News and noteworthy information for May 2016:


Changing the Way You Get Paid – CMS Issues Proposed MACRA Rule

On April 27, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule to begin implementing the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). MACRA was bipartisan legislation signed into law in the spring of 2015 to permanently repeal the Sustainable Growth Rate (SGR), streamline quality reporting programs, and provide incentive payments for participation in advanced alternative payment models. The proposed rule released by CMS is a first step in implementing the law. The proposed rule establishes an umbrella Quality Payment Program with two new pathways for Medicare payment: 1. Merit-Based Incentive Payment System (MIPS) and 2. Advanced Alternative Payment Models (Advanced APMs).

These new programs will completely change the way physicians get paid and how they report data to CMS. As part of the proposed rule, CMS has started to develop and define “episodes of care” for spine procedures including lumbar fusion. A more detailed summary including provisions related to spine surgery can be found here. CMS is accepting comments on the proposed rule until June 27, 2016. ISASS is working to analyze the proposal and provide feedback to CMS. Please send any questions or comments to CMS is expected to release the final rule in the fall of 2016 and the proposed effective date of the Quality Payment Program is January 1, 2017.


CMS Issues 2017 Proposed Hospital Inpatient and Long-Term Care Rule

On April 18, the Centers for Medicare and Medicaid Services (CMS) released the proposed 2017 Hospital Inpatient and Long-Term Care Hospital (LTCH) payment and policy rule. The proposed rule, which would apply to approximately 3,330 acute care hospitals and approximately 430 LTCHs, would affect discharges occurring on or after October 1, 2016. (Please note physician payment is made via the Physician Fee Schedule, which will be released in July.)

The Hospital Inpatient Prospective Payment System (IPPS) pays hospitals for services provided to Medicare beneficiaries using a national base payment rate, adjusted for a number of factors that affect hospitals’ costs, including the patient’s condition and the cost of hospital labor in the hospital’s geographic area. CMS generally sets payment rates prospectively for inpatient stays based on the patient’s diagnosis and severity of illness. A hospital receives a single payment for the case based on the payment classification (MS-DRGs under the IPPS) assigned at discharge.

The following provisions relate to hospital payment and policy for inpatient spine surgery:

CMS is accepting comments on the proposed rule until June 17, 2016 and will issue the final rule on August 1, 2017. A more detailed summary including provisions related to spine surgery can be found here. ISASS is working to analyze the proposed rule and provide feedback to CMS. Please send any questions or comments to


Senate Finance Committee Issues Report on PODs

On May 10, the Senate Finance Committee issued an updated report on Physician Owned Distributorships (PODS) titled, “Physician Owned Distributorships: An Update on Key Issues and Areas of Congressional Concern.” The report focuses on the influence of PODs in spine surgery and their impact on surgeon behavior when recommending spine surgery. The report follows an analysis conducted in 2011 by the Committee and a 2015 hearing on the issue. Key findings of the analysis include: POD surgeons saw 24% more patients than non-POD surgeons; POD surgeons performed fusion surgery on nearly twice as many patients (91% more) than the non-POD surgeons; POD surgeons performed surgery at a much higher rate (44% higher) than non-POD surgeons; and POD surgeons performed nearly twice as many fusion surgeries (94% more) as non-POD surgeons. The report makes nine recommendations related to transparency, utilization, illegal behavior, hospital policies, and changing payment structures.


House E&C Health Subcommittee Hearing on Health Care Solutions

Recognizing the growing problems of rising health insurance premiums and health insurers dropping out of the health insurance exchanges, on May 11, the House Committee on Energy and Commerce Subcommittee on Health convened a hearing on “Health Care Solutions: Increasing Patient Choice and Plan Innovation.” The purpose of the hearing was to discuss health care solutions centered on promoting patient choice and innovation in the design on health coverage in order to reform health insurance markets without government mandates. Testimony from the hearing will be used to help shape the House GOP’s Affordable Care Act replacement plan currently under development by a task force appointed by Speaker Paul Ryan (R – Wis.). The Subcommittee heard testimony from Scott Gottlieb, MD from the American Enterprise Institute, Avik Roy from the Manhattan Institute, and Sabrina Corlette, JD from the Center on Health Insurance Reforms at Georgetown University.


CMS Releases Third Annual Physician and Other Supplier Utilization and Payment Data Files

On May 5, the Centers for Medicare and Medicaid Services (CMS) released the Physician and Other Supplier Utilization and Payment data files containing summarized information on Medicare Part B services and procedures provided by physicians and other healthcare professionals. The data includes payment and submitted charges, or bills, for services and procedures provided by each physician or supplier. It allows for comparisons by physician, specialty, location, types of medical services and procedures delivered, Medicare payment, and submitted charges.

The updated 2014 dataset has information for over 986,000 distinct health care providers (up from 950,000 in 2013) who collectively received $91 billion in Medicare payments (compared to $90 billion in 2013). New in the 2014 data is the Medicare standardized payment amount, which removes geographic differences in payment rates for individual services, such as those that account for local wages or input prices, and makes Medicare payments across geographic areas comparable.


Noridian Draft LCD for Intraoperative Neurophysiological Testing

Noridian (the Medicare Administrative Contractor covering Jurisdiction F: Alaska, Arizona, Idaho, Montana, North Dakota, Oregon, South Dakota, Utah, Washington, and Wyoming and Jurisdiction E: California, Nevada, and Hawaii and Territories) recently issued a draft Local Coverage Determination (LCD) on the use of intraoperative neurophysiological testing during surgery. Noridian has included a list of procedures where intraoperative testing is considered “medically necessary” including for “correction of scoliosis or deformity of spinal cord involving traction on the cord; protection of the spinal cord where work is performed in close proximity to cord as in the removal of old hardware or where there have been numerous interventions; spinal instrumentation requiring pedicle screws or distraction; decompressive procedures on the spinal cord or cauda equina carried out for myelopathy or claudication where function of spinal cord or spinal nerves are at risk; and resection of spinal cord tumors.” The draft LCD tracks closely with active LCDs implemented by WPS Medicare, First Coast Service Options and Novitas. Noridian’s draft LCD is open for comment until August 8.

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