Policy & Regulation News

House Reps Ask for FFS Waivers for Alternative Payment Models

House members urged CMS to grant more fee-for-service waivers for providers engaging in risk-based alternative payment models.

By Jacqueline LaPointe

- CMS should make it easier for fee-for-service providers to get involved in risk-based alternative payment models by reducing regulatory barriers, House representatives said in a letter this week.

House members urge CMS to reduce regulatory barriers for providers in risk-based alternative payment models

The seventy representatives asked CMS to waive certain fee-for-service regulations, such as the 25 percent Rule for long-term care hospitals, which have prevented some healthcare providers from transitioning to value-based care models.

“Such regulations were designed for the Medicare fee-for-service (FFS) environment; their waiver is necessary to allow payment reform to more effectively move into the post-FFS era, thereby producing more insightful lessons for policymakers and innovators developing the next generation care delivery system,” wrote the House members.

These regulations have created substantial barriers for providers that participate in downside risk alternative payment models, in which the provider shares financial risk with taxpayers, explained the letter.

“The continued application of FFS regulatory barriers within downside risk payment reform models often hinders providers’ ability to identify and place beneficiaries in the most clinically appropriate setting,” stated the Congressional leaders. “It also inhibits their ability to test new, more patient-centered and streamlined clinical pathways.”

For example, CMS finalized a rule in 2005 that mandated Medicare fee-for-service reimbursement reductions for long-term care hospitals if the facility admitted more than 25 percent of Medicare cases from an onsite or neighboring inpatient acute care hospital. The rule became known as the “25 percent rule.”

CMS hoped that the rule would reduce Medicare spending by $90 million, but some industry groups have criticized the regulation. In 2013, the American Hospital Association penned a letter to CMS explaining that the regulation “imposes a barrier by reducing payments based on the origin of the referral, with no regard for a patient’s medical necessity for these services.”

The letter calls on CMS to reconsider regulations like the 25 percent rule because they have created significant challenges for care facilities that have started to engage with value-based care models.

“We urge CMS, to the greatest extent of its authority, to waive the regulations (such as the Long-Term Care Hospital 25 percent rule) that CMS or Congress established for use in FFS reimbursement that stymy the redesign of episodes of care that involve both hospital and post-acute care service and other cross-setting innovations,” wrote the House members.

They added that testing new care delivery approaches in an environment without artificial barriers to care coordination is key to improving patient-centered care, advancing patient outcomes, and reducing healthcare costs and variation.

Additionally, the lawmakers advised CMS to consider new reimbursement models for inpatient rehabilitation facilities and long-term care hospitals in order to encourage providers in alternative payment models to collaborate with these care facilities.

“These higher-cost settings face challenges within downside risk payment reform models because currently, any new efficiencies achieved are not reflected in their per-discharge Medicare reimbursement,” explained the letter.

“Hospitals and other stakeholders, in order to effectively partner with these settings within downside risk payment reform models, need more flexibility.”

In April, CMS released proposed rules that would update the prospective payment systems for both inpatient rehabilitation facilities and long-term care hospitals for the 2017 fiscal year.

Under the proposed rule regarding inpatient rehabilitation facilities, CMS would increase Medicare reimbursements by 1.45 percent to reflect current market baskets and productivity adjustments. The agency would also increase aggregate payments by 1.6 percent due to updated outlier thresholds.

The proposed rule also stated that CMS would add five new quality measures to the inpatient rehabilitation facilities Quality Reporting Program, including discharge to the community, Medicare spending per beneficiary, potentially preventable 30-day post-discharge readmissions, potentially preventable within stay readmissions, and drug regimen review conducted with follow-up.

Through the proposed rule for the long-term care hospital prospective payment system, CMS would decrease overall payments by 6.9 percent, or $355 million, by creating two types of payments depending on if patients meet specific clinical criteria.

The proposed rule would also expand the 25 percent rule to apply to more long-term care facilities. Congressional interventions that delayed the full implementation of the rule are set to expire in 2016 and the proposed rule does not contain more delays.

CMS would also add four quality measures to the long-term care hospital Quality Reporting Program, including discharge to community, Medicare spending per beneficiary, potentially preventable 30-day post-discharge readmissions, and drug regimen review conducted with follow-up.

While the proposed rules have yet to go into effect, the most recent letter to CMS from the group of House members demonstrates that these blended fee-for-service and performance-based models may need to change to advance value-based care models.

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