Strike balance in proposals to modify private physician contracts, KFF warns

Policy makers considering proposals to ease Medicare private contracting rules should strike a balance between ensuring doctors and practitioners receive fair payment and helping beneficiaries face predictable and affordable medical care, a Kaiser Family Foundation (KFF) issue brief concluded. While proponents of such proposals may tout increased physician autonomy, easing private contracting rules could lead to “an unraveling of financial protections” currently in place.

Options for charging Medicare patients

Currently, physicians and practitioners have three options for charging patients in traditional Medicare—by registering as a participating provider, a nonparticipating provider, or an opt-out provider who privately contracts with Medicare patients. Participating providers (see Social Security Act (SSA) Sec. 1842(h)(1)) agree to accept the Medicare physician fee schedule amount as payment in full for all Medicare services, and patients are liable for a 20 percent coinsurance. Nonparticipating physicians may choose, on a service-by-service basis, to charge Medicare beneficiaries higher fees, up to a limit of 115 percent of the fee schedule amount (see SSA Sec. 1848(g)).

Opt-out providers with private contracts may charge Medicare patients any fee they feel is appropriate, as agreed upon in the contract, and Medicare does not cover or pay for such services (see SSA Sec. 1802(b)). Less than 1 percent of physicians in clinical practice chose to opt out of Medicare in 2016.

Patient protections

Before providing services, physicians must inform a beneficiary in writing that they opted out of Medicare (see 42 C.F.R. Sec. 405.415). The physician is prohibited from entering into a private contract when the beneficiary needs emergency or urgent care. Also, a physician must opt out of Medicare for all of his or her Medicare patients and for all services provided to them. A two-year opt-out period is automatically extended for two-year periods.

Proposals to change Medicare private contracting

The issue brief described various proposals to modify private contracting in Medicare, including legislation introduced by Rep. Tom Price (R-Ga): (1) allowing physicians to contract more selectively, on a patient-by-patient or service-by-service basis; (2) allowing patients and physicians to seek Medicare reimbursement for an amount that Medicare would normally pay under the physician fee schedule; and (3) allowing patients and physicians to seek reimbursement from supplemental insurance, such as Medigap policies and employee-sponsored retiree coverage.

KFF noted the arguments in favor of these proposals. First, lifting restrictions on private contracting would allow physicians to receive higher payment for services, which could offer practitioners greater autonomy. Second, the proposals could increase the number of physicians willing to accept Medicare patients because they could charge higher fees to some Medicare patients. Third, the proposals could reduce beneficiary out-of-pocket costs because beneficiaries entering into private contracts would be able to seek Medicare reimbursement for part of the physician’s bill.

KFF raised concerns, however. For example, liberalizing private contracting rules could increase costs for beneficiaries. In addition, some beneficiaries could lose access to affordable services, particularly for less common physician specialties.

‘Mid-build’ outpatient departments: submit paperwork soon to qualify for OPPS exemption

Off-campus provider-based hospital outpatient departments (HOPDs) that qualify for the mid-build exception must submit the required materials to their Medicare Administrative Contractor by February 13, 2017, to qualify for the exception for services provided in 2018. The hospital must (1) attest that department requirements are met; (2) include the department on the provider’s enrollment form; and (3) and submit a written certification that the department met the mid-build requirement that is signed by the CEO or COO of the main provider. All attestations must be audited by HHS for accuracy.

Outpatient prospective payment changes

Under the 2017 Outpatient Prospective Payment System (OPPS) Final rule (81 FR 79562), CMS implemented section 603 of the Bipartisan Budget Act (P.L. 114-74), which disallows payment made to off-campus HOPDs under the OPPS (see OPPS, ASC payment rates updated; off-campus PBD billing system established, Health Law Daily, November 2, 2016). This provision was created to ensure that services are billed at a uniform rate, regardless of the facility in which the services are provided.

21st Century Cures Act

Section 16001 of the 21st Century Cures Act (P.L. 114-255) provides an important “mid-build” exception for off-campus HOPDs that had a written contract with an outside party for construction of the facility before November 2, 2015. CMS’ preliminary guidance outlines the requirements for HOPDs that qualify for the 2018 exception. It also clarifies that attestations received from providers before December 2, 2015, qualifies that provider for the exception, and that these HOPDs should continue to use the ‘PO’ modifier when billing, rather than the ‘PN’ modifier. Those that did not submit timely attestations are to use ‘PN,’ which triggers the Medicare physician fee schedule (MPFS) payment.

The Cures Act also excepted HOPDs of cancer hospitals from the change to OPPS. Departments that met the requirements of 42 C.F.R. section 413.65 between November 1, 2015, and December 13, 2016, will qualify, as long as attestation is received February 13, 2017. HOPDs of cancer hospitals that meet regulatory requirements after December 13, 2016, will be exempt as long as an attestation is received within 60 days of meeting the requirements.

Proposed MIPS rule requires new vocabulary for physician payments

When CMS published the advance release of a Proposed rule to implement the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (P.L. 114-10), it changed existing and created new terms and acronyms to describe aspects of the Merit-based Incentive Payment System (MIPS) and the Alternative Payment Model (APM) incentive under the physician fee schedule (PFS). As providers and health lawyers prepare to adjust to MACRA’s changes, they should also train themselves to be conversant in this new language.

New language

MACRA created a number of new terms, most of which are used in the Proposed rule. A few of the terms MACRA created have been changed in the Proposed rule; see Obsolete terms, below.

APM: For the purposes of the APM incentive, MACRA defines an APM as a model under section 1115A of the Social Security Act (the Act) (excluding a health care innovation award), the Shared Savings Program under section 1899 of the Act, a demonstration under section 1866C of the Act, or a demonstration required by federal law.

Other Payer APMs: The Proposed rule uses this term to refer to arrangements in which eligible clinicians may participate through other payers.

APM Entity: Under the Proposed rule, an APM Entity is an entity that participates in an APM through a contract with a payer.

Qualifying APM Participant (QP) / Partial Qualifying APM Participant (Partial QP): These terms, defined in Act secs. 1833(z)(2) and 1848(q)(1)(C)(iii) do not report on MIPS applicable measures and activities that are required under MIPS. QP and Partial QP status is determined based on participation in Advanced APMs during a corresponding QP Performance Period.

MIPS eligible clinician:  The Proposed rule uses this term to replace MACRA’s wording of MIPS eligible professional (EP), defined at Act sec. 1848(q)(1)(C). MIPS eligible clinicians will include physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists, and groups that include such clinicians. This definition does not include QPs and Partial QPs.


Obsolete terms

Sustainable growth rate (SGR): MACRA ended the SGR, which came from a 1997 law aiming to control Medicare costs. The SGR has been rendered ineffective for more than a decade due to Congressional “doc fixes.”

Physician Quality Reporting System (PQRS); Physician Value-based Payment Modifier (VM); Medicare Electronic Health Record Incentive Program for Eligible Professionals, also known as the Meaningful Use program: These three programs will sunset after 2018, while some elements of each will be incorporated into MIPS, which begins in 2019.

MIPS EPs: The Proposed rule would define MIPS program participants as “MIPS eligible clinicians” rather than “MIPS EPs.” The agency believes that eligible clinicians is a more flexible, inclusive term than EP.

“All-or-nothing” scoring: The PQRS required EPs to meet all program criteria or receive a negative adjustment. The Proposed rule instead would give MIPS eligible clinicians partial credit, rewarding them partially for the measures they do meet.

For Wolters Kluwer’s analysis of the Proposed rule, see Physician reporting streamlined, less burdensome under flexible Quality Payment Program, Health Law Daily, April 28, 2016.