• CMS Releases Proposed Rules for Outpatient Hospital Payments and Physician Payments; CMS Proposes Home Health Cuts; Debt Ceiling Agreement Could Include Healthcare Cuts
  • July 12, 2011 | Authors: Edward Eynon; Leslie J. Levinson
  • Law Firm: Edwards Wildman Palmer LLP - Washington Office
    The Centers for Medicare and Medicaid Services (CMS) recently released its hospital outpatient prospective payment system (OPPS) proposed rule for 2012, which will impact Medicare reimbursements to more than 4,000 hospital outpatient facilities.

    The proposed rule, which is scheduled to be published in the July 18 Federal Register, would increase such payments to about $41.9 billion - an increase of 1.5 percent. It also contains reporting measures to promote better quality and more efficiency in services. Specifically, the rule would add nine quality measures to the current roster of 23 quality measures that must be reported by a hospital’s outpatient department.

    Comments on the proposed OPPS rule must be submitted to CMS by August 30, and the final rule is expected to be issued by November 1. Changes will go into effect on January 1, 2012.

    CMS also recently released a rule for Medicare payments to physicians for 2012 that proposes a 29.5 percent reimbursement reduction. The cut is so steep because CMS is required by law to use a specific formula - called the sustainable growth rate (SGR) - to determine such reimbursement rates.

    Averting such a reduction can only be accomplished by a change in law - something that Congress has done on a temporary basis every year for almost a decade. While it is expected that lawmakers will act again on a temporary fix this year before the cuts are scheduled to go into effect on January 1, 2012, CMS and many lawmakers would like to find a permanent solution to reform the flawed SGR methodology. To that end, congressional hearings have been underway, but it is widely acknowledged that a permanent solution will be difficult, given its $300 billion price tag.

    Comments on the proposed physician payment rule also must be submitted to CMS by August 30.

    Additionally, CMS recently proposed payment cuts for home health agencies amounting to a 3.35 percent decrease, or a $640 million net reduction, for 2012. The reduction comes from the combined effects of wage index and market basket updates (amounting to a $310 million increase) and a $950 million decrease to the home health prospective payment system (HH PPS).

    Additionally, CMS’ proposal would revise policies such as the national standardized 60-day episode rates, the low utilization payment amount, the national per-visit rates and outlier payments under the Medicare HH PPS.

    That National Association for Home Care and Hospice estimates that the proposal would add up to between $10 billion and $12 billion in cuts over 10 years. Association Vice President Bill Dombi stated that he believes “-these cuts will have access-to-care problems in various parts of the country because the cuts are across the board but not all home health agencies are in the same financial condition.”

    Comments on CMS’ home health proposal must be submitted by September 6. The provisions included in the final rule will take effect on January 1, 2012.

    As President Obama and Congressional leaders continue to work toward a debt reduction deal that would accompany an upcoming vote to raise the federal debt ceiling, it is becoming increasingly clear that any such deal could include significant cuts to Medicare and Medicaid.

    From hospitals to skilled nursing facilities to mental health providers, all facets of the healthcare industry are gearing up for potential reimbursement reductions. Such cuts may include: Reverting back to state Medicaid coverage for “dual-eligibles” (those eligible for both Medicare and Medicaid), with a savings of $115 billion over 10 years; Medicare reimbursement cuts to inpatient hospital care and to graduate medical education, with an estimated savings of $15 billion to $20 billion; $30 billion in savings by trimming health insurance exchange subsidies for those in higher income brackets; and payment reductions to home health agencies, long term care hospitals and skilled nursing facilities, with an estimated savings of $15 to $20 billion.

    Specific details remain under wraps as lawmakers continue to meet at the White House and behind the scenes, in hopes of hammering out an agreement before August 2 - the date the Treasury Department has said the federal government will face default on its loans without the debt ceiling increase.

    As the summer progresses and lawmakers move forward with debt reduction plans, we continue to follow healthcare-related news from Capitol Hill. In addition, we continue to monitor HHS/CMS and other agencies as current rulemaking processes are finalized and as new rules are released. We will bring you timely updates as new developments occur.