Medicare Reimbursement: Federal Government Funding Extension Includes a Boatload of Medicare Changes

The government shutdown fiasco is having an impact on Medicare spending and reimbursement. But the crucial details are being buried in the legislative paperwork. So we decided to ferret them out for you.

The Continuing Resolution
On Feb. 6, 2018, the House passed a special kind of appropriations bill known as a Continuing Resolution (CR) to extend federal government funding until March 23. Among the CR’s government-wide spending provisions are Medicare changes from other bills that passed the House or Senate. Here’s an overview of the key changes.

Medicare Part B
The CR incorporates changes from the Medicare Part B Improvements Act, including:

• Codification of recent CMS changes on when leases violate Stark Law regulations and when signatures are required to document terms of legal arrangements;

• Creation of temporary transition service and education Medicare payment for home infusion starting in 2019; and

• Green light for dialysis providers to seek outside accreditation from Medicare-approved organizations to qualify billing Medicare end-stage renal disease services.

Medicare Extenders
Key items in the CR provisions extending Medicare programs:

• Codification of new reporting and other requirements designed to ensure that beneficiaries get the diabetic testing supplies they need;

• Permanent repeal of Medicare payment cap for therapy services starting Jan. 1, 2018;

• Reduced threshold for targeted manual medical review process from $3,700 to $3,000;

• Permanent reauthorization of Medicare Advantage (MA) Special Needs Plans (SNPs) for vulnerable populations as well as revisions to Dual-Eligible SNPs and Chronic Condition SNPs;

• Five-year extension of 2% urban, 3% rural and 22.6% rural ground ambulance add-on payments through Dec. 31, 2022;

• Addition of providers and suppliers of ground ambulance as new category subject to annual cost reporting requirements;

• Two-year extension of funding for quality measure endorsement, input, selection and reporting requirements;

• Two-year straight extension of:
  • Geographic Cost Indices floor until Jan. 1, 2020;
  • Medicare-dependent hospital program until Oct. 1, 2019; and
  • Increased inpatient hospital payment adjustment for low-volume hospitals until Oct. 1, 2019;

• Five-year extension of home health rural add-on until Oct. 1, 2022, along with new methodology for targeting add-on payment to areas with population density of six or fewer people per square mile;

• Requirement that HHS Secretary reform the home health payment system and implement a 30-day episode for payment starting Jan. 1, 2020;

• Technical corrections to Quality Payment Program under MACRA, including changes to definition of “covered professional services” and giving CMS three more years to ensure gradual and incremental transition to performance threshold; and

• Making coverage of speech generating devices under medical equipment, which was due to expire in 2018, permanent.

CHRONIC Care Act
The CR includes changes affecting telehealth, MA plans and Accountable Care Organizations (ACOs) contained in the CHRONIC Care Act:

• Letting providers utilize telehealth for home dialysis patients;

• Letting MA plans offer a wider array of targeted supplemental benefits to chronically ill enrollees starting in 2020;

• Letting MA plans offer additional telehealth benefits in their annual bid amounts beyond the services that currently receive payment under Part B starting in 2020;

• Letting ACOs expand their use of telehealth services;

• Expanding use of telehealth for stroke patients starting in 2021;

• Giving Medicare ACOs the option to have their beneficiaries assigned prospectively at start of a performance year and beneficiaries the option to voluntarily align to an ACO in which the beneficiary’s main primary care provider participates; and

• Creating new voluntary ACO Beneficiary Incentive Program letting two-sided risk ACOs make incentive payments to all assigned beneficiaries who receive qualifying primary care services.

Public Health
The CR includes provisions extending funding for public health programs:

• Two years of funding for community health centers;

• Two years of funding for the National Health Service Corps and Teaching Health Center;

• Two years of funding for the Special Diabetes Program for Type 1 Diabetes and the Special Diabetes Program for Indians;

Cuts to Finance Spending Increases
The CR lists specific health-related fiscal offsets to finance the above spending enhancements, including:

• Modified payments for early discharges to hospice care;

• Cuts in pay for non-emergency ambulance transports of kidney patients;

• Extending the target for relative value adjustment for mis-valued codes for one more year;

• Delaying CMS’s authority to terminate contracts for certain MA plans through the 10-year budget window;

• Rescinding unspent money from the Medicare and Medicaid Improvement Funds;

• Cutting pay for outpatient physical and occupational therapy services by a therapy assistant to 85% of the rate that would have otherwise been paid for by a physician;

• Reducing long term care hospital (LTCH) payments by delaying the current law blended payment rate for two years and reverting back to the FY17 blended rate of 50% site neutral and 50% LTCH;

• Reducing the LTCH market basket update for FY18 through FY26 by 4.6%;

• Changes to Medicaid and CHIP’s third-party liability requirements;

• Requiring state Medicaid programs to count lottery winnings for determining an individual’s income eligibility under Medicaid;

• Eliminating the Medicaid Disproportionate Share Hospital (DSH) reductions scheduled for FY18 and FY19 under current law;

• Requiring $6 billion in additional DSH reductions to offset the cost of eliminating the FY18 and FY19 reductions—$3 billion in FY21; $2 billion in FY22; and $1 billion in FY23;

• Setting the FY20 market basket update for home health agencies at 1.4%; and

• Includes biosimilars in the Medicare Part D coverage gap discount program.

Takeaway: Few, if any, of these spending changes will have a direct impact on labs—especially those whose involvement with Medicare is limited to billing for lab tests under Part B. By the same token, the changes may have major, albeit indirect, effects on some labs, particularly those affiliated with hospitals and integrated health care organizations.