Washington Report – October, 2013
Bill Finerfrock, Zhaneta Mansaku, Kirk Shields
Bi-partisan/Bi-Cameral SGR Repeal/Replace proposal put forward
Healthcare.gov Rollout Has a Few Glitches
PPACA Delay?
Government Shut Down Ended October 17 – Now What?
It’s Open Season – For Medicare Advantage
Healthcare Reform – A Look Back, a Look Ahead
Regulatory Delays
CMS Transmittals
Bi-partisan/Bi-Cameral SGR Repeal/Replace proposal put forward
On Thursday, October 31, a bi-partisan group of Members from both the House and Senate released a DRAFT proposal for repealing and replacing the Sustainable Growth Rate (SGR) formula. The bi-partisan group included the Chairmen and Ranking Minority Members of the House Ways and Means Committee and the Senate Finance Committee – two of the key Committees of jurisdiction over this issue.
This is an important next step in the process of permanently replacing the flawed SGR formula. If enacted, this proposal would dramatically alter the way physician fee schedule payments are determined. The financial and administrative implications for physicians are very significant. For physicians wishing to continue to receive Fee-for-Service payments from Medicare, the amount of data that physicians will be asked to compile and report will be significant.
Because of the new data reporting requirements, it appears that there may be a strong incentive for providers to move to what the proposal refers to as alternative payment models (APMs).
Although not specifically stated in the summary released by the Committee leadership, it would appear that the phrase alternative payment model is a proxy for Accountable Care Organizations or Bundled Payments. There appears to be a strong desire on the part of the authors of this initiative to want to move physicians from a payment model that places financial risk for clinical decision making on the payer (i.e. fee-for-service) to one where financial risk for clinical decision making is shifted to the provider.
Prior to adoption of the SGR formula for determining annual adjustments in physician fee schedule payment, physicians could expect an annual inflationary adjustment in their fee-for-service payments. Since the adoption of the SGR, physicians have been threatened with ever increasing cuts in physician fee schedule payments and even when Congress stepped in to prevent these draconian cuts, the annual adjustments approved by Congress have been either non-existent or so nominal that the increases hardly kept pace with medical inflation.
Under the bi-partisan proposal, there will be no automatic annual adjustments in the physician fee schedule for 10 years. Beginning in 2024, providers still in the fee-for-service system would receive a 1% annual inflationary adjustment. Providers enrolled in one of the “to be approved” Medicare APMs would get a 2% inflationary update beginning in 2024.
Between 2014 and 2017, there would be no inflationary updates for fee-for-service providers. The only changes in fee-for-service payments during that 3-year period would be for “misvalued” codes.
1. Beginning in 2017, annual updates to the fee schedule would be physician specific and they would be “performance based” incentive adjustments – called the Value-Based Performance Program (VBP). Physician scores on a prior year (not specified) would be used to determine the incentive adjustment.
2. Performance based incentive adjustments would be based on a composite score, which would be a combination of:
a. Quality Score
b. Resource Use Score
c. Clinical Practice Improvement Activity
d. EHR Meaningful Use
3. Payment reductions for failure to report (PQRS) or meaningfully use EHR; and the Value- based modifier penalties would be repealed.
4. Physicians with low APB scores would see a reduction in their payments for that year.
5. The VPB payment incentive (and penalties) program would be expanded to include PAs and NPs in 2018 and all others (subject to Secretarial discretion) paid under the fee schedule, beginning in 2019.
Incentive payment scoring can occur either at an individual level or at the group level for providers who belong to a group. There is a special process that could be used by “facility-based” professionals to determine their quality score. Providers would receive “timely” updates indicating how they are doing through the course of the year.
As noted earlier, the overall goal of the initiative appears to be to encourage providers to move to an APM. Physicians who receive a significant percentage of their Medicare revenue through a risk-sharing Alternative Payment Model, will receive an automatic 5% annual increase in payments between 2016 and 2021.
The proposal would also direct the GAO to undertake a study of the Relative Value Scale Update Committee (RUC) process for determining the “valuation of physician services.” Concern has been expressed that organized medicine exercises too much control over the RUC process and as a consequence, efforts to adjust so-called “misvalued” codes have been undermined by physician specialty organizations.
Information for determining value would be obtained from “selected health professionals” rather than from physician organizations. The proposal makes a vague reference to providers who submit the requested information being eligible for additional compensation. However, should a provider fail to assist in the data gathering effort, they would be assessed a penalty – a 10% payment reduction.
The Secretary of Health and Human Services would also be directed to undertake an analysis of global surgical payments for work, focusing on post-surgical visits.
You are encouraged to review the proposal.
Finally, it should be noted that the proposal does not address how these changes will be “paid for.” Under the budget rules governing the Congress, any change in the Medicare program that would increase Medicare expenditures above what had previously been budgeted, must be offset by either additional revenues or cuts elsewhere in the Medicare program.
Currently, the Congressional Budget Office (CBO) estimates that repealing the SGR and simply freezing payments for 10 years would result in higher Medicare expenditures of approximately $138 Billion. CBO has not provided an estimate for the cost of this repeal/replace initiative.
Therefore, in order to comply with the budget rules (yes there are rules), Congress must offset the cost of the SGR repeal/replace proposal with additional revenue into the Medicare Trust Fund or cut payments to other providers.
As the circumstances warrant, HBMA will send additional information to you via articles in the Washington Report or special Legislative Alerts specially written about the SGR repeal/replace efforts.
The HBMA Government Relations Committee has been reviewing the proposal in detail and is preparing comments to submit to the sponsors of the legislation.
If you have questions, please do not hesitate to contact the GR Committee through the National Office.
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Healthcare.gov Rollout Has a Few Glitches
In the weeks and months leading up to the October 1, 2013 launch of the Healthcare.gov website, federal officials were optimistically predicting that the website would set a new standard – not only for government run websites, but private sector sites as well – when it came to efficiency and speed and ease of transactions. To say that the website failed to meet those expectations would be an understatement.
The Obama Administration has promised Congress and the American people that the website’s problems will be fixed and has set a November 30th date as the target for the site being fully operational – for the vast majority of people wishing to use the site.
There are two private sector alternatives to healthcare.gov for individuals who would like to learn more about the plans available in their markets as well as determine the approximate amount of a federal subsidy they could receive: ehealthinsurance and valuepenguin.
Both sites allow you to browse the health plans available in the market. You are not asked to provide any personally identifiable information. Visitors wishing to get plan information are asked to identify the state for which they would like information, the specific zip code or county within that state, the age(s) of the potential insured and approximate annual income (optional). Each site will provide a listing of health plans, by metal category (bronze, silver, gold, platinum), and other pertinent product-specific information about the plans being sold in those markets.
Although much of the media’s attention has been focused on the operational problems with healthcare.gov, there are actually four ways to apply for health coverage through the Marketplace. In addition to going to the trouble-plagued healthcare.gov website, individuals can complete a paper application. Depending on the area of the country, individuals can visit a trained assistor. These assistors are generally located in the more urbanized areas. Finally, people can reach the Call Center at 1-800-318-2596 (TTY: 1-855-889-4325) to apply for health insurance and enroll over the phone. The Call Centers are operational 24 hours a day, 7 days a week. According to information made available by HHS, the call centers have the capability to handle calls in more than 150 languages.
According to an HHS press release, more than 1.5 million individuals have contacted the call centers to get information or sign-up for health insurance. Based upon statistics provided by HHS, the average wait times for calls is less than 30 seconds.
Initially, the officials responsible for creating the site stated that the problems accessing the website were due to the overwhelming amount of traffic the site was experiencing in the initial rollout. However, over the next several weeks, it became apparent that the problems went much deeper.
According to recent announcements by both the Secretary of Health and Human Services, Kathleen Sebelius and the White House, numerous IT experts from the public and private sectors have been tasked with fixing the website’s problems.
It appears that one of the reasons the website has been plagued with problems since it went live, was the lack of pre-launch testing. According to the contractors CMS hired to set up the website, there were constant changes in what the site was expected to handle and there was insufficient time to conduct end-to-end testing of the system. It appears that the optimistic statements about the operation of the website that were being made in the weeks and months leading up to the launch were based on the testing of the individual parts that make up the entire site but no testing of the interoperability of the various parts. In fact, according to testimony presented by one CMS contractor, just days before the site went live, the contractor attempted to stress the website to see how many simultaneous hits could be handled before the site “crashed” and the site crashed at 1,100 simultaneous hits.
The limited testing of the full site as a whole occurred in the last few weeks and only in a controlled environment. This information came to light from information provided by the private sector contractors the government hired to build the site. In statements presented to Congressional investigators, the contractors argued that the compressed timeframes under which they were asked to work prevented them or the government from conducting full end-to-end testing of the entire system before the launch.
Although the PPACA was enacted in March, 2010 and therefore it could be argued that HHS had nearly 3 ½ years to build the site, the software and hardware developers said that they did not get the website specifications until much later and even then, the specifications were constantly being revised. As an example, the site originally was designed to allow anyone to fully browse the site and the plan information without providing any information or “sign-up”. Two weeks prior to going live, the Contractors were ordered to take down that capability. Instead, the new work order changed the website so that anyone wishing to browse the health plans available on the site would be required to establish an official account and complete a full application (regardless of whether the person actually intended to purchase insurance).
Former acting director of the Office of Management and Budget Jeffrey Zients has been put in charge of fixing the website and he has expressed confidence that they will meet the November 30th date for fixing the problems.
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PPACA Delay?
As a reminder, effective January 1, 2014, most individuals are required to have qualified health insurance or they could be subject to a tax penalty. The problems with the healthcare.gov website have caused some inside and outside of Congress to urge the Administration to delay the effective date of the individual mandate.
It should be noted that although the mandate is effective on January 1, the PPACA allows individuals to be without insurance for up to three consecutive months without suffering the penalty. This means that technically, an individual does not have to be enrolled in a qualified health plan until April 1, 2014. For 2014 – and 2014 only – the open enrollment period for purchasing health insurance through the Exchange runs until March 31st.
Also, it had previously been announced that due to the administrative time it takes to process the insurance application through the Exchanges, individuals wishing to have insurance that starts on April 1, 2014, would have to complete the application process by March 15th. This meant that technically, to avoid the penalty, individuals would have to sign-up by March 15th. If a person signed up on March 16th, that insurance will not begin until May 1st.
Again, because of the healthcare.gov problems, the Administration has announced that the IRS will not enforce the tax penalty as long as individuals “sign-up” for qualified health insurance by March 31st. This, even though applications submitted after March 15th will not be processed in time to meet the April 1st deadline. This announcement has the effect of extending the PPACA “deadline” for an additional 15 days.
To date, the President has resisted those demanding a delay. If, however, the websites problems are not fixed by November 30th, you can expect that the chorus of people calling for a delay will grow – and be bi-partisan.
We already know that a majority of Members of the House of Representatives are in favor of a delay. Their opinions were known long before the healthcare.gov problems surfaced. So getting legislation passed by the House to delay the individual mandate is not in question. The focus on the potential for a delay will be on the Senate. It would take approximately 16 Democratic Senators, voting with a unified GOP minority, to get a delay passed in the Senate. That is not an unrealistic possibility. Again, it all depends on whether the November 30th deadline for substantially fixing the problems with healthcare.gov is met.