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Binder No. 15 DPC [Domestic Policy Council] Documents: Medicare Policies 04/16/99
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Binder No. 15 DPC [Domestic Policy Council] Documents: Medicare Policies 04/16/99
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BACKUP: MEDICARE POLICIES
April 16, 1999
COMMISSION'S BBA EXTENDERS: ($51 billion over 10 years)
For 2003-2007:
Reduce hospital market basket update by 1.1 percentage points
Extend hospital PPS capital reduction of 2.1 percent
Extend the 15 percent hospital PPS-exempt capital reduction
Reduce PPS-exempt hospital update using BBA relationship between hospital's operating
costs and hospital's target amount
Reduce skilled nursing facility (SNF) update by 1 percentage point
Reduce hospice update by 1 percentage point
Reduce OPD update by 1 percentage point
Reduce ambulance payment updates to CPI minus 1 percentage point
Reduce prosthetics and orthotics updates by 1 percentage point
Freeze lab updates, DME updates, and PEN payments
Reduce ambulatory surgical centers update to CPI minus 2 percentage points
Potential Changes:
Extend policies through 2009 to get additional savings
Home health: put back update factors that were lowered in Fall 1998 home health bill
Therapy caps: Raise from $1,500 limit to $2,000
Hospital market basket update: From 1.1 to 1.0 for 2003-09
Rural hospital market basket: From 1.0 to XX
DRAFT: Medicare Provider Changes
BBA Extenders included in Commission Package, except:
Extend through 2009 (adds $7 billion in savings relative to 2007)
Hospitals
Updates: Drop President's Budget proposal to reduce hospital market basket (Cost
relative to PB: about $9 billion over 10)
In extenders for 2003 - 2009,
-
General hospital market basket update reduction of 1.0 (rather than 1.1)
-
Rural hospital market update reduction of 0.5
Cost: $12.1 billion over 10 years relative to BBA extenders through 2009
Indirect Medical Education: Change the reduction in IME payments in 2000 to (a) 6.5
percent or (b) 6.25 percent (instead of 6.0 percent).
DSH: Carve out full DSH payments from Medicare+Choice payments, and make full
DSH payment directly to hospitals for Medicare+Choice enrollees, effective 1/1/01.
Hospital Outpatient: Provide for a transitional (3 years, 6 months) add-on adjustment to
Medicare OPD PPS payment amounts for the following groups of hospitals: low volume
hospitals; low-volume rural; low-volume urban; teaching hospitals with more than 100
residents or with no DSH; and PPS-exempt hospitals (including cancer hospitals).
Skilled Nursing Facilities
Complex case adjustment. Increase the Federal portion of per diem payments by 1
percent for approximately 9 specified RUGs with high non-therapy ancillary
costs/medically complex cases. This policy would be effective until the Secretary refined
RUGs to deal with non-therapy ancillary costs/medically complex cases at which time
this temporary add-on policy would end.
Outlier policy development. Authorize the Secretary to develop and implement a
budget-neutral outlier policy for SNFs.
Therapy Caps: Increase each of the two therapy caps (physical/speech therapy and
occupational therapy) from $1,500 to (a) $2,200 per year, effective 1/1/00 (approximate
$1 billion over 5-years); or $3,000 per year, effective 1/1/00. (approximate $2 billion
over 5-years); or create a third therapy cap, separating speech and physical therapy with
each having a limit of $1,500 per year.
Home Health
Update: Eliminate the reductions, established by section 5105(d) of OCESA, in the
home health market basket increase of 1.1 percentage points for each of fiscal years 2000,
2001, 2002 and 2003.
Interim payment system: Eliminate half (i.e., 7.5 percentage points) of the scheduled
15 percent reduction in the home health per visit cost limits and per beneficiary limits in
effect on 9/30/00.
Old agency designation (administrative): Effective 10/1/99, allow long-existing home
health agencies (i.e., those in existence since 1980) that had less than a 12 month cost
reporting period ending in the FY 1994 base year because the agency changed the end
date of its cost reporting period during fiscal year 1994, to choose to be treated as an
"old" agency for application of the per beneficiary limits.
Managed Care:
Risk adjustment (administrative actions): (a) Change the share in the risk adjustment
that is based on demographics; (b) delay full phase-in of risk adjustment until 2006; (c)
delay full phase-in of risk adjustment until 2007. Note: Delays in risk adjustment affect
the ability to implement competitive managed care payment policies.
DRAFT
ovider
Proposal
Supporting
Legislative or
Comments
Type
Organizations (1)
Administrative
Famitals
Repeal the Transfer Provision Thomas
AHA
Legislative
The transfer provision requires Medicare to
- -Teaching,
Runk
$ 1.3/5
one of few
Possible
reduce payments to hospitals that transfer
patients to another hospital, or unit, skilled
4.2/10
that
Could
nursing facility, or home health agency after a
Delang
shorter than average length of stay. The transfer
policy applies to only ten DRGs. Concern *bout
Corpitals
Limit Impact of Outpatient PPS
AHA
Legislative
While HCFA is considering various expending proposals to
B. Neutral= Corridors.
limit the impact of the OPD PPS, existing
Transitier
gets help to Tenal Teaching. +
Budget Ref
authority would have this happen on a budget
neutral basis. AHA is asking for new spending
provision
Establishment of a Clinical Education Trust
AHA
Legislative
which they estimate will be $1.9 billion Rule: 6/30
Fund that Both Private and Public Payers
AAMC
Contribute
Hospitals
Make Medicare+Choice Payment Rates
AHA
Legislative
Would like Congress to make additional dollars
More Uniform Nationwide
7
available so blend works as Congress intended.
Note that in 2000, blend rates in effect in 63%
of counties.
Hospitals
Carve-Out DSH Payments from Medicare
AHA
Legislative
Would like payments to go directly to hospitals
Payments to Medicare- Plans
AAMC
that incur the cost of caring for those who
Allied :20
Saving.
cannot pay.
Ours
paysica 2000
Hospitals
Eliminate the Volume Expenditure Cap
AHA
Legislative
The statue currently requires us to develop a
Included in the Proposed Outpatient
mechanism for controlling volume. HCFA could
Prospective Payment System Regulation
potentially delay imposition of a volume
expenditure cap for a few years.
ovider
Proposal
Supporting
Legislative or
Comments
Type
Organizations (1)
Administrative
Hospitals
Remove the $510 Million Cut in Outpatient
AHA
Legislative
Copayment would be calculated according to a
Reimbursement Included in the Proposed
Z
different formula resulting in higher beneficiary
Outpatient Prospective Payment System
Regulation. -Came
5.66/5
copayments. Say that a technial 6
median
error in the law Ang Charges.
Tenching
Eliminate IME Cuts Included in the BBA
AAMC
Legislative
Included in the BBA, the IME adjustment rate
Hospitals
keep at
6.0 00
6.0
00
5.5'01
*
was reduced from 7.0 percent to 5.5 percent
6-6, lower step.
over 4 years.
Traching
Eliminate DME and IME Caps Included in
AAMC
Legislative
Homitals
the BBA
Home Health
Grant home health agencies overpayment
NAHC
Legislative
Antencies
forgiveness for payments in excess of their
Flex, $ 100 $
IPS limits.
Home Health
Under IPS, develop outlier payments for
NAHC
Legislative
Agencies
sicker patients (or some mechanism for
patient or case-mix adjustments).
X
Home Health
Eliminate the mandatory October 1, 2000,
NAHC
Legislative
Agoucies
15% reduction in the limits.
2,
$ Ease 45:11 $ 16, 11:0
Home Health
Increase home health per visit cost limits to
NAHC
Legislative
Agencies
112% of the mean, rather than 106% of the
median, lift the application of the freeze to
the cost limits, and require that the data
used to calculate the limits be based on all
types of home health agencies, including
hospital-based programs.
$8-10 As
vovider
Proposal
Supporting
Legislative or
Comments
Type
Organizations (1)
Administrative
Time Health
Reimburse agencies the full costs agencies
NAHC
Legislative
Americies
will incur in implementing and continued
management of OASIS.
Phone Health
Delay OASIS by requiring HHAs to begin
NAHC
Legislative
Americies
implementing OASIS based on the amount
of advance time and data actually needed
for the development of a home health PPS.
Home Health
Restore the full market basket update to
NAHC
1
Legislative
Amencies
home care payments.
$900million/5
Home Health
Oppose coinsurance for Medicare and
NAHC
Legislative
Currently, there is no copayment in Medicare
Americies
Medicaid home health services.
home health However, the Medicare
Commission is proposing a 10 percent
copayment.
Home Health
Repeal or significantly alter the surety bond
NAHC
Legislative
The surety bond proposed rule is being
Anencies
requirements, applying them only to
developed for publication later this year. The
agencies with poor records of repayment to
rule will include a $50,000 bond and will not be
Medicare and/or Medicaid or to new
effective until PPS begins on 10/1/00.
agencies wishing to participate in the
program(s). Requirements should be
reasonable so that legitimate, reputable
home care agencies can meet them.
covider
Proposal
Supporting
Legislative or
Comments
Type
Organizations (1)
Administrative
Health
Enact homebound definition that ensures
NAHC
Legislative
Currently, eligibility requirements include
Amencies
access and eligibility to the home care
physician certification that the patient is under a
benefit based upon the beneficiary's
physician's care; a plan of care developed by a
functional limitations and clinical condition.
physician; physician certification that the patient
is confined to the home; and need for skilled
nursing care on an intermittent basis, physical
therapy, speech-language pathology, or
continued occupational therapy.
The BBA requires the Secretary to report to
Congress on the study of the homebound issue
and make recommendations by 10/1/98. This
report is currently under clearance in the
Secretary's office. We recommend retaining the
current homebound policy.
Insue Health
Provide HCFA with authorization to issue
NAHC
Legislative
Anencies
emergency no-interest payments to health
care providers where Medicare claims
processing, payment, and payment rate
updates are delayed as a result of
incomplete or erroneous Y2K computer
changes. Reimbursement limits should be
adjusted and payments for home health
agencies to allow completion of Y2K
compliance efforts.
Rund
PT,
Thomas:
speech aperate from Occap
4500 M 3000 can be fungible
rovider
Proposal
Supporting
Legislative or
w/iFacilig Comments
Type
Organizations (1)
Administrative
PrE RBA $909
ed
Legislate exceptions to the therapy caps
AHCA
Legislative
These groups had tried in the 105th Congress to
Thing
AOTA
eliminate the caps entirely, but have focused their
Familities
BRA per persons
APTA
Strict
efforts in the 106th on backing the Grassley bill
ASHA
Cap John person-
which would allow exceptions to the caps.
AAHSA
OACT scores the bill at about $2.6 billion over
Now per facility
the 5 year period, 2000-2004.
Shilled
Autlier policy for medically complex
AHCA
Legislative
These groups are unhappy with the way the SNF
Nursing
patients
only
NSCA
to
PPS rates account for non-therapy ancillary
Familities
AACP
True
How much
services (including drugs) and support higher
NSCLC
10-cases.
PPS payments for medically complex patients.
But No abrolysis
percle
BNroom/year
but liers
par diem
The BBA does not specify an outlier policy for
Shilled
Exclude non-therapy ancillary services from
AHCA
Legislative
This is another proposal supported by/industry
SNFs. RUGS shortaming
Morning
the PPS rates.
NASL
groups to increase payments for non-therapy
Frailities
AACP
ancillary products and services. The BBA
Drugs:-
specifically requires that these types of services
be bundled into the rates. A December GC
memo states that HCFA can not do this
P
administratively.
Si
Fight reductions in baseline spending
AHCA
Legislative
This proposal reflects the belief that the amount
Nameing
NASL
of savings from the SNF PPS provision in the
Familities
NSCA
BBA has increased from about $9 billion to
about $16 billion because CBO has adjusted their
baseline. CBO has not, however, rescored the
provision.
Short-term: Pump in $ Rogs.
$2.4= upper Band
X
Long+am: Long Onthier poing authorization
to Jevelop
Provider
Proposal
Supporting
Legislative or
Comments
Type
Organizations (1)
Administrative
naged
Delay implementation of M+C risk
AAHP
Legislative
In support of this proposal, AAHP and HIAA
adjustment
HIAA
note concerns with using an in-patient based
ganizations
BCBS
methodology and with data collection and
transmission. HIAA suggests a demonstration of
the methodology and capping the impact at 1%
of payments. AAHP also noted the exclusion of
1-day hospital stays.
Managed
Implement M+C risk adjustment on a
AAHP
Administrative
AAHP characterizes this as one element of a
budget neutral basis
HIAA
"fairness gap", indicating that relative to
anizations
Medicare FFS payments, the national average
7.6% impact of implementing risk adjustment
contributes to M+C payments being only 82% of
FFS in 2004. The starting point for AAHP's
analysis is that pre-BBA rates were 95% of fee-
for-service costs. However, taking favorable
selection into account, they were actually in the
range of 102-110% of fee-for-service costs.
maged
Modify method for updating M+C rates --
AAHP
Legislative
One approach to increasing payments would be
no very specific proposals
HIAA
to drop the 0.5% reduction in the update in 2001
ganizations
0 AAHP suggests linking rates more
and 2002. Additionally, the reductions for 1998-
closely to local FFS spending
2000 could also be given back in 2001.
0 HIAA suggests assuring that they cover
medical inflation
covider
Proposal
Supporting
Legislative or
Comments
TOTAL P.08
Type
Organizations (1)
Administrative
aged
Modify M+C "user fee" provisions so M+C
AAHP
Legislative
Administration's FY2000 budget includes a
e
plans are not the source for all funding for
HIAA
proposal to increase the authorization from $100
unizations
M+C information activities
million to $150 million for FY 2000 and beyond
Alternative funding mechanisms were considered
and rejected during the FY2000 process.
(1)
Organizations that have expressed support in public statements such as Congressional testimony or press releases or in meetings
with HCFA. Other organizations may also support these proposals.
G:VENNINGS.WPD