Payment Matters

January 10, 2013

American Taxpayer Relief Act of 2012: Physician Cuts Averted, Hospitals to Carry Portion of Price Tag

By: Kristin Cilento Carter

Avoiding sending American taxpayers over the so-called “fiscal cliff,” Congress enacted the American Taxpayer Relief Act of 2012 [PDF] that was signed into law on January 2, 2013. Of biggest note, the Act included a provision to avoid implementation of the statutory reduction of Medicare payments to physicians of approximately 26.5% required under the Sustainable Growth Rate (SGR) (Section 601). Congress has enacted similar “doc fixes” in the past to delay implementation of the flawed SRG adjustment. While this temporary fix will cause physicians to breathe a sigh of relief and will stave off the potential for drastic reduction in physician participation in Medicare for at least one more year, it comes at a price for hospitals, as its $25.2 billion dollar price tag is funded, in part, by the following purported cost-saving measures:

  • Implementation of documentation and coding adjustments for inpatient prospective payment system (IPPS) hospitals to recoup purported overpayments associated with the transition to Medicare Severity Diagnosis Related Groups (MS-DRGs). (Section 631). According to the Congressional Budget Office (CBO) Report this will cost hospitals approximately $10.2 billion in the next five years.
  • Rebasing of the state disproportionate share hospital (DSH) allotment effective in 2021 resulting in approximately $4.2 billion in savings. (Section 641).
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Extension of Time for Overpayment Recoveries in Fiscal Cliff Law Not as Broad as it Sounds

By: Leslie Demaree Goldsmith and Thomas W. Coons

The recently passed fiscal cliff legislation, i.e., the American Taxpayer Relief Act of 2012 [PDF], includes a number of provisions addressing Medicare and Medicaid. One of these provisions extends the recovery period for the collection of overpayments under certain circumstances. Specifically, section 638 of the Act amends section 1870 of the Social Security Act and addresses the period of time that providers are deemed to be “without fault,” and thereby protected from having to repay overpayments.

Under the old law, a provider was deemed to be without fault beginning with three years after the year in which the original payment was made to the provider, unless there was evidence to the contrary. Under the new law, the no fault status does not attach until five years after the year in which the original payment is made. Although this appears to give the government two more years to go after overpayments, in reality the expansion of the time period does not ultimately give the government that much additional opportunity to recover overpayments.

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CMS Acknowledges Transitional Care Management as Separate Service from E/M

By: Julie E. Kass

Recognizing that care coordination is a key component to achieving better care and health for individuals and reducing expenditure growth, CMS has implemented several new programs to provide payment for such services, including post-discharge transitional care management (TCM) payments. In the 2013 physician fee schedule [PDF], CMS created such payments for physicians and certain non-physician practitioners. While CMS states that generally care coordination is a component of an Evaluation and Management (E/M) service, CMS acknowledged that such payments may not be sufficient to support comprehensive management of certain categories of patients, such as those being discharged from institutions to community-based care. Accordingly, CMS has adopted CPT TCM codes 99495 and 99496, with certain modifications, for a single physician who provides care coordination services to a patient within thirty days of the patient’s discharge from a hospital, psychiatric hospital, long-term care hospital, skilled nursing facility, or partial hospitalization at a community mental health center to community-based care.

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