United States: Ways and Means Committee Approves Bill to Make Reforms to Medicare Hospital and Other Payment Policies

The House Ways and Means Committee has approved an amended version of H.R. 5273, the "Helping Hospitals Improve Patient Care Act of 2016."  While most of the provisions address Medicare payment policies pertaining to hospitals (including long term care hospitals (LTCHs) and hospital outpatient departments), certain other reimbursement policies, including Medicare Advantage and physician payment policies, also would be impacted. Among other things, the bill would:

• Require the HHS Secretary to develop a coding crosswalk between similar inpatient and outpatient hospital services (which would facilitate comparison of procedures performed in both settings). Specifically, by January 1, 2018, the Secretary would be required to develop Healthcare Common Procedure Coding System (HCPCS) versions of Medicare Severity-Diagnosis Related Groups (MS-DRGs) that are similar to the ICD-10-PCS versions of the MS-DRGs for at least 10 surgical MS-DRGs. Such a comparison of similar inpatient and outpatient services could lead to leveling of payment rates (e.g., site-neutral prospective payments) across these two different settings of care. The legislation does not explicitly address how potential differences in the patient populations (acuity, comorbitities, etc.) treated in the two settings would be addressed.
• Require the Secretary to implement, on a budget-neutral basis, a transitional risk adjustment methodology to account for socioeconomic status under the Hospital Readmissions Reduction Program, applicable to discharges occurring during and after fiscal year (FY) 2019. Under this provision, the hospital's proportion of full-benefit dual eligible beneficiaries would serve as a proxy for socioeconomic status. In addition, the Secretary would be authorized to establish a permanent socioeconomic status refinement following an analysis required by the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT Act). It would also allow the Secretary to consider the use of "V-codes" or other ICD-related codes to permit removal as a readmission of an admission that is classified as: transplant, end-stage renal disease, burns, trauma, psychosis, or substance abuse.
• Extend by five years the current Rural Community Hospital Demonstration Program.
• Allow certain long-term care hospitals (LTCHs) to qualify for a "mid-build" exception to the reinstated moratorium on LTCH bed expansion in existing LTCHs or satellite facilities. The cost associated with this provision would be offset by a reduction to LTCH high-cost outlier payments and establishment of a higher a higher threshold for LTCH discharges to qualify for outlier payments, effective for fiscal years beginning on or after October 1, 2017.
• Provide an exception from a Bipartisan Budget Act of 2015 provision that changed how hospitals are reimbursed for services provided in "new" off-campus hospital outpatient departments (HOPDs) — those located more than 250 yards from the main hospital campus that enter into a Medicare provider agreement after November 2, 2015. Under the Bipartisan Budget Act, effective for services provided on or after January 1, 2017 (other than services furnished by a dedicated emergency department), such HOPDs will be paid under the ambulatory surgical center (ASC) prospective payment system (PPS) or the Medicare physician fee schedule, rather than the (generally higher-paying) hospital outpatient prospective payment system (OPPS). HOPDs that were billing under the OPPS with respect to covered HOPD services furnished prior to November 2, 2015 are grandfathered and will continue to be paid under the OPPS. H.R. 5273 would extend the grandfather provision – and continue Medicare payment under the OPPS – to HOPDs that attest to having been "mid-build" (the provider had a binding written agreement with an outside unrelated party for the actual construction of such department) prior to November 2, 2015. The extension of the HOPD grandfather provision would be offset by a reduction in the hospital inpatient documentation and coding adjustments as implemented in the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015. The legislation also would apply the HOPD grandfather policy to certain PPS-exempt cancer hospitals; this provision would be offset by a reduction to the target payment-to-cost ratio for PPS-exempt cancer hospitals.
• Temporarily exclude physicians who furnish substantially all of their Medicare services at ASCs from the penalties under the Electronic Health Records Incentives Program and subsequent program under the Merit-Based Incentive Payment System.
• Delay for three years (through the end of plan year 2018) CMS's authority to terminate Medicare Advantage (MA) contracts based solely on plans failing to achieve minimum quality ratings under the MA STARS rating system.

The legislation was approved by the Committee on May 24, 2016.

This article is presented for informational purposes only and is not intended to constitute legal advice.