Medicare Access and CHIP Reauthorization Act of 2015 March 2015 Summary

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1 Medicare Access and CHIP Reauthorization Act of March Summary On Thursday, March 26, the House passed the Medicare Access and CHIP Reauthorization Act (H.R. 2), fully repealing the Sustainable Growth Rate (SGR) before the current patch expires on March 31 st, with 397 yeas and 37 no votes. The majority of Representatives who voted against the legislation come from the most conservative wing of the Republican Party and expressed reservations about adding billions to the deficit. The Congressional Budget Office (CBO) scored the legislation at $214 billion over ten years. $73 billion would be offset with beneficiary reforms and provider cuts, but $141 billion will be added to the deficit. In the early hours of Friday, the Senate adjourned for a two-week recess without passing the House bill. Majority Leader McConnell assured Senators and industry leaders that the Senate will take up the legislation when they return on April 13 th, one day before CMS runs out of authority to hold Medicare claims. President Obama has come out in favor of the bipartisan legislation and has said that he will sign it quickly. The legislation is endorsed by the many health groups, including the American Hospital Association and the American Medical Association. Permanent Fix to the Sustainable Growth Rate (SGR) The bill repeals the SGR payment formula. Ever since SGR s passage in 1997, Congress has passed short-term fixes rather than allow physician payment cuts. The new legislation replaces the SGR with a stable, 0.5 percent update for five years and ensures no changes are made to the current payment system for four years. An improved incentive program will be implemented in Stabilizing Fee Updates Medical professionals will receive an annual update of 0.5 percent starting June 1st through The 2019 rates will remain in place through 2025, while an improved incentive program (MIPS) will be implemented in 2019 for medical professionals to receive additional payment incentives. In 2026 and subsequent years, medical professionals participating in Advance Payment Models (APMs) that meet certain criteria will receive annual updates of 0.75 percent, while all other medical professionals will receive annual updates of 0.25 percent. Merit-Based Incentive Payment System (MIPS) Starting in 2019, payments to medical professionals will be adjusted based on performance in a unified MIPS program. This new program consolidates three current incentive programs: 1. The Physician Quality Reporting System (PQRS), which incentivizes reporting of quality measures 2. The Value-Based Modifier (VBM), which adjusts based on quality and resource use 3. Meaningful Use of EHRs (EHR MU) The penalties associated with the current incentive programs will end at the end of Medical Professionals to Whom MIPS Applies MIPS will apply to doctors of medicine, osteopathy, dental surgery, dental medicine, podiatric medicine, and optometry, chiropractors, physician assistants, nurse practitioners, clinical nurse

2 specialists, and certified nurse specialists beginning in Other medical professionals paid under the physician fee schedule may be included beginning in MIPS Assessment Categories MIPS will assess medical professionals in four categories: 1. Quality 2. Resource Use 3. Meaningful Use 4. Clinical Practice Improvement Activities Each year, the Secretary will publish a list of quality measures to be used in the forthcoming MIPS performance period, established with notice and comment rulemaking. Quality measures selected for inclusion on the final list will address all five of the following quality domains: 1. Clinical care 2. Safety 3. Care coordination 4. Patient and caregiver experience 5. Population health and prevention MIPS Payment Adjustment Each eligible medical professional s score will be compared to a performance threshold. Those whose composite scores are above the threshold will receive positive payment adjustments and those with scores below the threshold will receive negative payment adjustments. Negative adjustments will be awarded proportionally and capped at four percent in 2019, five percent in 2020, seven percent in 2021, and nine percent in Positive adjustments will also be awarded proportionally, up to a maximum of three times the annual cap for negative payment adjustments. A medical professional s payment adjustment in one year will have no impact on their payment adjustment in a future year. Expanded Participation Options and Tools to Enable Success Technical assistance will be provided to help practices with 15 or fewer medical professionals improve MIPS performance or transition to APMs. Priority will be given to practices with low MIPS scores and those in rural and underserved areas. Priorities and Funding for Quality Measure Development The Secretary is required to publish a plan for the development of quality measures for MIPS and APMs, taking into account how measures from the private sector and integrated delivery systems could be utilized in Medicare. This plan will address gaps in quality measurement and applicability of measures across health care settings. The Secretary will publish a report on the progress made in developing quality measures by May 1, 2017 and annually thereafter. Funding for medical professional quality measure development will be $15 million annually in through Encouraging Care Management for Individuals with Chronic Care Needs At least one payment code will be established for medical professionals treating individuals with chronic conditions. Empowering Beneficiary Choices through Access to Information on Physician Services Beginning in, in addition to the quality and resource use information that would be posted through the MIPS, the Secretary is required to publish utilization and payment data for physicians

3 and other medical professionals. This information will be emphasized on the services a medical professional most commonly furnishes, and will include the number of services furnished and submitted charges and payments for such services. Reducing Administrative Burden and Other Provisions This ensures that MIPS participation cannot be used in liability cases, and reaffirms existing law with respect to medical malpractice and medical products cases. Medicare and Other Extenders The bill includes 21 extenders for Medicare and other health care programs. Most of the extenders in the package extend funding for programs that were scheduled to lose funding on March 31, or. Some highlights include extending funding for Community Health Centers, extending the Geographic Practice Cost Index floor, extending the Medicare-dependent hospital program, and the permanent extension of the qualifying individual (QI) program. See the table at the end of the document for all of the Medicare extenders included in the legislation. The Children s Health Insurance Program (CHIP) The ACA authorized the CHIP program through 2019, but only authorized funding through the end of this fiscal year (September 30, ). This bill provides CHIP funding through FY 2017 with no changes to the program. Senate Democrats had pressed for an additional 2 years (through FY 2019) when the ACA authorization expires for the program, but House Democratic Leaders, and several moderate Senate Democrats, argued that a two year extension is better than no extension at all. Offsets Medicare Reforms Ban on Medigap first-dollar plans The legislation bans Medigap plans from covering the Part B deductible (currently $147/month), starting in 2020 for new enrollees only. Medigap plans are often purchased by beneficiaries to cover the beneficiary costs. By limiting the first-dollar plans, the legislation anticipates care utilization by beneficiaries to drop, saving federal funds Income-related premium adjustment for Parts B and D The legislation increases Medicare Part B and D premium contributions from wealthier beneficiaries. The table below shows the increased percentage wealthy beneficiaries must pay starting in Modified Adjusted Gross Income (MAGI) Individual: $133,501 - $160,000 Couple: $267,001 - $320,000 Individual: $160,001 $214,000 Couple: $320,000 $428,000 Current Premium % 2018 Premium % 50% 65% 65% 80% Other Offsets Market basket reductions The legislation limits the increase in Medicare reimbursements for post-acute care providers to one percent in FY 2018 saving $12 17 billion. This cut applies to all post-acute providers, including Skilled Nursing Facilities (SNFs), Inpatient Rehabilitation Facilities (IRFs), Long-Term Acute Care Hospitals (LTCHs), and home health.

4 Medicaid DSH cut delays The legislation delays the implementation of planned Medicaid DSH cuts. Currently, cuts are planned for state DSH allotments beginning in FY2017. This legislation pushes the delays the cuts by one year to FY2018 and adds another year of cuts in FY2025. Levy on Medicare providers for nonpayment of taxes Currently, the Department of the Treasury may impose a levy of up to 30 percent against Medicare service providers with tax delinquencies. This bill allows the Treasury to impose a levy of up to 100 percent on tax delinquent Medicare service providers. Adjustments to inpatient hospital payment rates Hospitals are scheduled to receive a one-time 3.2 percentage point payment increase in FY2018. This section of the bill provides for the anticipated hospital payment increase to be phased in at 0.5 percentage points per year over 6 years beginning in FY2018. Miscellaneous Protecting the Integrity of Medicare Act of (PIMA) This legislation includes bipartisan provisions that strengthen Medicare s ability to fight fraud and build on existing program integrity policies. For more details, please see Strategic Health Care s 6- page summary here. Delay of Two-Midnight Rule The legislation delays the implementation of CMS s two-midnight rule until September 30,. CMS can continue to use Medicare Administrative Contractors (MAC) to probe and educate to assess provider understanding and compliance. Appendix Medicare and Other Health Extenders Medicare Extenders Section Impact Original Sec Extension of work Geographic Practice Cost Index (GPCI) floor Sec Extension of therapy cap exceptions process Sec Extension of ambulance add-ons Sec Extension of increased inpatient hospital payment adjustment for certain low-volume The existing 1.0 floor on physician work is extended, boosting payments for the work component of physician fees in areas where labor cost is lower than the national average. Medicare currently limits the amount of annual perpatient therapy expenditures. In 2006, Congress created an exception process to allow patients to exceed the cap based on medical necessity. This provision extends the therapy cap exception and reforms the process of medical manual review changes to the review process will take effect 90 days after enactment. The add-on payment for ground ambulance payments is extended until 2018, including in super rural areas. Low-volume hospital payments, which CMS has historically provided to hospitals for the higher costs associated with operating a hospitals with low volumes of discharges, are extended until March 31, Extended 2018 December 31,

5 hospitals Sec Extension of the Medicaredependent hospital (MDH) program Sec Extension for specialized Medicare Advantage (MA) plans for special needs individuals Sec Extension of funding for quality measure endorsement, input, and selection Sec Extension of funding outreach and assistance for lowincome programs. Sec Transition and Extension of Medicare reasonable cost contracts. Sec Medicare Home Health Rural Add-On MDHs, rural hospitals with 100 or fewer beds that serve a high percentage of Medicare beneficiaries, are paid on a blend of current PPS rates and costs. This provision extends special payments made to MDHs. MA special needs plans (SNPs) are plans that may limit enrollment to certain populations, such as beneficiaries dually eligible for both Medicare and Medicaid or those suffering from certain chronic conditions. This provision extends authority for SNPs. This provision provides additional funding to the National Quality Forum (NQF) in FY, and extends funding in FYs 2016 and This would fund the NQF s review, endorsement, and maintenance of quality and resource use measures. Additional funding is provided to State Health Insurance Programs, Area Agencies on Aging, Aging and Disability Centers, and the National Center for Benefits Outreach and Enrollment to fund outreach and educational activities for Medicare beneficiaries. This provision would allow for a smooth transition policy for cost plans that no longer meet statutory requirements to operate under Medicare in their service area. This policy outlines rules and beneficiary protections for cost plans to transition to Medicare Advantage plans. This policy extends a three percent add-on to payments made for home health services provided to patients in rural areas. Other Health Extenders Section Impact Original Sec Permanent extension of the qualifying individual (QI) program. Sec Permanent extension of transitional medical assistance (TMA). Sec Extension of special diabetes program for type I diabetes and for Indians. Sec Extension of abstinence education. Sec Extension of personal responsibility education program (PREP) The QI program assists low-income Medicare beneficiaries with incomes between 120 percent and 135 percent of poverty (currently between $14,124 - $15,890 a year) in covering the cost of their Medicare Part B premium. This provision makes the QI program permanent. TMA allows low-income families to maintain their Medicaid coverage for up to one year as they transition from welfare to work. This provision extends TMA permanently. This provision extends both the Type I Diabetes and Type II Indian Health Service programs. This provision extends abstinence only programs and associated funding. PREP provides states, community groups, tribes, and tribal organizations with grants to implement evidence-based, or evidence-informed, innovative strategies for teen pregnancy and HIV/STD prevention, youth development, and adulthood preparation for March 31, March 31, 2018 Extended Permanent Permanent

6 Sec Extension of funding for family-tofamily health information centers. Sec Extension of health workforce demonstration project for low-income individuals Sec Extension of maternal, infant, and early childhood home visiting programs. Sec Tennessee disproportionate share hospital (DSH) allotment for fiscal years through Sec Delay in effective date for Medicaid amendments relating to beneficiary liability settlements. Sec Extension of funding for Community Health Centers (CHC) and National Health Service Corps Fund (NHSC) and Teaching Health Centers. young people. This provision extends the PREP program and associated funding The Family-to-Family Health Information Centers program, administered by the Health Resources and Services Administration (HRSA), provides grants to support family-staffed organizations in each state to assist families of children with disabilities or special health care needs. This provision extends the program s funding. Extends this program at the current funding level, which provides funding to help low-income individuals obtain education and training in high-demand, wellpaid, health care jobs The Maternal, Infant, and Early Childhood Home Visiting Program provides states, territories, and tribes with grants to support evidence-based in-home visiting programs for at-risk families. This provision extends the program s funding. The Medicaid statute requires that states make DSH payments to hospitals treating large numbers of lowincome patients. States receive an annual DSH allotment, which is the maximum amount of federal matching funds a state is permitted to claim for Medicaid DSH payments. Hawaii and Tennessee have had different DSH arrangements provided through multiple previous laws due to unique past circumstances. This legislation provides parity by treating Tennessee like other states, thus providing an annual DSH allotment for fiscal years through In December 2013, the Bipartisan Budget Act of 2013 overturned a circuit court case dealing with Medicaid estate recovery, allowing a state to recover medical expense claims from any portion of a Medicaid beneficiary settlement, potentially allowing a state to commandeer money set aside for a beneficiary s future care or living expenses. The Protecting Access to Medicare Act of 2014 package delayed this provision until The legislation provides an additional delay, until The fund for the CHC Program will expire in September. These dedicated mandatory funds supplement annual spending for the CHC program. The NHSC helps bring health care professionals to the areas where they are needed the most by providing scholarships and loan repayment in exchange for a commitment of service in an underserved community. The Teaching Health Center Graduate Medical Education Payment Program expanded residency training in communitybased settings. Residents are trained in family and internal medicine, pediatrics, obstetrics and gynecology, psychiatry, and general and pediatric dentistry through this program. The funds for these 2016 FY

7 programs are set to expire in, but this provision expands funding for the programs until FY 2017.