Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

CMS Announces Possible Delay as Medicare Doc Payment Begins

By Jacqueline DiChiara

- The Bipartisan Permanent Sustainable Growth Rate (SGR) Fix and Children’s Health Insurance Program (CHIP) Reauthorization Package replaces the flawed Medicare formula as a “doc-fix.” This legislation aims to transition Medicare towards a value-based system to improve care quality. It also provides health insurance to millions of children via an extension. 

The reduction of Medicare reimbursement rates for physician services delivered after March 31 by over twenty-one percent is not an April Fools’ prank. The healthcare industry waits for the Senate to delay the SGR repeal vote. The Senate returns from a recess to take further action on Monday, April 13.

Physicians will remain unaffected by this reduction if the Senate approves the repeal bill and the President signs it by April 14. Although future events are still in the process of unfolding, the status quo may be maintained without a hiccup.

Last Wednesday, the Centers for Medicare & Medicaid Services (CMS) announced it would not begin processing a twenty-one percent cut to physician reimbursements under Medicare’s SGR formula until April 15.

“Under current law, electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt,” says CMS. “CMS will notify you on or before April 11, 2015, with more information about the status of Congressional action to avert the negative update and next steps.”

READ MORE: Healthcare Spending Varies More by Provider Than Hospital

According to CMS, holding Medicare claims for a short period of time beginning on April 1 will minimize claims reprocessing and the disruption of physician cash flow regarding the twenty-one percent payment reduction.

CMS adds that a payment cut will not affect Medicare physician fee schedule claims for services rendered at before the last day of March. Such claims, says CMS, will be processed and paid under normal procedures and time frames.

CMS previously mandated contractors to hold Medicare claims within a given statutory payment window to avoid an economically sound claims processing that is only negated later.

The healthcare industry at large ponders what specific series of actions to take next to ensure future financial success. Physicians may decide to voluntarily cut their Medicare claims by twenty-one percent for services rendered in April as Congress attempts to avoid implementation of yet another patch to the payment system as it stands currently.

According to former CMS administrator Thomas A. Scully, CMS "could hold [payment] off for three months," but confirms providers will only support this delay if there is an assurance of later payment.

READ MORE: Hospital Execs Focus on Outpatient Growth, Healthcare Costs

Scully adds that "after two weeks [of payment delays], it gets pretty awkward."

According to Scully, federal officials can temporarily cut reimbursement rates to make the full payments retroactively, if Congress acts accordingly. Scully adds, however, that doing so would be expensive and a “waste of time.”

Other forms of speculation abound regarding the next course of action from CMS as mid-April approaches.

“In the meantime, expect CMS to do what it can to give Congress some breathing room,” says Kent Moore, Senior Strategist for Physician Payment at the American Academy of Family Physicians. If CMS is obliged to pay the lesser of the submitted charge or the Medicare approved rate, this will create further complication, Moore adds. “It’s likely physicians won’t feel the pinch immediately – and possibly never again,” confirms Moore.

Another option for physicians is to hold on to Medicare claims for April’s services before submitting them by simply waiting for either a temporary twenty-one percent cut or the passing of the repeal bill. Doing so would likely minimize claims needing to be additionally processed if a financial cut was in fact actualized following the April 14 deadline. However, this option would also create a backlog of Medicare cash flow for a potential series of weeks and cause those practices who treat a substantial amount of elderly beneficiaries to struggle financially.

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Further driving this push into the realm of quality based care, recent SGR legislation’s objectives to consolidate performance measures and resultantly alleviate administrative burdens are especially needed, says Reid Blackwelder, MD, FAAFP, Board Chair of the American Academy of Family Physicians (AAFP).

Blackwelder reports patients often feel “harassed” by payers due to lack of communication involving misinformed insurers and excessively administered costs. Blackwelder adds he has noticed a rise in unnecessary visits that result in a waste of patients’ time as he is often unsure why patients keep coming in when he was not expecting to see them.

“Most of them said they had received phone calls from their insurance companies stating they needed to be seen for a health maintenance visit, but in reality, no such need existed,” says Blackwelder, who cites insurance companies’ increased focus on coding instead of actual provided care as a primary concern requiring immediate and active addressing.

Within the SGR legislation, a stronger focus on interoperability is needed to allow immediate tracking when such measures are executed at any point within the healthcare system, Blackwelder states. Additionally, Blackwelder documents treating a patient for a diabetic check per insurance when later discovering this patient did not have diabetes.

“Despite their efforts, my patients had been unable to convince insurance representatives on the phone that they had actually covered all of these issues,” explains Blackwelder, who pushes for more legislative progress.

The SGR replacement measure will cost over two hundred billion dollars. The deal will offset seventy billion dollars of costs projected. Half of the possible offsets is anticipated to come from cuts to hospitals, insurer, and acute care providers. The other half is expected to come from cuts to Medicare beneficiaries.

Following the House vote last week of 392 to 37 to approve the H.R. 2. legislation, the Senate is scheduled to readdress the measure when it returns from recess on April 13 where senators will have two days to either temporarily or permanently fix the SGR. 

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