Long-term cuts loom, despite short-term gains
By Linda Rouse O’Neill
HIDA publishes comprehensive reimbursement policy updates on both Medicare and Medicaid each year, tracking annual changes that will likely influence provider behavior. Last month, we examined some important Medicaid trends. This column will take a look at key Medicare insights, factoring in federal and individual market implications.
2016 Medicare reimbursement outlook
The Centers for Medicare & Medicaid Services (CMS) implemented final 2016 annual Medicare payment regulations for acute and long-term care providers on Oct. 1, 2015, coinciding with the federal fiscal year; laboratory diagnostics and physician reimbursement changes begin at the start of every calendar year. Once again, this year’s payment and regulatory policies are a mixed bag when looking at comparing care settings across markets:
Hospitals
- Hospitals that successfully participate in CMS’s Meaningful Use and Inpatient Quality Reporting programs will receive, on average, a 0.9 percent payment increase.
- Facilities are also required to report on 29 individual quality measures in outpatient settings or face a penalty of up to 2 percent of reimbursements.
- The maximum penalty hospitals can receive under the Hospital Readmissions Reduction program remains 3 percent.
Physicians
- In April 2015, Congress repealed the Sustainable Growth Rate (SGR) formula used to control physician payment rates. Until a new payment system is established in 2019, physician reimbursements will increase by 0.5 percent each year.
- In 2019, providers will have to choose between two new fee-for-service payment systems that seek to reward quality, efficiency, and innovation. Reimbursement adjustments could range from – 4 percent to + 12 percent depending on performance.
- CMS made significant changes to Stage 3 of its Meaningful Use electronic health record (EHR) incentive program, which begins in 2017 for early adopters. EHR standards continue to prove difficult for some doctors to achieve, and these changes make it easier to meet IT standards and broaden hardship exemption criteria.
Skilled Nursing
- Skilled nursing facilities (SNFs) will receive a 1.4 percent payment increase in FY 2016.
- CMS currently requires nursing homes to report on 34 quality measures calculated using data from the Minimum Data Set (MDS), yet this information is not yet tied to reimbursement rates. Beginning FY 2017, failure to report this information will result in a 2 percent reduction to the SNF annual payment update effective Oct. 1, 2016.
Laboratory Diagnostics
- In 2014, Congress passed the Protecting Access to Medicare Act (PAMA), which will refine Medicare payment rates to all labs paid under the Clinical Lab Fee Schedule (CLFS) based primarily on private payer rates. The policy, scheduled to go into effect Jan. 1, 2017, is expected to result in significant payment reductions.
- Some lab services are bundled with base payments in certain settings such as outpatient. Additionally, CMS is evaluating a number of bundling pilots for future policy proposals.
HIDA’s Medicare 360°: 2016 Medicare Reimbursement Analysis and Outlook provides payment details for other care settings, such as home health agencies and ambulatory surgical centers. For more information on HIDA reports, email HIDAGovAffairs@hida.org.