Healthcare Financial News

The Centers for Medicare and Medicaid Services (CMS) released its final regulations for the inpatient prospective payment system final rule for FY09 on July 31. The final rules provide long-awaited clarification and guidance for hospital on-call requirements under the Emergency Medical Treatment and Active Labor Act as it relates to community call plans.

Under the final rule, a community plan is defined as two or more hospitals that coordinate on-call coverage within a specific geographic area. Participating hospitals must designate the facility that will offer specific coverage; the other participating hospitals would then transfer patients requiring the designated care to that facility. Hospitals are also required to establish the time period this coordinated on-call coverage is in effect. Under the rule, they will also be required to develop a formal plan that includes a clear delineation of on-call responsibilities for each hospital participating in the plan, a description of the geographic area covered by the plan, and an annual assessment of the plan by the participating hospitals. Download the final rule.

On July 31, CMS sent a letter to state Medicaid directors to provide guidance on payment policies related to conditions on the National Quality Forum’s (NQF) list of serious reportable events (“never events”). Among other things, the letter provides direction as to how states can avoid payment liability as a secondary payer.

Medicare will no longer pay the higher MS-DRGs arising from these selected conditions if they arose in the course of an admission. Theoretically, for dual eligibles, the hospital could then attempt to bill Medicaid as a secondary payer, and the decision to balance bill would vary by state as to whether a coordinated denial by the state Medicaid program and the Medicare program would occur.

Given the large number of dual eligibles, CMS wants to articulate the payment policy for Medicaid as a secondary payer for Medicare nonpayment. The intention is to avoid federal and state fiscal consequences from the provider’s improper patient care. Therefore, states are encouraged to coordinate their Medicaid payment policies with the existing Medicare hospital-acquired condition (HAC) payment policy and prevent this unintended consequence.

States are neither required nor limited to devising never event policies that deal with the Medicare-Medicaid payment interaction created by the Medicare HAC policy. CMS encourages the states to consider the entire Medicaid population (not just dual eligibles) and all of the NQF never events in the creation of individual state policies. The guiding principle should be that payment and performance need to be linked. Read the letter.