Healthcare Financial News

The vast majority of hospitals—97 percent—participating in HFMA’s most recent Healthcare Financial Pulse study reported an increase in self-pay receivables compared with the prior fiscal year. At more than one-third of these hospitals, the increase was 10 percent or greater. The study found that small hospitals were most likely to experience a self-pay increase of this magnitude.

The increase in self-pay receivables is a significant factor in hospital financial performance. Receivables are growing faster than patient revenue at almost one-third of hospitals that participated in the study.

To address these trends, more than seven in 10 respondents are devoting moderate or substantial efforts toward point-of-service collection. Many cite difficulty in estimating the cost of services as the most significant barrier to more extensive point-of-service collections.

View the Healthcare Financial Pulse study results.

The House of Representatives voted 243-183 to approve the Medicare Physician Payment Reform Act (HR 3961), which would permanently revamp the Medicare physician payment formula.

In the absence of congressional action, physicians face a 21 percent payment cut in 2010 under the current system.
 
“Today’s House vote is the first step toward preventing this cut. The AMA urges the Senate to act quickly before the cut begins on Jan. 1,” American Medical Association President J. James Rohack, MD, said in a statement issued soon after the House action.

Earlier this month, the Senate failed to advance a bill averting the physician pay cut.

Combining the House healthcare reform bill with this Medicare physician payment change would raise the deficit by $89 billion over 10 years, according to a Congressional Budget Office analysis released today.

Senate Majority Leader Harry Reid (D-Nev.) unveiled a healthcare reform bill that would cost $849 billion over 10 years and provide health insurance to 31 million more people by 2019, according to a preliminary estimate by the nonpartisan Congressional Budget Office (CBO).

CBO projects that the bill would reduce the federal deficit by $130 billion over the first 10 years, with substantial additional savings projected for the second decade. CBO's preliminary report on the Senate bill included the following analysis:

• Coverage: The bill would ensure coverage for 94 percent of U.S. residents. However, 24 million people still would be uninsured in 2019. About one-third of these would be “unauthorized immigrants.”
• Health insurance exchanges: Health insurance exchanges to facilitate purchase of insurance by individuals and small businesses would take effect in 2014.
• High-cost insurance plans: The bill would impose a 40 percent excise tax on high-cost employer-sponsored health plans.
  Individual mandate: Most U.S. residents would be required to have health insurance by 2014. Penalties starting at $95 would apply after that time. The penalty would rise to $750 per person in 2016, with a maximum penalty of $2,250 for a family.
• Industry fees: The bill would impose annual fees amounting to $6 billion on health insurers, $2 billion on pharmaceutical companies, and $2 billion on medical device manufacturers.
• Long-term care: A voluntary government-administered insurance plan for long-term care is included in the bill
• Medicare cuts: The CBO analysis did not offer an estimate for savings associated with Medicare payment reductions to providers. A scheduled 21 percent physician payment cut in 2010 would be replaced with the latest in a series of one-year fixes that would raise the payment rates by 0.5 percent.
• Medicare payroll tax: A payroll tax would be assessed on individuals whose annual incomes are greater than $200,000 and families whose incomes are greater than $250,000 annually. The current payroll tax, which is equal to 1.45 percent of wages, would be raised to 1.95 percent
• Penalties: Companies with more than 50 employees that fail to provide adequate coverage options would be subject to penalties of up to $750 in fines per employee.
• Public plan: The bill would include a government-run public health insurance plan with an "opt-out" clause allowing states to choose whether to participate. The public plan would negotiate payment rates directly with healthcare providers instead of tying them to Medicare rates.
• Subsidies: U.S. residents whose incomes are below 133 percent of the federal poverty level (FPL) would qualify for Medicaid coverage, while those whose incomes are between 133 percent and 300 percent of FPL would qualify for federal subsidies and annual caps on their premiums and out-of-pocket expenses.

This article was updated on Nov. 19.

HHS Secretary Kathleen Sebelius issued the following statement today on new breast cancer screening recommendations from the U.S. Preventive Services Task Force:

“There is no question that the U.S. Preventive Services Task Force Recommendations have caused a great deal of confusion and worry among women and their families across this country. I want to address that confusion head on. The U.S. Preventive Task Force is an outside independent panel of doctors and scientists who make recommendations. They do not set federal policy and they don’t determine what services are covered by the federal government.

“There has been debate in this country for years about the age at which routine screening mammograms should begin, and how often they should be given. The Task Force has presented some new evidence for consideration but our policies remain unchanged. Indeed, I would be very surprised if any private insurance company changed its mammography coverage decisions as a result of this action.

“What is clear is that there is a great need for more evidence, more research and more scientific innovation to help women prevent, detect, and fight breast cancer, the second leading cause of cancer deaths among women.

“My message to women is simple. Mammograms have always been an important life-saving tool in the fight against breast cancer and they still are today. Keep doing what you have been doing for years -- talk to your doctor about your individual history, ask questions, and make the decision that is right for you.”

The Centers for Medicare & Medicaid Services (CMS) reports that the rate of Medicare fee-for-service payment errors more then doubled in FY09, increasing to 7.8 percent, or $24.1 billion, as compared with 3.6 percent in 2008. CMS attributes the increase to changes in the methodology for reviewing Medicare claims for inpatient hospital services.

In addition, the baseline composite Medicare Advantage error rate jumped from 10.6 percent to 15.4 percent, or $12 billion, in FY09 with no changes in methodology.

In all, at least $54.2 billion in erroneous payments were made by Medicare or Medicaid in FY09, according to data released by the White House Office of Management and Budget.

“As we move forward in our review of the Medicare and Medicaid error rate data, we expect to be able to determine if there are specific trends that can better help us identify weaknesses in our programs or systems,” said Acting CMS Administrator Charlene Frizzera in a press release. “It’s important that we continue to work closely with doctors, hospitals, and other healthcare providers to make sure they understand and follow the more comprehensive fee-for-service requirements.”

Sen. Charles Grassley (R-Iowa) has introduced legislation that would give the federal government more time to pay Medicare providers when fraud, waste, or abuse is suspected.

Federal law requires that Medicare send payment within a short time frame irrespective of the risk of fraud, waste, or abuse. “Because of this prompt payment rule, the government puts itself in a position of having to pay and chase Medicare fraud, instead of working to prevent it in the first place. That doesn’t make any sense,” Sen. Grassley said in a statement issued by his office, “and it’s no way to manage Medicare’s resources.”

The bill, known as the Fighting Medicare Payment Fraud Act of 2009, would give the Secretary of Health and Human Services authority to extend the time period in which payments must be made under the prompt payment rule if the Secretary determines there is a likelihood of fraud, waste, or abuse. With this additional time, the Secretary would be required to conduct more detailed reviews of the claims in question to make sure they should be paid.

The proposed law would authorize the extension of the time period that claims must be paid to up to one year for categories of suppliers or providers in a particular geographic area or individual providers when there is a likelihood of fraud, waste, or abuse. For individual providers or suppliers, the Secretary would be required to take whatever time is necessary to engage in more in-depth reviews to determine that the claims should be paid.

The Grassley bill would also require the Office of Inspector General to recommend, on at least an annual basis, categories of providers or suppliers where additional scrutiny is needed before payments are made under the prompt payment rule. To make sure there is action on these recommendations, the Secretary would be required to provide a response to the Inspector General on these recommendations.

More than 85,000 physicians and other eligible professionals who successfully reported quality-related data to Medicare under the 2008 Physician Quality Reporting Initiative (PQRI) received incentive payments totaling more than $92 million, the Centers for Medicare & Medicaid Services (CMS) announced, well above the $36 million paid in 2007.

The number of eligible professionals who earned an incentive payment increased by one-third from 2007, when 56,700 earned an incentive payment. In 2007, eligible professionals could only participate in the program during a six-month reporting period. In 2008, the program expanded to allow reporting for either a six-month or a 12-month period.

Established in late 2006 by the Tax Relief and Health Care Act, PQRI is a voluntary program that allows physicians and other eligible healthcare professionals to receive incentive payments for reporting data on quality measures related to services furnished to Medicare beneficiaries. In the initial program years, those who satisfactorily submitted quality data were able to receive incentive payments of 1.5 percent of the total estimated allowed charges under Medicare Part B for covered professional services.

Those who satisfactorily reported PQRI quality measures data and thus qualified for an incentive payment for the 2008 PQRI received their payments this fall. The average incentive amount for individuals is more than $1,000, with the largest payment more than $98,000.

In 2008 Congress extended the PQRI under the Medicare Improvements for Patients and Providers Act (MIPPA) and authorized incentive payments through 2010. CMS recently announced its plan for the 2010 PQRI Program as part of the Medicare Physician Fee Schedule final rule.

In a preliminary review of the biannual report The Fiscal Survey of States, officials from the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO) forecasted continued fiscal difficulties for states for most of the next decade.

In FY09, states were forced to reduce General Fund expenditures by 4.8 percent and are expected to reduce FY10 General Fund expenditures by at least 4.0 percent, marking the first time that state spending has declined in back-to-back years. As state revenue collections historically lag any national economic recovery, state revenues will remain depressed throughout FY10 and likely into FY11 and FY12, according to the report.

The weakening of state fiscal conditions is reflected in the $250 billion in budget gaps faced by states between FY09 and FY11. Of the $250 billion, states closed $72.7 billion in budget gaps during FY09 and $113.1 billion before the enactment of their FY10 budgets to bring them into balance with drastically declining revenues.

"These are the worst numbers we’ve ever seen in the decades of putting together this report," said NASBO Executive Director Scott D. Pattison in a news release. "States have been forced to lay off and furlough employees, raise taxes, drain rainy day funds and sharply cut state spending in ways that impact every part of state government."

Despite the recession, overall growth of the heathcare retail clinic market has increased approximately 15 percent in the past two years, according to a new report released today by the Deloitte Center for Health Solutions. Retail clinic market growth, however, will likely slow to 10-15 percent from 2010 through 2012 and will accelerate above 30 percent from 2013-2014, according to the report.

Retail Clinics:Update and Implications suggests that four factors will likely contribute to the sector’s growth:

• Increased use and satisfaction by consumers
• Increased use and acceptance by commercial health plans and large employers
• Increased services provided through the retail medicine model
• Increased demand for preventive and primary health care services as a result of health reform and consumer demand

According to the report and Deloitte’s 2009 Survey of Health Care Consumers, 33 percent of consumers indicate they are willing to use a retail clinic, especially younger and middle-aged working adults. Moreover, 30 percent of respondents are likely to use a retail clinic if it would cost them 50 percent less than seeing their physician.

Most retail clinics currently operate in retail pharmacy settings (82 percent), or as a department or wholly owned subsidiary of the host organization, such as a grocery store (12 percent) or big-box discount store (6 percent). Notably, 2009 has seen increased activity by acute care organizations entering retail medicine via contractual arrangements with drug store and grocery chains.

National healthcare spending could be reduced by 5.4 percent between 2010 and 2019 by bundling payments for the treatment of chronic diseases and applying the model to all payers, not just Medicare, according to an article published in the Nov. 11 issue of The New England Journal of Medicine. Researchers point out the Congressional Budget Office (CBO) estimate of savings achievable through payment bundling, which was much lower (0.05 percent), reflected only hospital and post-acute care services paid for by Medicare.

“The difference between the CBO’s estimates and ours illustrates the limits of focusing solely on savings in the federal budget,” researcher Peter Hussey wrote.

The Rand Health research team identified eight options that evidence suggests have the potential to reduce spending and are broadly applicable to the United States. For each option, they developed high and low estimates of cumulative cost savings over 10 years.  Other options that were analyzed include hospital-rate regulation, health IT, disease management, medical homes, retail clinics, extending mid-level practitioners’ scope of practice, and changing benefit design.

A newly released report from the Institute of Medicine (IOM) summarizes key discussions and presentations from The Summit on Integrative Medicine and the Health of the Public, a 2½ day event convened by IOM last February. More than 600 health practitioners, scientists, policy experts, and others gathered to examine the potential of integrative medicine for improving health.  

“Integrative medicine may be described as orienting the healthcare process to create a seamless engagement by patients and caregivers of the full range of physical, psychological, social, preventive, and therapeutic factors known to be effective and necessary for the achievement of optimal health throughout the life span,” according to the report.

IOM president Harvey V. Fineberg, MD, PhD, set forth five critical dimensions of integrative medicine:

• A broad definition of health that covers physical, mental, emotional, and spiritual factors.
• A wide range of interventions—from prevention to rehabilitation and recovery.
• Coordination of care across an array of caregivers and institutions.
• Patient-centered care, which focuses on the needs and values of the individual patient.
• A variety of care modalities, including unconventional as well as traditional therapies.

The 250-page report summarizes the presentations of more than 35 Summit speakers, including Senator Tom Harkin and Dean Ornish, MD, as well as highlights from small groups' discussions around key aspects of integrative medicine.

Participants at the IOM summit acknowledged that the current reimbursement system makes it difficult to provide team care. “We have not so much an evidence-based system of health care as a reimbursement-based system of health care,” said David L. Katz, from The Integrative Medicine Center, Griffin Hospital.

Read the IOM report.

Seven out of 10 hospitals experienced a decline in their overall financial health during the past year, according to a survey of 768 community hospital CEOs conducted in August by the American Hospital Association.  In a report and presentation released on Nov. 11, AHA said that more than one third of hospitals expect losses in the first half of 2009, up from 29 percent for the same period last year. The vast majority of hospitals surveyed have made cutbacks to address economic concerns. According to the report:

• More than half of hospitals have reduced staff.
• Eighty percent have cut administrative expenses.
• One in five hospitals have reduced services such as behavioral health, post acute care, patient education, and other services that require subsidies
• Since the beginning of 2008, 70 percent of hospitals have reduced capital spending for facility upgrades, clinical technology, and/or IT

In addition, many hospitals report “a marked increase” in the number of physicians seeking hospital financial support since the fall of 2008. Eight in 10 hospitals have seen an increase in the number of physicians seeking compensation of services such as on-call coverage. Nearly 75 percent report that more physicians are pursuing hospital employment. And more than one-third say that a growing number of physicians are interested in selling their practices to the hospital.

The percentage of emergency department (ED) patients seen within the triage target time declined steadily each year from 1997 to 2006, according to a study published in the Nov. 9 issue of Archives of Internal Medicine. In addition, the study found that the most emergent or highest priority ED patients were least likely to be seen within the triage target time. Patients of all racial/ethnic backgrounds and payer types were similarly affected. Overall, one in four emergency department patients in 2006 waited longer than recommended to be evaluated by a physician, up from one in five in 1997.

Beginning November 15, Medicare beneficiaries will have an opportunity to sign up for coverage under a Medicare Advantage plan or a Medicare stand-alone Part D drug plan, or change plans if they are already enrolled in either type of plan. The Kaiser Family Foundation is issuing a collection of new and updated analyses examining key elements of the private plan options available to Medicare beneficiaries in 2010.

For both types of plans, beneficiaries could face substantial increases in their premiums if they stay in the same plan for 2010. For example, for Medicare Advantage enrollees who stay in the same plan in 2010, monthly premiums will increase by 32 percent on average, with a steeper 78 percent average increase for enrollees in private fee-for-service plans who do not switch plans.

Kaiser’s new and updated resources include:

• Medicare Advantage 2010 Data Spotlight: Plan Availability and Premiums, authored by a team of researchers at Mathematica Policy Research Inc. and the Kaiser Family Foundation.
• Medicare Part D 2010 Data Spotlight: The Coverage Gap, authored by a team of researchers at Georgetown University, NORC and the Kaiser Family Foundation. The team also has updated Medicare Part D Spotlight: Part D Plan Availability in 2010 and Key Changes Since 2006 released initially last month.
• Updated fact sheets on Medicare Advantage and on the Medicare Prescription Drug Benefit.

The median profit margin of U.S. hospitals increased from near zero in the third quarter of 2008 to an average of 8.4 percent in the second quarter of 2009, according to an analysis of hospital financial performance released today by Thomson Reuters. About 20 percent of hospitals still had negative total margins in the second quarter, which is similar to the rate seen before the recession began in late 2007. This represents an improvement from the first quarter of 2009, when 30 percent of hospitals were operating with negative margins.

Hospital admissions also increased in the second quarter of 2009, according to the report, moving into positive territory after a period of decline that began shortly after the recession started.

The study analyzes a combination of proprietary and public data from more than 400 hospitals nationwide. Trends in revenue and profit, employment levels, closures, inpatient volume, days cash on hand, and case mix are evaluated.

Late Saturday night, the U.S. House passed a sweeping health reform bill that for the first time in the nation's history would provide near-universal health insurance coverage. According to an analysis by the nonpartisan Congressional Budget Office, the bill would extend coverage to 36 million people. The CBO also found that although the bill would cost more than $1 trillion over 10 years, it would reduce the projected federal budget deficit by $104 billion over that same period.

The bill passed on a vote of 220-215, with 39 Democrats joining all but one Republican House members in opposition.

Meanwhile, the Senate is working to consolidate reform proposals into a bill that the Senate can debate. If the Senate passes a health reform measure, the House and Senate bills would need to be reconciled prior to legislation going to the President's desk.

Read Kaiser Health News coverage of the House vote. Read a summary of the House bill. Access HFMA's payment reform resources.

Less than 2 percent of nonfederal general acute care hospitals had a comprehensive electronic health record (EHR), according to a new report funded by the Robert Wood Johnson Foundation, Health Information Technology in the United States: On the Cusp of Change, 2009. An additional 7.6 percent had a basic EHR. Teaching hospitals, those with more than 500 beds, and hospitals that were members of a system or located in an urban area more commonly reported having EHRs.

The individual functionalities most commonly reported as fully implemented across all hospital units were electronic viewing of laboratory (77 percent) and radiology (78 percent) reports, and radiology images (78 percent). Approximately one in five hospitals reported fully implemented computerized order entry and clinical decision support.

This report is the third in a series of reports about health IT (HIT) adoption in the United States. This edition highlights the needed integration steps between performance measurement initiatives and HIT. Other topics covered include: adoption of electronic health records in U.S. hospitals, and specifically among hospitals that care for the poor; state roles in the advancement of HIT; and recent federal initiatives related to HIT.

Collaboration and technology are the keys to improving healthcare results for all parties involved, according to Blue Cross and Blue Shield Association Senior Vice President and CFO Robert J. Kolodgy. In a keynote speech today at HFMA's Revenue Cycle Strategies Conference in Chicago, Kolodgy outlined areas where providers and payers could collaborate to support innovation and improve patient results. Those areas included care delivery, medical home pilots, electronic health records, e-prescribing and information sharing. Kolodgy pointed to the Alabama Hospital Quality Initiative and the Minnesota Health Information Exchange as examples of collaboration with positive results. He also voiced support for comparative effectiveness via an Independent Research Institute.

Revenue cycle excellence can be achieved by all hospitals and health systems, regardless of an organization’s financial means or patient mix, according to the Healthcare Financial Management Association’s latest PATIENT FRIENDLY BILLING® Project report, Strategies for a High-Performance Revenue Cycle. The 37-page report was released today at HFMA’s Revenue Cycle Strategies Conference in Chicago.

Based on visits to high-performing sites across the nation and interviews with executives and revenue cycle staff, the report identifies three traits shared by high performers: an organizational culture that elevates the importance of the revenue cycle, mastery of areas that are important to organizational circumstances, and the ability to accelerate improvements.

Strategies for a High-Performance Revenue Cycle features detailed research findings, guidance for senior executives and revenue cycle leadership, and numerous case studies demonstrating practical applications of high-performance strategies.

“We know that hospital leaders are committed to the principles of Patient Friendly Billing, but they need to know which revenue cycle practices matter the most,” said HFMA President and CEO Richard L. Clarke, DHA, FHFMA. “This report highlights the practices frequently found at high-performing revenue cycle hospitals—and how they differ from the rest of the industry.”

Oaklawn Hospital, Marshall, Mich., is among the 14 hospitals that shared their expertise with Patient Friendly Billing report leaders through onsite visits and extensive interviews. “Over five years ago, Oaklawn began integrating its adaptation of HFMA’s Patient Friendly Billing Initiative best practices into our organizational goals. Over those years, it has played a significant role in improving our organizational performance and enhancing our patient satisfaction. We recently were recognized with HFMA’s High Performance in Revenue Cycle Award, in part, due to this foresight,” said Rob Covert, President & CEO, Oaklawn Hospital.

Joseph Fifer, Vice President, Hospital Finance at Spectrum Health added “Determining the value proposition for patients and the organization is a critical factor in every decision we make. Hospitals highlighted in this report, that deploy the practices from previous Patient Friendly Billing reports, satisfy this standard by demonstrating tangible and better results.”

More information about the project, including a 16-page executive summary of the report, is available at the Patient Friendly Billing web site, www.patientfriendlybilling.org.

U.S. Department of Health and Human Services Secretary Kathleen Sebelius today called on states and communities to join with HHS to redouble efforts to find and enroll the 5 million children who are currently eligible for Medicaid or the Children’s Health Insurance Program (CHIP), but are not yet covered. The Secretary issued this call to action as she opened the National Children’s Health Insurance Summit in Chicago, kicking off the nation’s largest campaign to find and enroll uninsured children in over a decade.

For more information about free or low-cost children’s health insurance, parents and caregivers may visit www.insurekidsnow.gov  or call 1-877-KIDS-NOW (1-877-543-7669). National Children’s Health Insurance Summit presentations are available online.

The names of 75 hospitals recognized for their exceptional quality achievements and ongoing commitment to quality improvement were announced today by Nashville, Tenn.-based research firm Data Advantage.

The firm examined hospital performance in the categories of quality, affordability, efficiency, and patient satisfaction. Quality was analyzed using publicly available data from the Centers for Medicare & Medicaid Services (CMS) Core Measures, Agency for Healthcare Research and Quality (AHRQ) Patient Safety Indicators, CMS 30‐day mortality scores, and CMS-reported hospital readmission rates.

Read the press release about the awards.

Most healthcare leaders surveyed in the latest Commonwealth Fund/Modern Healthcare Health Care Opinion Leaders Survey favor sweeping Medicare changes to help control program costs and support broader healthcare reform.

The vast majority of respondents favor expanding the power of the Secretary of Health and Human Services to put Medicare payment pilot programs on a "fast track" (95 percent) and to work with private payers and providers to establish multipayer initiatives (94 percent). Similarly, there was strong support for creation of an independent Medicare advisory council (favored by 75 percent) with broad authority to collaborate in multi-payer initiatives (89 percent), develop, test, and implement payment reforms rapidly and flexibly (88 percent), and alter beneficiary incentives based on effectiveness of services, drugs, and devices (86 percent).

Among other survey findings:

• Sixty-five percent of respondents feel that bundled payments and encouraging beneficiaries to designate a medical home would be effective policies for improving care and reducing costs.
• Nearly three-quarters (74 percent) of leaders believe older adults ages 50 to 64 should be able to buy Medicare coverage.
• A strong majority (69 percent) favor having Medicare offer its own comprehensive benefit package option as an alternative to Medigap or Medicare Advantage coverage.
• Nearly all (91 percent) healthcare opinion leaders support a requirement that Medicare providers participate in developing state, regional, and national all-payer databases to aid in research, policy development, and monitoring and evaluation.

By a clear margin, opinion leaders do not favor strategies that shift costs to beneficiaries or reduce payments across the board. Only 42 percent support offering a high-deductible health plan and 36 percent approve of requiring Medicare beneficiaries to pay a higher share of costs. Capping federal spending was similarly unpopular (26 percent), as was reducing payments to providers (19 percent).

At the request of the National Committee on Vital and Health Statistics, the Workgroup for Electronic Data Interchange (WEDI) has developed two surveys to assess healthcare industry progress toward achieving 5010 and ICD-10 implementation.

WEDI is seeking a single response to each of the two surveys from each participating organization, in order to maintain the integrity of the survey results.

The group has removed any questions that could be used to identify respondents. WEDI assures prospective respondents that no enforcement will result from survey participation.

Responses will be accepted until Nov. 12.

Access the surveys and files that may be downloaded for use as worksheets from the WEDI survey announcement.

The Federal Trade Commission (FTC) is delaying enforcement of the Red Flags rule until June 1, 2010, for financial institutions and creditors subject to enforcement by the FTC. The extension follows previous delays that were set to expire on Nov. 1. The Rule was promulgated under the Fair and Accurate Credit Transactions Act, in which Congress directed the FTC and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft. The resulting Red Flags rule requires all such entities that have “covered accounts” to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities – known as “red flags” – that could indicate identity theft.

Read the FTC announcement.

The Centers for Medicare & Medicaid Services (CMS) has issued a final rule on home health payment that includes a 2.0 percent market basket update to Medicare’s CY10 home health prospective payment system rates and a 2.75 percent coding reduction. The CY10 reduction is the third of four reductions authorized in a prior rule. In other provisions of the rule, CMS will cap home health outlier payments at 10 percent per home health agency and target total aggregate outlier payments at 2.5 percent of total payments. The current target for aggregate outlier payments is 5 percent of total expenditures.

The final rule will be published in the Federal Register on Nov. 10, 2009. The effective date is Jan. 1, 2010.

The Centers for Medicare & Medicaid Services (CMS) has published a final rule updating payment policies and rates for hospital outpatient departments (OPPS) and ambulatory surgical centers (ASCs) in CY10.

Most hospitals will receive an inflation update of 2.1 percent in their payment rates for Medicare outpatient services. Under the Hospital Outpatient Department Quality Data Reporting Program, hospitals that did not participate in the program or did not successfully report the quality measures will receive an update equal to the annual inflation update factor minus 2.0 percentage points for a net update of 0.1 percent.

ASCs will receive a 1.2 percent inflation update.

CMS projects that aggregate Medicare payments to hospitals and community mental health centers in CY10 will be approximately $32.2 billion, while aggregate Medicare payments to ASCs will total $3.4 billion.

The final rule will appear in the Nov. 20 Federal Register. Comments are due by Dec. 29. CMS will respond to comments in the CY11 OPPS/ASC final rule.

The Centers for Medicare & Medicaid Services (CMS) has released the Medicare physician fee schedule final rule for CY10, which will reduce Medicare payment rates for physicians by 21.2 percent in the absence of Congressional action to avert the cut. The U.S. House of Representatives has introduced draft legislation to permanently reform the physician payment formula. A similar measure in the Senate did not pass a vote at the committee level in October.

The CMS final rule will appear in the Nov. 25, 2009 Federal Register. CMS will accept comments on designated provisions of the final rule until Dec. 29, and will respond to comments at a later date. Unless otherwise specified, the new payment rates and policies will apply to services furnished to Medicare beneficiaries on or after Jan. 1, 2010.

The U.S. Department of Health and Human Services (HHS) on Oct. 31 issued an interim final rule that increases penalties for violations of the privacy and security rules promulgated under the Health Insurance Portability and Accountability Act (HIPAA).  The Health Information Technology for Economic and Clinical Health (HITECH) Act, which was enacted as part of the American Recovery and Reinvestment Act of 2009, significantly increase the penalty amounts HHS may impose for violations of the HIPAA rules.

Prior to the HITECH Act, the Secretary could not impose a penalty of more than $100 for each violation or $25,000 for all identical violations of the same provision. A covered healthcare provider, health plan or clearinghouse could also bar the Secretary’s imposition of a civil money penalty by demonstrating that it did not know that it violated the HIPAA rules.  Section 13410(d) of the HITECH Act strengthened the civil money penalty scheme by establishing tiered ranges of increasing minimum penalty amounts.

Under the new rule, the maximum individual penalty for civil violations of HIPAA will increase from $100 to $25,000 and the penalty cap will rise from $25,000 to $1.5 million for total violations of the same provision.  A covered entity can no longer bar the imposition of a civil money penalty for an unknown violation unless it corrects the violation within 30 days of discovery.

The interim final rule with request for comments will become effective on Nov. 30, and HHS will consider all comments received by Dec. 29, 2009.

Read the HHS press release.