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CMS Releases Rule Creating Payment System for Health Centers

By Rebecca Adams, CQ HealthBeat Associate Editor

April 29, 2014 -- Community health centers' Medicare payments would rise under a final rule recently released by the Obama administration.

Some centers' payments could rise by as much as 32 percent, said Centers for Medicare and Medicaid Services (CMS) officials in a statement. Medicare currently reimburses health centers for their costs, up to payment limits. The health care law (PL 111-148, PL 111-152) requires CMS officials to devise a new system with set payments for care provided.

Under the new system, Medicare will pay health centers a single per-patient daily rate for all of the care the patient gets, with some exceptions. The base rate will be $158.85 per day but fluctuate to reflect the cost of care in geographic regions. The same services that have been paid for by Medicare in the past will continue to be covered under the new system, CMS officials said.

Health centers will get more money for new patients who might have unmet medical needs and need more intensive services at the outset. A center also will get more for patients receiving an initial preventive exam or for those getting their annual wellness visits.

National Association of Community Health Centers spokeswoman Amy Simmons said that under the current system that is being replaced, most health centers lost money on each Medicare patient they serve.

Health centers are supported by many members of both parties in Congress and have received significant amounts of additional payments in recent years from the federal government. About 21 million Americans got their care from health centers in 2012.

"The new payment system helps increase the ability and capacity of federally qualified health centers to provide essential and affordable services for even more patients who need care," said CMS Administrator Marilyn Tavenner. The centers "are essential to countless patients in local communities who depend on them for getting their primary and preventive care," she said.

Under the current system, the out-of-pocket costs for patients was based on the health centers' charges. Typically, patients are required to pay 20 percent of charges, but the sum can rise to more than 20 percent of the total Medicare pays the center. Under the new rule, patients' coinsurance will cost either 20 percent of the providers' charge or the daily rate—whichever is less.

The rule states that in future years, the rates must be adjusted by the Medicare Economic Index or by the increase in the cost of services and goods provided by health centers.

The law said that CMS officials must take into account the type, intensity and duration of health center services when setting the payments. The rule will be published in the Federal Register on May 2 and the new payment system will be implemented starting with the new fiscal year, on Oct. 1.

Even though it is a final rule, CMS officials solicited further comments on a few proposals. CMS will accept comments until July 1 and will issue another final rule this year. The issues include: a simplified method for calculating coinsurance when a preventive and non-preventive service is on the same claim, the creation of Medicare-specific payment codes to be used under the new system and ways in which payment for chronic care management could be adapted for health centers and rural health clinics.

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