CMS: Centers for Medicare and Medicaid Services

Payment Provisions in the Traditional Medicare Program Delayed by the Deficit Reduction Act

January 3, 2006

Earlier this month, the Congress considered the Deficit Reduction Act of 2005.  Versions of this bill and of a subsequent conference report were passed by both chambers.  However, because of technical “points of order” against three specific minor provisions in the act, the final version passed by the two chambers differed slightly.  We expect this bill to be taken up again soon after the full Congress reconvenes.  At such time, CMS will be ready to make all appropriate payment changes in the least burdensome manner possible.  In the meantime, a number of changes that the bill intended to be effective on January 1, 2006, will not go into effect. 

• As required under current law, claims for physicians’ services on or after January 1 will be paid with the -4.4 percent reduction from 2005 levels.  The bill would have kept physician payment rates from being reduced, and would have provided significant offsetting savings to limit any impact on beneficiary costs.

• The base composite rate paid to end-stage renal disease facilities will not increase from 2005.  The bill would have implemented a 1.6 percent increase.

• Hold harmless payments for outpatient services of small rural hospitals  will expire under current law on December 31.  The bill would have helped prevent payment reductions for about 230 small rural hospitals.

• The 5 percent add-on payment for home health services to rural beneficiaries expired on April 1, 2005.  The bill re-established these payments effective January 1 to support access to home health services in rural areas. 

• Caps on payments for outpatient therapy services  are scheduled to go into effect January 1, without the exceptions process outlined in the conference report for the DRA.  Current law calls for two separate caps: $1740 per beneficiary per year for physical therapy and speech therapy, and the same amount for occupational therapy.  The bill would have provided an exception process under which additional services could be approved when they are medically justified, but this provision will not be implemented.  

• Rental arrangements for durable medical equipment and oxygen equipment  will remain unchanged.  Under current law, certain “capped rental” items are rented by Medicare for up to 15 months before they become the property of the beneficiary; the bill would have changed the period to 13 months.  Oxygen equipment is now rented indefinitely; the bill would have capped the rental period after 36 months, at which time the equipment would become property of the beneficiary.

• Skilled nursing facilities  will continue to be fully reimbursed for bad debt resulting from failure of Medicare beneficiaries to pay copayments.  The bill would have reduced Medicare’s payment to 70 percent of the bad debt.

• Services  payable by Medicare at Federally qualified health centers (FQHCs)   will remain unchanged.  The bill would have added self-management training and medical nutrition therapy for diabetics to the list of FQHCs Medicare services.  

• The minimum number of days Medicare requires after submission of a non-electronic claim before it makes payment will remain unchanged.  The bill would have changed this threshold from 27 to 29 days.

• Home health agencies  will receive payments reflecting a 2.8 percent increase on January 1, rather than the zero percent increase as recommended by MedPAC  and specified in the bill. 

• Specialty hospitals .  Last summer, CMS temporarily suspended enrollment of new specialty hospitals while the agency reviewed its procedures for enrollment.   At present, CMS plans to continue the suspension until February 15, 2006, after this review is completed.  The bill calls for continuation of this suspension for up to six months pending development of a Report to Congress containing a strategic plan for addressing specialty hospitals.  

CMS Implements Coding Changes

January 10, 2006

CMS Made revisions to Chapter 2, "The Certification Process," Appendix E--"Providers of Outpatient Physical Therapy or Outpatient Speech Language Pathology (OPT/OSP) Services," and Appendix K-- "Comprehensive Outpatient Rehabilitation Facilities."

Click HERE to view the coding updates.

United States Senate

Finance Committee Chairman Grassley Urges CMS to Delay Enforcement of Therapy Caps

Medicare spending limits for outpatient therapy should be suspended until Congress completes passage of the budget reconciliation legislation, which includes a system to provide for beneficiaries with exceptional needs, the chairman of the Senate Finance Committee said Dec. 22.

In a letter to Health and Human Services Secretary Michael O. Leavitt, Sen. Charles E. Grassley (R-Iowa) asked for an administrative moratorium on implementation of the caps, which are scheduled to go into effect on Jan. 1, 2006.

"I am concerned that if you proceed with implementing the current law and Congress does not conclude passage of this provision prior to the imposition of the caps, a significant number of beneficiaries may be harmed," the chairman said.

Twenty-five organizations wrote to the House and Senate conferees working on the budget reconciliation measure, asking them to maintain a moratorium on the caps. Despite their plea, the final package did not do so.

However, under the exception process that was agreed to in conference, a beneficiary would be able to request an exception from the two caps--physical therapy/speech language pathology and occupational therapy--for medically necessary treatment.

Under the 2006 physician fee schedule, each cap would be $1,740.

If no response to a request is made within 10 business days, "the secretary is deemed to have found the services medically necessary," the budget bill said.

Although Congress may complete work on reconciliation within the first few weeks of 2006, "an individual with intense rehabilitation needs could easily exceed the cap by the middle of January," Grassley said.

The controversial caps were required by the Balanced Budget Act of 1997 as a means of controlling service growth. Because of the controversy surrounding the limitation of services, there have been frequent moratoriums placed on the caps since the BBA was enacted, with the latest due to expire on Dec. 31.

To read the Press Release and Senator Grassley’s letter to Health and Human Services Secretary Michael O. Leavitt, click HERE.

OSHA, the Occupational Safety & Health Administration has come out with a webpage offering the opportunity to take a virtual reality tour of a physical therapy exam room. It explores common safety hazards as well as important health topics including blood borne pathogens, ergonomics, slips/falls, hazardous chemicals, equipment hazards and Legionnaires’ disease, to better equip all therapist in the design and maintenance of their offices. To view this e-tool, click HERE.