The Centers for Medicare & Medicaid Services (CMS) recently published proposed regulations for fiscal year (FY) 2010 payment rates for inpatient services furnished to Medicare beneficiaries at acute care and long-term care hospitals, and for services furnished to Medicare beneficiaries at skilled nursing facilities.

Acute Care Hospitals

CMS is proposing to update the acute care hospital rates by 2.1 percent for inflation less an adjustment of 1.9 percent. The adjustment is intended to remove the effect of increases in aggregate payments due to changes in hospital coding practice since the Medicare Severity Diagnosis-Related Groups (MS-DRGs) were introduced in FY 2008. This will result in only a nominal increase in the Inpatient Prospective Payment System (IPPS) rate of 0.2 percent for FY 2010, beginning on October 1, 2009.

Long-Term Care Hospitals

Similarly, CMS is proposing to update the long-term care hospital rates by 2.4 percent for inflation less an adjustment of 1.8 percent to account for changes in documentation and coding practices since the introduction of MS-DRGs. This will result in only a 0.6 percent increase in the Long-Term Care Hospital Prospective Payment System (LTCH PPS) rate for FY 2010.

Skilled Nursing Facilities

While CMS is proposing to nominally increase the IPPS and LTCH PPS rates, skilled nursing facilities will face an overall rate decrease in FY 2010. This decrease is primarily due to CMS's recalibration of the case-mix indexes (CMIs), resulting in a 3.3 percent reduction in payments to skilled nursing facilities. This reduction is offset by a fiscal year update in Medicare payments to skilled nursing facilities by 2.1 percent. The combination of the fiscal year update and recalibration of the CMIs yields an overall reduction of 1.2 percent in skilled nursing facility rates (SNF PPS) for FY 2010.

In addition to recalibrating and updating the SNF PPS rates, the proposed rule also (1) introduces a revised case-mix classification methodology (RUG-IV) and implementation schedule for FY 2011; (2) requests comments on a new component to account for the use of nontherapy ancillaries, as recommended by MedPAC; and (3) solicits public input regarding a possible new requirement for quarterly reporting of nursing home staffing data currently under consideration by CMS.

More information about the proposed rate adjustments and policy updates for acute care hospitals and long-term care hospitals can be found here. You can find information about the SNF rule here and here.

New York Medicaid Inspector General Reveals Work Plan

The New York Office of Medicaid Inspector General (OMIG) has released its 2009-2010 work plan, detailing the intended areas of focus for its efforts in the coming year to recover inappropriately distributed Medicaid funds. The work plan singles out several hospital services for examination, including (1) ambulatory surgery centers (to ascertain whether procedures were performed for reasons of patient safety and administration of anesthesia); (2) hospital outpatient clinics and diagnostic and treatment centers (to determine whether there were duplicate payments for services); and (3) physician and hospital financial relationships (with respect to physician payments for direct patient care, administrative services and rental of hospital space for private offices). The work plan also notes that there will be an increase in the use of corporate integrity agreements, all of which OMIG intends to post on its web site. The OMIG will also focus on payments to out-of-state providers for ambulatory surgery, inpatient hospital services, laboratory services and skilled nursing facilities. In 2008, New York State reimbursed out-of-state providers $290 million. The OMIG also intends to monitor New York's share of federal stimulus Medicaid funds.

New Office of Health Reform Established

The Department of Health and Human Services (HHS) has announced the establishment of the Office of Health Reform, which will lead the agency's efforts to pass health reform legislation. The new office will work closely with the White House Office of Health Reform. Both offices were created by Executive Order. Among the key staff members who have been appointed to the HHS Office of Health Reform are the following:

Jeanne Lambrew, Ph.D., Director of the HHS Office of Health Reform. Lambrew will lead the health reform effort in the Office. Lambrew was previously an associate professor at the LBJ School of Public Affairs, senior fellow at the Center for American Progress and worked on health policy in the Clinton Administration.

Michael Hash, Senior Advisor. Hash will be responsible for developing specific aspects of health reform legislation. He will be an assignee at the White House Office of Health Reform and assist in the preparation of Administration positions and in communications with Congress. Prior to his appointment, Hash held senior positions at the CMS.

Neera Tanden, Senior Advisor. Tanden will work on developing health care policies for HHS and the Administration. She is the former domestic policy director for the Obama-Biden campaign and policy director for the Hillary Clinton campaign, and oversaw health care work on both campaigns.

Meena Seshamani, M.D., Ph.D., Director of Policy Analysis. Seshamani will coordinate the quantitative and qualitative analyses on health reform conducted throughout HHS. Before joining the Administration, Seshamani was a resident physician in Otolaryngology-Head and Neck Surgery at Johns Hopkins University.

Caya B. Lewis, M.P.H., Director of Outreach and Public Health Policy. Lewis will coordinate HHS outreach and interaction with stakeholders on health reform. She will also advise the Office on prevention and public health policy. Before joining the Administration, Lewis was the Deputy Staff Director for Health for the Senate HELP committee under the chairmanship of Senator Edward M. Kennedy.