The Centers for Medicare & Medicaid Services (CMS) issued final rules detailing how the agency will pay for services provided to beneficiaries in Medicare by physicians and other healthcare professionals in 2016. Payment rules for the 2016 calendar year for End-Stage Renal Disease Prospective Payment System (ESRPPS), the Hospital Outpatient Prospective Payment System (HOPPS), Home Health Prospective Payment System (HHPPS), and the Physician Fee Schedule (MPFS) were all finalized during the last week of October.

Key policies finalized in the 2016 payment rules include:

  • Finalizing the Home Health Value-Based Purchasing model. This model, authorized under the Affordable Care Act (ACA or Obamacare), is designed to improve health outcomes and value by tying home health payments to quality performance. All Medicare-certified home health agencies that provide services in Massachusetts, Maryland, North Carolina, Florida, Washington, Arizona, Iowa, Nebraska, and Tennessee will participate in this model starting January 1, 2016. Compared to the proposed rule, the maximum payment adjustment in the first year of the model was reduced from 5 percent to 3 percent.
  • Finalizing updates to the “Two-Midnight” rule in the MPFS. The rule clarifies when inpatient admissions are appropriate for payment under Medicare Part A. CMS said this continues its long-standing emphasis on the importance of a physician’s medical judgment in meeting the needs of Medicare beneficiaries by providing clearer guidelines and a more collaborative approach to education and enforcement.
  • Finalizing the End-Stage Renal Disease Quality Incentive Program. The End-Stage Renal Disease final rule will apply payment incentives to dialysis facilities to improve the quality of dialysis care. Facilities not achieving a minimum total performance score with respect to quality measures—such as anemia management, patient experience, infections, and safety—will receive a reduction in their payment rates.
  • Beginning the new physician payment system post the Sustainable Growth Rate (SGR) formula and supporting patient- and family-centered care. This is the first final MPFS final rule since the repeal of the SGR formula by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Through the final rule, CMS is beginning implementation of the new payment system for physicians and other practitioners, the Merit-Based Incentive Payment System, required by the legislation.
  • Finalizing provision to empower patients and their families regarding advance care planning. Consistent with recommendations from a wide range of stakeholders and bipartisan members of Congress, CMS is finalizing its proposal that supports patient- and family-centered care for seniors and other Medicare beneficiaries by enabling them to discuss advance care planning with their providers.