IN THIS WEEK’S ISSUE:
- Medicare Physician Payments to Rise 1.5 Percent in 2005
- Inpatient Rehab, Skilled Nursing Payment Increases Announced
- New Rules Propose Medicare Drug Benefit Options
- IRS Gives Employers Greater Flexibility to Offer HSAs
- FTC, DOJ Recommend End of CON Programs
- Debt Delinquencies Decline for Senior Living Facilities
- OIG Opinions Clarify Antikickback Risks
- Quick Links
1. MEDICARE PHYSICIAN PAYMENTS TO RISE 1.5 PERCENT IN 2005
Physicians would receive a 1.5 percent increase in Medicare payments next year under a proposed rule posted to the CMS web site July 25. The 2005 increase would match the increase physicians received in 2004. This and other changes required by MMA are outlined in the agency’s proposed 2005 update to the physician fee schedule.
The 1.5 percent increase supersedes a 3.7 percent decrease that would have been required under previous law. End-stage renal disease facilities would receive a 1.6 percent payment increase in 2005. Overall, CMS projects 2005 spending for the 875,000 healthcare professionals paid under the fee schedule to be $55 billion, a 4 percent increase over the projected 2004 spending.
Among other proposed changes, preventive care benefits lead the list. These include:
- An initial physical for all new beneficiaries
- New coverage of cardiovascular screening blood tests
- Diabetes screening tests for at-risk beneficiaries
Improved access is addressed through incentive payments: 5 percent extra for physicians practicing in physician scarcity areas and 10 percent extra for those in health professional shortage areas (HPSAs). Some physicians would be hurt by proposed changes to drug payments, also required by MMA, that convert the payment basis from average wholesale price to average sales price.
The proposed rule is to be published in the August 5 Federal Register, with comments due September 24. CMS plans to issue the final rule by November 1, to be effective January 1, 2005.
2. INPATIENT REHAB, SKILLED NURSING PAYMENT INCREASES ANNOUNCED
Payment rates for inpatient rehabilitation facilities (IRFs) will increase 3.1 as of October 1, and rates for skilled nursing facilities (SNFs) will increase by 2.8 percent in FY05, according to notices published in today's Federal Register.
For IRFs, CMS estimates that aggregate FY05 payments will increase 5.6 percent over projected FY04 payments--$5.7 billion in FY05 compared with $5.4 billion in FY04.
Under the SNF notice, CMS announced its decision to retain the current RUGs classification system that establishes daily payment rates to SNFs based on the needs of Medicare beneficiaries. This decision will result in nursing homes continuing to receive an estimated $1 billion in temporary add-on payments next year. CMS noted that it will continue working to refine the case-mix classification methodology, but the refinements won't be implemented this year. For SNFs, CMS estimates that aggregate payments
will increase by $440 million in FY05.
3. NEW RULES PROPOSE MEDICARE DRUG BENEFIT OPTIONS
HHS has released two proposed rules outlining the prescription drug benefit options for Medicare beneficiaries. The rules address the primary sections of the 2003 Medicare Prescription Drug, Improvement, and Modernization Act (MMA). One rule describes HHS’s proposed structure for the prescription drug benefit under traditional Medicare; the other explains how Medicare would make regional PPOs with a drug benefit available to all beneficiaries under the new Medicare Advantage program.
Under the traditional Medicare proposal, beneficiaries could keep their traditional fee-for-service coverage with the option of adding drug coverage for a premium of about $35 per month. The rule also includes provisions to protect retirees’ private drug coverage through subsidization of employer/union health plans providing such coverage.
The Medicare Advantage rule proposes a new competitive bidding system for participating plans and would provide support for regional Medicare Advantage PPOs. Following a market survey and analysis that is to take into consideration public comments, HHS will establish 10 to 50 Medicare Advantage regions.
The rules were posted July 26 on the CMS web site and are to be published in the August 3 Federal Register. Comments are due by October 4, and the final rules are to be issued in early 2005. Enrollment in the drug plans will begin in the fall of 2005, with benefits starting January 1, 2006.
4. IRS GIVES EMPLOYERS GREATER FLEXIBILITY TO OFFER HSAs
The IRS has issued guidance on health savings accounts (HSAs) that provides greater flexibility to employers to offer HSAs as part of their benefits packages. The IRS says that coverage under employee assistance programs (EAPs), disease management programs, or wellness programs does not make an individual ineligible to contribute to an HSA. The IRS wants to enable employers to offer both HSAs and EAPs, but does not want EAPs used as a way around providing a “real medical program.”
HSAs were created under MMA as a tax-free savings vehicle. HSAs are intended to make consumers more active purchasers of healthcare services, with the aim of reducing overutilization and promoting more price competition among providers. The law requires that HSAs be linked to high-deductible health plans with at least a $1,000 deductible for an individual policy and at least a $2,000 deductible for a family policy.
5. FTC, DOJ RECOMMEND END OF CON PROGRAMS
States should reconsider whether certificate of need (CON) programs best serve their citizens’ healthcare needs, according to a joint report released by the Federal Trade Commission (FTC) and Department of Justice (DOJ). The FTC and DOJ stated that CON programs are not successful in containing healthcare costs and that they pose anticompetitive risks that usually outweigh their purported economic benefits.
In a two-year project, the FTC and DOJ reviewed the role of competition and recommended how to “improve the balance between competition and regulation in health care.” The report also addresses a wide range of topics, including consumer-driven health care, hospital mergers, quality ratings of hospitals and physicians, pay for performance mechanisms for healthcare services, mandated benefits, licensure, allied health professionals, pharmaceutical pricing, pharmaceutical benefit managers, single-specialty
hospitals, buying power in healthcare markets, and clinical and financial integration.
6. DEBT DELINQUENCIES DECLINE FOR SENIOR LIVING FACILITIES
Skilled nursing facilities (SNFs) experienced a decline in permanent debt delinquencies in the first quarter of 2004, from 12.54 to 10.9 percent, according to the latest financial and performance indicators released by the National Investment Center for the Seniors Housing & Care Industries, suggesting some improvement in the financial health of these facilities. Debt delinquencies for assisted living facilities (ASLs) dropped to 6.15 percent during this period.
The loan performance rate for both ASLs and SNFs increased slightly from the last quarter of 2003 to the first quarter of 2004, from 93.1 to 94.2 percent. Over the longer term, the loan volume placed showed a decline, dropping to $499 million from $527 million placed in the first quarter of 2003.
7. OIG OPINIONS CLARIFY ANTIKICKBACK RISKS
Two new advisory opinions from the HHS Office of Inspector General (OIG) give insight into the types of physician group practice arrangements that might be permissible under the antikickback statute.
In Advisory Opinion 04-08, the OIG responded to a request from a physician group practice that wanted to develop and own a comprehensive physical therapy center and lease the center's space, equipment, and personnel to other physicians whose patients required physical therapy services. The OIG concluded that the proposed arrangement could potentially generate prohibited remuneration under the antikickback statute.
In Advisory Opinion 04-09, the OIG responded to a request from a group practice specializing in geriatrics that wanted to hire primary care physicians to serve as consultants to patients residing in the group's nursing home. The OIG concluded that the proposed arrangement would not generate prohibited remuneration under the antikickback statute.
8. QUICK LINKS
CERTIFICATION DEADLINE EXTENDED FOR NONIMMIGRANT WORKERS
The deadline by which certain nonimmigrant healthcare workers from Canada and Mexico must obtain required certification has been extended for an additional year to July 26, 2005, according to an interim rule published by the Department of Homeland Security, Bureau of Citizenship and Immigration Services.
CMS SOLICITS COMMENTS ON INTRAOCULAR LENS PAYMENTS
CMS seeks public comments on applications that it has received for review of established Medicare payment amounts for new technology intraocular lenses furnished by ambulatory surgical centers.
Copyright 2004 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XI, Number 30.
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