Unsure of CMS' strategy, providers may retreat on risk models

The CMS is asking hospitals to develop claim modifiers to track which drugs are obtained under the program. This will lead to a dramatic spike in costs for hospitals, not only for health information technology, but in terms of labor costs—possibly millions of dollars.

Hospitals said that the CMS erroneously assumed that all of their drugs are purchased under 340B, but the system utilized for purchasing medications is actually separate from a hospital's pharmacy drug dispensing system and patient billing system. As a result, it may be three to 10 days post-dispensing before the hospital knows whether a drug was purchased under 340B or at regular pricing, according to the Provider Roundtable, a group of hospital leaders convened by Nimitt Consulting to comment on federal rulemakings. During the 340B comment period, some hospitals said it would take up to a year to test and implement a new health IT system, but the CMS has only given them until Jan. 1 to do so, putting them at even further risk of loss of reimbursement for noncompliance. The outpatient rule will also cause hospitals to lose reimbursement due to a decision to pay for total knee arthroplasty in outpatient settings. Medicare paid for more than 400,000 knee and hip replacements in 2014, shelling out more than $7 billion for hospitalizations stemming from the procedures. The change could lead to healthier beneficiaries seeking care in outpatient settings, leaving only the sickest for inpatient settings, according to Ninfa Saunders, CEO of four-hospital Navicent Health in Macon, Ga., and co-founder of Stratus Healthcare, an alliance of nearly two dozen Georgia hospitals. The physician payment rule released this month also contained a provision that hospitals say undermines efforts to provide higher quality of care to beneficiaries. The agency finalized plans to reduce off-campus facilities' rates from 50% to 40% of what they would have been paid under outpatient rates. The cut applies to off-campus facilities that started billing Medicare after Nov. 2, 2015. The CMS estimated the cut would result in a $12 million decrease in reimbursement next year for hospitals. However, hospitals argue that the policy will have a bigger impact over time since there were no exceptions included if a site needed to relocate to adjust for patient demand or to update an outdated facility. The policy "will limit our ability to provide community-based care," said Peter Kaprielyan, vice president of government and external relations at Inspira Health Network, a three-hospital system in New Jersey. Doctors are also facing barriers to making the jump to value-based models. The CMS finalized a rule that exempts more than 900,000 providers from having to report under the Merit-based Incentive Payment System. Only 39% of 1.5 million Medicare clinicians now billing under Medicare will be complying with MIPS in 2018, according to the CMS. MIPS was structured to take funds away from poor-performing providers and reward physicians who meet quality benchmarks with an incentive payment. The pool is now so narrow and filled with providers who are likely to perform well that the possibility of rewards has dropped dramatically. As envisioned, MIPS awarded up to 5% collectively in bonus payments in 2020. The CMS now estimates that the best providers can hope for is a 0.9% collective increase in payments that year Now, with the exclusions being as large as they are, MIPS has devolved into a compliance exercise that will have very little impact on quality, said Chet Speed, vice president of public policy at the AMGA. A potential bonus that small does not cover the expenses of implementing the program. The cost of tracking and reporting the quality measures under MIPS was expected to cost providers $1 billion in 2017, according to the CMS. "What CMS has done is exclude so many physicians there is really no one left on the negative side," said Darryl Drevna, director of regulatory and public policy at AMGA. "You're losing the incentives to learn how to compete in a value-based environment." CMS officials said they were responding to many practices' concerns that they didn't have enough Medicare patients to justify the cost of overhauling their EHR systems or buying new ones to track and report quality measures. Decreased incentives to participate in value-based care and a reduction in reimbursement under the various pay policies outlined in the rulemakings may cause some to scale back the number of Medicare patients they treat, according to Joseph Webb, CEO of Nashville General Hospital. "If physicians are not able to get a return on their investment for caring for this patient population, then they are going to move on to other populations," Webb said. "At the end of the day, they still need to make a living."