Signed into law on Dec. 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act, P.L. 108-173 (the "Act"), with close to 200 major sections, has been called the largest overhaul to the Medicare Program since its inception. The Act not only creates a historic prescription drug benefit, but makes significant payment changes to Medicare Part A and Part B, and Medicaid. Congress has hailed the Act as correcting existing payment "inequities." Although rural providers and teaching hospitals are among the big winners, and durable medical equipment (DME) and drug suppliers potentially among those expected to suffer the most losses, the payment provisions contain increased revenue opportunities for hospitals, physicians, and other providers. For hospitals, increased revenue opportunities exist in the following:
- inpatient PPS update;
- short-term bump in IME reimbursement through 2006;
- GME FTE opportunities for geriatric and family practice programs;
- one-time moratorium on the financial arrangement requirement for supervision of residents at non-hospital settings;
- ability to apply for an increased GME FTE limit;
- expanded coverage of device trials;
- reduction in thresholds to qualify for the new technology add-on payment; and
- expanded opportunities for wage index reclassifications.
Hospitals may experience reductions in reimbursement for certain covered outpatient drugs, while other drugs may more easily qualify for separate outpatient ambulatory payment classification (APC) payment. For rural providers, the Act provides for numerous protections and opportunities for revenue enhancements, including extensions to hospital outpatient prospective payment system (OPPS) hold harmless, wage index reclassifications, increased disproportionate share (DSH) payments, and increased reimbursement for Critical Access Hospitals. Skilled nursing facilities will see significant increases in payments for services to patients with AIDS.
For physicians, increased revenue opportunities include:
- update to the physician fee schedule;
- coverage of initial physical examinations;
- coverage of certain screening tests for cardiovascular disease and diabetes; and
- physician scarcity 5 percent bonus payments for 2005-2007.
Increased reimbursement is also available for screening mammography services, and beginning in 2005 for diagnostic mammography services, furnished in a hospital outpatient department. Outpatient physical and occupational therapy providers benefit from the two-year moratorium on the therapy cap.
DME suppliers will see their reimbursement rates frozen through 2008 for most items and services. In addition, reimbursement will decrease for selected items such as oxygen, oxygen equipment, wheelchairs, nebulizers, diabetic supplies, hospital beds, and air mattresses. Ambulatory Surgical Center (ASC) facilities will also see a reduction in payments beginning in April 2004, with rates then frozen while the General Accounting Office (GAO) conducts a study to determine how to re-vamp the ASC reimbursement system.
To determine whether the changes help or hurt the bottom line, providers are scrambling to make sense of the rules. While some Congressional mandates are quite clear, others remain subject to the Centers for Medicare and Medicaid Services (CMS) guidance and implementation. Ambitiously, and quite unrealistically, Congress has set implementation dates for many provisions in 2004, some as early as January. Congress has already imposed a deadline of Feb. 15, 2004 for providers to apply for one of the wage index opportunities. We expect to see a flood of CMS program issuances in the first quarter of 2004.
To help our clients evaluate how they fare under the new rules and how to take advantage of the available revenue enhancement opportunities, we have summarized on our website the key payment provisions, organized by issue and divided into sections for Medicare Part A and Part B. We have indicated the changes likely to result in significantly increased reimbursement, as well as those likely to have significant negative reimbursement impacts.
For a summary of key payment changes resulting from the 2003 Medicare bill, click here.