How CMS' 2015 Payment Proposals Will Affect Hospitals, Physicians: 5 Things to Know From Moody's

CMS recently released proposed Medicare reimbursement rates for 2015 will likely have a largely positive impact on healthcare providers, according to a report from Moody's Investors Service.

Most providers will see a "relatively modest" increase in Medicare payments in calendar year 2015 under the proposed rules, according to Moody's. Here are five things to know about how the reimbursement rates will affect acute-care hospitals and physicians.

1. The proposed payment rate increase of 2.1 percent for acute-care hospitals under Medicare's Outpatient Prospective Payment System for calendar year 2015 would be a "modest credit positive" for hospitals, according to Moody's. Outpatient revenue is increasing as a percentage of total revenue at Moody's rated hospital companies, and subsequently outpatient reimbursement are becoming more important in how they affect the financial results of hospital operators.

2. Additionally, CMS' proposed OPPS rule includes the continuation of a 2 percent pay cut for hospitals that don't meet outpatient quality reporting requirements. Moody's doesn't expect that this will have a significant impact on rated hospital companies. However, the proposal's provision to start collecting data on services provided in off-campus provider-based departments could potentially have a negative financial effect on hospital operators that have been aggressively aligning with physicians, as CMS could use the data it collects to measure Medicare costs and/or make changes in how it reimburses hospitals that have been changing the billing of acquired physician practices to a hospital outpatient department under the OPPS, according to Moody's.

3. Finally, the OPPS proposed rule includes additional comprehensive-ambulatory payment classifications. Comprehensive-APCs were created to pay for high-cost device-dependent services using a single payment for a hospital stay in 29 device-dependent APCs. A comprehensive-APC policy meant to expand the items and services packaged into a single payment for a comprehensive primary care service was included in a final rule for calendar year 2014, CMS delayed implementation by a year to give the agency and hospitals more time to evaluate and comment on the policy. According to Moody's, "operators that have the ability to control the costs of devices, either through the leveraging of scale in purchasing devices or their ability to track costs, would be in the best position to benefit from the comprehensive payment."

4. Earlier this month, CMS also released a proposed rule that would update the Medicare Physician Fee Schedule for calendar year 2015. The proposed rule doesn't actually contain proposals or announcements concerning the PFS update or the sustainable growth rate, a statutory formula meant to control growth in Medicare spending on physicians' services. Since the PFS rate and SGR-related cuts are determined under a statutory formula, CMS cannot change them. The final figures will be announced in the final rule issued in November.

5. Every year since 2003, Congress has enacted a short-term legislative patch to delay double-digit cuts determined by the SGR. In April, the latest patch was passed, protecting physicians until the end of March 2015. Before that patch took effect, CMS estimated the PFS update for calendar year 2015 would be -20.9 percent. Moody's expects that Congress will once again act to protect physicians from SGR cuts after the current patch expires, and, therefore, the calculated 20.9 percent reduction isn't likely to have any actual impact on rated hospital companies.

More Articles on Medicare Payment:
CMS Releases Proposed 2015 Hospital Outpatient Payment Rates: 7 Things to Know  
CMS Proposes Changes to Physician Fee Schedule in 2015: 11 Things to Know  
CMS to Increase End-Stage Renal Disease Facility Payments 0.3% in 2015 


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