IN THIS WEEK’S ISSUE:
- HOSPITAL 2005 PPS PAYMENTS TO INCREASE BY $5 BILLION
- CMS CLARIFIES INPATIENT PPS WAGE INDEX TABLES, TIMETABLE OF PSYCH RULE
- CMS ISSUES FLOOD OF TRANSMITTALS
- SENATE PASSES PATIENT SAFETY BILL
- GROWTH SLOWS FOR HEALTHCARE EMPLOYMENT COSTS
- Quick Links
- New in the HFMA Resource Center
1. HOSPITAL 2005 PPS PAYMENTS TO INCREASE BY $5 BILLION
On August 2, CMS issued a final rule increasing Medicare FY05 hospital inpatient PPS payments by $5 billion more than 2004 projections, for a total of $105 billion. CMS projects the rule’s changes will produce an average 5.8 percent payment-per-case increase for all hospitals, a 5.7 percent increase for urban hospitals, and a 6.2 percent increase for rural hospitals.
The outlier threshold in the final rule will be $25,800, a decrease both from $31,000 in FY04 and from the $35,085 originally included in the FY05 hospital inpatient PPS proposed rule.
The final rule also implements major payment and policy changes for acute care hospitals required by the Medicare Prescription Drug, Improvement, and Modernization Act (MMA). The changes include:
- A market basket update of 3.3 percent
- Financial relief to rural hospitals
- Critical access hospital (CAH) payment improvements
- Operational details of the link between quality of services and payments
- Supplemental payments to certain low-volume acute care hospitals
- Updated labor market areas
The regulation is scheduled for publication in the August 11 Federal Register and will go into effect with hospital discharges on or after October 1, 2004.
2. CMS CLARIFIES INPATIENT PPS WAGE INDEX TABLES, TIMETABLE OF PSYCH RULE
At the August 3 CMS Open Door Forum for hospitals, CMS staff clarified use of the wage index tables included in the FY05 hospital inpatient PPS rule (see story 1). Staff noted there are tables for metropolitan statistical areas (MSAs) and core-based statistical areas (CBSAs). To identify the applicable wage index, hospitals should use the CBSA table unless the wage index is lower than the wage index in the table for MSAs, in which case there would be a blending of the two tables. There is more on this subject in Appendix A of the inpatient PPS rule, part VI.
Additionally, CMS staff stated that the Medicare inpatient psychiatric facilities' rule proposed November 28, 2003, should be released by the end of the year. More than 300 comments, received during the extended comment period that ended in the spring, will be addressed in the final rule.
3. CMS ISSUES FLOOD OF TRANSMITTALS
Since July 23, CMS issued 51 transmittals communicating new or changed policies and procedures that are being incorporated into CMS program manuals. While some of the transmittals give directions to carriers and fiscal intermediaries that are transparent to providers, others give important details providers should use in training staff and modifying administrative processes.
Included in this batch of transmittals (which CMS calls “change requests,” or CRs) are:
- Instructions requiring FIs to accept monthly bills from skilled nursing facilities (SNFs) and Tax Equity and Fiscal Responsibility Act (TEFRA) hospitals, and that coordinate proper billing when an individual outpatient PPS service is performed on the same day as an outpatient PPS repetitive service (see CR 3382)
- New pricing procedures for certain durable medical equipment, prosthetic, orthotic, and supply (DMEPOS) items based on modifiers (CR 3300)
- An update to the Health Care Claims Status and Category codes used with claims status request and response ASC X12N 276/277 (CR 3361)
- How the common working file (CWF) will edit for compliance with the interrupted stay policy for long-term care hospitals (CR 3279)
- Notice of the new interest rate for Medicare overpayments and underpayments (CR 2831)
An update to be implemented in October for bills from hospitals that are not paid under the outpatient PPS (CR 3396)
4. SENATE PASSES PATIENT SAFETY BILL
On July 22, the Senate passed the Patient Safety and Quality Improvement Act of 2004 (S. 720), legislation that would create a mandatory system for reporting medical errors. The legislation is supported by the American Hospital Association.
The bill provides legal and confidentiality protection for reported patient safety data and establishes an accreditation process for patient safety organizations (PSOs). PSOs may provide information to the National Patient Safety Database, information in which the patient, provider, and reporter are not identifiable. The bill also provides that PSOs and providers may disseminate information on recommended interventions and best practices to other PSOs, providers, and consumers to improve quality of care and enhance patient safety.
The Senate bill must now be reconciled with the House patient safety bill, H.R. 663, which passed in March 2003.
5. GROWTH SLOWS FOR HEALTHCARE EMPLOYMENT COSTS
The growth rate for compensation costs for health services fell 0.8 percent from March to June 2004, down from a growth rate of 1.3 percent in the previous quarter, according to Employment Cost Index data released by the Bureau of Labor Statistics on July 29. For the healthcare sector, compensation costs increased 4.1 percent for the year ending June 2004.
Second-quarter compensation costs for hospital services also grew by 0.8 percent, down from the 1.1 percent growth rate of the previous quarter. Compensation costs in hospitals increased 4.3 percent for the year ending June 2004.
6. QUICK LINKS
SCHERING-PLOUGH CORPORATION INTEGRITY AGREEMENT. The OIG posted a $345.5 million corporate integrity agreement with Schering-Plough.
CCI EDITS VERSION 10.3 UPDATED. CMS recently published quarterly update to the correct coding initiative (CCI) edits, version 10.3. This version includes all previous versions and updates from January 1, 1996, to present.
7. NEW IN THE HFMA RESOURCE CENTER
SELF-ASSESSMENT TOOL: CODING AND BILLING. Use this self-assessment tool to ensure you have key coding and billing processes covered for effective revenue cycle management.
Copyright 2004 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XI, Number 31.
For customer service, send an e-mail to HFMA’s Member Service Center or call (800) 252-HFMA, and press 2.