long-term sustainability. The report is used by Congress and others to examine issues affecting the Medicare program. Its content is often used to advance policy discussions that look at reforming the Medicare system to enhance quality and efficiency within the healthcare delivery system. The full report can be viewed at www.medpac.gov.

OIG Report Says 20 Percent of E/M Services Payments Not Appropriate (June 2014)
According to a report released by the HHS Office of Inspector General (OIG), Medicare inappropriately paid $6.7 billion for evaluation and management (E/M) services in 2010. This accounts for approximately 20 percent of all E/M service payments made that year. The OIG report identified the following errors: 55 percent of E/M claims were incorrectly coded or lacked documentation; 26 percent were upcoded; 15 percent were downcoded; and 12 percent were insufficiently documented. The report went on to find that high-coding physicians were more likely to code inappropriately and provide insufficient documentation. As a result of its findings, the OIG has recommended to CMS the following: educate physicians on coding and documentation requirements for E/M services; continue to encourage contractors to review E/M services billed for high-coding physicians; and follow-up on claims for E/M services that were paid in error.

CMS Proposes Rule to Ease Participation in 2014 Meaningful Use Program
(June 2014)
CMS has issued a proposed rule to allow the use of 2011 Edition certified electronic health records (EHRs) in the 2014 Meaningful Use Program for providers who are not able to upgrade in time. Under the current rule, providers are required to adopt EHRs certified under the 2014 Edition certificate criteria to be eligible for 2014 incentive payments and to avoid Medicare penalties in 2015. The proposed rule is an effort to respond to numerous complaints that providers have been unable to upgrade through no fault of their own. In addition, the proposed rule would also put into regulation CMS’ promise to postpone the start of Stage 3 of the Meaningful Use Program until 2017. It is important to note that the proposed rule does not allow the use of 2011 Edition EHRs beyond 2014. In addition, 2014 is the last year eligible professionals can start participation in the Medicare EHR Incentive Program in order to receive incentive payments. Those who begin participation in the Medicare EHR Incentive Program after 2014 will not be able to earn incentive payments for that year or any subsequent years. If 2014 is the year you choose to participate for the first time in the Medicare EHR Incentive Program, you should begin your 90-day reporting period no later than July 1 and submit attestation by October 1 in order to avoid a penalty in 2015. Additional information on participation is available at www.cms.gov.

Implementation of the “Two-Midnight” Rule Delayed (June 2014)
The Centers for Medicare and Medicaid Services (CMS) recently updated its guidance on inpatient hospital reviews to delay enforcement of the controversial “two-midnight” rule through March 31, 2015.

CMS officials indicated during a recent congressional hearing that efforts are underway to explore hospital reimbursement mechanisms for short inpatient stays. The review is a result of confusion created by the “two-midnight” rule established in 2013 with implementation originally scheduled for 2014. Under the rule, if a patient stays in a hospital for a minimum of “two-midnights” the stay is deemed “generally reasonable and necessary” as an inpatient stay. Anything less is a short-stay and not assumed to be reasonable and necessary. CMS officials stated that the rule was created in response to a high number of denied payments by Recovery Audit Contractors (RACs) for short-stays and the resulting increased use of observation status by hospitals. CMS is concerned with the increased reliance by hospitals on the use of observational status and the uncertainty and confusion that has resulted. Patients who are placed on observational status who later require post-acute care in a nursing facility are also placed in financial peril if they are not able to meet the three-day consecutive stay rule for Medicare coverage purposes. To this end, CMS is considering payment alternatives that will effectively compensate hospitals for the care they provide under a clear and concise rule that can be understood and applied by all affected providers. Is important to note that Medicare Administrative Contractors (MACs) are still able to select a small number of inpatient claims per hospital to conduct “probe and educate” activities. However, RACs will not be permitted to conduct reviews on claims with dates of October 1, 2013 through March 31, 2015. The ACOI will continue to monitor this issue as regulatory and legislative resolutions are sought to address the confusion and uncertainty created by the two-midnight rule.

Medicare to Cover Hepatitis C Virus Screening (June 2014)
CMS has determined that Medicare Parts A and B will cover screening for the Hepatitis C Virus. CMS will cover the screening when ordered by a beneficiary’s primary care physician in the context of a primary care setting and performed by an eligible Medicare provider. The screening will be covered if the beneficiary is at “high risk” for Hepatitis C Virus infection because of a current or past history of illicit injection drug use, or the person has a history of receiving a blood transfusion prior to 1992. In addition, a single screening test is covered for individuals who are not “high risk,” but who were born from 1945 through 1965. Additional information is available at www.cms.gov.

New ICD-10 Implementation Date Released (May 2014)
The Centers for Medicare and Medicaid Services (CMS) has indicated in a proposed rule that October 1, 2015 will be the new implementation date for the ICD-10 code set. Implementation was set to begin October 1, 2014, but was delayed by legislation recently signed into law by the President. The ACOI will continue to monitor this matter as CMS moves closer to implementation of ICD-10 and provides additional information to assist providers in the adoption of the ICD-10 code set.

Medicare Physician Payments Made Public (April 2014)
The Centers for Medicare and Medicaid Services (CMS) has made data available about the number and type of healthcare services provided by physicians and others. According to Jonathon Blum, CMS Principal Deputy Administrator, “This data contains information on more than 880,000 health care professionals in all 50 states who collectively received $77 billion in payments in 2012 for services delivered to beneficiaries under the Medicare Part B Fee-for-Service program.” The release of the data is intended to allow the analysis of 6,000 different services and procedures. According to CMS, the information is organized by National Provider Identifier (NPI) and Healthcare Common Procedure Coding System (HCPCS) code. Individual claim information will not be released. The release of this information became possible following the removal of an injunction in 2013 by a federal court that was in place since 1979. Additional information is available at http://blog.cms.gov/2014/04/02/next-steps-in-medicare-data-transparency/.

Congress Fails to Capitalize on Opportunity to Permanently Repeal SGR (April 2014)
Negotiators in the House and Senate worked feverishly over the past year to approve legislation that would permanently repeal the Medicare Sustainable Growth Rate (SGR) formula. Legislation was advanced in both House and Senate committees of jurisdiction. Further advances were made when common ground was found between bipartisan House and Senate negotiators on a reform package that would repeal the SGR formula and phase in new physician payment models. What remained was to find agreement on a way to pay for the legislative package. Rather than finding a permanent resolution to this difficult problem in an election year, Congress decided to approve the 17th temporary patch since 2002 and most likely moved the debate to 2015 by approving the “Protecting Access to Medicare Act of 2014” (H.R. 4302, Pub. L. 113-93).

Problems with achieving meaningful permanent reform first appeared on March 14 when the House approved the “SGR Repeal and Medicare Provider Payment Modernization Act of 2014” (H.R. 4015). While H.R. 4015 was the package agreed to by both House and Senate negotiators and supported by the physician community, House leaders added a “poison pill” amendment prior to its consideration. To pay for the package, House Republican leaders added a provision to delay implementation of the “individual mandate” created by the Affordable Care Act. The intentional addition of this extremely contentious provision almost certainly assured that the Senate will not consider and approve H.R.4015.

As the calendar moved closer to March 31 and with a nearly 24 percent reduction in Medicare physician reimbursement looming, the House approved the temporary patch, H.R. 4302. This occurred via a controversial procedure before most House members were present on the floor. Since there was still time to enact a permanent solution, some members of both parties opposed the legislation, as did the physician community, but they were precluded from trying to bring a permanent repeal measure to the House floor. The Senate, just about out of time, agreed to H.R. 4302 on March 31and President Obama signed it into law on April 1.

H.R. 4302 maintains the .5 percent positive update that was implemented on January 1 and extends it to December 31, 2015. The legislation extends the existing one percent Geographic Practice Cost Index (GPCI) through March 31, 2015. Finally, the law delays the implementation of the International Classification of Disease, 10th Revision (ICD-10) until October 1, 2015.

While enactment of H.R. 4302 provides temporary relief from the implementation of ICD-10 (see this month’s Coding Corner for more information) and prevents a severe reduction in Medicare physician reimbursement, an opportunity to create stability and protect access to care for millions of Medicare beneficiaries was missed in order to avoid difficult conversations and votes in an election year. The ACOI will continue to work to ensure that physicians are properly reimbursed for the services they provide.

$2.4 Billion in Improper Payments Identified by RACs (April 2014)
According to a CMS report recently released to Congress, Recovery Audit Contractors (RACs) identified $2.4 billion in improper Medicare payments in fiscal year 2012. This is up from $797 million in fiscal year 2011. Of the $2.4 billion, $2.3 billion was overpayments and $109.4 million was returned to providers for underpayments. According to the CMS report, more than $2 billion in overpayments related to inpatient hospital claims. After deducting payments to providers for underpayments and the cost of running the program, $1.9 billion was returned to the Medicare Trust Fund. According to CMS, the most common reasons for improper payments are: payment is made for services that do not meet Medicare’s coverage and medical necessity criteria; payment is made for services that are coded incorrectly; and payment is made for services where the supporting documentation submitted does not support the ordered service. Additional information on the Recovery Audit Program is available at www.cms.gov.

Act Now to Repeal the SGR! (March 2014)
The House and Senate committees of jurisdiction have reached agreement on legislation to repeal Medicare’s flawed Sustainable Growth Rate (SGR) physician payment formula (H.R. 4015/S. 2000). It is essential that you contact your US representatives to urge them to approve this legislation. With yet another substantial cut in physician reimbursement looming, the timing has never been better for Congress to act. In order to prevent the cut and eliminate the SGR formula for good, final action is needed by the full House and Senate by March 31. Contact your representatives today and ask them to support this critical legislation by visiting http://capwiz.com/aoa-aoia/issues/alert/?alertid=63084721.

CBO Releases New Estimates for Physician Reimbursement Reform Legislation (March 2014)
The non-partisan Congressional Budget Office (CBO) recently released a cost estimate for the “SGR Repeal and Medicare Provider Payment Modernization Act of 2014” (H.R. 4015/S. 2000). Additional congressional action is required by March 31 in order to prevent a nearly 24 percent reduction in physician reimbursement under the Medicare program.

The legislation provides a guaranteed five-year positive update of .5 percent and moves the current fee-for-service system to one that is outcomes-based, among other things. According to the CBO, the legislation would cost approximately $138.4 billion from 2014 through 2024. The estimate assumes enactment this spring. The legislation, does not include “extenders” of other Medicare programs that are traditionally dealt with when addressing Medicare physician reimbursement. As such, any efforts to add this omitted component will drive up the cost of the legislation. Enactment of this legislation is further complicated by the application of pay-as-you-go rules which require that the cost of the legislation be offset by increasing revenue or decreasing expenses elsewhere equal to the cost of the bill. The ACOI is continuing to monitor the situation closely.

CMS Announces Extension of EHR Meaningful Use Attestation for 2013 (Feburary 2014)
The Centers for Medicare and Medicaid Services announced it has extended the deadline for physicians to attest to electronic health record (EHR) meaningful use under the Medicare program from February 28 to March 31. Under the Medicare meaningful use program, physicians can earn up to $44,000 in Medicare incentive payments over five years. Additional information is available at www.cms.gov/Regulations-and-Guidance/Legislation/....

House and Senate Approve Legislation with Funds for Physician Payment Reform (February 2014)
The House and Senate approved S. 25 to reverse cuts to pension benefits for veterans that were enacted through earlier legislation. S. 25 extends Medicare sequestration cuts for one year through 2024 to pay for the legislation. In addition to reversing cuts to veteran cost-of-living adjustments, the legislation sets aside $2.3 billion to help fund future efforts to reform the current SGR formula under Medicare. More than $125 billion dollars must still be identified prior to the enactment of a comprehensive Medicare physician payment package. The legislation was approved by the House and Senate by margins of 326 -90 and 95-3, respectively. The legislation is expected to be signed into law by the President.

Act Now to Repeal the SGR! (February 2014)
The House and Senate committees of jurisdiction have reached agreement on legislation to repeal Medicare’s flawed Sustainable Growth Rate (SGR) physician payment formula (H.R. 4015/S. 2000). It is essential that you contact your US representatives to urge them to approve this legislation. With yet another substantial cut in physician reimbursement looming, the timing has never been better for Congress to act. In order to prevent the cut and eliminate the SGR formula for good, final action is needed by the full House and Senate by March 31. Use this link to contact your representatives today and ask them to support this critical legislation http://capwiz.com/aoa-aoia/issues/alert/?alertid=63084721.

The negotiated legislation would provide a guaranteed five-year positive update of .5 percent. In addition, beginning in 2018 a new incentive program called the Merit-Based Incentive Payment System (MIPS) would combine the existing Physician Quality Reporting System (PQRS), the Value-based Modifier Program and the electronic health record Meaningful Use programs into one system. Under MIPS payments would be moved from a fee-for-service model to one that promotes outcomes. Payments would be adjusted up or down based on guidelines set under the new program. Another payment incentive program of up to five percent would be established for physicians who receive more than 25 percent of their Medicare compensation from alternative payment models such as a medical home. Under the legislation, a physician would be able to participate in only one incentive program.

While agreement on reforming physician payment policies has been reached, H.R. 4015/S. 2000 does not establish a way to pay for the legislation nor does it include the extension of other expiring provisions under Medicare. It is estimated that the legislation as drafted would cost approximately $128 billion over 10 years. As a result, additional negotiations are ongoing. Absent congressional action, physicians face a nearly 24 percent reduction in Medicare reimbursement when the current extension established under the Bipartisan Budget Act of 2013 expires on March 31. The ACOI will continue to review this legislation and closely monitor the ongoing congressional negotiations to permanently repeal the SGR formula.

Legislation Temporarily Preventing Medicare Physician Payment Cuts Signed into Law (January 2014)
President Obama signed into law the “Continuing Appropriations Resolution for 2014” (H.J. Res. 59, Pub. L. 113-67) on December 26. Enactment of H.J. Res. 59 prevented a nearly 24 percent reduction in Medicare physician reimbursement from taking effect on January 1. The law replaces the scheduled reduction with a .5 percent positive update through March and extends the Geographic Practice Cost Index (GPCI) floor through the same time period, among other things. Enactment of H.J. Res 59 is simply another short-term patch to the ongoing threat of physician payment reductions under the Medicare program. As a result, Congress must still act to advance a long-term solution. The ACOI will continue to closely monitor this matter and advocate for appropriate physician reimburse under the Medicare program.

HHS Inspector General Cites Need to Increase EHR Fraud Prevention Efforts (January 2014)
The Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) has released a report identifying the practice of copying and pasting in electronic health records (EHR) as an activity that can promote both inadvertent and intentional excess billing in Medicare. As a result, the OIG believes that the Centers for Medicare and Medicaid Services (CMS) and its contractors need to adjust their techniques for identifying improper payments and investigating fraud. To this end, the report recommends CMS provide guidance to its contractors on detecting fraud associated with EHRs. In addition, the report recommends that CMS should direct its contractors to use providers’ audit logs to better track changes within an EHR. You can view the full report at http://oig.hhs.gov/oei/reports/oei-01-11-00571.asp.

2013

Meaningful-Use Deadline Pushed Back (December 2013)
The Centers for Medicare and Medicaid Services (CMS) proposed a one-year delay for providers to implement Stage 2 of its Medicare and Medicaid “meaningful use” electronic health record incentive programs. Stage 2 participation was already delayed once. As a result of the new proposed timeline, Stage 2 will be extended through 2016 Stage 3 will begin in 2017 for those who have successfully completed at least two years under Stage 2. Additional information is available at http://www.cms.gov/eHealth/ListServ_Stage3Implementation.html.

Physician Payment Reform Advances in the House and Senate (December 2013)
With a nearly 24 percent reduction in physician payment under the Medicare program slated for January 1, Congress continues to advance measures aimed at staving off the cut and permanently repealing the flawed Sustainable Growth Rate (SGR) formula.

Recognizing the importance of finding a permanent solution, the House Ways and Means Committee and the Senate Finance Committee developed a bipartisan package that would permanently repeal the SGR and establish a value-based performance program that consolidates and enhances existing incentive programs. It would also incentivize the development of, and participation in, alternative payment models. Following consideration of the legislation, the Ways and Means and Finance Committees approved the legislation with some variations. It is widely understood that final approval of a legislative package repealing the SGR will require that its cost is offset. To date, offsets have not been identified.

While significant advances have been made in moving toward the enactment of legislation to permanently repeal the SGR, the reality is that a nearly 24 percent reduction will take effect on January 1 absent congressional action. As this issue goes to press, the House and Senate are working to approve a federal budget agreement (H. J. Res. 59). Included in the resolution working its way through Congress is a three-month extension to the current Medicare physician payment rate. The short timeframe for the extension is intended to ensure that Congress quickly completes the work advanced in the House and Senate committees.

The ACOI is continuing to closely monitor this rapidly changing situation. Additional information will be provided as it becomes available.

CMS Releases Final Physician Payment Rule (December 2013)
The Centers for Medicare and Medicaid Services (CMS) announced payment and policy changes under the Medicare Physician Fee Schedule on November 27. CMS estimates that total payments made under the fee schedule in 2014 will be approximately $85 billion.

The final rule would cut physician reimbursement by about 24 percent for physicians providing Medicare services on or after January 1. In addition to changes in the SGR, the final rule modifies the Physician Quality Reporting System (PQRS) by adding 57 new measures and two measure groups. The rule also provides for the following: changes the Physician Compare Tool; implements the value-based payment modifier required under the Patient Protection and Affordable Care Act (ACA); and sets the stage for Medicare to pay for complex chronic-care management services that occur without a face-to-face visit beginning in 2015, among other things. The complete rule is available at http://www.ofr.gov/OFRUpload/OFRData/2013-28696_PI.pdf.

New CBO Report Updates Cost to Reform Physician Reimbursement Rate (December 2013)
The non-partisan Congressional Budget Office (CBO) recently released a revised cost estimate to reform physician reimbursement under the Medicare program. Specifically, the CBO estimates that repealing the Medicare physician payment formula known as the Sustainable Growth Rate (SGR) will now cost $116.5 billion over ten years. The new estimate is lower than its previous estimate of $139.1 billion and is less than half what CBO estimated as recently as 2012. In addition, the CBO reduced its cost estimate of the “Medicare Patient Access and Quality Improvement Act” (H.R. 2810), as approved by the House Committee on Energy and Commerce. It has reduced the estimate of H.R. 2810 from $175.5 billion down to $153.2 billion. The reduced estimates come at a crucial time in Congress’ efforts to address the perennial reductions that confront physicians and threaten to impact access to care.

HHS Releases Model Documents to Assist with HIPAA Compliance (October 2013)
HHS released 16 model notices of privacy practices for healthcare providers and others to assist in meeting requirements under the Health Insurance Portability and Accountability Act (HIPAA). The notices are required to inform patients of a provider’s privacy practices. According to an HHS release, “Many entities have asked for additional guidance on how to create a clear, accessible notice that their patients or plan members can understand.” The new model notices are intended to meet this need and are provide in three options: notice in the form of a booklet; a layered notice that presents a summary on the first page, followed by detailed comment; and, a text only version. These resources are available at http://www.hhs.gov/ocr/privacy/hipaa/modelnotices.htm.

CMS Face-to-Face Requirement for DME Postponed (October 2013)
The Centers for Medicare and Medicaid Services (CMS) announced that it again will postpone a requirement that medical providers have a face-to-face encounter with a Medicare beneficiary within six months of prescribing durable medical equipment. The requirement was established in the Patient Protection and Affordable Care Act (ACA). The new date for enforcement of the requirement will be announced in 2014. According to CMS, “CMS expects all durable medical equipment suppliers to have fully established such internal processes and have appropriate documentation of required encounters by a date that will be announced in calendar year 2014.” Additional information is available at www.cms.gov.

New CBO Report Updates Cost to Reform Physician Reimbursement Rate (October 2013)
The non-partisan Congressional Budget Office (CBO) recently released a revised cost estimate to reform physician reimbursement under the Medicare program. Specifically, the CBO estimates the reform mechanisms contained in the “Medicare Patient Access and Quality Improvement Act” (H.R. 2810), as approved by the House Committee on Energy and Commerce, would cost approximately $175.5 billion over ten years. This estimate is up from the $139 billion estimate released earlier this year.

According to the CBO, its earlier estimate reflected a repeal of the Medicare Sustainable Growth Rate and maintaining current payment levels. H.R. 2810 would repeal the SGR and provide a positive update of .5 percent from 2014 through 2018. Absent congressional intervention, physicians are facing an estimated reduction of 24.7 percent in January 2014. It is important to note that the revised cost estimate is still below last year’s estimate of $245 billion. The CBO cites a reduction in physician spending under the Medicare program for the reduced cost of a repeal. Still unresolved in this debate is how Congress will pay for the repeal and replacement of the SGR with a positive update. Current budget and debt ceiling negotiations will also complicate negotiations going forward. The ACOI will continue to monitor this situation closely.

While physicians are not required to report information to CMS, they will have the opportunity to review the information pertaining to them prior to it becoming publicly available. To this end, CMS announced the release of a free web application available through the Apple Store and the Google Play Store. According to CMS, the app designed for physicians will help doctors ensure the information reported about them is accurate and complete. Additional information is available at http://www.cms.gov/Regulations-and-Guidance/....

House Committee Approves Repeal of Medicare Physician Payment Formula (August 2013)
The House Energy and Commerce Committee considered and approved the “Medicare Patient Access and Quality Improvement Act” (H.R. 2810) by a bipartisan vote of 51-0 on July 31. The legislation would permanently repeal the Medicare Sustainable Growth Rate (SGR) formula.

H.R. 2810 would repeal the SGR formula and replace it with “alternative payment models.” The specific replacement payment models are not defined. The legislation would provide for a period of stability by creating a .5 percent positive physician payment update for five years. Following the five-year statutorily guaranteed update, high-performing physicians under a new quality reporting system would receive a positive update of one percent. Low-performing physicians would receive a one percent reduction.

The House Ways and Means and Senate Finance Committees are expected to consider legislation designed to repeal the SGR as well. According to the non-partisan Congressional Budget Office, a repeal of the SGR with a freeze in current payment would cost approximately $139.1 billion over 10 years. H.R. 2810 and other legislative proposals under consideration by committees of jurisdiction are projected to increase budget deficits, and as such, will likely require offsets prior to being approved by the House and Senate and sent to the President for signature. Congress is in recess until September and is expected to take up this issue upon its return. Failure to do so, would result in an approximately 25 percent decrease in reimbursement under the Medicare program in January, 2014. The ACOI is continuing to closely monitor this important issue.

Increase in Primary Care Incentive Program Payouts (August 2013)
The Centers for Medicare and Medicaid Services (CMS) announced an 18.5 percent increase in pay outs under the Primary Care Incentive Payment Program (PCIP) created under the ACA. According to CMS, providers received $664 million in 2012 under the PCIP compared to $560 million in 2011. The five-year program offers the highest percentage of payments to internal medicine physicians, followed by family physicians and nurse practitioners. According to CMS, the number of rural providers receiving incentive payments also increased from 13.6 percent to 17.8 percent during the same time period.

Efforts to Advance Medicare Physician Reimbursement Reform Continue (July 2013)
Congressional committees of jurisdiction in both the House and Senate are continuing to work to develop legislation to reform the current Medicare physician payment formula. Most recently, the House Energy and Commerce Committee released a second draft of legislation that is under review by the ACOI and others. Committee leadership has indicated that it plans to consider the legislation prior to the end of the summer. An exact schedule for consideration of Medicare physician payment reform legislation by the Energy and Commerce Committee, as well as the Ways and Means Committee, has not been set to date. It also remains unclear when the full House will act.

Individual Physician Payment Data Made Available (July 2013)
The U.S. District Court for the Middle District of Florida vacated a 33-year old injunction preventing disclosure by the US Department of Health and Human Services (HHS) of Medicare physician payment information requested under the Freedom of Information Act (FOIA). In granting the injunction, the court originally determined that the disclosures were exempt from FOIA requests because such disclosures would violate the Privacy Act of 1974. In Florida Medical Association vs. Department of Health, Education and Welfare the court determined that the injunction was now invalid as a result of subsequent interpretations of the law. The federal judge ruled that parties interested in obtaining the information will be required to file a FOIA request. Such requests could be denied under a policy issued by HHS in 1980 stating that identifiable Medicare reimbursement data should not be released based on a FOIA exemption that prevents disclosures that would constitute a clearly unwarranted invasion of personal privacy. It is a possible that additional legal challenges will be brought in light of this ruling.

Efforts to Advance Medicare Physician Reimbursement Reform Continue
(June 2013)
Congressional committees of jurisdiction in both the House and Senate are continuing to work to develop legislation to reform the current Medicare physician payment formula. The House Energy and Commerce Committee released draft legislation that is under review by the ACOI and others. A hearing by the Committee has been scheduled and is expected to explore the barriers and opportunities existing in the current healthcare environment to achieve a long-term solution to this ongoing problem. Central to the policy proposals advanced in Congress thus far is the belief that there is a need to expand “quality reporting” mechanisms to control costs and improve patient care. The ACOI has conducted an initial review of the draft legislation produced by the Energy and Commerce Committee, as well as policy statements put out by other committees. Further review is underway. Additional information will be provided as it becomes available.

CMS Proposes Increase in Reward for Reporting Medicare Fraud (May 2013)
The Centers for Medicare and Medicaid Services (CMS) released a proposed rule increasing the award for reporting Medicare fraud from a maximum of $1,000 to $9.9 million. Under current regulations, individuals who report fraud that results in the recovery of funds can receive 10 percent of the funds up to a maximum of $1,000. The proposal is intended to create new incentives to report Medicare fraud by increasing the recoverable amount to 15 percent of the improper payments with a maximum amount of $9.9 million. The program has been in place since 1998 and has paid out a total of $16,000 for 18 rewards that resulted in the recovery of $3.5 million. The proposed changes to the program are modeled after a highly successful program conducted by the Internal Revenue Service (IRS). According to Department of Health and Human Services Secretary Kathleen Sebelius, the announcement “is a signal to Medicare beneficiaries and caregivers, who are on the frontlines of this fight, that they are critical partners in helping protect taxpayer dollars.”

CMS Announces IPAB Not Needed in 2015 (May 2013)
The acting chief actuary for CMS determined that the Independent Payment Advisory Board (IPAB) will not be needed in 2015. IPAB was created under the ACA to reduce Medicare spending if such spending exceeded target rates. The ACA requires that a 15-member board, nominated by the President and approved by the Senate, make cost-cutting recommendations to Congress that would automatically go into effect absent congressional action. Current estimates project that Medicare spending per beneficiary will not exceed target rates until 2022. These estimates are consistent with those made by the non-partisan Congressional Budget Office (CBO). To date, no members have been nominated to the IPAB. The ACOI has called for the repeal of the IPAB and will continue to monitor this situation closely.

National Physician Payment Transparency Program Launched (May 2013)
CMS announced the launch of a website for the National Physician Payment Transparency Program. The website will serve as the clearinghouse for data reported under the Physician Payment Sunshine Act. The Act, created under the ACA, requires manufacturers of drugs, devices, biologics and medical suppliers covered by federal healthcare programs to report to CMS payments or other transfers of value made to physicians and teaching hospitals. Under the final rule implementing the program, data collection will begin August 1, 2013. Manufacturers are required to submit data to CMS by March 31, 2014 with the first posting of the data on the public website by September 30, 2014. Physicians and teaching hospitals will be able to register in 2014 on the website to access their data prior to public posting. CMS announced that additional information on registration will be made available later in the year. The ACOI will continue to monitor.

CMS Announces Release of Chronic Conditions Dashboard (April 2013)
CMS has released a new online tool to help physicians, researchers and others find, analyze and apply summarized data on multiple chronic conditions. According to CMS, the Medicare Chronic Conditions Dashboard will allow users to get current data on where multiple chronic conditions occur and how much Medicare spends helping beneficiaries with these diseases. Acting CMS Administrator Marilyn Tavenner said that more than two-thirds of Medicare beneficiaries have multiple chronic diseases such as heart disease and diabetes. You can view the dashboard and its content at www.ccwdata.org/web/guest/interactive-data.

Medicare Physician Reimbursement Reductions Take Effect (April 2013)
President Obama signed an order triggering the $85 billion across-the-board cuts to federal spending, referred to as sequestration, on Friday, March 1. On Monday, April 1, the mandatory two percent payment reductions under the Medicare Fee-for-Service (FFS) program took effect. In addition to this reduction, the Centers for Medicare and Medicaid Services (CMS) estimated in a letter to the Medicare Payment Advisory Commission (MedPAC) that physicians will experience a 24.4 percent reduction in 2014 as a result of the Medicare sustainable growth rate (SGR) formula absent congressional action. As reported earlier, the chairmen of the House Committees on Ways and Means and Energy and Commerce have begun to explore legislative solutions that may be considered later this year. The ACOI continues to advocate for meaningful reform of the physician reimbursement system under the Medicare program.

CMS Releases ICD-10 Implementation Guides (April 2013)
CMS announced the release of new checklists and timelines for providers and payers to help with the transition from the International Classification of Diseases, 9th Edition (ICD-9) to International Classification of Diseases, 10th Edition (ICD-10). The deadline for the transition is October 1, 2014. Implementation of ICD-10 will increase the number of available codes from 13,000 to 68,000. The new materials are intended for small and medium-size practices, large practices and small hospitals. The checklists, timelines and other helpful materials are available for download at www.cms.gov/Medicare/Coding/ICD10/index.html.

MedPAC Releases Report to Congress (April 2013)
The Medicare Payment Advisory Commission (MedPAC), an independent Congressional agency, released its annual report on Medicare payment and policy updates to Congress on March 15. “Report to the Congress: Medicare Payment Policy,” underlines the urgency to repeal the SGR. According to the report, “Deferring repeal of the SGR will not leave the Congress with a better set of choices as the array of new payment models is unlikely to change and SGR fatigue is increasing.” The report highlights the opportunity to reform the Medicare physician payment system as a result of the reduced cost estimates released by the non-partisan Congressional Budget Office (CBO). You can view MedPAC’s entire report at www.medpac.gov/documents/Mar13_EntireReport.pdf.

Sequestration Cuts Set to Affect Physicians April 1 (March 2013)
President Obama signed an order triggering the $85 billion across-the-board cuts to federal spending, referred to as sequestration, on the evening of Friday, March 1. The order was legally required to be signed by midnight. Following issuance of the order, the Office of Management and Budget released a memo stating that sequestration will require a 7.8 percent cut to discretionary defense spending, a five percent cut to discretionary domestic spending, a 5.1 percent cut to domestic mandatory spending and a two percent cut to Medicare spending. The Centers for Medicare and Medicaid Services (CMS) announced that the two percent reduction to Medicare will take effect on April 1. Medicare reductions will equate to an approximate $11 billion loss in revenue for Medicare providers.
In addition to the general reductions outlined above, the National Institutes of Health will see a cut of approximately $1.5 billion, CMS will lose $289 million and the Food and Drug Administration (FDA) will lose about $209 million through the remainder of the 2013 fiscal year ending September 30. Additional reductions will occur without congressional action. The ACOI continues to closely monitor budget negotiations impacting the healthcare delivery system.

Efforts to Address Medicare Physician Reform Underway (March 2013)
The chairmen of the House Ways and Means Committee and the Energy and Commerce Committee released a draft outline of a plan to reform the current Medicare physician reimbursement system. They hope to convert the outline into legislative language later this year.
The outline provides for a three-phase process that would consist of the following: a period of physician reimbursement updates; adoption of a payment model based on quality; and, adoption of reforms that will promote efficiency of care. Efforts to advance meaningful reform of the Medicare physician reimbursement system were given a boost by the non-partisan Congressional Budget Office’s (CBO) recent release of reduced cost estimates for revising the current reimbursement system from $245 billion to $138 billion over 10 years.

HIPPA Does Not Prevent Disclosure of Patient Information When Risk is Present (February 2013)
Following the tragic events in Newtown, CT, the Department of Health and Human Services, Office for Civil Rights (OCR), released a letter on January 15 clarifying the applicability of the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule.
Specifically, the OCR letter stated, “the HIPAA Privacy Rule does not prevent your ability to disclose necessary information about a patient to law enforcement, family members of the patient, or other persons, when you believe the patient presents a serious danger to himself or other people.” The letter goes on to state that the HIPAA Privacy Rule, “protects the privacy of patients’ health information but is balanced to ensure that appropriate uses and disclosures of the information still may be made when necessary to treat a patient, protect the nation’s public health, and for other critical purposes, such as when a provider seeks to warn or report that persons may be at risk of harm because of a patient.” The full text of the letter may be viewed at http://www.hhs.gov/ocr/office/lettertonationhcp.pdf.

Medicare Physician Reimbursement Remains Front and Center (February 2013)
While the “American Taxpayer Relief Act of 2012” (H.R. 8, Pub. Law 112-240) extends the 2012 Medicare physician payment rates through December 31, additional reductions loom. Without additional congressional action, across-the-board cuts to federal spending referred to as sequestration, will be implemented on March 1. Under current law, physicians will be limited to a two percent reduction in reimbursement under Medicare if sequestration is allowed to take effect. Additional reductions are slated for January 1, 2014 under the Medicare Sustainable Growth Rate (SGR) formula. Legislation has been introduced in the House to permanently repeal the SGR. In addition, the leadership of the House Committees on Ways and Means and Energy and Commerce expressed interest in addressing this matter by mid-year. The ACOI will continue to carefully monitor legislation impacting physician reimbursement under the Medicare program.

House Rules Address IPAB (January 2013)
Following the convening of the 113th Congress, the House adopted the rules (H.Res. 5) under which it will operate for the next two years. Included in the rules package is a provision that addresses the Independent Payment Advisory Board (IPAB) established under the PPACA. IPAB is a 15 member panel created to come up with ways to restrict Medicare spending growth if it reaches a certain target. Its recommendations would automatically become law without prescribed congressional intervention.

H.Res. 5 as adopted eliminates PPACA’s requirement that a replacement bill for the IPAB save equal amounts of Medicare money. In addition, it undoes the limitations for floor consideration provided for in the PPACA. To date, no members of the IPAB have been nominated or confirmed.

2012

Department of Justice Announces Fraud Recovery Record (December 2012)
According to a representative of the Department of Justice (DOJ), the government recovered $4.959 billion in settlements and judgments under the False Claims Act (FCA) in fiscal year 2012. According to the DOJ, the Health Care Fraud and Enforcement Action Team (HEAT) “led to our recovering $3 billion in health care fraud actions under the FCA in FY 2012—a record for a single year.” The DOJ has recovered more than $13 billion in the last four years under the FCA.

ACOI and Others Call on Congress to Protect Medicaid Primary Care Increase (December 2012)
The ACOI and over 200 other physician organizations sent a letter to House and Senate leadership strongly opposing proposals to eliminate the Medicaid primary care payment increase that recently was finalized in a rule issued by the Centers for Medicare and Medicaid Services (CMS). The final rule is scheduled to be implemented on January 1.
While efforts to avoid the fiscal cliff continue to advance, word began to circulate that Congress was looking to repeal the Medicaid primary care payment increase provided for in the Patient Protection and Affordable Care Act (PPACA, Pub. L. 111-152) as a possible item to reduce federal spending. The letter sent by the ACOI and others stated that an elimination of this policy would adversely impact a Medicaid patient’s ability to access quality, cost-effective, coordinated care provided by primary care physicians. The letter concluded by stating, “A key to achieving our joint goals of ensuring increased access and improved quality is ensuring that Medicaid and Medicare payment policies are aligned with the access and quality goals established by the public and private health care systems.” The ACOI will continue to monitor congressional negotiations that would impact access to care.

New CBO Report Updates Cost to Maintain Current Physician Reimbursement Rate (December 2012)
Absent congressional intervention, physicians again are facing a reduction in Medicare payment rates of more than 27 percent, effective January 1, 2013. In addition, the “Budget Control Act of 2011” (Pub. L. 112-25) requires across-the-board reductions in federal spending in 2013. Medicare reductions are limited to an additional two percent reduction.
According to numbers recently-released by the CBO, maintaining physician reimbursement at 2012 levels will cost approximately $10.6 billion for one year and create an approximate 25 percent reduction in 2014. Further, locking in a freeze of the 2012 payment rates for 10 years will cost approximately $243.7 billion. As the White House and congressional leaders continue negotiations to prevent the expiration of certain tax provisions and the implementation of across-the-board federal spending reductions, addressing physician reimbursement reform under the Medicare program is complicated by these estimated costs. The ACOI is continuing to work to ensure appropriate physician reimbursement. The complete updated CBO analysis is available at www.cbo.gov.

CMS Releases 2013 Final Payment Rule (November 2012)
The Centers for Medicare and Medicaid Services (CMS) announced payment and policy changes under the Medicare Physician Fee Schedule on November 1. Under the rule, absent congressional action the conversion factor for services on or after January 1, 2013 will be reduced by 26.5 percent. The across-the-board reduction will apply to over one million physicians and non-physician providers as a result of the Medicare Sustainable Growth Rate (SGR) formula created under the Balanced Budget Act of 1997 (BBA). Congress has overridden the required reduction every year since 2003. According to a statement released by CMS announcing the final rule, “The Administration is committed to fixing the SGR update methodology and ensuring these payment cuts do not take effect.”
The final rule with comment period includes a new policy to pay a patient’s physician to coordinate care in the 30 days following a hospital or skilled nursing facility discharge. The new policy is expected to increase reimbursements by three to five percent if Congress acts to avert the mandatory reduction in Medicare’s physician fee schedule. The rule also provides continued phased-in implementation of the physician value-based payment modifier; addresses payments for Medicare Part B drugs; continues efforts by CMS to align quality reporting across programs; and implements provisions of the Patient Protection and Affordable Care Act (PPACA), among other things. The complete rule is available at http://www.ofr.gov/(X(1)S(ifln4q4b5n2jvkbewkbidp4w))/OFRUpload/OFRData/2012-26900_PI.pdf.

ACOI and Others Outline Payment Reforms (November 2012)
The ACOI and other medical societies outlined a series of principles and core elements needed to transition Medicare’s current physician reimbursement system to a higher performing one in a letter sent to House and Senate committees of jurisdiction on October 15. The letter was sent to the leadership on the Senate Finance Committee, the House Committee on Ways and Means and the House Committee on Energy and Commerce on October 15.
In the letter, the ACOI and others called for the repeal of the SGR formula as the first step in enhancing the healthcare delivery system. Following repeal of the SGR, there needs to be a series of reforms including the development of new payment models that lead to changes in care delivery while rewarding physicians for improving the quality of patient care and lowering the rate of growth in costs. The letter to congressional leaders also called for the development and implementation of physician-led, patient-centered models of care over a defined transition period. According to the letter, “Physicians facing the constant specter of severe cuts under the SGR cannot invest their time, energy and resources in care re-design.” The letter went on to say, “The status quo is bad for patients, physicians, and taxpayers.” The ACOI will continue to work over the upcoming weeks and months to advance meaningful reforms that adequately recognize the challenges of providing high-quality care.

CMS Releases Final Payment Rule for Inpatient Acute Care Hospitals (August 2012)
The Centers for Medicare and Medicaid Services (CMS) released a final rule on August 1 that revises the Medicare hospital inpatient prospective payment system (IPPS) for operating and capital-related costs of acute care hospitals. The changes contained in the final rule will be applicable to discharges occurring on or after October 1, 2012, unless otherwise specified in the rule.
The final rule amends current regulations affecting payment to teaching hospitals. It ends the exclusion of labor and delivery beds from the count of “available beds” for purposes of indirect medical education (IME) and disproportionate share hospital (DSH) adjustments. It is estimated that this change will decrease IME payments by about $40 million in fiscal year 2013. The rule finalizes a proposed increase in the cap-building period from three to five-years for new residency training programs. In addition, the rule modifies the methodology for calculating the resident cap when a new teaching program rotates residents to other hospitals during the five year cap-building period. Finally, the rule provides that hospitals that provide services to Medicare Advantage patients are subject to the same timely claims filing rules that apply to other Part A claims for no-pay (“shadow”) claims submitted in order to receive direct graduate medical education (DGME) and IME payments, among other things. The complete rule is available at www.ofr.gov/(X(1)S(qsw1v4mgwehvq5c03aslpga0))/OFRUpload/OFRData/2012-19079_PI.pdf.

Release of Final Stage 2 Meaningful Use Rule Expected Soon (August 2012)
It has been reported that the final regulations for Stage 2 of the Meaningful Use Program have been submitted to the White House Office of Management and Budget (OMB) for review. Final rules are generally released following a review by the OMB. The rules were made available for public comment earlier this year. Concerns were raised with the complexity of the draft rule as well as the timeline for implementation, among other things. The ACOI will continue to closely monitor the release of this much anticipated rule.

ACOI Calls on CMS to Minimize Burden of Regulations (May 2012)
The ACOI along with other physician organizations sent a letter to the Centers for Medicare and Medicaid Services (CMS) expressing concern about the simultaneous implementation of multiple programs that will create extraordinary financial and administrative burdens on physicians. These programs include the value-based modifier, penalties under the electronic prescribing program, the physician quality reporting system (PQRS), the electronic health record incentive program and transition to ICD-10.
The ACOI and others called on CMS to re-evaluate the penalty timelines associated with these programs and examine the administrative and financial burdens created by the intersection of these and various other federal regulatory programs. The letter urges CMS, “to use its discretionary authority provided by Congress under these programs to minimize burdens to physician practices.” The regulatory burdens are on top of the ongoing uncertainty created by the Medicare Sustainable Growth Rate (SGR), which determines the annual updates to the Medicare physician fee schedule. The ACOI continues to advocate for regulatory reform.

Senate Approves Legislation with Medicare Provider Tax Provision (May 2012)
The Senate approved the “America Fast Forward Financing Innovation Act of 2011” (S. 1813) by a vote of 74-22 on March 14. While S. 1813 is a transportation funding package, it did include a provision to increase the Internal Revenue Service’s levy authority from up to 15 percent to up to 100 percent on payments to Medicare providers with tax delinquencies. The provision is estimated to raise $841 million over 10 years. The package moves to the House for consideration where, to date, additional action has not been scheduled.

HHS Announces ICD-10 Implementation Delay (March 2012)
The Department of Health and Human Services announced that the October 1, 2013 deadline to transition from the International Classification of Diseases, 9th Edition (ICD-9) to the International Classification of Diseases, 10th Edition (ICD-10) will be postponed. In a release, HHS indicated that in response to concerns expressed by physicians that the administrative burden will be too great, the implementation deadline will be reexamined. To date, additional information has not been provided by HHS. Implementation of ICD-10 will increase the number of available codes from 13,000 to 68,000. Additional information will be provided when it is released by HHS.

House Committee Approves Repeal of IPAB (March 2012)
The House Committee on Energy and Commerce favorably reported the “Medicare Decisions Accountability Act of 2011” (H.R. 452) by voice vote on March 6. The legislation would repeal the Independent Payment Advisory Board (IPAB). The IPAB was created under the PPACA to help reign in escalating costs under the Medicare program. Under current law, the IPAB is to propose recommendations to reduce Medicare spending if certain benchmarks are reached. The proposals would be implemented unless a “supermajority” of Congress acts to prevent the recommendations. The ACOI and others expressed concern with the authority of the IPAB before its creation. Bipartisan concerns have been raised in Congress that the IPAB would circumvent congressional authority. The full House is expected to approve H.R. 452. Its future in the Senate remains uncertain.

Legislation Temporarily Preventing Reduction in Medicare Physician Reimbursement Signed into Law (March 2012)
The President signed the “Middle Class Tax Relief and Job Creation Act of 2011” (H.R. 3630, Pub. L. 112-96) into law on February 22. The legislation prevents the significant reduction in Medicare physician reimbursement previously scheduled for March 1. Prior to the President signing the Act into law, H.R. 3630 was approved by the House by a vote of 293 to 132 and by the Senate by a vote of 60 to 36 on February 17.
H.R. 3630 freezes the current Medicare physician payment rate through December 31, 2012. Without congressional intervention, physician reimbursement under the Medicare program would have been reduced 27.4 percent. As a result of the legislation, the reduction scheduled for March 1 will be added to any additional reductions that will occur as a result of the Medicare Sustainable Growth Rate (SGR) formula on January 1, 2013. Current estimates project approximately a 32 percent reduction at that time. In addition to extending the Social Security payroll tax rate, reforming unemployment insurance benefits and freezing the Medicare physician payment rate for 10 months, H.R. 3630 also extends the Geographic Practice Cost Index (GPCI) floor of one percent through 2012. The cost of H.R. 3630 is partially funded through cuts to the Prevention and Wellness fund created under the “Patient Protection and Affordable Care Act” (PPACA, Pub. L. 111-148). It also reduces the amount of patient bad-debt that can be recovered from Medicare and eliminates special Medicaid funding that was created in the wake of Hurricane Katrina for Louisiana, among other reductions in federal spending.
While enactment of H.R. 3630 addresses severe cuts to Medicare physician reimbursement that were imminent, it does not provide for a long-term meaningful solution to this ongoing problem. Additional efforts will be needed before the end of the year to prevent an even larger reduction on January 1, 2013.

CBO Releases New Report on Costs of Addressing Medicare Physician Payment (March 2012)
According to a new report released by the non-partisan Congressional Budget Office (CBO), maintaining Medicare’s 2011 reimbursement rate for physicians would cost $316 billion over the next 10 years. The same report indicated that Medicare spending is expected to top $1 trillion annually by 2022. This represents a doubling from the $560 billion expenditure projected for 2012. The CBO stated that the single biggest driver of spending growth in the Medicare program is the expected increase in the number of beneficiaries. Medicare rolls are expected to grow from 48 million in 2011 to 66 million by 2022. The entire report can be viewed at www.cbo.gov.

Congress Agrees on Temporary Freeze in Medicare Physician Reimbursement (January 2012)
Following extensive negotiations, the House and Senate approved the “Temporary Payroll Tax Cut Continuation Act of 2011” (H.R. 3765)(Pub.L. 112-78) by unanimous consent on December 23. The Act was signed into law the same day.
The Act provides a temporary reprieve for a number of provisions that were set to expire January 1. Specifically, H.R. 3765 extends for 60 days the payroll tax cut; extends Unemployment Insurance (UI) programs; extends the Medicare Work Geographic adjustment; and prevents the 27.4 percent reduction in Medicare physician reimbursement scheduled for January 1, among other things. The provisions of H.R. 3765 expire on February 29, 2012.
As part of the agreement to secure passage of H.R. 3765, House and Senate leaders agreed to appoint conferees to bridge differences in the “Middle Class Tax Relief and Job Creation Act of 2011” (H.R. 3630) approved by the House on December 13 and the Senate on December 17. The conferees are as follow: senators Max Baucus (D-MT), Benjamin Cardin (D-MD), Jack Reed (D-RI), Robert Casey (D-PA), Jon Kyl (R-AZ), Mike Crapo (R-ID), and John Barrasso (R-WY); representatives Dave Camp (R-MI), Kevin Brady (R-TX), Renee Ellmers (R-NC), Nan Hayworth (R-NY), Tom Price (R-GA), Tom Reed (R-NY), Fred Upton (R-MI), and Greg Walden (R-OR). The conference committee is expected to begin meeting the week of January16 when Congress returns from its winter recess. Negotiators are charged with the task of extending the provisions contained in H.R. 3765.
The enactment of H.R. 3765 and the appointment of conferees do not resolve the underlying problems caused by the Medicare Sustainable Growth Rate (SGR) formula. To this end, the ACOI will continue to seek a meaningful long-term solution to this ongoing problem.

2011

CMS Expands Coverage for Preventive Care Services (December 2011)
The Centers for Medicare and Medicaid Services (CMS) announced two new preventive care services covered under Medicare to address cardiovascular disease and obesity. One face-to-face cardiovascular disease risk reduction visit each year will be now be covered for Medicare beneficiaries. In addition, Medicare will be adding coverage for preventive services to reduce obesity.
According to a statement released by CMS, a beneficiary who screened positive for obesity with a body mass index (BMI) greater than or equal to 30 kg/m2, can receive one face-to-face counseling visit each week for one month and one face-to-face counseling visit every other week for an additional five months. A beneficiary may receive one face-to-face counseling visit every month for an additional six months (for a total of 12 months of counseling) if he or she has achieved weight reduction of at least 6.6 pounds during the first six months of counseling. The new covered services are intended to advance the Million Hearts initiative led by CMS and the Centers for Disease Control and Prevention. The initiative is aimed at preventing one million heart attacks and strokes in the next five years. You can learn more about the Million Hearts initiative by visiting http://millionhearts.hhs.gov/.

Efforts Continue to Repeal the SGR (December 2011)
The House approved the “Middle Class Tax Relief and Job Creation Act of 2011” (H.R. 3630) by a vote of 234 to 193 on December 13. In addition to proposals to extend the pay-roll tax cut and Unemployment Insurance (UI) programs, the legislation includes a provision to prevent the 27.4 percent reduction in physician reimbursement scheduled for January 1. H.R. 3630 replaces the scheduled reduction with a one percent increase for 2012 and 2013. The legislation also extends the Medicare Work Geographic Adjustment through 2012, among other things.
The Medicare physician reimbursement provisions of H.R. 3630 are estimated to cost approximately $38.9 billion over 10 years. H.R. 3630 would increase premiums for higher-income beneficiaries and decrease funding for the Prevention and Public Health Fund to pay for the increase in physician reimbursement for two years. The legislation also creates a “cliff” that will result in a 37 percent reduction in 2014 and increase the 10-year cost of repealing the Medicare Sustainable Growth Rate (SGR) formula to over $350 billion.
Senate leadership has indicated that it will not consider H.R. 3630 and the White House issued a statement of policy indicating that it will veto H.R. 3630 if it reaches the President’s desk in its current form. It remains uncertain what package the Senate will consider and what legislation will ultimately clear both chambers. The ACOI is continuing to monitor this matter closely.

HHS Implements Plan to Inventory and Streamline Regulations (November 2011)
In response to Executive Order No. 13563, HHS announced its “Plan for Retrospective Review of Existing Rules” to inventory and eliminate or streamline out-dated and overly burdensome regulations. The President issued the Executive Order in January directing federal agencies to create a more effective regulatory framework. The goals of HHS’ plan are to do the following: streamline or eliminate unjustified costs and burdens; increase transparency in the retrospective review process; increase opportunities for public participation; set clear retrospective review priority; and strengthen analysis of regulatory options.

MedPAC Finalizes SGR Reform Proposal (November 2011)
The Medicare Payment and Advisory Commission (MedPAC) recently approved draft recommendations for repealing the Medicare Sustainable Growth Rate (SGR) formula by a vote of 15 to 2. The recommendations are to eliminate a nearly 30 percent cut scheduled for January, 2012 and replace the SGR formula with a 10- year legislative fee schedule update. The proposal would shift this fee schedule toward primary care by freezing payment rates for primary care physicians and reducing fee schedule conversion factors for non-primary care physicians.
Repealing the SGR is estimated to cost $300 billion over 10 years. In order to preserve budget neutrality, MedPAC has recommended a freeze for primary care physicians and a 5.9 percent reduction for three years, followed by a freeze for the remaining seven years for all other Medicare Part B providers. Under the proposal, physician contribution toward the repeal would be $200 billion over 10 years. Additional offsets would be obtained from payments for post-acute care, Medicare Advantage, laboratories, hospitals, prescription drugs, durable medical equipment, and from beneficiaries by allowing for balance billing. While most agree there is a need to replace the SGR, a great deal of concern has been raised with MedPAC’s proposed approach. The ACOI will continue to closely monitor efforts to reform or repeal the SGR.

Women’s Preventative Services Rule Issued (August 2011)
The Centers for Medicare and Medicaid Services (CMS), the Department of Labor’s Employee Benefits Security Administration and the Internal Revenue Service issued an interim final rule on women’s preventive services August 1. The guidelines were recommended by the Institute of Medicine on July 19. As a result of the new rules, group and individual plans with plan years beginning after August 1, 2012 will have to cover a wide-range of preventive services for women. The new services include: contraception; well-woman visits; breastfeeding supplies and support; domestic violence screening; and human papillomavirus DNA testing for women 30 years of age or older, among other things. The rule issued on August 1 implements provisions of the “Patient Protection and Affordable Care Act” (ACA, Pub. L. 111-148). Plans that began before the ACA was enacted and that meet certain Health and Human Service’s requirements may be exempted from having to provide the new preventive services. It is estimated that nearly 88 million women will be in non-grandfathered plans by 2013.

CMS Proposes Rule on Release of Claims Data (July 2011)
The Centers for Medicare and Medicaid Services (CMS) released a proposed rule to give “qualified entities” access to Medicare claims data for the purpose of creating healthcare provider and supplier performance reports. The reports are to be made available to the public. The proposed rule is in response to a provision contained in the “Patient Protection and Affordable Care Act” (ACA, Pub. L. 111-148). According to CMS Administrator Donald Berwick, MD, “Performance reports that include Medicare data will result in higher quality and more cost effective care.” Under the proposed rule, providers and suppliers are required to receive a copy of the report prior to its release to ensure its accuracy. Additional information on this proposed rule will be provided as it becomes available.

CMS Proposes Annual Physician Reimbursement Rule (July 2011)
CMS proposed a 29.5 percent reduction in physician reimbursement under the Physician Fee Schedule on July 1. According to a release by CMS, there are over one million Medicare providers consisting of physicians and non-physicians. CMS is projecting over $80 billion in payments under the Medicare Physician Fee Schedule (MPFS) in 2012 alone. Physician payment under the Medicare program is directed by the Sustainable Growth Rate (SGR) formula created under the Balanced Budget Act of 1997. The formula has resulted in 11 reductions since its inception. All but one reduction, the 2002 cut, has been averted by congressional intervention. The final rule is expected to be issued by November 1. The ACOI is working aggressively with other physician organizations to prevent the scheduled 29.5 percent reduction and replace the current formula with a long-term solution to this annual problem. The issue is complicated this year by congressional negotiations to sharply reduce discretionary spending.

IOM Report Highlights Disparities in Medicare Geographic Payment Adjustments (June 2011)
According to a report released by the Institute of Medicine (IOM) on June 1, fundamental changes are needed to the data sources and methods used to calculate geographic adjustments under the Medicare program. The report states that the fact that almost 40% of hospitals have been granted exceptions to their adjustments, “strongly suggests that the mechanisms underlying the adjustments are inaccurate.” According to the IOM report, Medicare should use health sector data from the Bureau of Labor Statistics (BLS) to develop its indexes for calculating wage adjustments. The report argues that the BLS statistics are more accurate, independent and appropriate than hospital cost reports, physician surveys, census data and other information currently used. The full report is available at www.iom.edu.

Physician Reimbursement under Medicare Receives Committee Consideration (May 2011)
The House Energy and Commerce Subcommittee on Health held a hearing to explore mechanisms to repeal the sustainable growth rate (SGR) formula on May 5. The SGR is used to calculate physician payment under the Medicare program. Without congressional intervention, physicians will experience a reduction in reimbursements by approximately 29.4 percent beginning January 1, 2012. The Congressional Budget Office (CBO) has estimated that simply maintaining the current system with a zero percent update through 2020 would cost $275.8 billion. As such, the cost of repeal is certain to be an issue. The ACOI and others continue to work to secure a long-term solution to this ongoing problem. Efforts are underway to repeal the SGR formula, create a stable 5-year payment environment, and establish a transitional period in an effort to avoid unintended consequences, among other things.

“Red Flag” Rule Court Challenge Dropped (March 2011)
The D.C. Circuit Court declared an action brought by the American Bar Association (ABA) against the Federal Trade Commission (FTC) moot following enactment of the “Red Flag Program Clarification Act of 2010” (Pub. L. 111-319). The suit challenged the FTC’s definition of “creditor” and subsequent application to attorneys and physicians for purposes of the “Red Flag” rule. As earlier reported, the FTC interpreted “creditor” to include attorneys and physicians. Application of the rule to physicians would have resulted in a regulatory burden not intended or supported by legislative history. The ACOI and others challenged the FTC’s application of the rule. This brings this matter to a successful conclusion.

Form 1099 Reporting Requirement Repeal Clears the House (March 2011)
The House approved the “Small Business Paperwork Mandate Elimination Act of 2011” (H.R. 4) on March 3 by a vote of 314 - 112. The Senate previously approved similar legislation. Under current law, businesses will be required to issue a Form 1099 for payment to corporations for goods or services that exceed $600 per year to each vendor beginning in 2012. The House and Senate versions of the legislation differ on how to offset the approximate $24.7 billion cost of repealing the Form 1099 reporting requirement. Both parties in the House and Senate have expressed a desire to repeal the requirement before it takes effect. It appears that a compromise will be found in the near-future.

ACOI Calls for Long-Term Fix to Medicare Physician Payment Formula (March 2011)
The ACOI and 130 other physician organizations called on House and Senate leadership to eliminate the sustainable growth rate (SGR) formula in a letter on March 10. Without congressional intervention, physicians are facing an approximate 29.5 percent reduction on January 1, 2012. Congress acted five times to pass short-term measures in 2010 alone. On three occasions Congress failed to act prior to implementation of cuts, causing disruptions in processing Medicare claims. The letter sent by the ACOI and others reflects the growing concern that payment uncertainties and delays create for physicians and their patients. While Congress continues to address this issue through a series of short-term fixes, the cost of permanently repealing the SGR continues to rise making it increasingly difficult to find a long-term solution. The ACOI will continue to work to address this important issue.

MedPAC Recommends Increase in Physician Fees (April 2010)
The Medicare Payment Advisory Commission (MedPAC) released its semiannual report to Congress entitled, "Report to Congress: Medicare Payment Policy" on March 1. The report recommends rate adjustments in fee-for-service Medicare. Specifically, in its report MedPAC recommended physicians and other Part B providers receive a one percent increase in their fees in 2011. In a news release announcing the report MedPAC stated, "These updates are based on an assessment of payment adequacy taking into account beneficiaries" access to care, supply of providers, the quality of the care they receive, and Medicare margins." You may view the entire report at www.medpac.gov.

"Meaningful Use" Rule Released (July 2010)
CMS announced a final rule defining "meaningful use" of electronic health records (EHR). Physicians and hospitals that attain meaningful use of certified EHR's may qualify for federal bonus payments. The final rule implements provisions contained in the American Recovery and Reinvestment Act of 2009 (ARRA, Pub. L. 111-6). A companion rule was released by the Office of the National Coordinator for Health Information Technology (ONCHIT) to delineate the rules for technology to be certified.

The final meaningful use rule is more flexible than the original proposed rule. This is accomplished by dividing Stage 1 meaningful use adoption objectives into "core" objectives and "optional" objectives that can be deferred in 2011 or 2012. Overall, the final rule relaxed the threshold requirements for meeting Stage 1 criteria. According to a fact sheet released by CMS, "Eligible professionals can receive as much as $44,000 over a five-year period through Medicare. For Medicaid, eligible professionals can receive as much as $63,750 over six years. A table that outlines the maximum EHR incentive payment for Medicare eligible professionals appears on page 4.

FTC "Red Flag" Rule Delayed(July 2010)
The Federal Trade Commission (FTC) announced that it was delaying, for the fifth time, enforcement of the "Red Flag" rules from June 1, 2010 to December 31, 2010. The delay preceded an agreement by the FTC to temporarily exempt physicians from application of the "Red Flag" rules until the U.S. Court of Appeals for the District of Columbia settles questions over the scope of the Commission's rule. Under the rules, financial institutions and creditors must put in place identity theft prevention programs to identify, detect and respond to specific activities that could indicate identity theft. The ACOI and others have challenged the FTC's interpretation that physician's fall under the definition of "creditors." Additional information will be provided in upcoming newsletters.

House Advances Legislation to Reduce Fraud in Medicare (October 2010)
The House approved the “Strengthening Medicare Anti-Fraud Measures Act of 2010” (H.R. 6130) by voice-vote on September 22. The legislation authorizes the Secretary of Health and Human Services (HHS) to exclude from participation in any federal healthcare program entities affiliated with a sanctioned entity, as well as any officer or managing employee of an affiliated entity, if the affiliated entity was affiliated at the time of any of the conduct that lead to the conviction or exclusion of the sanctioned entity. Currently, executives can leave a company before it is convicted of fraud and keep participating in federal healthcare programs. H.R. 6130 would essentially give the HHS inspector general’s office greater power to weed out fraud and abuse within the Medicare program. To date, action on this legislation has not been scheduled in the Senate.

1099 Reporting Requirement Repeal Fails in the Senate (October 2010)
The Senate failed to approve two separate amendments to the “Small Business Jobs Act and Credit Act (S. 5297)(Pub. L. 111-240) that would have repealed Form 1099 reporting requirements created under the ACA. Specifically, the ACA requires all businesses to report to the Internal Revenue Service (IRS) any payments to vendors that are greater than $600 starting in 2012.
The provision was added to the ACA as a means to increase tax revenue by decreasing the occurrence of businesses that fail to report income. A great deal of concern has been raised with regard to the additional paperwork burdens that will be placed on small businesses and others. The amendments to S. 5397, S. Amdt. 4595 and S. Amdt. 4596, would have raised the reporting threshold and would have repealed the reporting requirement, respectively. While there is concern on both sides of the aisle that the current reporting requirement may be overly burdensome, there is little agreement on how best to address the matter. The ACOI will continue to work on this matter over the upcoming months in order to ensure members are not adversely impacted by the rule.

Limitation of “Red Flag” Rules Signed Into Law (February 2011)
The President signed into law the “Red Flag Program Clarification Act of 2010” (S.3987, Pub.L. 111-319) on December 18. The legislation was approved by the Senate on November 30 and the House on December 7. The enactment of this important legislation prevents the Federal Trade Commission (FTC) from applying its “red flag” rule to physicians and attorneys. Application of the rule to physicians would have required physicians to put in place identity theft prevention programs to identify, detect and respond to specific activities that could indicate identity theft. The ACOI and others challenged the FTC’s interpretation that physicians fell under the definition of “creditors.” Enactment of this legislation brings this matter to a favorable conclusion.

End-of-Life Planning Provision Removed from
Final Medicare Regulation (February 2011)
The White House announced that it will remove an end-of-life planning provision from the final rule entitled, “Medicare Program; Payment Policies Under the Physician Fee Schedule and other Revisions to Part B for CY 2011.” Specifically, the final rule contained language that provided for voluntary advance-care planning discussions between patients and physicians for Medicare’s new annual checkup created under the “Patient Protection and Affordable Care Act” (ACA, Pub. L. 111-148). The language in the final rule was similar to now-debunked claims of “death panels” in the healthcare reform debate.

Medicare Physician Payment Legislations Signed Into Law—
2011 Payments Adjusted (February 2011)
The President signed into law the “Medicare and Medicaid Extenders Act of 2010” (MMEA, H.R. 4994, Pub. L. 111-309) on December 15. The legislation extends through 2011 the payment rate in place at the end of 2010; extends the work geographic practice cost index; and allocates money to the Centers for Medicare and Medicaid Services (CMS) to cover the expenses of reprocessing 2010 claims impacted by payment fixes enacted earlier in 2010.
The 2011 payment update is based on the 2.2% update that went into effect on June 25, 2010. As a result, the 2.2% update from June continues through 2011. This replaces the approximate 23 percent reduction in reimbursement scheduled for December 1 and the additional 1.9 percent reduction scheduled for January 1. According to CMS, all properly filed 2011 claims are expected to be paid at the correct rates with no adjustments or withholding of claims. Efforts are already underway to find a long-term solution to the ongoing problems created by the Sustainable Growth Rate formula that dictates Medicare physician payment rates.

Medicare to Cover HIV Screening (January 2010)
The Centers for Medicare and Medicaid Services (CMS) announced it will cover Human Immunodeficiency Virus (HIV) infection screening for Medicare beneficiaries who are at increased risk for the infection, including women who are pregnant and Medicare beneficiaries of any age who voluntarily request the service. The decision is effective immediately and will cover both standard and US Food and Drug Administration-approved HIV rapid screening tests. The decision to expand coverage for HIV testing is result of a provision contained in the "Medicare Improvements for Patients and Providers Act of 2008" (MIPPA), which allows CMS to add to the list of covered preventive services, if certain requirements are met.

2010

Final Rule on Physician Payment Released (December 2010)
The Centers for Medicare and Medicaid Services (CMS) issued a final rule with comments entitled, Medicare Program; Payment Policies Under the Physician Fee Schedule and other Revisions to Part B for CY 2011” on November 2. The final rule provides that the Medicare physician fee schedule will result in a 23 percent reduction in physician reimbursement on December 1 and an additional reduction of 1.9 percent on January 1, 2011. While the reductions are required by law, the ACOI and others are actively pursuing legislation to block the cuts from taking effect.
The final rule also implements a number of provisions contained in the “Patient Protection and Affordable Care Act” (ACA, Pub. L. 111-148). As such, the rule provides for incentive payments equal to 10% of primary care services under Medicare Part B and expands the Physician Quality Reporting Initiative (PQRI), among other things.

House and Senate Act to Briefly Extend Medicare
Physician Payment Rates (December 2010)
The U.S. Senate and House of Representatives approved the “Physician Payment and Therapy Relief Act of 2010” (H.R. 5712) on November 18 and November 29, respectively. Once signed into law, this legislation will extend the current Medicare physician payment rates for one month through December 31. Additional legislation will be needed to prevent reductions from taking effect on January 1, 2011. The ACOI continues to advocate for an equitable payment system.

CMS Announces Payments for PQRI Participants (August 2010)
The Centers for Medicare and Medicaid Services (CMS) announced that payments for successful participation in the 2009 Physician Quality Reporting Initiative (PQRI) will not be made until October. According to a representative of CMS, technical issues associated with the collection and analyses of submissions have delayed payment. The same official announced that payments for successful participation in the 2010 PQRI, which is ongoing, are expected to be made in July, 2011.

CBO Puts Price Tag on 10-Year Physician Payment Fix (August 2010)
According to new numbers released by the non-partisan Congressional Budget Office (CBO), blocking reductions in physician reimbursement under the Medicare program from 2011 – 2020 would cost approximately $330 billion. The previous estimate for freezing rates with an inflation adjustment from 2011 – 2019 was $278 billion. The current political environment, the state of the economy, estimates by the CBO and other factors will continue to shape the dialogue to reform the physician payment model under the Medicare program. The ACOI continues to work to find meaningful reforms to the Medicare physician payment system.

FTC "Red Flag" Rule Delayed (July 2010)
The Federal Trade Commission (FTC) announced that it was delaying, for the fifth time, enforcement of the "Red Flag" rules from June 1, 2010 to December 31, 2010. The delay preceded an agreement by the FTC to temporarily exempt physicians from application of the "Red Flag" rules until the U.S. Court of Appeals for the District of Columbia settles questions over the scope of the Commission's rule. Under the rules, financial institutions and creditors must put in place identity theft prevention programs to identify, detect and respond to specific activities that could indicate identity theft. The ACOI and others have challenged the FTC's interpretation that physician's fall under the definition of "creditors." Additional information will be provided in upcoming newsletters.

IRS Announces Tax Incentive for Those Who Work in Underserved Areas (July 2010)
The Internal Revenue Service (IRS) announced efforts to strengthen the healthcare workforce in underserved areas on June 16. The IRS announced that, "Under the Affordable Care Act healthcare professionals who received student loan relief under state programs that reward those who work in underserved communities may qualify for refunds on their 2009 federal income returns as well as an annual tax cut going forward." Prior to the enactment of the "Patient Protection and Affordable Care Act," only amounts received under the National Health Service Corps Loan Repayment and Forgiveness Program were eligible for the tax benefit. As a result of this legislation, the tax exclusion applies to any state loan repayment or loan forgiveness programs intended to increase the availability of healthcare services in underserved or health professional shortage areas. Additional information is available from the IRS at www.irs.gov/newsroom/article/0,,id=224387,00.html.

CMS Issues Proposed Physician Payment Rule for 2011 (July 2010)
The Centers for Medicare and Medicaid Services (CMS) issued a proposed rule entitled, "Medicare Program; Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2011" on June 25. The proposed rule would cut physician reimbursement rates by 6.1 percent effective January 1, 2011 and would implement provisions of the healthcare reform law, among other things.

Included in the rule is a requirement that would waive the Medicare Part B deductible and coinsurance that applies to most preventative services. The proposed rule would also implement a provision of the healthcare reform law that provides a 10 percent primary care bonus for allowed services under Medicare Part B. In addition to other measures, the proposed rule modifies the Physician Quality Reporting Initiative (PQRI) by adding new measures and would create a group practice reporting option. Final comments are due by August 24. You may view the proposed rule in its entirety at www.regulations.gov. The ACOI is continuing to review the proposed rule.

Medicare Physician Reimbursement Receives Yet Another Short-Term Patch
(July 2010)
The President signed into law the "Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010" (Pub.L. 111-192) on June 25. The legislation was approved by the Senate by unanimous consent and by the House by a vote of 417 -1 on June 18 and June 25, respectively. This Act replaces the 21.3 percent reduction in physician reimbursement under the Medicare program that took effect on June 1 with a positive 2.2 percent update. The update is for the six months running from June 1 through November 30, 2010. It is estimated that reimbursements would be cut by approximately 23 percent on December 1 without further congressional action. This is the fifth piece of legislation since November, 2009 signed into law to prevent the reduction that was slated for January 1, 2010. If you have any questions or concerns, you may contact Tim McNichol directly at tmcnichol@acoi.org or by calling 1-800-327-5183.

CBO Releases New Cost Estimate for Increasing Physician Reimbursements
(June 2010)
According to a recent report released by the Congressional Budget Office, keeping physician reimbursement rates level for the remainder of 2010 will cost approximately $6.5 billion. In addition, the report indicates physicians would experiences a 26 percent reduction beginning in 2011, unless Congress intervenes. In the report, the CBO goes on to estimate that it will cost approximately $374 billion dollars to provide a 2 percent increase in reimbursements. You may view the full report at www.cbo.gov.

Permanent Fix for Medicare Physician Reimbursement Remains Elusive
(June 2010)
Following three short-term extensions to the 2009 physician fee schedule under the Medicare program, Congress continues to seek a long-term solution to what has become an annual problem. At the time this goes to press, there appear to be two likely scenarios that involve passage of the "Tax Extenders Act of 2009" (H.R. 4213).

The Senate approved H.R. 4213 with amendment on March 10 by a vote of 62-36. As amended, H.R. 4213 would extend the 2009 physician fee schedule through September 30, 2010. Discussions are underway to further amend the legislation to provide a five-year fix to physician reimbursements under the Medicare program. The five-year patch would provide minimal positive updates over the next five years. Absent further congressional action, a significant reduction would occur following expiration of the five-year patch. Additional information will be provided in upcoming newsletters.

The status of these efforts to reform physician reimbursement under the Medicare program continues to evolve. For the most current news and information you may sign up for the ACOI government affairs listserv at www.acoi.org/InteractListerve.html. In addition, if you have any questions or concerns, you may contact Tim McNichol directly at tmcnichol@acoi.org or by calling 1-800-327-5183.

FCC Proposes Broadband Funding for Healthcare Providers
(April 2010)
The Federal Communications Commission (FCC) has submitted a plan to Congress to revamp its Rural Health Care Program to reimburse healthcare providers for the purchase of broadband services in any location, including urban areas, where the purchase of broadband services is unaffordable. As part of the plan, the FCC is proposing to create a Health Care Broadband Infrastructure Fund. According to a study conducted by the FCC, there are about 3,600 small physician practices in the United States that do not have sufficient access to broadband services to achieve "meaningful use" of electronic health records. In addition, the FCC found that while broadband services may be available, the expense may be cost prohibitive.

CMS Delays Implementation of Non-Payment for Physicians Not Enrolled in PECOS
(April 2010)
The Centers for Medicare and Medicaid Services (CMS) announced that it will delay implementation of its policy requiring rejection of Medicare claims filed or services ordered by physicians and other Part B providers not enrolled in the Provider Enrollment, Chain and Ownership System (PECOS). Implementation was set to begin on April 5. The policy will now take effect on January 3, 2011. CMS has said that even if physicians have had no change to their enrollment data, they still need to submit an initial enrollment application that will establish a current record in PECOS.

Most Recent Delay of Reduction in Medicare Physician Reimbursement Expires
(April 2010)
After two separate bills were signed into law delaying implantation of the scheduled 21.2 percent reduction in Medicare physician reimbursements, Congress has failed to act to address the expiration of the most recent temporary extension.

In an attempt to address the pending reduction in Medicare physician reimbursement for physicians, the Senate approved the "Tax Extenders Act of 2009" (H.R. 4213) by a vote of 62-36 on March 10. The package of tax breaks and economic safety-net extensions includes a provision to freeze the 2009 Medicare physician payment rate through September 30, among other things. The House approved the "Continuing Extension Act" (H.R. 4851) under suspension of the rules on March 17. Neither the House nor Senate was able to approve the legislation approved by the other chamber. Most recently, the Senate tried to consider H.R. 4851 as approved by the House. Consideration of the bill was blocked by a senator Tom Coburn (R-OK) who required that the cost of the legislation by offset by cuts in spending elsewhere. The Majority Leader filed a motion to move to consideration of the bill (cloture motion) on March 25. The earliest that the Senate will be able to consider H.R. 4851 is April 12.

The Centers for Medicare and Medicaid Services (CMS) announced that it instructed its contractors to hold claims containing services paid under the Medicare Physician Fee Schedule for the first ten business days of April under the belief that Congress will act to advance another short-term freeze in reimbursement rates. It appears that the House and Senate will continue to address this important issue with additional short-term fixes. The ACOI will continue to work to advance meaningful long-term solutions to this annual problem that threatens the ability of patients to access needed care.

Proposed Rules on "Meaningful Use" and EHR Certification Released
(February 2010)
The Office of the National Coordinator (ONC) and the Centers for Medicare and Medicaid Services (CMS) published proposed rules establishing criteria for the certification of electronic health records and the definition of "meaningful use" for those EHRs on January 13, respectively. The rules were released in response to provisions contained in the â€œHealth Information Technology for Economic and Clinical Health (HITECH) Act. The HITECH Act was signed into law as part of the American Recovery and Reinvestment Act (ARRA)(Pub. L. No. 111-5).

The ARRA provides for Medicare and Medicaid incentive payments to eligible health professionals who make "meaningful use" of certified EHRs. Under the proposed rule, incentive payments for providers could begin as early as 2011. Additional information will be provided in this column in the upcoming months. You may contact Tim McNichol at tmcnichol@acoi.org or by calling toll-free 1-800-327-5183 should you have any questions or wish to share your thoughts on these proposed rules.

Medicare Physician Reimbursement Reductions Loom (February 2010)
The temporary extension of the 2009 fee schedule provided for by Congress late last year is scheduled to expire February 28. Without further congressional intervention, the 21.2 percent reduction originally scheduled for January 1 will take effect on March 1.

The President received H.J. Res 45 on February 4. The resolution raised the federal debt limit and reinstated Pay-as-You-Go (PAYGO) rules for new federal spending. Under the PAYGO rules, any new spending or tax cuts will have to be offset by corresponding spending cuts or tax increases. The resolution exempts any legislation that would reform the Medicare Sustainable Growth Rate (SGR) from the PAYGO rules, effectively allowing Congress to address the looming reduction in physician reimbursements without having to offset the cost of the fix.

Efforts continue to prevent the reduction scheduled for March 1 and to enact a long-term solution. You are encouraged to contact your federal elected officials on this important issue by visiting the ACOI's webpage at www.acoi.org and click on the "Write to Congress" icon.

Massachusetts Special Election Changes Healthcare Reform Debate February 2010)
Republican Scott P. Brown's election to fill the US Senate seat vacated by Senator Edward M. Kennedy on January 19 changed the landscape of the healthcare reform debate, as well as the prospects for any legislation that is viewed to be controversial. As a result of Senator Brown's election, the Senate consists of 59 Democrats and 41 Republicans. Sixty votes are needed to end filibusters, which have become increasingly common. The change in the composition of the chamber will allow the minority to indefinitely delay floor action on any matter before the Senate.

In the end, Senator Brown's election has called into doubt the enactment of a comprehensive healthcare reform package. The majority leadership in the House and Senate are left trying to find a way to move forward. It appears unlikely that a comprehensive healthcare reform bill will be sent to the President's desk without considerable modification of the packages that have been advanced thus far.

CMS Announces Delay of Database Requirement (January 2010)
The Centers for Medicare and Medicaid Services (CMS) announced that it will delay from January 1 until April 5, 2010, implementation of a policy requiring physicians and other Medicare Part B providers to enroll in the Provider Enrollment, Chain, and Ownership System (PECOS) database. Under the policy, Medicare will not pay claims for services when the referring or ordering physician is not in the PECOS database by April 5. CMS estimates that approximately 200,000 physicians are not in the PECOS database at this time. According to CMS, providers who have not updated their Medicare enrollment record information since 2003, when PECOS started, need to update their records. If a physician has no changes to his or her enrollment, he or she still needs to submit an initial enrollment application to establish a record in PECOS. Additional information on enrollment in the PECOS system may be found at http://www.cms.hhs.gov/MedicareProviderSupEnroll/01_Overview.asp#TopOfPage.

This issue was addressed at the December meeting of CMSâ€™ Practicing Physician Advisory Committee (PPAC). ACOI and PPAC member Joseph A. Giaimo, DO, and other PPAC members called for a further delay of implementation of the rule to allow for additional education by CMS and to allow for greater preparation by the physician community.

Physicians Receive Temporary Reprieve in Reimbursement Reductions
(January 2010)
The House and Senate approved the "Department of Defense Appropriations Act, 2010" (H.R. 3326) on December 16 by a vote of 395-34 and December 19 by a vote of 88-10, respectively. The President signed the bill into law (Pub. L. 111-118) on December 19. The bill contains a provision extending the 2009 physician fee schedule for two months. The extension will expire February 28.

The freeze in Medicare physician reimbursements temporarily prevented a 21.2 percent reduction scheduled to take effect on January 1. Efforts are ongoing to achieve a permanent fix to this annual problem.