SGR Update — Fix Remains High Priority for 113th Congress

Congressional leaders remain committed to finding a permanent solution to the SGR problem that has plagued the Medicare program and provider payments for over a decade.  Although there has long been bi-partisan agreement that the SGR formula developed during the Clinton Administration was seriously flawed, a permanent fix has remained elusive. 

Although an SGR fix is not imminent, due to a convergence of factors, a permanent fix appears achievable in 2013.  All of the Congressional Committees (Senate Finance, House Ways and Means and House Energy and Commerce) that share jurisdiction over Medicare Physician Payment reforms have held hearings and solicited feedback from stakeholders on possible permanent solutions.  Democratic and Republican leaders in both the House and Senate remain committed to finding a permanent solution whereas in years past, the level of commitment to finding a permanent fix has not been as strong. 

Draft proposals have been circulated amongst the various physician and other healthcare organizations, and industry feedback and reaction have been sought. 

If Congress should fail to come up with a permanent fix before the end of 2013, current estimates are that a cut of approximately 24% in provider payments will be necessary to comply with the SGR law. 

Some of the common themes that are emerging as part of the SGR discussions center around the following concepts:

Repeal SGR and replace with statutory increases (possibly 1 – 2 % per year but still to be determined) for a period of time (possibly 3 – 5 years but still to be determined). This would eliminate the 24 % cut slated for January 1, 2014.

1. Incorporate Specialty Specific Quality Measures as part of the payment formula (aka Update Incentive Program).
2. Provider payments would be a combination of a “base rate” plus a variable rate tied to quality/performance (Specialty Specific Quality Measures).
3. Score on Quality would be based upon a comparison against peers (risk adjusted) AND compared to the individual provider’s prior year scores AND provider participation in specialty specific clinical improvement initiatives.
4. Each provider would “self-identify” with a peer cohort (i.e. providers of the same specialty); and provide information on each of the following:

*             Identifies the peer group the provider wants to be compared to; and
*             Provides information on each quality measure applicable to such peer group to which the provider shall be assessed.

The Secretary of HHS will be responsible for developing the methodology for assessing the performance of providers with respect to the measures and with developing the methods for collecting information needed for such assessments.  The Secretary is directed to establish these processes in a way that minimizes the “… amount of administrative burden needed to ensure reliable results.”

In reviewing the proposals, several administrative/operational questions have arisen.  These include: 

• Auditing/data retention requirements
• Claims reporting requirements
• Administrative complexity of process
• How/when will payments be made
• What will be necessary to support provider participation in this type of payment model
• Predictability of payment

 

Clearly, much still needs to be done to address and hopefully to resolve this ever-pressing matter.

reprinted with permission, Healthcare Business & Management Association (HBMA)

The Fix Is In… for 2012

The House and Senate have both voted to approve, and the President has signed into law, legislation preventing the scheduled 27.4% SGR related cut from taking effect on March 1.   While many issues are in fact addressed in this legislation – ranging from outpatient therapy caps to ambulance add-on payments; from the governments provision of bad debt payments to insitutions to the payment of the technical component of certain pathology services, etc…, by far the most anticipated and relevant item impacted by the legislation is the Medicare Physician Fee Schedule rates:

Physician Payment Rates – This provision prevents a 27.4 percent cut in Medicare physician payment rates slated to begin on March 1, 2012, and instead freezes payment rates at their current level though December 31, 2012.  This provision also requires the Government Accountability Office (GAO) and HHS to submit reports to assist Congress in the development of a long-term replacement to the current Medicare physician payment system.

Physicians can breathe a sigh of relief, as physician payments are safe for the remainder of 2012…  but a permanent fix is an ever increasing necessity, for now, physician practices will face a mounting 35% payment threat from Medicare in 2013, absent additional furture Congressional intervention.

2012 Medicare Physician Fee Schedule Is In the Crosshairs Again… AKA, “The Perils of The SGR”

Although most of us were not around during the era of silent movies, many of you may be familiar with a genre of movie referred to as a serial motion picture….  One of the more famous of this genre was titled, “The Perils of Pauline.”   In this series, the heroine, Pauline, would be put into a perilous situation (i.e. tied to the railroad tracks with a fast approaching train, tied to a barrel filled with explosives, etc.) and during the course of the installment, Pauline would miraculously escape near certain death at the last possible moment.  Each installment would end with words to the effect, “Tune in Next Week.”

Anyone familiar with “The Perils of Pauline” series cannot help but recognize the parallels between Pauline and healthcare providers as we watch our government deal with theSGR problem.  Every few months, it seems, Congress waits until the last possible moment to fix the SGR cut and avoid the financial calamity that would ensue if Congress allowed the cut to take effect. 

As we all know, in the latest “Perils of SGR,” Congress voted to delay any resolution of the SGR – and the potential 27% reduction in the Medicare Physician Fee Schedule — in late 2011.  However, that “fix” was only for two months and we were all told to, “Tune in next month,” as our intrepid Congress attempts to once again step in at the last minute to avoid yet another possible cut in physician fee schedule payments on March 1, 2012.  Unfortunately, whereas “The Perils of Pauline” was a movie, the perils of the SGR cut are all too real.

On January 24^th a House-Senate Conference Committee met for the first time to begin formal work on resolving the SGR differences between the House and Senate.  Although this was the first meeting by the Representatives and Senators, their staffs had been meeting regularly leading up to this meeting.  The Conference Committee met again on February 1^st and 2^nd, and additional meetings are anticipated over the next few weeks, during which committee members are to present all ideas and solutions. 

Representative Renee Ellmers (R-NC), a freshman Member of Congress on the Conference Committee (and a healthcare executive prior to being elected to Congress in 2010) suggested a two-year extension for the SGR fix, thus giving the Congress time to find alternate solutions.  Follow-up remarks made by several members of the Conference Committee indicated that there was at least some bi-partisan interest in coming up with a permanent fix to the SGR rather than another in the long series of temporary fixes. 

The stumbling block for enacting a permanent SGR solution has not been the lack of an alternative formula, but rather how to pay for any fix the Congress might adopt.  Current estimates are that adopting a permanent fix would increase the federal deficit by approximately $300 billion over the next year unless corresponding spending reductions were made to offset the debt. 

The AMA and some other organizations have suggested that money saved by the ending of the war in Iraq could be used to pay for the SGRfix.  The current federal budget (which projects spending out for 10 years) assumed that theIraq war would go on for several more years and money was budgeted for that purpose.  However, with the ending of the war, the money previously budgeted will no longer be needed.  Therefore, from a budgeting standpoint, this money could technically be redirected to pay for the SGR fix, rather than being set aside for the war inIraq.  Doing so would not increase the projected federal deficit beyond current estimates as this would be viewed as a reprogramming of dollars already budgeted for another purpose.  It remains to be seen whether the Congress will pursue this budgetary line of reasoning or not. 

Although it appears unlikely that Congress would allow the 27% SGR-related cut to go into effect on March 1, there are no guarantees.  Stay tuned for the next installment…   

Adapted and reprinted with permission of Bill Finefrock, Washington Report – January 2012.

SGR Reprieve For Holidays

Just a quick note to let everyone know that late last Thursday, (11/18) the Senate, by unanimous consent, approved a one-month extension of the current payment levels for Medicare Part B. This would avoid the 23% SGR related cut that is scheduled to go into effect on December 1. This temporary extension would postpone the SGR cut until January 1, 2011 unless Congress enacts another “fix” between December1, 2010 and January 1, 2011.

The House has already adjourned until after the Thanksgiving Holiday. However, late last night, House Majority Leader Steny Hoyer (D-MD) announced that he intended to bring up the 30 day extension when the House reconvenes on November 29th.

Majority Leader Hoyer released the following statement following Senate approval of the 30 day extension:

“It is my intention to schedule this bill for consideration when the House reconvenes on November 29th, so we can send it to the President’s desk prior to the November 30th expiration date of current SGR relief.”

Hoyer went on to say,

“This legislation allows Congress to continue our work on a longer- term solution – one which provides our seniors with the security of continued access to the physician of their choice and our physicians with at least one full year of SGR relief.” 

 We’ll keep you posted as developments unfold. 

(Reprinted with permission, Bill Finerfrock, Capitol Associates)

Medicare Claims Processing (For Dates Of Service Post-June 1st) On Hold Again

As mentioned in our last post, the House approved legislation last night rescinding the 21.3% SGR cut and replacing it with a 2.2% increase. This increase is retroactive to claims for services provided on or after June 1, 2010 and will be in place for services provided through November 30, 2010.

The Centers for Medicare & Medicaid Services (CMS) has directed Medicare claims contractors to discontinue processing claims at the negative update rates and to temporarily hold all June 1 or later claims for services until the new 2.2 percent update rates are tested and loaded into the Medicare contractors’ claims processing systems.  According to a statement from CMS, “We expect to begin processing claims at the new rates no later than July 1, 2010.”  Claims for services rendered prior to June 1, 2010, will not reflect the 2.2% increase but will continue to be processed.

CMS has also announced that claims containing June 2010 dates of service which have already been paid at the negative update rates will be reprocessed as soon as possible.  Under current law, Medicare payments to physicians and other providers paid under the MPFS are based upon the lesser of the submitted charge on the claim or the MPFS amount. 

Please take note that claims containing June dates of service that were submitted with charges greater than or equal to the new 2.2 percent update rates will be automatically reprocessed.  Providers who submitted claims containing June dates of service with charges less than the 2.2 percent update amount will need to contact their local Medicare contractor to request an adjustment.  According to CMS, “Providers should not resubmit claims already submitted to their Medicare contractor.”

While we appreciate the steps Congress has taken to address the SGR problem, this is still only a temporary solution and the Congress must enact a permanent fix to the SGR.  Because this fix is only for 6 months, providers will be facing a reinstatement of the 21.3% cut on December 1, 2010.  Then, a SGR second cut, estimated at 25%, will occur on January 1 unless Congress takes steps to prevent these cuts from occurring.

We’ll keep you posted…

SGR Update – Bill “Fixing” SGR Before The President

Following last week’s action by the Senate, the House has just passed legislation, H.R. 3962, which would “fix” the SGR problem (and table the Medicare Physician Fee Schedule cut) for the next 6 months.  Retroactive to services delivered on or after June 1, the Medicare Conversion Factor will be raised by 2.2%.  This will be in place for services provided between June 1, 2010 and November 30, 2010.  The bill has been sent to the President for his signature.

However, unless Congress takes steps between now and November 30th, the 2.2% increase will cease on December 1, 2010 and the 21.3% reduction will be restored.

Senate Finally Passes 6-month SGR “Fix” – Sent To House For Vote

The Senate, via unanimous consent, has passed a 6 month SGR “fix”.  The legislation was broken out from the larger tax extenders/unemployment legislation to which it had been attached.  Here is a summary of the proposal passed by the Senate:

Medicare Physician Payment: Provides a 2.2% increase in reimbursement levels for June-November of 2010. Spends $6.4 billion over five and ten years.

Hospital Payments: Prohibits Medicare from reopening or adjusting claims made by hospitals during the three days preceding a patient’s inpatient admission.

Pension Relief: Offers the same relief from pension funding obligations for companies that will result in fewer tax-preferred contributions to pension plans and therefore more taxable income for the firms, and generates $675 million in outlay savings due to lower than expected payments by the Pension Benefit Guarantee Corporation (PBGC).  Saves $2.8 billion over ten years.

IRS Data Match: Includes provisions allowing the IRS and CMS to coordinate data matching efforts with regard to delinquent tax debts owed by Medicare providers, and to take such information into account when releasing reimbursement payments and accepting new providers.  Saves $175 million over five years and $425 million over ten.

The legislation has been sent to the House for consideration but the House has adjourned for the day.  The soonest the House will be able to take up this proposal – assuming they can get the votes – would be Monday or Tuesday.

Hoping For Resolution To The SGR, CMS Delays Payments Again

As I am sure everyone is aware, no action was taken by Congress with regard to enacting a fix (temporary or otherwise) to the SGR problem by the June 14th deadline.

If you recall, CMS had instructed its contractors on May 27th to hold claims for services paid (for claims with dates of services June 1. 2010 or later) under the MPFS for the first 10 business days of June (i.e., through June 14, 2010) in order to avoid disruption in the delivery of health care services to beneficiaries and payment of claims for physicians, non-physician practitioners, and other providers paid under the MPFS.  Given the possibility of Congressional action in the very near future, CMS is now directing its contractors to continue holding June 1 and later claims through Thursday, June 17, lifting the hold on Friday, June 18.  This action will facilitate accurate claims processing at the outset and minimize the need for claims reprocessing if Congressional action changes the negative update.  It also should minimize the provider and beneficiary burdens and costs associated with reprocessing claims.  We understand that the delayed processing of Medicare claims may present cash flow problems for some Medicare providers.  However, we expect that the delay, if any, beyond the normal processing period will be only a few days.  Be on the alert for more information regarding the 2010 Medicare Physician Fee Schedule Update. 
   
The House and Senate continue to work on legislation providing an 18 – 24 month SGR fix.  And, although it is fully anticipated that Congress will eventually enact legislation restoring the full payments for all claims subject to the SGR cut, it is not clear exactly when that might occur.  All Congressional action is currently focused on enacting an SGR fix that is at least 18 months long rather than the 30 or 60 days “fixes” that have become the norm this year.  Once Congress enacts an SGR fix, it is also not clear whether providers will be asked to resubmit claims or whether Contractors will automatically reprocess the previously submitted claims and remit the additional payments to the providers with no additional action required by the provider to obtain full payment.

There is broad bi-partisan support for fixing the SGR problem in both the House and Senate, and various proposals for fixing the SGR problem have been put forward by Members of both parties. Unfortunately, there are significant policy differences over how to “pay for” the SGR fix as well as differences on just what the new policy should be that would replace the current Sustainable Growth Rate formula.

Stay tuned….

CMS Orders Medicare Contractors To Hold Claims Beginning June 1st

Congress has failed to adopt another extension of the freeze of the Medicare physician fee schedule Conversion Factor.  This means that effective for services provided on or after June 1, there is currently slated a 21.3% cut in the Medicare fee schedule payments. 
 
The Congress will not be in session next week due to the Memorial Day Recess, meaning that the earliest it could consider legislation reinstating the freeze (or enacting a replacement to the SGR) would be June 7th.  

Because Medicare claims are not paid any sooner than 14 days after receipt, technically Congress has until June 13th to adopt legislation avoiding the 21.3% cut.  In an effort to avoid the administrative confusion and ugliness that stems from this waffling of the Physician Fee Schedule, CMS has once again instructed its contractors to hold claims containing dates of services as of June 1st to paid under the Medicare physician fee schedule for the first 10 business days of June.  One can only hope that the SGR issue will be resolved by then!

Congressional leaders are trying to avert a 21 percent payment cut scheduled to take effect June 1 under the current fee schedule.

The 10-day hold applies to claims with dates of service of June 1 and later. According to CMS officials, the hold should have little impact on provider cash flow because electronic claims are not paid until at least 14 calendar days after receipt.

The Doc Fix Is On The Table Yet Again…

Matthew DoBias of ModernHealthcare.com (http://www.modernhealthcare.com/apps/pbcs.dll/article?AID=/20100526/NEWS/305269978) reports that:

House leaders are eyeing a legislative package that would increase physician Medicare payments over the next 19-months—until the end of 2011—but trim back some benefits for safety net health programs.

Under the measure, physicians would not see a 21% pay cut that’s scheduled to go into effect June 1, according to two sources with knowledge of the ongoing negotiations between House and Senate leaders.  If approved, it would be the third attempt to rework the troublesome sustainable growth-rate formula used to determine physician reimbursement. Previous attempts have proven too costly for some debt-wary lawmakers.  The package was expected to have been approved by the House Rules Committee Wednesday evening, clearing the way for final passage today.

House leaders huddled behind closed doors to help shape the bill’s framework, which attempts to patch the SGR while also extending unemployment insurance benefits as well as the timeline for a higher level of aid for COBRA premiums.  But those last two measures could be scaled back, ending in November rather than December—a move that would keep the unpaid provisions in the bill under $100 billion.  

Sources stressed that negotiations were fluid.  “We’re looking at the options,” Rep. Chris Van Hollen (D-Md.), a member of the House leadership team, echoed. Van Hollen said he expects the House to pass the bill before Memorial Day, though it remains unclear whether or not the Senate will support the package.