Medicare Pay Cut of 27% Averted; Next Deadline For Action is March 1.

The threat of an across-the board Medicare doctor pay cut was defused with over a week to spare. But the congressional agreement only maintains rates for an additional two months before Congress must act again to avoid a steep reduction. The House and Senate on Dec. 23, 2011, approved a two-month payroll tax cut extension package that included a two-month doctor pay freeze. That means physicians will continue to receive 2011 rates for Medicare services they provide through the end of February. Lawmakers will need to agree on a longer-term patch if they are to prevent the 27.4% cut from taking effect on March 1.

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From January 9th, 2012 edition of American Medical News, Volume 55, Number 1
American Medical News

Top 10 government issues for practice executives to watch in 2012

As 2012 gets underway, here are the top government issues that will impact medical groups this year.

1. Medicare payments remain in flux
   Congress left Washington late last year after only passing a two month fix for the flawed sustainable growth rate (SGR) formula, despite the fact that they had a full year to address the 2012 cuts. Congress’s inability to avert the 27.4 percent cut for a full year exacerbates uncertainty for physician payment in 2012.


2. Version 5010 transition
   Jan. 1 was the compliance deadline to use Version 5010 standards for electronic claims and other HIPAA transactions. MGMA research indicated that some practice trading partners, including practice management system vendors and health plans, were not able to meet the deadline.


3. E-prescribing penalties begin in 2012
   A 1 percent penalty will be levied in 2012 for physicians who are eligible for the Medicare e-prescribing program and did not successfully e-prescribe in 2011 or have a hardship exemption request approved by the Centers for Medicare & Medicaid Services (CMS). E-prescribing penalties increase to 1.5 percent in 2013 and to 2.0 percent in 2014.


4. Countdown to ICD-10
   The healthcare industry has been focused on transitioning to HIPAA Version 5010 electronic transaction standards, but 5010 is only a stepping stone to implement ICD-10, the new diagnosis code set. The industry must transition from ICD-9 to ICD-10 by Oct. 1, 2013. This new code set is vastly more complex.


5. 2012 elections
   Campaigns are underway for the 2012 elections, which could change the political landscape for the next four years and have a significant impact on health policy, including repeal or further implementation of healthcare reform.


6. Continued emphasis on compliance
   Both Congress and CMS continue to focus on curbing fraud, waste and abuse in public health programs, such as Medicare and Medicaid. Medicare recovers more than $7 for every $1 spent on fraud investigations, according to government data. Group practices should be prepared for new compliance initiatives.


7. The Supreme Court hearing on ACA
   Justices will hear challenges to the constitutionality of the 2010 healthcare reform bill, the Patient Protection and Affordable Care Act (ACA).


8. CMS explores alternative payment models
   The Center for Medicare & Medicaid Innovation (CMMI) and CMS continue to explore payment models that move away from the current fee-for-service reimbursement method.


9. Focus on site of service payment differentials
   The Medicare Payment Advisory Commission and Congress are taking a closer look at payment differences for identical services across delivery settings, including the difference between payments made to hospitals and physician practices.


10. EHR meaningful use incentives continue
    The second year of the Medicare EHR incentive program is important because 2012 is the last year that physicians can start participating and earn the maximum amount of $44,000 over five years per eligible professional.

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Practices should continue HIPAA Version 5010 implementation efforts

Despite the contingency plan issued by the Centers for Medicare & Medicaid Services in late December, physician practices still risk claims payment disruption if they do not completely convert to HIPAA Version 5010. Practices and others were required to transition to the latest version of the HIPAA electronic transaction standards by Jan. 1. Due to the lack of testing between providers and Medicare Administrative Contractors (MACs) on Version 5010 electronic transactions, CMS announced a contingency plan that included:

• Practices and clearinghouses that have tested with their MAC and have been approved for Version 5010 will be notified that they have 30 days to cutover to Version 5010.


• Practices and clearinghouses that have not yet tested were to be notified in December 2011 that they must submit their transition plan (including compliance timeline) to their MAC within 30 days of the notification. Those who submit a transition plan by the deadline will have until April 1, 2012 to complete their transition to the 5010 formats.


• Covered entities are afforded a 90-day enforcement delay at the discretion of the agency.

Practices should:

• Work with their trading partners (practice management system vendors, clearinghouses and health plans) to ensure that you are able to generate Version 5010 transactions as quickly as possible.


• Check with their clearinghouses to determine if they will be submitting the required “transition plan” (Notification will come from the MACs, with clearinghouses having the responsibility to notify the providers they service.


• Review the notification letter sent by the MAC to the practice that submit claims directly to a MAC and submit the required transition plan (Note: While there is no specific format required for the transition plan, submitters should outline the steps they have taken and the steps they still need to take to successfully achieve compliance with the updated version of the transactions.)


• Determine if their commercial health plans will continue accepting Version 4010 transactions and if so, for how long (If they will not, identify a clearinghouse or other contingency plan to ensure there is no disruption in cash flow.)
  Remember that despite CMS’ discretionary enforcement delay, the compliance date for these new standards remains Jan. 1, 2012.

For more information visit the CMS Web site.

CMS releases revised fee schedule RVU files and conversion factor

The Centers for Medicare & Medicaid Services (CMS) released revisions to the 2012 Medicare physician fee schedule relative value units (RVUs) files. The revised payment files are based on current law, including the Temporary Payroll Tax Cut Continuation Act of 2011, which provides for an “update” of zero percent for claims with dates of service from Jan. 1, 2012, through Feb. 29, 2012 instead of a 27.4 percent cut. To make 2012 RVU changes budget neutral, CMS adjusted the conversion factor. In the revised RVU file, CMS sets the 2012 conversion factor at $34.0376. This is a slight increase from last year’s conversion factor of $33.9764.

To view the updated files, visit the CMS Web site.

Recovery Audit Program (RAC) demand letters now coming from Medicare Administrative Contractors (MACs)

Beginning Jan. 3, the Centers for Medicare & Medicaid Services (CMS) shifted responsibility for issuing Recovery Audit Program (RAC) demand letters from the Recovery Audit Contractors (RACs) to the Medicare Administrative Contractors (MACs). The change, announced last summer, is an attempt to reduce delays in issuing demand letters, which can count against a provider's time to rebut a finding.

The model demand letter from CMS, which references the Recovery Audit Program in the second paragraph and uses a “Letter Number” beginning with an “R” to indicate the finding is coming from a RAC. While CMS originally stated that the demand letters would include contact information for the RAC, they do not currently contain that information. Contact information for each of the four RACs can be found on the CMS Web site.

This process change comes as CMS reports that the RAC program identified $939.4M in overpayments and underpayments in FY 2011, up from $92.3M in FY 2010.

Early EMR adopters get a break; tougher criteria delayed to 2014

Physicians who didn't wait until 2012 to get their first meaningful use bonus will have an extra year to meet more rigorous reporting thresholds.

Physicians meeting criteria in 2011 to earn federal electronic medical record incentives will have more time before the Dept. of Health and Human Services requires them to satisfy tougher standards for attaining additional bonuses. The move is being viewed by physicians and health policy observers as a goodwill gesture by the Obama administration toward EMR early adopters. Doctors and hospitals who currently meet stage 1 meaningful use criteria would be able to vie for bonuses for an extra year under the same requirements, HHS Secretary Kathleen Sebelius announced on Nov. 30. These bonus recipients would not need to upgrade their EMR systems to comply with stage 2 standards until 2014, instead of 2013 under the initial plan.

The delay of stage 2 affects only physicians and hospitals who met stage 1 criteria in 2011. Doctors who will report meeting stage 1 requirements for the first time in 2012 will still be expected to meet stage 2 requirements starting in 2014. Before the new policy change, those who waited until 2012 to adopt would have had a later upgrade deadline but still would have been eligible to receive the same total bonus amounts as the early adopters.
Oct. 3 was the last day a physician could begin a 90-day reporting period for 2011, according to the Centers for Medicare & Medicaid Services. Physicians who met the requirements will have until Feb. 29, 2012, to register and attest to receive a bonus for 2011. Physicians can earn up to $44,000 over five years from the Medicare program or up to $63,750 over six years from Medicaid.

The full article may be accessed at American Medical News: http://www.ama-assn.org/amednews/2011/12/12/gvl11212.htm

Reminder: providers must use new Medicare ABN forms by Jan. 1, 2012

The Centers for Medicare & Medicaid Services is requiring providers to use new Advanced Beneficiary Notice of Non-coverage (ABN) forms beginning Jan. 1. The instructions and latest version of the ABN (with the release date of 3/2011 printed in the lower left hand corner) are available for immediate use http://www.cms.gov/BNI/02_ABN.asp. Providers may use the new forms prior to January, and all ABNs with the release date of 3/2008 that are issued on or after Jan. 1 will be considered invalid.