Revenue Cycle Management Blog | GroupOne Health Source

SGR Fiscal Cliff Updates and Medical Practice Impact

Written by Kaitlyn Houseman | January 2, 2013

Yesterday, the United States Congress approved legislation that prevents most taxpayers from experiencing a tax increase; prevents the scheduled 26.5% SGR related cut in physician fee schedule payments; and delays (until early March) the 2% across-the-board cut in Medicare payments due to sequestration.

In lieu of the 26.5% SGR cut, the Congress approved a one-year freeze in the Medicare conversion factor used to calculate Medicare Physician Fee Schedule payments.  The Congress also approved a one-year extension of several Medicare payment policies that were set to expire.  Finally, the Congress approved a series of payment reductions in other provider payments as a way to “pay for” the SGR fix.

Other than the 2% sequester cut that has been delayed, none of these changes directly affects RHCs.  However, we thought it would be helpful to make you aware of these changes as many RHCs are part of larger organizations (hospitals, CAHs, group practices, etc.) that may be affected by some of these changes.  



A list of the Medicare provisions “extended” is below, along with the list of payment reductions the Congress approved as “offsets”. 

Medicare Provider Payment provisions extended as part of the Fiscal Cliff compromise.

Work Geographic Adjustment. This provision extends the existing 1.0 floor on the “physician work” index through December 31, 2013.

Payment for Outpatient Therapy Services. This provision extends the exception process through December 31, 2013. The provision also extends the cap to services received in hospital outpatient departments only through December 31, 2013.

Ambulance Add-On Payments. This provision extends the add‐on payment for ground including in super rural areas, through December 31, 2013, and the air ambulance add‐on until June 30, 2013.

Extension of Medicare inpatient hospital payment adjustment for low volume hospitals. This provision extends the payment adjustment until December 31, 2013.

Extension of the Medicare-Dependent hospital (MDH) program. This provision extends the MDH program until October 1, 2013.

Other Health Provisions used to offset the cost of a temporary SGR fix. 

Documentation and Coding (DCI) adjustment. This provision will phase in the recoupment of past overpayments to hospitals made as a result of the transition to Medicare Severity Diagnosis Related Groups (MS‐DRGs). Savings: $10.5 billion.

Rebase End Stage Renal Disease (ESRD) payments. This provision incorporates recommendations from the General Accountability Office by re‐pricing the bundled payment to take into account changes in behavior and utilization of drugs for dialysis. Savings: $4.9 billion.

Therapy Multiple Procedure Payment reduction. This provision further reduces payment for subsequent therapies when therapies are provided on the same day. Savings: $1.8 billion.

Payment for Certain Radiology Services. This provision would equalize payments for stereotactic radiosurgery services provided under Medicare hospital outpatient payment system. Savings: $300 million.

Adjustment of Equipment Utilization Rate for Advance Imagining Services. This policy would increase the utilization factor used in the setting of payment for imaging services in Medicare from 75% to 90%. Savings: $800 million.

Competitive Prices for Diabetic Supplies. This proposal would apply competitive bidding to diabetic test strips purchased at retail pharmacies. Savings: $600 million.

Adjust Payment Adjustment for Non-Emergency Ambulance Transports For ESRD Beneficiaries. This provision reduces the payment rates for ambulance services by 10% for individuals with ESRD obtaining non‐emergency basic life support services involving transport, based on a recent General Accountability Office report. Savings: $300 million.

Increase statute of limitations for recovering overpayments. This provision increases the statute of limitations to recover overpayments from three to five years, based on recommendations from the Office of Inspector General at the Department of Health and Human Services. Savings: $500 million.

Medicare Improvement Fund. This provision eliminates funding for the Medicare Improvement Fund. Savings: $1.7 billion.

Rebase Medicaid Disproportionate Share Hospital (DSH) payments to extend the changes from the Affordable Care Act (ACA) for an additional year. This proposal rebases DSH allotments to maintain the level of changes achieved in the ACA, and determines future allotments off of the rebased level using current law methodology. Savings: $4.2 billion.

Repeal of Class Program. The provision repeals the Community Living Assistance Services and Supports (CLASS) program established by the Affordable Care Act. This provision has no scoring implications.

Coding Intensity Adjustment. Under current law, Medicare Advantage plans receive risk‐adjustment payments that are further adjustment to reflect differences in coding practices between Medicare fee-for‐ service and Medicare Advantage. This provision increases this coding intensity adjustment. Savings: $2 billion.

Consumer Operated and Oriented Plan (CO-OP). This provision will rescind all unobligated CO‐OP funds under section 1332(g) of the Affordable Care Act. This provision also creates a contingency fund of 10 percent of the current unobligated funds to be used to further assist currently approved co‐ops that have already been created. The provision does not take away any obligated CO‐OP funds. Savings: $2.3 billion