States’ Projections for Medicaid Expansion Were Accurate

Medicaid spending and enrollment has increased in all states during fiscal years (FYs) 2014 and 2015 due to the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), according to a report from the Kaiser Family Foundation (KFF). Overall spending on Medicaid has increased 10.2 percent during FY 2014 with spending from state source increasing by 6.4 percent. These increases were in line with projections made by state Medicaid administrators. KFF projects that overall spending on Medicaid in FY 2015 will grow 14.3 percent. The higher rate of growth is due to the fact that FY 2105 will be the first full year of Medicaid expenditures since expansion occurred.

As would be expected, the majority of these increases occurred in the states that expanded Medicaid, but enrollment and spending also increased in states that did not choose to expand Medicaid eligibility to all adults with incomes below 133 percent of poverty. These findings are based on KFF’s 14th annual survey of Medicaid directors in all 50 states and the District of Columbia and conducted in conjunction with Health Management Associates. The findings of this study reflect earlier findings (see Hospital financials, access to care, state budgets improve under Medicaid expansion, September 17, 2014).

Medicaid Expansion

The ACA required states to expand eligibility to all individuals with incomes below 133 percent of poverty or lose all federal Medicaid funding. The Supreme Court in National Federation of Business v Sebelius found that this expansion radically changed the nature of Medicaid from a voluntary program providing states with funding to care for the poor and disabled to a program of limited universal coverage—and that those changes were unconstitutional. Following the Supreme Court’s decision states could decide to expand Medicaid or not. During 2014, 25 states and the District of Columbia choose to expand Medicaid and received 100 percent federal funding for the individuals enrolled under the expanded criterion. Those states will receive 100 percent funding for 2014, 2015 and 2016. In 2017 the federal funding will decrease to 95 percent. Funding will continue to decrease to 94 percent in 2018, to 93 percent in 2019, and to 90 percent in 2020 and beyond. During 2015, an additional two states expanded Medicaid eligibility and an additional two states are seeking CMS approval of a waiver to expand Medicaid coverage in their states.

Overall Spending

The average growth in spending on Medicaid was 10.2 percent in FY 2014. In the states that expanded Medicaid the increase in spending averaged 13.1 percent, and in states that did not expand Medicaid the average increase in growth was 5.6 percent. State legislatures did a good job of appropriating sufficient funds to cover this growth, KFF reported. State legislatures appropriated an additional 13.1 percent for Medicaid spending in states that expanded Medicaid, and state legislatures that did not expand Medicaid appropriated an additional 6.8 percent for Medicaid expenditures, which was more than the growth amount of 5.6 percent.

Enrollment Growth

Across the country Medicaid enrollment increased 8.3 percent in FY 2014 and is projected to increase 12.2 percent during FY 2015, KFF reported. Enrollment in states that expanded Medicaid grew by 12.2 percent, and in states that did not expand enrollment Medicaid enrollment increased 2.8 percent during FY 2014. In FY 2015 enrollment in states that have expanded Medicaid is projected to increase 18 percent and 5.2 percent in states that have not expanded Medicaid, according to KFF.

The increase in enrollment in states that did not expand Medicaid eligibility is attributed to individuals who were eligible for Medicaid prior to the ACA but who never applied. The reasoning is that due to increased media attention and outreach efforts these individuals now learned that they might be eligible for Medicaid, even though they were eligible all along. Medicaid directors have estimated that 20 percent of new enrollees were eligible prior to the ACA expansion of Medicaid eligibility, reported KFF.

KFF expects these trends to continue as additional states decide to expand Medicaid eligibility. KFF notes that Congress has increased the amount of federal funding to states for Medicaid during recessions and that this may occur again. Finally, the economy can also impact Medicaid funding, as legislatures have to make decisions based upon receipt of tax revenues. All of these factors could change the rates of change in Medicaid enrollment and spending.

Kusserow’s Corner: Extendicare Health DOJ Settlement of $38 Million and Five-Year Quality of Care CIA with the OIG

The Department of Justice (DOJ) announced the largest “failure of care” settlement with a chain-wide skilled nursing facility (SNF) in the Department’s history. Extendicare Health Services, Inc. (Extendicare) and its subsidiary ProStep entered into a settlement with the DOJ and agreed to pay $38 million to resolve allegations that they billed Medicare and Medicaid for materially substandard nursing services that were so deficient that they were effectively worthless, and billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services in 33 of its skilled nursing homes in eight states (Indiana, Kentucky, Michigan, Minnesota, Ohio, Pennsylvania, Washington, and Wisconsin). Overall, the chain provides services at 146 facilities in 11 states.

Two Relators brought separate cases against Extendicare; they will receive more than $2 million as their share of the recovery. [See United States ex rel. Lovvorn v. EHSI, et. al. C.A. 10-1580 (E.D. Pa) and United States ex rel. Gallick et al., v. EHSI et al., C.A. 2:13cv-092 (S.D. Ohio)].

Extendicare also will enter into a five-year chain-wide Quality of Care Corporate Integrity Agreement with the HHS Office of Inspector General (OIG) under which they must have a comprehensive compliance program with systems to address the quality of resident care. The compliance program must include, among other things, corporate-level committees to address compliance and quality, including a committee to assess staffing, and an internal audit program to assess the quality of care provided to residents. Extendicare must retain an independent monitor, selected by the OIG, who will regularly visit Extendicare’s facilities and report to the OIG, along with an Independent Review Organization (IRO) that will perform annual reviews of claims to Medicare.

This case is particularly significant in the fact that the fraud charges resolved by the settlement were for billing for sub-standard care. It helps set precedents for taking actions against other providers who provide services that did not measure up to quality of care standards. The DOJ allegations focused on the fact that Medicare and Medicaid were billed for materially substandard nursing services. They alleged that the services were so deficient that they were effectively worthless, and that Extendicare billed Medicare for medically unreasonable and unnecessary rehabilitation therapy services, meaning the claims were in fact false and fraudulent.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.

CMS Issues New CEHRT Deadlines for FY 2015

With October 1, 2014 marking the beginning of the 2015 Electronic Health Reporting (EHR) Incentive Program year, CMS has announced guidance on payment adjustments and hardship exceptions for Medicare-eligible hospitals and providers. The announcement highlights new deadlines for the application process and provides links to the adjustment and hardship exception applications.

Background

The American Recovery and Reinvestment Act of 2009 (ARRA) mandated that Medicare-eligible professionals and hospitals who are not “meaningful users” of Certified Electronic Health Record Technology (CEHRT) under the Medicare EHR Incentive Program will be subject to Medicare payment adjustments. If a provider is eligible to participate in the Medicare EHR Incentive Program, it must demonstrate meaningful use of the technology in either the Medicare EHR Incentive Program or in the Medicaid EHR Incentive Program. Medicaid providers who are only eligible to participate in the Medicaid EHR Incentive Program are not subject to the payment adjustments.

Payment Adjustment

The payment adjustments will be applied to eligible hospitals beginning on October 1, 2014, and to eligible professionals (EPs) on January 1, 2015. CMS offers a reconsideration application for Fiscal Year (FY) 2015 for eligible providers that believe the adjustment has been erroneously applied to them.

Hardship Exception

CMS extended the submission period for hardship exception applications and provided a new deadline for submission for eligible providers that do not use CEHRT and can show they would suffer hardship by using the technology. In order to avoid the FY 2015 payment adjustment, providers must submit the extension hardship application by November 30, 2014, along with proof of the hardship. If approved, the exception is valid for one payment year, and a new application will have to be submitted should the hardship continue for the following payment year. CMS stresses that no eligible providers will be granted an exception for more than five years.

Some providers, such as new providers in their first year and EPs who are 90-percent hospital-based, are automatically granted hardship exceptions for FY 2015. CMS will use Medicare data to determine which providers receive the exemption. Such providers do not need to submit the hardship application.

Further Guidance

In order to align with the EHR Incentive Programs, all eligible hospitals must have already obtained the 2014 edition certified EHR technology (2014 Edition CEHRT) to participate in 2015. Some hospitals require the certification for the entire year, while others may require it for only part of the year. CMS released Eligible Hospitals:Meeting Meaningful Use in 2015 with 2014 Edition Certified EHR Technology (CEHRT) for further guidance.

CMS Urged to Reimburse Providers for End-of-Life Planning

Should Medicare and Medicaid reimburse providers for counseling patients regarding end-of-life issues? Support for Medicare and Medicaid reimbursement for end-of life planning has been growing from a variety of sources, including Congress, state Medicaid programs, the American Medical Association (AMA), the American Academy of Family Physicians, and the Institute for Medicine (IOM). An August 30, 2014, New York Times article, noted that even private payers have begun reimbursing doctors for advance care planning service.

Congressional Support

“Currently, the time doctors spend having discussions with their patients about end-of-life care and planning is not reimbursed under Medicaid and Medicare. Without this incentive, these conversations are not happening,” according to a news release issued by Congressman Earl Blumenauer (D-Oregon). On March 14, 2013, Blumenauer and Phil Roe (R- Tennessee) introduced a bill titled “Personalize Your Care Act” (H.R. 1173) that would provide for coverage of voluntary advance care planning consultation under Medicare and Medicaid every 5 years or in the event of a change in health status. In summary, the bill, which had 58 additional co-sponsors, allows for periodic revisiting of advance care documents and goals of care recognizing that an individual’s preference may change over time. It also provides grants to states to establish or expand physician orders for life sustaining treatment programs and improves the accessibility of advance care planning documents by ensuring that an individual’s electronic health record is able to display his or her current advance directive and/or physician orders for life sustaining treatment so that his or her wishes would be more readily known. The bill was endorsed by AARP, American Academy of Hospice and Palliative Medicine, American College of Physicians, American Geriatrics Society, American Hospital Association, and the American Academy of Family Physicians.

Blumenauer along with 33 other members of the House of Representatives sent a letter to Marilyn Tavenner, CMS Administrator, on September 24, 2014, urging CMS to adopt recommendations to reimburse Medicare providers for voluntary discussions with patients on end-of-life care and planning. Blumenauer cited to a recent study in the New England Journal of Medicine that found that more than one in four elderly Americans lacked the capacity to make their own medical care decisions at the end of life.” He noted that this leads to decisions that are made by family members and doctors “who may not know the treatment preferences of their loved one.” To conduct complex and time consuming end-of life discussions regarding patients’ goals and wishes, Blumenauer stressed that providers need adequate time, space, and reimbursement.

AMA Establishes End-of-Life CPT Codes

Blumenauer noted in the letter that the AMA has created two specific current procedural terminology (CPT) codes for providers to report advance care planning services with patients to CMS. He urged Tavenner to adopt the CPT codes recommended by the AMA in the Medicare Physician Payment Schedule so that providers could be reimbursed for end-of life discussions with patients. According to a September 19, 2014, article in Medscape Multispecialty Medical News, the AMA CPT codes, which will be incorporated into the CPT in January 2015, are “a necessary step for Medicare to begin considering reimbursement for end-of-life discussions between physicians and patients” and also “will help streamline reimbursement from private payers.” One of the two codes would be used for the first 30 minutes of face-to-face time with the patient or family member to discuss advance directives and the second code would be used to bill for each additional 30 minutes of planning.

The Medscape article noted that “The Illinois State Medical Society submitted an editorial proposal to the AMA’s CPT Editorial Panel requesting that a code be added for advance care planning services.” In response to the Illinois State Medical Society’s request, the CPT Editorial Panel created the new codes, which then “triggered an evaluation of the time and resources required to perform the services detailed in the code,” according to Medscape. The AMA’s Relative Value Scale Update Committee (RUC), which evaluates time resources and raw materials, “has met to discuss advance care planning services and has submitted its reimbursement recommendation to Medicare,” Medscape said.

IOM’s Report on “End-of-Life”

In its report “Dying in America: Improving Quality and Honoring Individual Preferences Near the End of Life,” published in September 2014, the IOM noted that the medical community has more knowledge about how to better engage patients and families in advance care planning and shared end-of-life decision making. The IOM committee recommended “integrated, person-centered, family-oriented, and consistently accessible care near the end-of-life be provided by health care delivery organizations and covered by government and private insurers.” IOM stated that advanced planning is of critical importance to ensure individuals goals and needs are met. Recognizing the usefulness of advance directives, the IOM stressed, nonetheless, that they “should not take the place of open, continuous communication.” IOM recommended payers and health care delivery organizations adopt standards “as a necessary component of high-quality care for individuals with advanced serious illness and their families and enable them to seek these services from their physicians and providers. “