The Centers for Medicare and Medicaid Services (CMS) released the FY 2013 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Notice on July 27, 2012 which updates the Part A payment rates used under the PPS for SNFs for FY 2013.

1. SNF PPS rates will increase by 1.8 percent for FY 2013 (2.5 percent market basket update minus 0.7 percentage point productivity adjustment). 
2. CMS estimates that net Medicare Part A payments to SNFs will increase by about $670 million.
3. The SNF PPS notice will be published in the Federal Register on August 2^nd. This notice and payment rates are effective on October 1, 2012.  The Federal Register desk copy is available, here: http://www.ofr.gov/OFRUpload/OFRData/2012-18719_PI.pdf.

Providers should also remember that when Congress passed the bipartisan deficit-reduction law last year, the $1 trillion budget sequesters mechanism deadline of January 2, 2013 is on the immediate horizon. A provision in the sequestration law caps Medicare funding cuts at 2%.  Details of the funding cuts are not yet known at this point but analysts are projecting that it will most likely be a flat across-the-board cut.

CMS also published the proposed rule for the 2013 Medicare Physician Fee Schedule (PFS) in the July 30^th Federal Register.  The proposed rule would update the Medicare fee schedule for calendar year 2013 and the deadline for submitting comments on the proposed rule is September 4, 2012.  The final rule must be issued by November 1^st with policies becoming effective January 1, 2013.  The following are key components of the proposed rule:

1. Manual Review Process for exceptions effective October 1 through December 31, 2012: for exceptions to the therapy caps after expenses incurred for the beneficiary’s therapy services (including therapy provided in hospital outpatient department)
   1. $3700 for PT/SLP and $3700 for OT
   2. Requests for exceptions to the therapy caps for services above the thresholds are subject to a manual medical review process not yet established by CMS
   3. The therapy caps amount for CY 2013 will be announced in the CY 2013 PFS final rule
2. Claims-based data collection strategy implementation on January 1st: is designed to assist in reforming the Medicare payment system for outpatient therapy services;  is a requirement of The Medicare Class Tax Relief and Jobs Creation Act (MCTRJCA):  
   1. The emphasis/focused on functional limitations which will need to be identified in the documentation and on the claim form
   2. Will utilize phraseology based on the International Classification of Functioning, Disability and Health (ICF)
   3. The functional limitations identified will be utilizing the ICF functional areas of:
      1. Walking and Moving Around
      2. Changing and Maintaining Body Position
      3. Carrying, Moving and Handling objects
      4. Self-care (washing oneself, toileting, dressing, eating, drinking)
      5. Communication both Reception and Expression of spoken words, nonverbal, sign language and writing
   4. Associated with this coding will be a series of G. codes that will be identified on the claim form at specific periods. These time frames will coincide with the status at: initial eval, the progress reports, and on discharge.
   5. Along with these G. codes CMS will use severity/complexity modifies based on a 12 point scale and use of the codes will come in effect on January 1, 2013
      1. These modifiers will identify independent limitations/restriction difficulties between 0% and 100% based on analysis of functional tests and measures
      2. CMS has indicated there will be a series of training sessions prior to its implementation between initiation and July 1^st when these codes will be mandatory
      3. Claims without the codes will be returned
3. Durable Medical Equipment (DME) Face-to-Face Encounters and Written Orders
   1. The ACA authorizes CMS to require, for specified covered items that payment may only be made if a physician has communicated to the supplier a written order for the item, before delivery of the item
   2. Applies to prosthetic devices, orthotics, and prosthetics in the same manner as it applies to items of durable medical equipment (DME)
   3. The list of specified covered items meets at least one of the following four criteria:
      1. Items that currently require a written order prior to delivery per instructions in the Program Integrity Manual
      2. Items that cost more than $1,000
      3. Items that, based on CMS experience and recommendations from DME MACs, are particularly susceptible to fraud, waste and abuse
      4. Items determined by CMS as vulnerable to fraud, waste and abuse, based on reports of the OIG, GAO or other oversight entities
   4. CMS is also proposing to include:
      1. Items already listed in the Program Integrity Manual (Chapter 5, section 5.2.3.1.)
      2. DME with a price ceiling greater than or equal to $1,000 in the DMEPOS Fee Schedule; and
      3. Recommended from DME MACs, which include: pressure reducing pads, mattress overlays, mattress, beds, seat lift mechanisms, TENS units, AEDs, external infusion pumps, glucose monitors, wheelchairs and wheelchair accessories, nebulizers, negative pressure wound therapy pumps, oxygen and oxygen equipment, pneumatic compression devices, positive airway pressure devices, respiratory assist devices and cervical traction devices