Health Center Regulatory Issues

NACHC Submits Comments on CMS Proposed Rule on Development of Medicare PPS

| by Susan Sumrell

As we have blogged about before, CMS released in September a Notice of Proposed Rulemaking for development of a new Medicare Prospective Payment System for Health Centers. Countless health centers have submitted comments, questions, and concerns to NACHC, and for that we are grateful. Accordingly, NACHC submitted comments to CMS yesterday that represent our best estimation of the law and corresponding regulatory policy, taking into account all of the feedback we have gotten from those of you in the field.
In general, NACHC was very pleased that CMS worked to develop a system that is administratively simple and does not stray far afield from the current, successful Medicaid PPS system—which provides payment based on an average bundle of services and costs. That said, we do feel that there are some components of the Proposed Rule that need clarification so as not to propagate further inequities similar to those that are commonplace under the current system. NACHC’s full comments, as submitted to CMS, can be found here and a summary of NACHC’s comments is as follows:

  • NACHC applauds the use of a bundled PPS rate. NACHC applauds CMS’s proposal to offer a bundled PPS rate, reflecting the national average costs of providing Medicare FQHC services as defined in the Social Security Act, with a geographic adjustment factor. We also appreciate CMS’s proposal to provide an upward adjuster for new patient visits. NACHC agrees with CMS’s reasoning that the encounter-based approach is consistent with the goal of encouraging more integrated provision of services, and that this methodology will function more effectively because of its similarity to the Medicaid bundled payment. NACHC appreciates CMS’s commitment to this type of payment methodology, which promotes health centers’ mission of providing comprehensive primary care services.
  • CMS should permit health centers to bill for multiple visits of different types on the same day. CMS sought comment on its proposal not to recognize multiple billable visits per day for services provided under the PPS. We urge CMS to withdraw this proposal and instead to apply, for services provided under the new FQHC PPS, the existing regulatory provisions on same-day visits. The existing rules allow health centers to bill for more than one visit on the same day when the patient suffers illness or injury requiring additional treatment after the first encounter, or when the patient has a medical visit and a mental health visit, diabetes self-management training (DSMT), or medical nutrition therapy (MNT) service in the same day. Given these services are often provided by multiple providers, in order to integrate these types of services into one visit, the costs associated with the single per diem rate would not adequately cover the costs of all providers. NACHC is concerned that the “per diem” aspect of the payment methodology (i.e., the limit of one billable visit per day) will impede the current movement toward more integrated care for Medicare beneficiaries in health centers. In addition, the ability to schedule more than one visit on the same day is crucial to ensuring access to care for elderly and disabled patients, who may have transportation constraints or face other health care access barriers.
  • CMS does not have statutory authority to enforce the lesser-of-PPS-or-charges provision. NACHC’s most serious concern about the Proposed Rule relates to Section 1833(a)(1)(Z) of the Social Security Act (the “lesser-of provision”), which requires Medicare payment for FQHC services provided under the PPS to equal “80 percent of the lesser of the actual charge or the amount determined under [the PPS provisions].” In NACHC’s opinion, CMS does not have the legal authority to enforce this provision. By its terms, the lesser-of provision applies only to services “described in section 1832(a)(1).” Section 1832(a)(1), in turn, explicitly excludes FQHC services. We recommend that CMS at a minimum obtain a legal determination as to whether it is authorized under the statute to enforce this limitation.  In addition, the draft regulations do not define “charge” or explain how CMS plans to implement the limitation. CMS also appears to have overlooked the lesser-of provision in its regulatory impact analysis.  Since the PPS is a per-encounter payment, the negative impact of the lesser-of provision will be especially acute if CMS contemplates a comparison, for each visit, of the PPS rate to the charges associated with specific HCPCS procedure codes that the health center billed for FQHC services on the day the visit occurred. That type of comparison would be “apples to oranges” – comparing costs of an aggregate bundle to charges associated with a specific visit or encounter. That approach would routinely result in underpayment of health centers.  If after considering the statutory language in Sections 1832(a)(1) and 1833(a)(1) of the Social Security Act, CMS concludes that it has statutory authority to enforce the lesser-of provision, NACHC recommends that CMS provide all interested parties with an opportunity to review and comment on any changes or additions may be made to the proposed rule. Additionally, if CMS should implement the provision in a way that ensures parity between the bundled rate and charges compared. For example, the PPS rate could be compared with the health center’s average charge per FQHC visit, as determined on an annual basis. For every service provided in a given year, the PPS rate would then be compared to the prior year’s average charge per visit, as adjusted by the applicable inflation factor. That type of approach would mitigate the negative effects of the lesser-of provision by ensuring an “apples to apples” comparison of the PPS rate to charges, by using a bundled approach for both.
  • CMS should clarify that it will provide 100 percent payment for the preventive services for which coinsurance is waived. The preamble to the Proposed Rule states that health centers will be required to waive the application of coinsurance for a variety of preventive services included in the PPS rate. However, this requirement is not stated in the draft regulations on coinsurance. Further, the draft regulations do not provide that Medicare will pay 100 percent of the PPS rate for those services. We presume that CMS’s intention was for Medicare to pay the health center 100 percent of the PPS where coinsurance is waived. Otherwise, health centers would receive only partial payment (80 percent) for preventive services that are essential to encouraging better health outcomes, such as annual wellness visits (AWV), the “welcome to Medicare” visit (“initial preventive physical examination,” or IPPE), and medical nutrition services. We urge CMS to clarify this point in the final regulations.
  • CMS should not exclude outlier health centers and outlier visits from total allowable costs in computing the PPS rate. CMS explains in the preamble to the Proposed Rule that it has excluded from the costs used to set the national PPS rate both (1) the costs of specific FQHCs whose total costs per visit on the cost reports that CMS used as the basis of the PPS rate were more than three standard deviations from the geometric mean, and (2) the costs associated with individual visits on the claims data CMS used in developing the PPS rate that were more than three standard deviations from the mean. Using these methods, CMS reduced the proposed initial PPS rate significantly. The application of these limitations is in our opinion inconsistent with the statute, which requires that the aggregate amount of PPS rates be based on “100 percent of the estimated amount of reasonable costs,” without the application of caps and screens. NACHC urges CMS, in computing the base PPS rate, to use the costs per visit without exclusion of outliers.
  • CMS should modify the geographical adjustment factors. To take into account regional variations in the costs of care, CMS proposes to use the Geographic Practice Cost Indices (GPCIs) currently used under the Physician Fee Schedule (PFS). In general, NACHC does not object to use of the GPCIs, but the factors influencing costs for urban versus rural providers are different for FQHCs than they are for physician practices. As one example, rural health centers face unique challenges in recruiting clinicians and often need to incorporate payment incentives to attract qualified candidates. The proposed geographical adjustment factors published in the Proposed Rule may result in underpayment to rural health centers and should be revised accordingly.
  • CMS should develop an FQHC-specific inflationary index. NACHC urges CMS to develop a specific inflation factor for the market basket of FQHC services, as required in the ACA amendments. As noted by the Government Accountability Office in a 2005 report, the Medicare Economic Index (MEI) falls short of the true rate of inflation affecting health center services because the MEI takes into account only physicians’ service costs, not the broader range of costs affecting health center operations. NACHC will gladly work with CMS on the development of the FQHC-specific index.
  • CMS should take this opportunity to clarify other important aspects of FQHC Medicare billing. NACHC also urges CMS to use the present rulemaking as an opportunity to resolve several issues concerning Medicare FQHC billing that have plagued the Medicare FQHC reimbursement system for years. For example, the fact health centers currently work with multiple Medicare fiscal intermediaries has propagated confusion, as each fiscal intermediary issues different instructions concerning the FQHC benefit and associated billing requirements. Under the Medicare administrative contractor (MAC) system, NACHC encourages CMS to assign one MAC to work with all FQHCs. Greater clarity is also needed concerning the requirement that health centers bill Medicare for the technical components of FQHC services separately under Part B. CMS indicated in the preamble that it intends to issue program guidance on this topic, and we encourage CMS to do so.

We hope that a number of health centers submitted comments on their own as well and will look forward to seeing CMS’ final rule taking into account the above issues as well as those raised directly by the field. Stay tuned to The Policy Shop for further updates on the Final Rule!