Provider Groups Outline Hopes for Upcoming Payment Rules

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By Michael D. Williamson

April 15 — Medicare should tackle a number of thorny provider issues in payment proposals that are expected to be released in the coming weeks, according to several industry groups.

Hospitals, for their part, want the Centers for Medicare & Medicaid Services to introduce a payment adjustment for admitting patients with low socioeconomic status, Ivy Baer, senior director of health-care affairs and regulatory counsel at the Association of American Medical Colleges (AAMC), told Bloomberg BNA April 15.

This is a big issue for the hospital industry and the AAMC would like to see the adjustment introduced in an upcoming hospital payment rule, Baer said.

Three payment proposals, covering inpatient hospitals, hospice care and skilled nursing facilities (SNFs), are under review by the White House Office of Management and Budget.

Nursing Homes

Nursing homes are waiting to see if the CMS makes any changes to how they are required to report quality measures, Michael Cheek, senior vice president of reimbursement policy and legal affairs at the American Health Care Association, a SNF industry group, said April 15.

Under the Improving Medicare Post-Acute Care Transformation (IMPACT) Act that President Barack Obama signed in October 2014 (194 HCDR, 10/7/14), nursing homes will need to submit outcomes on at least three additional quality measures to the CMS in fiscal 2017, Cheek told Bloomberg BNA.

“We're keenly interested to see” if the agency will mandate quality reporting on measures beyond the three the CMS is expected to require in the fiscal 2017 SNF payment rule, Cheek said.

As for the quality measures themselves, Cheek said the CMS has previewed which indicators it may require reporting on in 2017. According to Cheek, examples of the indicators nursing homes could be required to submit quality outcomes on include:

  •  improvement in self-care;
  •  90-day cost per beneficiary;
  •  discharge to community;
  •  potentially preventable readmissions after SNF discharge; and
  •  mobility improvement.


Other examples of quality measures the CMS could mandate reporting on include mobility at discharge, drug regime review, pain management following discharge, influenza vaccine and antipsychotics started following admission, according to Cheek.


The IMPACT Act also required health information technology systems to become interoperable between different types of providers, Cheek said. This could take the form of interoperability between two different post-acute care providers or a post-acute care provider and a hospital.

“We're supposed to have interoperable data by fiscal year 2018,” Cheek said, adding the AHCA expects, and hopes, the nursing home payment rule to have more detail about this requirement.

In an ideal world, the CMS would allow for a substantial phase-in for interoperability, Cheek explained. He noted that there haven't been payment incentives for post-acute care providers to become interoperable and because of that the industry is decades behind other providers.

“We see the value in this, but we need to know precisely what CMS wants this to look like and how it will be developed,” Cheek told Bloomberg BNA.

Hospice Care

Hospice providers, for their part, would like the CMS to remove remaining access barriers, Joy Cameron, vice president of policy and innovation at the Visiting Nurse Associations of America, told Bloomberg BNA April 15.

The VNAA is an industry group representing nonprofit hospice and home-care providers

For example, Medicare Advantage doesn't cover hospice care, Cameron said, and this creates an access issue for beneficiaries.

Other Hospital Issues

Hospitals remain concerned about the payment effects of the two-midnight policy, Joanna Hiatt Kim, the American Hospital Association's vice president of payment policy, told Bloomberg BNA April 15.

Under the two-midnight policy, which started in October 2013, Medicare Part A payment generally isn't appropriate for hospital stays not expected to span at least two midnights. Starting in calendar 2016, the CMS allows inpatient admissions that span fewer than two midnights to be payable under Medicare Part A on a case-by-case basis based on the judgment of the admitting physician.

When it initiated the policy, the CMS also cut inpatient payments to hospitals by 0.2 percent (or roughly $220 million nationally), because the two-midnight rule would actually increase Part A reimbursements.

Hospitals believe that the CMS has never provided a rational basis for the 0.2 percent payment reduction that accompanied the adoption of the two-midnight rule, Robert Roth, a Washington-based attorney at Hooper, Lundy & Bookman PC, told Bloomberg BNA April 15.

Hospitals sued the health and human services secretary over the pay cut. In that case, the U.S. District Court for the District of Columbia ordered the CMS to explain its rationale for the 0.2 percent pay reduction by April 27 (Shands Jacksonville Med. Ctr. v. Burwell, D.D.C., notice issued 3/17/16) (53 HCDR, 3/18/16).

The CMS may offer its court mandated explanation for the pay cut in the upcoming hospital payment rule, Kim said.

Roth, warned, however, that regardless whether the payment reduction associated with the two-midnight rule goes away, the CMS could always try to adopt some other kind of payment reduction.

“You really never know what the agency will do next,” he said.

Hospital-Owned Physician Offices

Hospitals would also like to see further clarification on Section 603 of the Bipartisan Budget Act of 2015, Chip Kahn, president and chief executive officer of the Federation of American Hospitals, an industry group representing for-profit entities, said April 15.

Section 603 equalizes Medicare payment rates for hospital outpatient departments and hospital-owned physician offices and was meant to address the practice of hospitals acquiring physician offices and then billing patients under the outpatient prospective payment system, which has higher reimbursement rates than the Medicare physician fee schedule.

The reimbursement changes will apply to hospital-owned physician practices acquired or opened since the date the law was signed—Nov. 2, 2015—that are located farther than 250 yards from a hospital's main campus (212 HCDR 212, 11/3/15).

Hospitals need instructions and specific directions on Section 603, Kahn told Bloomberg BNA. How will the CMS define what is 250 yards away from a hospital, Kahn asked rhetorically.

The CMS should also define what constitutes a hospital campus in an upcoming payment rule. “All of the details like that will be important,” Kahn said.

To contact the reporter on this story: Michael D. Williamson in Washington at

To contact the editor responsible for this story: Janey Cohen at

For More Information

A list of all rules under review at the Office of Management and Budget, including specifics about the inpatient, hospice and SNF payment proposals, is at