HealthBlawg

The latest health care legislation from the People's Republic of Massachusetts

Once again, Massachusetts is out in front on a number of hot issues.  The legislation, championed by Senate President Therese Murray, was signed by Gov. Patrick earlier this week.  See the full text of AN ACT TO PROMOTE COST CONTAINMENT, TRANSPARENCY AND EFFICIENCY IN THE DELIVERY OF QUALITY HEALTH CARE and the Boston Globe story on the new health care law.  The Globe highlights parts of the act that: 

• Limit pharma industry gifts to providers
• Provide some funding to get physician offices on EHR systems
• Require UMass Medical School to graduate more PCPs
• Institute closer oversight of health insurance premiums

Also of interest are:

• The mandate for hospitals and community health centers to all be on EHRs by 2015
• The requirement that facility with EHRs and CPOE be made a condition of physician licensure
• The HAI and med error reporting requirements, and
• The reintroduction of DON (that's CON for the rest of the country) jurisdiction
  
  • for outpatient projects if the capital budget is $25 million or more (ambulatory projects were deregulated years and years ago), and
    
  • for all ambulatory surgery centers -- not just multispecialty ASCs, and including physician office based ASCs.

A few observations: 

The doom and gloom gang at PhRMA say the gift limits and disclosure requirements will end up marginalizing Massachusetts-based researchers.  Seems unlikely to me.

The $25 million set aside for EHRs is a nice gesture.

More PCPs are key to making the universal health insurance law work -- we have a whole buch of newly-insured folks here in Massachusetts (325,000 or so), and not all of them can access a PCP, because we just don't have enough.

I still have that central health planning gene (thanks to a stint in state government a long while ago), so from the system perspective I am not that put off by the expansion of DON jurisdiction.  I reserve the right to argue differently, of course, in the case of a particular project.

And last of all, let's hope that the HAI and med error reporting system yields some new learning that can help avoid future incidents and errors.

-- David Harlow

Pan Mass Challenge coming up this weekend

This summer has been busy, busy, busy, so my apologies to all of you out there in HealthBlawg land for spotty posting lately.  My clients didn't get the memo about a nice long vacation this month or next, and I've been training for the Pan Mass Challenge, a 2-day, 200-mile bicycle fundraiser for Boston's Dana Farber Cancer Institute, which is coming up this weekend.  Think of me biking this weekend, and hope for nice weather.  If you are so inclined, please consider joining me in supporting the Dana Farber's Jimmy Fund by sponsoring my PMC ride via the link above.  I hope to be back soon to post about Massachusetts' revised DON regulations (that's CON regulations for everyone else) and green health care facility construction guidelines, a recent OIG advisory on a physician-hospital ASC JV, and the steady stream of other health care law and policy developments.

-- David Harlow

Final Medicare 2008 OPPS regulations released by CMS for publication in late November

The 2008 hospital outpatient prospective payment system (OPPS or HOPPS) regulations will be published by CMS in the November 27 Federal Register.  The 2008 OPPS rule went on display earlier this month, and includes a number of significant changes.  The CMS press release identified the following highlights:

  * Linking payment updates to quality measure reporting:  The Medicare Improvements and Extensions Act under Division B, Title I of the Tax Relief Health Care Act of 2006, Pub. L. 109-432 (MIEA-THRCA) requires the Secretary of Health and Human Services to develop measures to make it possible to assess the quality of care (including medication errors) furnished by hospitals in outpatient settings. In CY 2008, CMS is requiring that hospitals report seven consensus quality measures, including five emergency department acute myocardial infarction transfer measures and two surgical care improvement measures. Hospitals that are paid under the Inpatient Prospective Payment System are required to report the applicable hospital outpatient quality measures in order to receive the full OPPS market basket update in CY 2009; otherwise, their CY 2009 update will be reduced by 2.0 percentage points.

    * Expanded packaging for CY 2008:  In order to further efficiencies within the OPPS, CMS is extending the current packaging approach to include guidance services, image processing services, intraoperative services, imaging supervision and interpretation services, diagnostic radiopharmaceuticals, contrast agents, and observation services.  These groups of supportive ancillary services are integral to the performance of primary diagnostic and treatment procedures, so that packaging payment for these additional services results in larger payment bundles that will provide hospitals with the flexibility to manage their resources efficiently.

    * Introduction of composite ambulatory payment classification (APC) groups:   In this final rule with comment period, CMS is also adopting the use of composite APCs to encourage efficiencies by providing one bundled payment for several major services. Composite APCs encourage even greater hospital efficiencies than expanding packaging by making a single payment for the totality of hospital outpatient care provided during an encounter. CMS will provide payment for extended outpatient visits with observation care through two composite APCs and will also utilize composite APCs to pay for low dose rate prostate brachytherapy and cardiac electrophysiologic evaluation and ablation services.

    * Ensuring Medicare and its beneficiaries benefit from device credits:  Medicare payment and beneficiary liability for certain device-dependent APC groups will be reduced when a hospital receives a substantial partial credit from the manufacturer toward the cost of a replacement device implanted in a procedure.  This parallels Medicare’s inpatient hospital policy and extends the current OPPS payment reduction policy when a hospital replaces an implantable device without cost.

-- David Harlow

2008 HOPPS (hospital outpatient prospective payment system) and ASC payment system changes and rates released today by CMS

Today, CMS issued proposed changes to the Hospital Outpatient Prospective Payment System and CY 2008 rates, as well as proposed changes to the ASC payment system and CY 2008 rates. 

Peruse the text of the 2008 HOPPS regulations and ASC regulations, HOPPS fact sheet, and the ASC fact sheet.  Here are just a few highlights to whet your appetite.

Regarding hospital outpatient PPS, CMS says:

The proposed reforms in this rule address . . . growth [in hospital outpatient costs and volume] by focusing the OPPS on value-based purchasing, proposing incentives to improve quality and promote efficiency. Specifically, this rule includes an expansion of CMS’ efforts to measure and reward quality through the adoption of quality measures specific to the HOPD.  This rule also encourages efficiencies by focusing provider attention on how hospital outpatient services are provided, proposing larger payment bundles that would give hospitals greater flexibility in managing their resources.  Both efforts focus on value, working to contain growth in OPPS expenditures, to improve quality, and ultimately, to make health care more affordable and accessible for Medicare beneficiaries.

. . .

In this rule, CMS is proposing new measures that are specific to hospital outpatient services.  Hospitals that fail to report data for these outpatient-specific measures would incur a reduction in their annual OPPS payment update factor in CY 2009 by 2.0 percentage points. This proposal encourages value by tying the payment incentives to participation in quality reporting.  A similar quality reporting program for hospital inpatient services, implemented in fiscal year (FY) 2005 has been overwhelmingly successful.  Fewer than four percent of hospitals did not receive the full IPPS update amount for FY 2007 because they failed to report quality measures.

There will be ten measures initially; additional measures to be rolled out in the future, as is happening now in the wonderful world of PQRI.  CMS is seeking comments on the next 30 measures. 

The first ten proposed quality measures include five ED acute MI transfer measures, two surgical care improvement measures, and one measure each for the treatment of heart failure, community-acquired pneumonia, and diabetes.

Here is the ASC overview per the fact sheet:

The final and proposed rules are intended to encourage quality and efficient care in the most appropriate outpatient setting given the rapid spending growth for services and the large variations in the use of services.

Translation from CMS-speak:  Generally speaking, ASC reimbursement is being cut by about 1/3; cuts to be phased in over four years. 

Other ASC highlights include a tweak to the Stark rules:

The final rule provides for Medicare to pay ASCs separately for covered ancillary services that are provided in an ASC to beneficiaries. To be eligible for payment, the services must be integral to covered surgical procedures and must be provided immediately before, during or immediately after a covered procedure. Covered ancillary services that are eligible for separate payment include: radiology services, drugs and biologicals that are separately payable under the OPPS, devices that are eligible for pass-through payments under the OPPS, brachytherapy sources, and corneal tissue acquisition.

CMS is not proposing to change these policies in the OPPS/ASC proposed rule for CY 2008, but is proposing to revise the Stark Law definitions of “radiology and certain other imaging services” and “outpatient prescription drugs” to exclude those radiology services, and imaging services, and drugs that are covered ancillary services. Therefore, physicians would be permitted to refer these services to ASCs in which they had a financial interest, and the ASCs would be permitted to bill Medicare for these services, without violating the self-referral prohibitions.

Under the final rule, payment for a covered ancillary radiology service is made to ASCs at the lesser of the ASC rate or the amount of the nonfacility PE under the MPFS. To ensure that no duplicate payment is made, only ASCs may receive separate payment for the facility resources required for the covered ancillary radiology services provided in ASCs. This policy will ensure that payment for all ancillary radiology services, whether packaged or separate, is made to the ASC, thereby providing appropriate payment to the ASC for those radiology services that are essential to the delivery of safe, high quality surgical care.

Under the applicable statute, ASC payment rates will be inflation-indexed beginning in 2010.

-- David Harlow

      

2007 Medicare OPPS and ASC fee schedule finalized

CMS released the 2007 hospital outpatient prospective payment system (OPPS) and ASC rule and fee schedule last week.  It went on display November 1; it will be published in the coming weeks with an effective date of January 1, 2007.

UPDATE 11/27/06: The final rule was published Friday 11/24 in the Federal Register.

As is the case across many of CMS's activities lately, one overarching emphasis of the rule is quality.

An excerpt from the CMS press release, available in full here, follows:

CMS estimates that hospitals will receive an overall average increase of 3.0 percent in Medicare payments for outpatient department services in 2007 due to the changes in this final rule.

While the market basket update accounts for increases in the costs of providing a service, much of the growth in outpatient spending results from increases in utilization and complexity (volume and intensity).  CMS estimates that between 2005 and 2006, hospital outpatient expenditures increased by nearly 12 percent, mainly due to growth in the volume and intensity of services.  CMS projects that the expenditures under the OPPS in CY 2007 will be approximately 9.2 percent higher than the estimated CY 2006 expenditures.  That rate of growth in expenditures is of great concern to CMS, not only because of its impact on all taxpayers, but especially on beneficiaries whose monthly premiums cover 25 percent of Part B expenditures.

In order to promote greater value in the purchase of hospital outpatient services for Medicare beneficiaries, the final rule ties OPPS rate increases to the reporting of quality measures beginning in 2009.  The final rule announces CMS’ plans to develop additional quality measures that are specifically appropriate for hospital outpatient care, and will require hospitals to report the outpatient-specific measures beginning in CY 2009.

“In this final rule, we are taking one more step toward rewarding hospitals for providing quality care, not just in the inpatient setting, but also in the outpatient department,” said [Acting CMS Administrator Leslie] Norwalk.  “While our primary focus is on quality care for Medicare beneficiaries, we expect that our quality initiatives will stimulate better care for all patients who come to the hospital outpatient department.”

The final rule also includes an expansion of the hospital reporting of additional quality measures for inpatient services beginning in FY 2008, based on measures endorsed by the National Quality Forum (NQF) and supported by the privately-led Hospital Quality Alliance (HQA).

-- David Harlow

Bush signs executive order on HIT and transparency

As reported in the Washington Post, President Bush signed an executive order yesterday, "Promoting Quality and Efficient Health Care in Federal Government Administered or Sponsored Health Care Programs."  This is the latest in a series of administration initiatives regarding EHR interoperability, price transparency and quality transparency that are intended to promote better decisionmaking by patients in CDH plans.  (See, e.g., the CMS posting of price information for certain ASC procedures and hospital admissions.) 

One of the most immediate effects of this order on health care providers, health plans and health insurance issuers is that, to the extent they have not already been incorporated into federal health care program contracts, EHR interoperability standards (as defined by HHS) will begin to apply to all EHR systems implemented, acquired, or upgraded after January 1, 2007.

"I guess if I had to summarize how I view it, I would say there's a choice between having the government make decisions or consumers make decisions. I stand on the side of encouraging consumers," Bush said.  ". . . Health-care policy ought to be aimed at bolstering the consumer, empowering individuals to be responsible for health-care decisions -- is kind of the crux about what we're talking about."

While it is certainly valuable to encourage federal agencies to share information on health care quality and costs, the one element lacking in this new world of transparency is a significant number of consumers who are price-sensitive.

As other developments promote the more widespread diffusion of HSAs and HDHPs, there will be more and more price-sensitive health care consumers.  Indeed, the executive order also directs federal agencies to promote "pay for performance" (which it defines as including CDH) to the extent consistent with current law. 

However, as individuals become more directly responsible for health care spending, many are likely to delay or avoid care so as to delay or avoid the expense.  Handing the reins over to individuals through various forms of CDH may be laudable in some respects; but employers, insurers and providers will lose the ability to ensure that care is obtained early and often when appropriate, thereby ensuring that the care that will be sought later in the day will be more expensive and, perhaps, futile in some instances.

This executive order is positioned by the White House as part of the administration's health care cost reduction and quality improvement strategy, including association health plans (multistate plans to be established by small employers under legislation that has been stymied thus far by the big payors) and EHR systems (which are likely to improve quality but not reduce cost, thanks to the technological imperative).

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.