In 2013, primary care physicians will see increases in payments.  According to the CMS, family practitioners will see the greatest increase of seven percent. Geriatricians will see a five percent increase, while both nurse practitioners and internal medicine doctors will see four percent increases.

Several specialties will see reductions.  Radiation oncologists will see an overall decrease of seven percent, up from a slated 14 percent reduction in the proposed rule.  Radiation therapy centers will see an overall decrease of nine percent, up from a slated 19 percent in the proposed rule.  Additionally, there are reductions for pathology (six percent), neurology (seven percent), and independent laboratories (eleven percent).

CMS is required to issue a final rule that reflects current law.  Under current law, providers will face steep across-the-board reductions in payment rates based on the Sustainable Growth Rate (SFR) formula, which was adopted in the Balanced Budget Act of 1997.

In the absence of Congressional action, an overall reduction of 26.5 percent will be imposed in the conversion factor used to calculate payment for physicians’ services on or after January 1, 2013 due to the Sustainable Growth Rate (SGR).  This is less than the 27 percent reduction stated in the proposed rule.

The rule also addresses additional issues including:

• Durable Medical Equipment (DME) Face-to-Face Encounters and Written Orders Prior to Delivery
  • Expands Medicare Telehealth Services.
  • Updates Existing Standards for e-prescribing under Medicare Part D and Lifting the LTC Exemption.
  • Identifies Potentially Misvalued Codes to be Evaluated.
  • Establishes Additional Multiple Procedure Payment Reductions (MPPR).
  • Implements Regulatory Changes Regarding Payment for Technical Component of Certain Physician Pathology Services to Conform to Statute.
  • Requires the inclusion of specific information on claims for therapy services.
  • Establishes New Transitional Care Management Services.
  • Clarifies Services Included in the Certified Registered Nurse Anesthetists Scope of Benefit
  • Modifies Ordering Requirements for Portable X-ray Services.
  • Updates the Ambulance Fee Schedule.
  • Addresses Ambulance Coverage–Physician Certification Statement.
  • Updates policies regarding the—
    • Physician Compare Website.
    • Physician Quality Reporting System.
    • Electronic Prescribing (eRx) Incentive Program.
    • Electronic Health Record (EHR) Incentive Program.
    • Medicare Shared Savings Program.
• Discusses Budget Neutrality for the Chiropractic Demonstration.
• Addresses Implementation of the Physician Value-Based Payment Modifier and the Physician Feedback Reporting Program.
• Establishes Medicare Coverage of Hepatitis B Vaccine.

We have attached the official CMS fact sheet.  Please let us know if there are specific issues you want us to look out for as we continue to review the 1362-page rule and work on customized summaries for our clients.

1. The individual mandate to purchase health insurance
2. The expansion of Medicaid to all individuals earning less than 133% of the federal poverty level

The Court upheld the individual mandate, but held that the federal government cannot withhold Medicaid funding from states that do not comply with Medicaid expansion. By issuing an opinion that did not strike down the law in its entirety, the Court removed any uncertainty surrounding whether provisions included in the law, but unrelated to the health insurance exchanges and Medicaid expansion, would continue to be implemented (for example, Medicare’s Accountable Care Organizations, its durable medical equipment competitive bidding expansion and filling the prescription drug “doughnut hole”).

The “individual mandate” requires most individuals to maintain “minimum essential” health benefits coverage.  Individuals who do not comply with the mandate must make a “shared responsibility payment.”  Although the Court found that the Anti-Injunction Act did not bar the suit because Congress did not intend the mandate to be a tax, the Court decided that the penalty imposed for failing to maintain minimal health insurance coverage is a tax for purposes of the Constitution.

Writing for the majority, Chief Justice Roberts stated that the “Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax.  Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”

The biggest surprise of the case was that states won the right to opt-out of PPACA’s Medicaid expansion.  The current Medicaid program offers federal funding to states to assist pregnant women, children, needy families, the blind, the elderly and the disabled in obtaining medical care.  PPACA expands the scope of the Medicaid program by requiring state programs to provide Medicaid coverage for all individuals earning less than 133 percent of the federal poverty level. Currently, many states cover adults with children only if their income is considerably lower and do not cover childless adults at all. Under PPACA, if states did not expand their Medicaid programs, they would lose existing Medicaid funding.  The Court held the expansion violates the Constitution by threatening states with the loss of their existing Medicaid funding if they decline to comply with expansion. Therefore, states may now choose to reject the Medicaid expansion without losing federal funding for existing Medicaid programs.

In issuing its decision, the Court removed a great deal of uncertainty surrounding whether implementation of the health reform law would continue to move forward.

It is now clear the federal government can require individuals to purchase health insurance on the private market or be subject to a tax penalty.

At the same time, it created new uncertainties by invalidating the application of provisions that threatened states with the loss of Medicaid funding if they did not expand their Medicaid programs.

Allowing states to opt-out of the Medicaid expansion raises several interesting questions, including:

• Will the 26 states who were parties to the lawsuit opt-out of the Medicaid expansion?
• Will additional states facing budget crises opt-out of the Medicaid expansion?
• Will individuals with incomes below 133% of the poverty line be eligible to obtain insurance through the health insurance exchanges?
• Presuming these individuals are eligible to obtain insurance through the exchanges:
  • How will their enrollment affect premiums for health insurance plans offered through the exchanges?
  • Will they be able to navigate the IRS processes for obtaining the refundable tax credit designed to help them pay the costs of the insurance?

In remarks totally unrelated to the Supreme Court proceedings, Justice Thomas shared his inspiring thoughts on the role of the Supreme Court in our government.  He compared the Justices to referees in the NCAA basketball tournament’s “March madness,” whose calls are respected by all of the players whether the players like them or not.  To make his point that we all need to play by an agreed upon set of rules, he invoked Thomas More’s famous conversation with William Roper in A Man for All Seasons:

William Roper: So, now you give the Devil the benefit of law!
Sir Thomas More: Yes! What would you do? Cut a great road through the law to get after the Devil?
William Roper: Yes, I’d cut down every law in England to do that!
Sir Thomas More: Oh? And when the last law was down, and the Devil turned ’round on you, where would you hide, Roper, the laws all being flat? This country is planted thick with laws, from coast to coast, Man’s laws, not God’s! And if you cut them down, and you’re just the man to do it, do you really think you could stand upright in the winds that would blow then? Yes, I’d give the Devil benefit of law, for my own safety’s sake!

Though the passage is unrelated to the current case, I think it bears keeping in mind. Whatever the Supreme Court decides in the health reform case, we must respect its decision and its authority as referee to make the call as to which laws are constitutional and which are not.

In Aligning Your Health System’s Conflict Of Interest Policies with the Physician Payment Sunshine Act, my coauthor and I  acknowledge that advancements in clinical research and patient outcomes are possible when manufacturers of drugs, medical devices, and biologics collaborate with health providers.  Relationships between the manufacturers of drugs, devices, biologicals, and medical supplies; and individual physicians and medical centers produce numerous opportunities for the exchange of valuable clinical information and feedback necessary for the advancement of clinical decision-making and patient care.  Patients benefit from the firsthand knowledge these practitioners and their respective institutions bring to the practice of medicine.  These collaborations, however, often involve financial arrangements, which include financial or professional incentives.  These incentives can also pose possible conflicts of interest that can lead to a treatment bias or a clinical decision that favors the use of one device or drug over another.  In these situations, the practitioners’ motives may be in question, and their decisions and viewpoints are potentially compromised.  By shining a light on these relationships, the Physician Payment Sunshine Act can play an important role in eliminating relationships that create conflicts of interest and minimize the bias in treatment choices believed to increase health care costs, while encouraging appropriate relationships to continue.

We suggest that health systems and others would be wise to plan for these changes before CMS publicly posts data on the Internet about affiliated teaching hospitals and physicians.

Key Takeaways

1. An ACO may exist that does not participate in the Medicare Shared Savings Program.
2. To participate in the Advance Payment Initiative, ACOs must already be participating in the participate in the Medicare Shared Savings Program.  Not all ACOs in the Medicare Shared Savings Program will receive payment under the Advance Payment Initiative.
3. Pioneer ACOs cannnot participate in the Medicare Shared Savings Program and may not participate in the Advance Payment Initiative.

ACOs are groups of hospitals, physicians and other health care providers who come together to provide coordinated care to Medicare beneficiaries and share in any savings achieved for the Medicare program. CMS offers three ACO programs: the Medicare Shared Savings Program, the Advance Payment Initiative, and the Pioneer ACO model.

Medicare Shared Savings Program

Created by section 3022 of the Patient Protection and Affordable Care Act (PPACA), the Medicare Shared Savings Program is the only statutorily mandated ACO program.   CMS intends the shared savings program to facilitate coordination and cooperation among providers to improve the quality of care for Medicare Fee-For-Service  beneficiaries and reduce unnecessary costs.  CMS hopes the Medicare Shared Savings Program will promote accountability for the care of Medicare Fee-For-Service beneficiaries and encourage investment in infrastructure and redesigned care processes.

Advance Payment Initiative

CMS created the Advance Payment Initiative through its new Innovation Center, also created by PPACA.  The Advance Payment ACO Model is open only to two types of organizations already participating in the Medicare Shared Savings Program: (1) those without inpatient facilities and earning less than $50 million annually and (2) those in which the only inpatient facilities are critical access hospitals or Medicare low-volume rural hospitals and earning less than $80 million annually. ACOs that are co-owned with a health plan will be ineligible, regardless of whether they also fall into one of the above categories.  Only ACOs that enter the Shared Savings Program in April 2012 or July 2012 will be eligible for advance payments.

Pioneer ACO Model

CMS also created the Pioneer ACO Model through its Innovation Center.  CMS designed the Pioneer ACO Model for health care organizations and providers that are already experienced in coordinating care for patients across care settings. The Pioneer ACO Model is consistent with the Medicare Shared Savings Program model, but with generally higher levels of shared savings and risk for Pioneer ACOs than levels currently proposed in the Medicare Shared Savings Program. Thirty-two organizations were selected to participate in the Pioneer ACO model, which began January 1, 2012.

The Accountable Care Organization landscape is continuing to evolve, and we expect further changes as CMS gains experience in actually operating its various accountable care organization programs.  We continue to believe the best approach is to be proactive and to take your ideas for promoting accountable care to CMS.  In the meantime, we will continue to update you on ACOs and decode CMS’ program announcements.  Stay tuned.

Moving Along the Guiderails: How Does the Public View Comparative Effectiveness Research and Cost Cutting Measures.

On December 22, the Alliance for Aging Research presented a webcast presenting a survey titled, “Four-Country Comparative Effectiveness Decision-Making and Patient Access Survey.”  The key findings of the survey include:

• Most Americans oppose government or insurance company decisions not to cover drugs or other treatments because they are too expensive unless there is independent evidence indicating another option that is equally effective and less costly.
• 2/3 of Americans believe government and insurers are currently denying access to drugs or treatments on the basis of cost alone.
• Americans do not support a government decision-making body that would recommend whether the government pays for certain drugs or treatments.
• Generally speaking, Americans support decision making based on comparative effectiveness research.

The panel included Dan Perry, President and CEO of the Alliance for Aging Research; Robert Blendon, Sc.D., Harvard School of Public Health; and Joe Selby, MD, MPH, Executive Director of the Patient-Centered Outcomes Research Institute.

Yesterday (12/14/11), CMS released its proposed rule implementing the provisions of section 6002 of the Patient Protection and Affordable Care Displayed (Public Law 111-148), also known as the Physician Payment Sunshine Act (PPSA).  Comments are due by 5:00 PM eastern time on February 17, 2012.  A copy of the proposed rule is available here: Physician Payment Sunshine Act Proposed Rule 12-19-11.

The proposed rule would require manufacturers of drugs, devices, biologicals and medical supplies covered by Medicare, Medicaid or the Children’s Health Insurance Program to report to CMS payments or other transfers of value they make to physicians and teaching hospitals.  The rule would also require manufacturers and group purchasing organizations (GPOs) to disclose to CMS physician ownership and investment interests.  This information will be made available to the public through the Internet.

In its proposal, CMS states that “collaboration among physicians, teaching hospitals and industry manufacturers may contribute to the design and delivery of life-saving drugs and devices.  However, while some collaboration is beneficial to the continued innovation and improvement of our health care system, payments from manufacturers to physicians and teaching hospitals can also introduce conflicts of interests that may influence research, education and clinical decision-making in ways that compromise the clinical integrity and patient care and may lead to increased health care costs.”

CMS estimates that approximately 150 drug and biologic manufacturers, 1,000 device or medical supply manufacturers, and 420 GPOs will be required to submit information to CMS on an annual basis.  Altogether, CMS estimates a total cost of about $224 million for the first year of reporting followed by about $163 million in the second year and annually thereafter.  However, CMS noted the lack of data on which to base these estimates and states that the estimates are very uncertain.  CMS specifically solicits comments to help improve their cost estimates.

Violators of the reporting requirements will be subject to civil monetary penalties, capped at $150,000 for failure to report and $1,000,000 for knowing failure to report.  CMS is proposing that the HHS Office of Inspector General (OIG) and CMS reserve the right to audit, evaluate and inspect applicable manufacturers and GPOs for their compliance with the reporting requirements and is proposing to require those entities to maintain all relevant records and documents for at least five years from the date the payment or other information is published on CMS’ web site.