The HITSphere

If you’re interested in following news and trends concerning health information technology (HIT), be sure to check out the HITSphere, "a network of premium weblogs" — including HealthBlawg — "that write content about the healthcare, medical, and clinical informatics and IT industry."  In the words of The Healthcare IT Guy, who manages this network as well,      

The health IT blogs we aggregate and HITSphere community that we’re putting together help to bring out in the open the myriad problems in healthcare IT, but in a way that transcends technology; that’s because health IT is not about technology, it’s about improving medical care itself.

Moratorium for DRA imaging reimbursement cuts?

The Deficit Reduction Act of 2005, enacted in early 2006, is designed to cut $40 billion in federal spending (about $6 billion in Medicare spending) over five years.  Section 5102 of the DRA (P.L. 109-171), effective January 1, 2007, would rationalize payments made to different types of providers for the same imaging services.  Generally speaking, hospitals are paid more than non-hospital providers for the same services, but there are circumstances in which physician offices and imaging centers are being paid more than hospitals.  Thus, this section of the DRA will be affecting the non-hospital providers.

As the effective date draws nearer, legislation has been filed (the "Access to Medicare Imaging Act of 2006") that would delay the effective date for two years, and require a GAO study in the interim.

Freestanding imaging centers have, of necessity, begun planning for the January 1 effective date, but are ever hopeful that their pleas will be heard in Washington.  There is a healthy tradition of delayed and phased implementation of new Medicare reimbursement rules, so it is not unlikely that the imaging centers will obtain some measure of relief.

Stay tuned. 

Proposed ASC and OPPS rule issued by CMS

CMS proposes to change the way it pays ASCs, as required by the MMA.  It will phase in changes in 2006 and 2007 in order to comply with the statutory deadline of January 1, 2008.  Ultimately, CMS proposes to expand the range of services for which ASCs will be paid a facility fee.  It will pay ASCs a projected 62% of outpatient procedure fees paid to hospitals.  The proposed rule went on display on August 7.  The CMS fact sheet provides further detail.

One item of interest in the OPPS portion of the rule is the proposed change in PET reimbursement.  Nonmyocardial PET and PET/CT scans will be taken out of the new technology category and reimbursed at approximately $865 (not including FDG, which will continue to be paid for separately).  Myocardial PET scans will be paid at a lower rate.

Radiation therapy reimbursement will be ratcheted down as well.

EHR and E-Prescribing safe harbors finalized

CMS and the OIG finalized changes to the AKS regulations and Stark regulations, published today.  The HHS press release describes the changes as follows:

The CMS rule creates two new exceptions to the physician self-referral law, which prohibits a physician from referring Medicare patients for certain designated health services (DHS) to entities with which the physician has a financial relationship, unless an exception applies. The law also prohibits the health care entity from billing for Medicare services that are furnished as a result of a prohibited referral.

Similar to the CMS rule, the OIG rule establishes two new safe harbors under the federal anti-kickback statute. Arrangements involving the provision of items and services that meet the requirements of the safe harbors are exempt from enforcement action under the federal anti-kickback statute related to electronic prescribing as well as electronic health records systems.

The rules finalize an exception and safe harbor for the provision of electronic health records information that is more expansive than the exception and safe harbor proposed by CMS and OIG on Oct. 11, 2005. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA) mandated exception and safe harbor for arrangements involving the provision of electronic prescribing technology and services were finalized as proposed.

The exceptions and safe harbors establish the conditions under which:

1. Entities furnishing DHS (and certain other entities under the safe harbor) may donate to physicians (and certain other recipients under the safe harbor) interoperable electronic health records software, information technology and training services.

2. Hospitals and certain other entities may provide physicians (and certain other recipients under the safe harbor) with hardware, software, or information technology and training services necessary and used solely for electronic prescribing.

"These final rules will improve care by giving doctors and other health care providers needed support for interoperable health records that enable them to increase quality and improve efficiency," said CMS Administrator Mark B. McClellan, M.D., Ph.D. "Medicare plays a critical role in this important initiative, and we are committed to its success."

"These important regulations will help promote the adoption of essential health information technology while protecting the federal health care programs and beneficiaries from fraud and abuse," said HHS Inspector General Daniel Levinson.

The exception under the physician self-referral law for arrangements involving the donation of electronic health records technology will protect the provision of software or information technology and training services that are necessary and used predominantly to create, maintain, transmit or receive the electronic health records of the donor’s or physician’s patients.

The scope of donors and recipients under the final rules is considerably broader than in the proposed rules. Donations protected under the exception may be made to any physician by entities furnishing DHS. The exception requires compliance with criteria similar to those listed in the electronic prescribing exception, as well as additional criteria, such as those requiring cost sharing and selection of physician recipients of donated technology.

The corresponding OIG safe harbor is similar. However, consistent with underlying statutory differences, the safe harbor covers a broad array of providers, suppliers, practitioners and health plans when they provide electronic health records technology to physicians and others engaged in the delivery of health care.

Among other conditions, the final rules for arrangements involving the donation of electronic health records technology include a cost-sharing requirement. Recipients are required to pay 15 percent of the cost of the electronic health records technology items and services. In addition, consistent with the President’s goal of adoption of electronic health records technology by 2014, the exception and safe harbor protecting arrangements involving the donation of electronic health records will sunset on Dec. 31, 2013.

CMS has its own press release out as well, and the regulations themselves are available here (CMS) and here (OIG).

CMS releases final Medicare hospital fee schedule for 2007

On August 1, CMS released the acute care hospital inpatient prospective payment system rule and fee schedule for FY 2007.  It will be published in the August 18 Federal Register.  CMS summarized the mammoth rule in one of its fact sheets as follows:

In this rule, CMS identified the goals of

  • making meaningful first steps in diagnosis-related group (DRG) reform in FY 2007, while having further plans to continue reforms in FY 2008;
  • taking needed steps toward more accurate payments, without disrupting hospital payments;
  • ensuring that Medicare does not overpay for some services while underpaying for more severely ill patients and those with complex illnesses; and
  • correcting inappropriate hospital incentives for treating certain types of patients and providing certain types of services, by re-directing a portion of the payments from cases that are currently overpaid to those that are underpaid.

Key Policies for FY 2007 Final Rule:

  • Implement the first year of a three year transition for cost weights, including significant technical improvements to the payment methods based on public comments, and assess potential for further improvements for FY 2008 based on a contractor analysis of issues raised in public comments.
  • Make meaningful refinements to the current CMS classification system to increase recognition of severity of illness, including 20 specific DRG changes;   and
  • Conduct an evaluation with public comments of alternative severity adjustment systems for implementation in FY 2008.

Main Impacts:

  • There will be limited hospital payment impact because of the simultaneous implementation of incremental reforms for cost-based and severity-adjusted payments. 
    • More specifically, payment to all hospitals will increase by an average 3.5 percent in FY 2007 or by more than $3.4 billion.
    • Only 2 percent of hospitals have a projected reduction in payment as a result of the overall rule, and factors other than the DRG changes (particularly certain wage index changes) account for these reductions. 
  • There will be a limited impact on payments in specific DRGs.
    • No DRG weight will decrease more than 5.4 percent in FY 2007.   DRG weight reductions are less than in the proposed rule because of methodological changes suggested by commenters.
    • Nineteen DRGs weights increase by more than 5 percent as compared to the current weight methodology in the first year. 
  • Changes to improve the IPPS are widely-supported because they will help assure that all beneficiaries have access to appropriate, high-quality care. 
    • The Medicare Payment Advisory Commission (MedPAC), an independent body that advises the Congress on Medicare payment policy, supports these reforms.
    • The types of payment changes being implemented were described as “promising” in a recently released Government Accountability Office (GAO) report. 
  • The final rule represents a meaningful step towards DRG reforms that are needed to assure that all beneficiaries have access to quality care, while minimizing disruptions through a multiyear transition and the simultaneous implementation of severity and cost-based payment changes, as suggested by many who commented on the rule.

CMS also issued a press release and another fact sheet (this one focused on "improving accuracy" of DRG payments — gee, do you think that means increasing payments, or decreasing them?).

Not surprisingly, there were some significant differences between the proposed rule and the final rule.  The rule as initially rolled out earlier this year would have resulted in more drastic cuts in Medicare reimbursement; then the comment period opened.  As reported by the N.Y. Times’ Robert Pear,

The industry’s lobbying campaign offers a case study in how to influence the government on complex technical issues that have implications worth billions of dollars to a politically potent sector of the economy.

Rather than just filing comments on the proposed rule, the health care industry mobilized a political campaign that combined advertising and lobbying to beat back the proposed cuts. Lobbyists wrote dozens of letters to the Medicare agency, stoked concern on Capitol Hill, ran advertisements and met with White House officials . . . .

The result?  A moderated series of cuts, of the "improved accuracy" variety and otherwise, and even some rate increases here and there.  The N.Y. Times reports:

The reaction from Wall Street analysts on Wednesday was positive.

“The final rule significantly moderates proposed cuts for cardiac procedures,’’ Citigroup said in a note to investors. Lehman Brothers described the final rule as “a win for cardiac and orthopedic device companies, specialty hospitals and general acute care hospitals.’’ The Prudential Equity Group said the final rule, which takes effect on Oct. 1, was “favorable for device manufacturers’’ . . . .

We’ll have to wait and see whether CMS follows through with promised changes over the next two years, or whether the industry can beat them back even further.

GAO speaks with forked tongue about Medicare physician fee schedule; physicians are on the warpath

In its July 21 report, Medicare Physician Services: Use of Services Increasing Nationwide and Relatively Few Beneficiaries Report Major Access Problems, GAO-06-704, the GAO paints a rosy picture of physician services utilization and reimbursement, as summarized in the report’s abstract:

In general, from April 2000 to April 2005, an increasing proportion of beneficiaries received physician services and an increasing number of physician services were provided to beneficiaries who were treated. This trend was evident in every state’s urban areas and nearly every state’s rural areas. Two other access related indicators–the number of physicians billing Medicare for services and the proportion of services for which Medicare’s fees were accepted as payment in full–increased from April 2000 to April 2005. These increases suggest that there was no reduction in the predominant tendency of physicians to accept Medicare patients and payments. The increases in utilization and complexity of services GAO observed demonstrate that beneficiaries were able to access physician services.

Sounds like everything is copasetic, until you take a look at the GAO’s testimony presented just four days later: Medicare Physician Payments: Trends in Service Utilization, Spending, and Fees Prompt Consideration of Alternative Payment Approaches, GAO-06-1008T.  The abstract of this testimony states:

In 2002, the system Medicare uses to determine annual changes to physician fees–the sustainable growth rate (SGR) system–reduced fees by almost 5 percent. Subsequent administrative and legislative actions averted fee declines in 2003 through 2006. Absent additional actions, fee reductions are projected for 2007 through 2015.

. . .

To moderate Medicare spending for physician services, the SGR system sets spending targets and adjusts physician fees based on the extent to which actual spending aligns with specified targets. If growth in the number of services provided to each beneficiary–referred to as volume–and in the average complexity and costliness of services–referred to as intensity–is high enough, spending will exceed the SGR target. While the SGR system allows for some volume and intensity spending growth, this allowance is limited. If such growth exceeds the average growth in the national economy, as measured by the gross domestic product per capita, fee updates are set lower than the estimated increase in the average cost of providing physician services. A large gap between spending and the target may result in fee reductions. There are two principal reasons why physician fees are projected to decline under the SGR system. Recent growth in spending due to volume and intensity increases has been more than double that allowed under the SGR system, resulting in excess spending that must be recouped through reduced fee updates. Legislative actions that specified minimum updates for 2004 through 2006 have also contributed to future physician fee cuts. These actions, which averted fee reductions, did not revise the spending targets. Therefore, the SGR system must offset the additional spending resulting from the excess volume and intensity and the minimum fee updates by reducing fees beginning in 2007.

Hence the proposed physician fee schedule published in late June, which I noted recognized that physicians are being underpaid, but could not add dollars to the pot absent legislative authorization.

According to AMA Chair Cecil Wilson, the current Medicare formula will result in a 4.4% reduction in physician reimbursements this year and a 37% reduction over nine years,

per the Kaiser Network’s Daily Reports

Organized medicine is now seeking legislative action to prevent this reduction in reimbursement, but while the Daily Reports’ sources say that " ‘[m]omentum is growing’ among lawmakers for the passage of legislation that would prevent the scheduled reduction in Medicare physician reimbursement," such legislative action is sufficiently "radioactive" that it will likely have to wait until after the November elections.