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Medicare Agency, Providers Face Challenges This Year

By: Heather Boyd and Keith Haglund, Elsevier Global Medical News

February 02, 2012

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It’s back. The payroll tax extension signed by President Obama on Dec. 23 included language that delayed the 27.4% Medicare physician payment cut ‐ but only until the end of this month. The tumultuous legislation also extended the exemption to caps on Medicare reimbursements for therapy.

The 2-month suspension in Medicare fee cuts provided no increase to the Medicare conversion factor. However, a separate, final rule from the Centers for Medicare & Medicaid Services (CMS) had indicated that there would be a 0.18% increase in the conversion factor due to the adoption of the RVS (Relative Value Scale) Update Committee’s recommendations to fix misvalued codes. That change became effective Jan. 1, making the 2012 conversion factor $34.0376, up from $33.9764 in 2011.

Because Congress acted so late in 2011 to prevent the payment cut based on the Sustainable Growth Rate (SGR) formula, some January Medicare claims were being held to allow the CMS time to develop the new payment rate files and the Medicare claims administration contractors time to install and test the files. If Congress fails to pass a new extension or address the SGR by March 1, the 27.4% cut could be implemented.

On Jan. 12, the Medicare Payment Advisory Commission (MedPAC) again voiced its disappointment with Congress’s failure to find a permanent fix for the SGR. MedPAC Chairman Glenn Hackbarth said the opportunity to pay for an SGR fix is fading. “Repeal of SGR will only get more expensive.” He added that the likelihood that Congress would forgive any additional federal debt incurred by ending the SGR ‐ now calculated in the hundreds of billions of dollars ‐ also is fading, as are the Medicare savings that could fund the repeal.

At its October 2011 meeting, the commission recommended ways to pay for the SGR repeal: freezing payments to primary care physicians for 10 years and cutting reimbursements to special‐ ist physicians by 17% over 3 years, to be followed by a 7-year freeze. The commission’s next meeting is March 8.

Meanwhile, the CMS issued an updated Survey and Certification memo clarifying the use of civil money penalty funds by states. Superseding one released last September, the memo clarifies requirements of the health reform legislation (the Affordable Care Act) on how states may use some penalties collected for improvements in quality of care and the well-being of nursing home residents.

The agency included a sample list of previous uses of civil money penalties it deemed acceptable:
► Culture change.
► Support of resident or family councils.
► Direct improvements to quality of care or resident protection.
► Consumer information.
► Resident transition due to facility change/downsizing.
► Resident transition preparation.
► Temporary manager infrastructure.
► Training in facility improvement initiatives.

The CMS also included examples of prohibited uses of civil money penalties, including:
► Conflict-of-interest prohibitions.
► Duplication.
► Capital improvements.
► Nursing home services or supplies.
► Temporary manager salaries.
► Supplementary funding of federally required services.

One of the examples of an approved use cited by the CMS is a project in Wisconsin that “used CMP funds to develop the Wisconsin Clinical Resource Center and access the American Medical Directors Association Clinical Practice Guidelines (the only place that these have been provided electronically and without charge) for all nurses in Wisconsin nursing homes.”

David Zimmerman, PhD, director of the Center for Health Systems Research and Analysis at the University of Wisconsin-Madison commented, “This project is an excellent example of the innovative use of CMP funds, to promote quality improvement and provide a safe and healthy environment for the seniors in our state. It also reflects the benefits of cooperation between providers, advocates, state regulators, [AMDA], and the research community.”

Last fall also saw the agency propose to make consultant pharmacists for long-term care facilities independent of dispensing pharmacies and pharmacy benefit managers. AMDA supported the idea, asserting that the current system limits the consultant pharmacist’s role in providing the best prescribing practices to nursing facility residents. It also stated that “there is an inherent conflict of interest when consultant pharmacists are employed by dispensing pharmacies and pharmacy benefit managers.”

However, the association expressed concern that the CMS must fully fund payments to nursing facilities to hire independent consultant pharmacists, noting that allowing compensation by nursing facilities shifts the potential conflict of interest from excessive prescribing for the benefit of the pharmacy to inadequate prescribing for the benefit of the facility’s Medicare Part A costs, unless safeguards are in place. AMDA also recommended replacing medication therapy management services by Part D drug plans with reviews by consultant pharmacists.

As the year waned, the agency got even busier wrapping up loose ends. On Dec. 9, the CMS released another solicitation for states and U.S. territories to participate in its national program promoting background checks for all long- term care employees with direct patient access. Under the National Background Check Program, the agency will work individually with states to implement the program — several had said they needed more time to work with stake‐ holders in creating effective background check procedures.

On Dec. 20, the CMS announced that 32 health care organizations from across the United States will participate in the Pioneer Accountable Care Organization Model program. ACOs are to permit primary care doctors, specialists, hospitals, nursing homes, and other caregivers to provide more coordinated care for people with Medicare, and to save up to $1.1 billion over 5 years.

The program will test the effectiveness of several Medicare payment models in coordination with private payers. “We know that health care providers are at different stages in their work to improve care and reduce costs,” said Marilyn Tavenner, RN, BSN, acting CMS administrator. “That’s why we’ve developed a menu of options for Medicare to meet doctors, hospitals, and other health care providers where they are, and begin the conversation of how to enhance the care they are offering to people with Medicare.”

After a rigorous competitive selection process by the Innovation Center within the CMS, the selected ACOs include physician-led organizations and health systems, urban and rural organizations, and organizations in various geographic regions of the country. The 32 Pioneer ACOS in 18 states will pro‐ vide care for about 860,000 Medicare beneficiaries.

With Dr. Donald Berwick stepping down as the CMS administrator in December, the Obama administration nominated Ms. Tavenner to serve as acting administrator and then face the Senate confirmation process to become the official agency head. Ms. Tavenner previously served as the principal deputy administrator of the CMS, its second- ranking official.

As administrator, Ms. Tavenner will manage the agency’s $820 billion budget and assume responsibility for implementing much of the Affordable Care Act, including a vast expansion of Medicaid.

Prior to her CMS leadership role, Ms. Tavenner served for 4 years as the secretary of health and human resources for the State of Virginia. There she was charged with overseeing 18,000 employees and a $9 billion annual budget to administer Medicaid, mental health, social services, public health, aging, dis‐ abilities agencies, and children’s services.

The American Medical Association immediately put its support behind Ms. Tavenner’s confirmation. “We have worked extensively with her in her role as deputy administrator, and she has been fair, knowledgeable, and open to dialogue,” an AMA statement read. “With all the changes and challenges facing the Medicare and Medicaid programs, CMS needs stable leadership, and Marilyn Tavenner has the skills and experience to provide it.”

Dr. Berwick never underwent what were expected to be rocky confirmation hearings because President Obama had named him administrator while Congress was out of session in July 2010. But Ms. Tavenner will face the Republican senators who blasted Dr. Berwick as an advocate and even architect of socialized medicine.

As of early February, Ms. Tavenner’s path looked smoother than that, however. Berwick critic Sen. Orrin Hatch (R-Utah), ranking member of the Senate Finance Committee, said upon her nomination, “I’m glad the White House opted against another end run around the Senate and instead has put forward a CMS nominee that the Senate must thoroughly examine. Any nominee to a federal agency with this much power and authority over the lives of millions of Americans must be carefully scrutinized.” No mention of socialized medicine.

Heather Boyd is a health policy analyst for the government affairs department of AMDA. Keith Haglund is the managing editor of Caring for the Ages.

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