CLN Article

Regulatory Profiles

In This Issue...

Sequester Moves Forward, Taking Billions Out of Healthcare

With no action from Congress, reimbursement to hospitals and other providers under Medicare fell 2% in April, a cut of nearly $10 billion to healthcare as a result of the Budget Control Act of 2011. With no deal in sight in Washington, the Centers for Medicare and Medicaid Services (CMS) said providers should expect to see cuts to claims dated on or before

April 1, 2013. CMS emphasized that the sequestration claims payment adjustment will be applied to all claims after determining coinsurance, any applicable deductible, and any applicable Medicare Secondary Payment adjustments.

Although beneficiary payments for deductibles and coinsurance are not subject to the 2% reduction, Medicare's payment to beneficiaries for unassigned claims will be, CMS said. If providers have questions about how the claims adjustments will work, CMS is asking them to contact their Medicare claims administration contractor.

More information is available from the CMS website.

President, Congress Look at Lab Cuts in Budget Battle

Both President Obama and an independent congressional advisory panel are suggesting cuts to laboratory reimbursement to help reduce the deficit. A proposal in Obama's 2014 budget would cut lab reimbursement under Medicare by an additional $9.46 billion over 10 years, a drop of at least 14% over that time period. Adding this reduction to those already scheduled under current law would bring total cuts to the clinical laboratory fee schedule to an estimated 35–37% over the next 10 years, according to the American Clinical Laboratory Association (ACLA).

"Clinical laboratories were already facing cuts of 23 percent over 10 years from reductions enacted in the Affordable Care Act, a two percent rebasing, and sequestration—many laboratories that provide critical laboratory services for Medicare beneficiaries were already hard hit by these cuts," said Alan Mertz, president of ACLA in a letter to Obama. "While the president's budget proposes cutting an additional 14 percent under the pretext of 'modernizing payments for clinical laboratory services,' in fact, these reductions are so severe when added to cuts in current law that the ability of many laboratories to continue serving Medicare beneficiaries would be in doubt."

Mertz noted in the letter that Medicare spent $8.9 billion on clinical laboratory services in 2011—just 1.6% of total Medicare spending.

Separately, the Medicare Payment Advisory Commission (MedPAC), an independent advisory panel to Congress, also reminded legislators in its March bi-annual report that cutting the lab fee schedule could save Medicare money.

Specifically, MedPAC urged Congress to cut lab reimbursement as a way to pay for fixing the sustainable growth rate (SGR) system, Medicare's formula for paying physicians. Established in 1996, the SGR formula is widely recognized as deeply flawed, and Congress has had to act each year to intervene to prevent massive cuts to physicians under Medicare. MedPAC wants Congress to find a permanent fix to the SGR problem. MedPAC's proposal would mean a 10% cut to labs over 10 years, totaling $21 billion.

MedPAC also expressed support for recent cost-saving programs initiated under the Affordable Care Act by the Centers for Medicare and Medicaid Services (CMS). The commission recommended CMS broaden programs such as penalties for excessive readmissions and linking payments to quality outcomes. MedPAC also praised accountable care organizations, but noted adoption needs to move faster if Medicare's finances are to remain stable.

The report is available from the MedPAC website.

Use of Free Preventive Screening Tests Grows

Data show that about 71 million Americans in private health insurance plans in 2011 and 2012 received coverage for at least one free preventive healthcare service, such as a flu shot, cholesterol test, or cancer screening, because of the Affordable Care Act. The new data was released in a report from the Department of Health and Human Services (HHS). Additionally, an estimated 34 million Medicare participants have received at least one preventive service, such as an annual wellness visit, with no out-of-pocket cost because of the healthcare law.

"Preventing illnesses before they become serious and more costly to treat helps Americans of all ages stay healthier," HHS Secretary Sebelius said in a statement. "No longer do Americans have to choose between paying for preventive care and groceries."

Services that do not require cost sharing under the law include pap smears, cholesterol screening, screening HIV and other sexually-transmitted diseases, and diabetes screening, as well as preventive care such as flu shots and meningococcal and pneumococcal vaccinations for high-risk adults.

More information is available from the HHS healthcare website.

Government Pushes More Aggressive Health IT Agenda

The Centers for Medicare and Medicaid Services (CMS) announced a stepped up plan to accelerate adoption of health information exchanges and electronic health records (EHR).

In 2013, the government is setting the goal of 50% of physician offices using EHRs and 80% of eligible hospitals receiving meaningful use incentive payments by the end of the year. CMS is also increasing the emphasis on interoperability, promoting electronic information exchange across providers. It began this effort by issuing a request for information seeking public input about a variety of policies that will strengthen the business case for electronic exchange across providers to ensure patients' health information follows them wherever they access care.

Meaningful use rules will continue to be implemented this year, defining what data must be able to be exchanged between health IT systems, including how data will be structured and coded so that providers will have one uniform way to format and securely send data.

According to CMS, EHR adoption has tripled since 2010, increasing to 44% in 2012, and computerized physician order entry has more than doubled since 2008.

The document is available on the Federal Register website.