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

Policy & Regulation News

CMS Payment Reforms Mean Big Bucks for Medicare, Medicaid

Proposed CMS payment reforms would increase payments to Medicare programs and Medicaid managed care organizations in 2017.

By Catherine Sampson

- Over the past month, CMS has announced finalized and proposed rules that would significantly impact payment policies in 2017 for managed care in Medicaid and the Children’s Health Insurance Program (CHIP) as well as Medicare hospice benefits, inpatient rehabilitation facilities and skilled nursing facilities.

The reforms align with CMS’ strategy to increase the healthcare system’s reliance on value-based reimbursements and accountable care strategies while helping to maintain financial stability for providers who serve vulnerable populations.

Managed care organizations will get modernized due to finalized bill

On Monday, CMS announced a massive update to managed care in Medicaid and CHIP. CMS finalized a 1,425-page rule known as “CMS-2390-F” that will update how Medicaid works for almost two-thirds of its beneficiaries that obtain coverage through private managed care plans. 

It is CMS’s goal to align Medicaid and CHIP managed care plans with existing commercial, marketplace and Medicare Advantage regulations. The rule actually overhauls the entire Medicaid managed care delivery system and goes into effect in 2017.

READ MORE: MedPAC Targets Post-Acute Care for Healthcare Payment Reform

The aim of the rule is to improve beneficiary communications and access. Under this finalized rule, CMS will provide new program integrity tools. The rule will also supports state efforts to deliver higher quality healthcare in a cost-effective way.

The rule is supposed to improve beneficiaries’ experiences with enrollment, care coordination, managed care plans and communications from the state. It specifically requires a quality strategy for a state’s entire Medicaid program.

“The rule strengthens states’ efforts to support delivery system reform and authorizes the first-ever Medicaid and CHIP quality rating system so that states can publicly report plan quality information, and people can use that information to select plans,” CMS said in a blog post.

The rule expands the federal government’s role in rate setting at the provider and managed care organization level. Additionally, it establishes a Medicaid managed care quality rating system that would include performance information on all health plans.

Among many provisions, CMS-2390-P sets minimum federal network adequacy standards. There will be a minimum of 85 percent medical loss ratio. Additionally, there will also be certain information standards. For example, plans will be required to provide enrollees with member handbooks.

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Under the rule, states will be required to provide beneficiaries with information and at least 14 days to make decisions on plan enrollment.

States will also be allowed to place contracted provider payments under particular value-based payment methods as a way of promoting quality care.

This is the first time CMS has issued new regulations to the managed care since 2002. Overall, the finalized rule supports the CMS’s ambitious mission of improved, cost-effective healthcare.

Updates for the payment rates and wage index for Medicare hospice beneficiaries

CMS recently issued a proposed rule (CMS-1652-P) that would update Medicare payment rates and the wage index for hospices serving Medicare beneficiaries in 2017. Under this proposal, updates would also be made to cap amounts. Additionally, the rule called for new quality measures and changes to the hospice quality reporting program.

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The rule also requests feedback regarding enhanced data collection. CMS proposes to publicly display quality measures and other hospice data by mid-2017. CMS would also like to update hospice monitoring data analysis and provide discussion regarding ongoing monitoring efforts. CMS calls for updates on data analysis regarding hospice trends such as diagnosis reporting, pre-hospice spending, live discharges and non-hospice spending.

This rule would cause hospices to have a 2.0-percent increase in payments for 2017. This percent increase would give hospices $330 million.

Proposed payment and policy changes for Medicare inpatient rehabilitation facilities

Last week, CMS issued a proposed rule outlining 2017 Medicare payment policies and rates for the Inpatient Rehabilitation Facility (IRF) Prospective Payment System and the IRF Quality Reporting Program. Under this proposal, the federal government would give IRFs $125 million in increased payments over the course of 2017.

This rule specifically includes the weighting and classification factors for the IRF prospective payment system's case-mix groups. It also describes data use and methods for computing prospective payment rates. 

A new quality reporting rule for Medicare skilled nursing facilities

According to a recent proposal, skilled nursing facilities (SNFs) will be required to submit additional quality data or face a two-percent reduction in Medicare payments. Under a proposed rule, known as CMS-1645-P, one new assessment-based quality measure and three claims-based measures would be added to the Improving Medicare Post-Acute Care Transformation Act of 2014 framework for SNF quality reporting.

Due to the proposal, CMS expects payments to skilled nursing facilities to increase by $800 million, or 2.1 percent, from 2016 to 2017, a previous report noted.


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