MEDICARE PAYMENT SYSTEMS
PHYSICIAN FEE SCHEDULE | INPATIENT | LONG TERM CARE HOSPITAL | OUTPATIENT |AMBULATORY SURGERY | END STAGE RENAL | SKILLED NURSING FACILITY | HOSPICE |HOME CARE | INPATIENT PSYCHIATRIC
The Moran Company monitors Medicare payment system rules and policies across the entire health care system. We have the capability to keep our clients informed in real time about the potential implications of regulations affecting their business interests. Our knowledge of various rules supports our tracking of regulatory innovations and experiments from one payment system to another.
Knowing problems with elements in one payment system supports our ability to alert clients to issues that are likely to be addressed in other payment systems. In the current reform environment, tracking innovations and payment system issues enables rapid response to clients. Congress and the Centers for Medicare and Medicaid Services (CMS) have both transferred payment system components from one setting to another, and applied policies from one payment system to cap payment rates in another payment system. Current efforts are underway to standardize some provisions of prospective payment systems and rates for similar services across settings.
Medicare Physician Fee Schedule
The Moran Company has a team of consultants dedicated to monitoring changes in policy and payments within the Medicare Physician Fee Schedule (MPFS). Each year, our consultants prepare summaries of the proposed and final regulations released by the CMS. TMC consultants also analyze the effects that individual payment policies have on specialties and services of interest to our clients.
TMC consultants also analyze trends in MPFS service utilization and payments important to clients and Medicare policymakers. We are able to isolate disease populations, and track patients, the services they utilize, and the providers who perform them, over many years. To simulate the reimbursement consequences of CMS adopting alternative payment policies or data, TMC maintains a full replication model of the MPFS practice expense relative value unit (PE RVU) rate setting calculation by which CMS values MPFS services.
TMC consultants provide intelligence for clients forming reimbursement strategies, informing them of the likely effects different strategies will have if successful. We provide high-level intelligence for clients focused on specialties, and service-level intelligence for clients engaging with the American Medical Association’s RVU update committee (RUC) to revise the data valuing individual CPT® codes. We also provide guidance on how to engage with the RUC, which governs the primary data sources used to value individual MPFS services.
Inpatient Prospective Payment System
CMS sets rates annually for inpatient hospital services under the Inpatient Prospective Payment System (IPPS). Under this system, hospitals are paid for most services based on Medicare Severity Diagnosis Related Groups (MS-DRGs), which were adopted over the last several years to replace the previous DRG system.
The Moran Company annually replicates the CMS IPPS rate-setting methodology, which allows us to provide information to clients interested in various IPPS policies, including the documentation and coding adjustments that have been implemented by CMS since the advent of the MS-DRG system.
The proposed rules setting IPPS policies for each fiscal year are typically issued in the spring, with a 60 day comment period. During this period, we provide detailed analyses on a fast turnaround in support of various clients seeking to comment on policies that have been proposed.
Our work in this area ranges from replication of the CMS payment weights, replication of the CMS high cost outlier policy, support for new technology applications, and general analyses of the inpatient population, among other topic areas.
Our consultants have many years of experience working on issues related to inpatient hospital reimbursement, and analyze these issues using sophisticated econometric and statistical techniques.
Long Term Care Hospital Prospective Payment System
Each year, CMS updates payment rates and policies in the long-term care hospital prospective payment system (LTCH-PPS). The proposed and final rules are released in conjunction with the IPPS rules, with a 60 day comment period. The Moran Company replicates the LTCH-PPS rate-setting methodology, and models alternative policies to assist clients in understanding the implications of CMS’ proposals.
In addition to replicating the payment methodology, TMC has also done extensive analysis of the proposed Budget Neutrality Adjustment, and changes to the Short Stay Outlier (SSO) policy.
Outpatient Prospective Payment System
The CMS sets rates annually for hospital outpatient services. The Outpatient Prospective Payment System (OPPS) is the rate setting system for physician visits, emergency room and observation services, ambulatory surgery, and a wide range of outpatient procedures delivered in hospital operated clinics and departments that treat outpatients (e.g., radiology). The OPPS is a complex payment system that uses claims data from a recent year to create “weights” based on resource utilization for packages of services. These packages of services may include drugs, supplies, devices and procedures that are not separately paid, but whose costs are supposed to be covered by the payment rates. Every year the entire system is re-calibrated, resulting in shifting of weights from some procedures or visits to others. The weights are multiplied by a conversion factor to yield payment rates which are adjusted for local labor conditions by a wage index.
Because of the complexity of the system and its many interrelated parts, The Moran Company is one of the few organizations that completely replicates the work of CMS in rate setting. This replication is necessary to explain to clients why rates go up or down, and to support client efforts to communicate with CMS about concerns that rates are inadequate to support access to care. We often simulate rates and related decisions for new products or when procedure codes change, as well as alternative ways to apply and evaluate the packaging rules within the OPPS.
Annual OPPS rules are released each summer, and clients have 60 days to submit their comments for consideration before rules are finalized for a payment year. We handle a large number of requests for information and data analysis during the OPPS rule cycle so it is always helpful for clients to contact us as early as possible starting in June of each year. Of course, we understand that the need for data and policy assistance may not be apparent until the rules are released, and we try to accommodate as many clients as possible in each rule cycle.
When new CPT® codes are created, interim rates are published in the final OPPS rule in November of each year for the next year. Organizations interested in communication with CMS about rate setting for these new codes may want assistance in exploring options before interim rates are published. The best time to contact us about this type of work is immediately after the proposed rule comment period ends (generally in September).
Ambulatory Surgery Centers
Rate setting for Ambulatory Surgery Centers (ASCs) is based on both the OPPS payment system and on the Medicare Physician Fee Schedule (MPFS). Questions about ASC rates are handled in conjunction with our OPPS work.
End Stage Renal Disease
In 2011, the End Stage Renal Disease (ESRD) payment system was revised to be consistent with other prospective payment systems. Working with the major industry associations and organizations delivering dialysis services or manufacturing dialysis products, The Moran Company modeled and performed analyses to support interaction between the industry and CMS in the complex process of developing a new payment system. We continue to support the industry in its efforts to solve problems and negotiate refinements to the payment system as it evolves.
The ESRD prospective payment system represents an effort by CMS to bundle Medicare Part B services that were historically separately paid. In 2014, CMS has indicated its intent to integrate Part D services into the Part B payment system. It is also one of the first payment systems to implement value based purchasing, with its own Quality Improvement Program (QIP) regulations. Some of the innovations to the ESRD bundled payment system may be used in the future in other payment systems. The ESRD rules are released on the same cycle as the OPPS, ASC, and MPFS rules during the summer, with final rules released in November.
Skilled Nursing Facility Prospective Payment System
The Skilled Nursing Facility (SNF) prospective payment system depends upon both claims data and patient assessment data which are used to set rates for payment categories called Resource Utilization Groups (RUGs). The Medicare Payment Advisory Commission (MedPAC) recently recommended major changes and “rebasing” of this system and CMS has commissioned a variety of research studies to explore potential changes to solve problems it perceives in this payment system. The Moran Company works with a variety of industry organizations to model and evaluate SNF-PPS polices.
Therapy services (physical, occupational, and speech) are a core set of services provided by SNFs under Medicare Part B. The Moran Company has worked with industry organizations and providers to explore alternative payment approaches for therapy services. These services have been the target for a variety of concerns in the rulemaking process. Part B SNF rules are included in the MPFS rule released during the summer. SNF Part A rules are generally released during the spring for implementation in the new Federal fiscal year. Ongoing discussions within CMS and MedPAC result in year round work on this payment system.
The hospice payment system dates back to the early 1980s and has had few revisions since its inception. Minor changes have been made in the data reported on claims and in some aspects of the conditions of coverage. Hospice rates are set in statute and updated annually with associated policy updates published in the annual Part A rule cycle in what is referred to as the “hospice wage index” rule. The Affordable Care Act mandated adjustments to hospice rates after 2014. MedPAC has made some recommendations for future revisions. The Moran Company has worked with industry organizations to explore hospice margins, cost structures, payment system proposals, and proposals in annual rules.
Home Health Care
The home health care prospective payment system is based on 60 day episodes with rates set based on a patient assessment of the intensity of care required by the patient. In recent years MedPAC has raised questions about this payment system, and the Affordable Care Act required that adjustments be made to the payment system after 2013. The Moran Company has worked with industry organizations to explore future alternative payment policies.
Inpatient Psychiatric Facility Prospective Payment System (IPF-PPS)
The Moran Company analysts have studied various aspects of the Inpatient Psychiatric Facility (IPF) PPS, which unlike many other Medicare payment systems, is based on per diem payments. Our analysts have explored and understand the differences between free-standing psychiatric facilities and units within short term acute hospitals and the demographics of the patients served in each setting.