Healthcare Financial News

Wholesale prices for hospitals increased 0.2 percent in September, the Bureau of Labor Statistics reported. The increase in the Producer Price Index (PPI) compares with a price drop of 0.1 percent for the same month in 2008.
For the year ended in September, wholesale hospital prices rose 3 percent, the same as the increase for the prior year. For the 12 months that ended in August, the price increase was 2.6 percent.

Physician wholesale prices increased 0.1 percent in September, matching the price increase in September 2008. The physician PPI was up 2.6 percent for the 12-month period that ended in September, as compared with 0.7 percent for the prior year. It was unchanged from the 12 months ended in August.

The House Judiciary Committee on Wednesday approved a bill removing the federal antitrust exemption for health and medical malpractice insurers. 

The bill, which cleared the committee by a 20-9 vote, calls for ending the exemption to ensure these insurers “cannot engage in price fixing, bid rigging, or market allocations to the detriment of competition and consumers.” The exemption was granted under the 1945 McCarran-Ferguson Act, which defers insurance regulation to the states.

House Speaker Nancy Pelosi (D-Calif.) is planning to include the measure in the healthcare reform package that Democrats hope to bring before the full House in November, according to a report today in the Washington Post. A companion bill has been introduced in the Senate.

One in every four hospital professional liability claims and 24 percent of related costs are associated with hospital-acquired conditions such as infections and injuries, medication errors, objects left in surgery, and pressure ulcers, according to a study conducted by Aon Corporation in conjunction with the American Society for Healthcare Risk Management.

The study also finds that the frequency of claims is on the rise and is expected to continue increasing at 1 percent annually, after a decade of decreases. The rise is attributed to the economic downturn, changes to Centers for Medicare & Medicaid Services payment rules regarding never events, and changes in public sympathy toward healthcare providers.

Other study highlights include the following:

• In 2010, hospital loss costs per occupied bed equivalent, a major part of the total cost of risk, are expected to increase 5 percent annually to $3,170.
• Claim severity, including both indemnity and defense costs, continues to increase at a consistent rate and is projected to increase by 4 percent annually.
• In 2010, hospitals can expect to incur liability costs of $181 per birth in the obstetrics unit and $7.20 per visit in the emergency department.

Read the Aon press release.

The Centers for Medicare & Medicaid Services (CMS) has released four new FAQs regarding Recovery Audit Contractors (RACs) in the past four weeks. Excerpts from these FAQs are reprinted, in part, below.

How long is the RAC discussion period?
The discussion period begins with the time of notification (demand letter for automated reviews and the review results letter for complex reviews) through the time recoupment occurs. The discussion period normally requires written notification to the RAC. The discussion period does not extend the provider's appeal timeframes.

I heard that RAC medical record request limits will be based on my 2007 claims volume, then I heard on 2008. Which is it?
Limits in the remainder of the fiscal year ending September 30, 2009, are based on claim volume in the 2008 calendar year. This differs from our original announcement that limits in the current year would be based on 2007 claim volumes.

Will Code N432 appear on the remittance advice for RAC adjusted claims?
CMS created code N432 to identify RAC adjusted claims, however CMS believes the code is being superseded in some of the systems by code N469 which is the Section 935 Limitation on Recoupment code. We are working to correct this problem in the system. Providers will receive demand letters for all RAC adjusted claims. These letters will allow providers to keep track of RAC adjustments versus all other claims processing adjustments.

If I am a chain provider whose FI is WPS (serving as the national fiscal intermediary) who will my RAC be?
This answer assumes the hospital originally had Mutual of Omaha as the claims processing contractor and the merger of WPS and Mutual of Omaha is how WPS became the provider's claim processing contractor. WPS currently serves as a national fiscal intermediary in CMS. They service providers in the majority of the states. These providers have not yet transitioned to a MAC. WPS will work with all 4 RACs. If WPS is your claim processing contractor (as the national fiscal intermediary and not part of the local jurisdiction) your RAC is based on your physical location. For example, if you are located in Tennessee, but WPS is your claims processing contractor your RAC is in Region C.