Agenda

1. Reimbursement/Medicare PPS and Legislative UpdateLarry GoldbergLarry Goldberg ConsultingAugust 2, 2012

2. Agenda • Accessing the Federal Register • PPS Updates • IPPS • SNF • IRF • Hospice • IPF • Where is Medicare Heading • Accountable Care Organizations (ACOs) • Value-Based Purchasing Programs (VBP) • Bundling

3. Agenda • Proposed PPS Updates • OPPS • HHA • ESRD • Physician • Where is Medicare Heading • Accountable Care Organizations (ACOs) • Value-Based Purchasing Programs (VBP) • Bundling

4. Federal Register AccessPrior to Publication Date • 1. Start here: • http://www.archives.gov/federal-register/public-inspection/ • 2. Scroll down and click on: • View the Special Filing Document List • Look under Centers for Medicare & Medicaid

5. Federal Register AccessAfter Publication Date • 1. http://www.gpoaccess.gov/fr/index.html is now “deactivated : • 2. Go to: http://www.gpo.gov/fdsys • 3. Choose Federal Register from right side menu • 4. Know date • 5. Select CMS

6. The Fiscal Cliff • The following expire and/ or need to be addressed on December 31, 2012 • Bush era tax cuts • The Payroll tax holiday • The debt ceiling • The sequester – 2.0 percent for all Medicare services • The doc fix

7. FY 2013 IPPS

8. IPPS FY 2013 • Posted August 1st • Copy at • www.ofr.gov/inspection.asp • Published in Federal Registeron August 31 • Tables on CMS website only • Becomes effective October 1st 2012

9. Update • Market Basket is 2.6 percent [proposed at 3.0] • ACA adjustments are -0.8 percent (net 1.8percent) • Productivity is (0.7 percent) • Statutory is (0.1 percent) • Documentation & Coding adjustment is +1.0 percent • Minus 0.5 percent for Hospital Specific Rates

10. Update • Other adjustments: • VBP (1.0 percent now, but budget neutral) • Readmits – (0.3 percent) CMS estimate • Rural demo – (0.001 percent) • PPS excluded hospitals to receive 2.6percent increase

11. Rates National Adjusted Operating Standardized Amounts (68.8 Percent Labor Share/31.2 Percent Nonlabor if Wage Index Is Greater Than 1.0000) Comparison of FY 2012 Standardized Amounts to the FY 2013 Standardize Amount with Full and National Adjusted Operating Standardized Amounts (62 Percent Labor Share/38 Percent Nonlabor Share if Wage Index Is Less Than or Equal To 1.0000

12. IPPS Documentation & Coding • Recap: • CMS proposed to correct 4.8 percent with adoption of MS-DRGs over 3 years • 2008 @ 1.2 percent • 2009 @ 1.8 percent • 2010 @ 1.8 percent • Congress said no – take instead • 2008 – 0.6 percent • 2009 – 0.9 percent • 2009 – look back and correct in FYs 2010, 2011 2012

13. IPPS Documentation & Coding • CMS look back & found • 2008 should have been 2.5 percent (1.9 still needed) • 2009 should have been 4.8 percent (3.9 still needed) • In other words CMS says 5.8 percent overpaid

14. IPPS Documentation & Coding • Took ½ for FY 2011 (2.9 percent) • Took another ½ for FY 2012 (2.9 percent) • OK – we are even (may be) • CMS says that FY 2010 was over paid by 3.9 percent since no adjustments were made in 2010 • Took 2.0 percent of 3.9 percent in FY 2012 • Taking Balance of 1.9 in FY 2013

15. IPPS Documentation & Coding • Convoluted explanation • Proposing to complete D&C adjustments by: • Removing (adding back) 2.9 percent in effect in FY 2012 • Removing the 1.9 percent it didn’t take in FY 2012 • CMS is NOT as proposed removing an additional 0.8 percent for FY 2010 • Will there be more coding adjustments? • Statutory ??

16. IPPS Documentation & Coding • Hospital-specific rate reduced, too • CMS says HSR should also be subject to D&C • Will reduce HSR by -0.5percent

17. Comparison of FY 2012 Standardized Amounts to the FY 2013 Standardized Amount

18. Comparison of FY 2012 Standardized Amounts to the FY 2013 Standardized AmountComparison of FY 2012 Standardized Amounts to the FY 2013 Standardized Amount

19. Capital • Federal rate will be $425.49 • Proposed at $424.22 • Corrected Proposed $422.47

20. Outliers • Threshold will be $21,821 • Currently at $22,385 • Estimated a 6 percent payout for FY 2012 • Now estimated at 5.0 percent for FY 2012 • Estimated FY 2011 at 4.7 percent

21. Wage Index • Using data from FY 2009 • New occupancy mix adjustment applied • Based on survey data submitted on July 1, 2011 • Massachusetts • 5.5% increase for those hospitals • Rural floor effect • Impact is $118 million • Frontier floor continues for 4 states • MT, SD, ND, WY

22. Wage Index • Imputed floor continues for New Jersey • 663 hospitals have reclassification status • 193approved for FY 2013 • MGCRB reclassification applications for FY 2014 • Due September 4th • Instructions on website • See Table 4J for out-migration hospitals

23. Readmissions • Per ACA provisions • Section 3025 & Section 10309 • Effective October 1st • CMS estimates hospitals will lose $300 million • Three measures for FY 2013 • AMI (ICD-9 codes 410-410.91)(20 codes) • Heart failure (ICD-9 codes 402-404, plus 428)(10 codes) • Pneumonia (ICD-9 codes 480-88)(31 codes)

24. Readmissions • Three years of data ending 6-30-11 • Base operating rate includes new technology, but no DSH or IME • Only about 34 percent of all hospitals will avoid an adjustment • Max cap is 1.0 percent for FY 2013 (about 14 percent) • Hospital will know by June 20th • 30-day appeal period

25. Readmissions • Distribution of Readmission Adjustment Factors

26. Rural Issues • “Clarifying” SCH status reg • CMS can act unilaterally • Make a change retroactively • MDHs wishing to become SCHs • MDH program ends on September 30th • Can apply to switch at least 30 days ahead

27. Rural Issues • Usual update of the RRC criteria • CMI • Discharges • Low-Volume Adjustment • Special (ACA) adjustment sunsets on September 30th • Reverts back to pre-ACA rules • Hospital must make request by September 1st to keep it

28. IME / GME • IME multiplier unchanged at 1.35 • Claims for MA enrollees • Must comply with regs for timely filing • Including nursing / allied health • Include labor / delivery beds in bed count • Effective with cost reporting periods on / after October 1, 2012

29. IME / GME • “Five year window” for new programs • To grow resident count • Then cap would be set • Effective for new programs only on October 1, 2012 • Must fill half of new (§ 5503) slots (from closed programs) by one of following: • First 12-month c.r.p. • Second 12-month c.r.p. • Third 12-month c.r.p

30. MS-DRGs • See rule’s table 5 for MS-DRGs and weighting factors • Hospital Acquired Conditions • Would add diagnosis codes 999.32 & 999.33 – Blood stream infection, and local infection due to central venous catheter • Would add surgical site infection following Cardiac Implantable Electronic Device (CEID) with diagnosis codes 996.61 or 998.59 in conjunction with 21 associated procedure codes • Contains other minor changes

31. MS-DRGs

32. MS-DRGs

33. Quality Reporting • Will reduce 17 measures for FY 2015 reporting • SCIP-Venous Thromboembolism (VTE) measure: “SCIP-VTE-1: Surgery patients with recommended VTE prophylaxis ordered” • Eight HAC measures: • Air Embolism; • Blood Incompatibility; • Catheter-Associated Urinary Tract Infection (UTI); • Falls and Trauma: (Includes Fracture Dislocation, Intracranial Injury, Crushing Injury, Burn, Electric Shock); • Foreign Object Retained After During Surgery; • Manifestations of Poor Glycemic Control; • Pressure Ulcer Stages III or IV; and • Vascular:

34. Quality Reporting • Three AHRQ IQI Measures: • IQI-11: Abdominal aortic aneurysm (AAA) repair mortality rate (with or without volume); • IQI-19: Hip fracture mortality rate; and • IQI-91: Mortality for selected medical conditions (composite) • Five AHRQ PSI Measures: • PSI 06: Iatrogenic pneumothorax, adult • PSI 11: Postoperative Respiratory Failure • PSI 12: Postoperative PE or DVT • PSI 14: Postoperative wound dehiscence • PSI 15: Accidental puncture or laceration

35. Value-Based Purchasing • Effective for FY 2013 • 13 measures adopted in 2 domains • Increased to 17 measures for FY 2014 • Several measures are suspended for FY 2014 • Including the spending-per-beneficiary for one year • Definition of “base operating payments” • Excludes outliers, DSH, IME & LV adjustment • But does include the new-tech add on

36. Value-Based Purchasing • 1.0 percent cut to base operating payments in FY 2013 • Will make an estimate of reduction for each hospital in advance • Then summing each estimated reduction to get total for pool • Getting the adjustment payment is explained • Appeals process is created • 30 days from posting of report • To “review and correct”

37. Value-Based Purchasing • Domain Weighting by Year FY 2013 FY 2014 FY 2015 • Clinical Process of Care 70% 45% 20% • Patient Experience of Care 30% 30% 30% • Outcomes - 25% 30% • Efficiency -20% • Total 100% 100% 100%

38. Value-Based Purchasing • Correction Notice

39. LTCH PPS • Update • MB is 2.6 percent • ACA adjustment • (0.7%) for productivity • (0.1%) per statute • Coding adjustment • (1.3 percent) for this year, starting on 12-28 • More to come in future years • Standardized amount is $40,397.96 • Current is $40,222.05

40. LTCH PPS • Quality reporting • Adding five measures for FY 2016 • In addition to three (adopted last year) for FY ‘14 • Labor-related share will be 63.217 percent • Current is 70.199 percent • Wage Index tables are 12A & B • Outlier threshold will be $15,408 • Current is $17,931 • Proposed one-year delay to 25 percent rule

41. LTCH PPS • Correction to Proposed one-year delay to 25 percent rule • LTCHs and LTCH “satellite facilities with a cost reporting period beginning on or after July 1,2012, and before October 1, 2012 would have to comply with §§ 412.534 and 412.536 for discharges occurring in that respective cost reporting period • These facilities would then have a moratorium the following (2014) FY

42. Skilled Nursing PPS

43. SNF PPS • Posted on 7-27-12 • Published in 8-2-12 Federal Register • Copy at: http://www.ofr.gov/OFRUpload/OFRData/2012-18719_PI.pdf • Link Changes 8-2-12 • Notice – no proposed rulemaking • CMS says no need for proposed rule inasmuch as no policy changes made • Overall payments to increase $670 million

44. SNF PPS Update • Market Basket Increase – 2.5 percent • Less MFP adjustment – 0.7 percent • Net Update = 1.8 percent • Labor Share to 68.383 from 68.693 • Budget neutrality factor 1.0004 • NO market basket error rate adjustment • Was positive 0.1 percent (CMS’ favor) • Threshold is 0.5 percent

45. SNF PPS Update • Notice contains the wage index addenda • CMS says its continuing to monitor: • Recalibration of the FY 2011 SNF parity adjustment to align overall payments under RUG-IV with those under RUG-III. • Allocation of group therapy time to pay more appropriately for group therapy services based on resource utilization and cost. • Implementation of changes to the MDS 3.0 patient assessment instrument, most notably the introduction of the Change-of-Therapy (COT) Other Medicare Required Assessment (OMRA).

46. Inpatient Rehabilitation Facilities PPS

47. Inpatient Rehabilitation Facilities PPS • Posted July 25th • Published in Federal Register on July 30th • Copy at: • http://www.gpo.gov/fdsys/pkg/FR-2012-07-30/pdf/2012-18433.pdf • Notice -- no proposed rulemaking • CMS say no new policy changes • No adjustments to the facility-level items

48. Inpatient Rehabilitation Facilities PPS • Market Basket at 2.7 percent • Less MFP adjustment 0.7 percent • Less ACA adjustment 0.1 percent • Net increase 1.9 percent • CMS says payments to increase $140 million – net update =$130 million + Outlier increase of $10 million • Area Wage index on line only • Labor share = 69.981 • Conversion factor = $14,343, currently $14,076

49. Inpatient Rehabilitation Facilities PPS • High cost outliers • Paid at 2.8 percent for 2012 • Says overall IRF increase to be 2.1 percent • 1.9 rate + 0.2 by changing outlier threshold • Outlier threshold to be $10,466

50. Inpatient Rehabilitation Facilities PPS • Quality • See hospital OPPS rule for details