IN THIS WEEK’S ISSUE:
- Proposed 2005 Outpatient PPS Rule Includes 3.3 Percent Update
- IRS Targets Not-For-Profit Compensation Practices
- For-Profit Hospitals Sued
- Not-For-Profit System Agrees To Settlement, Bond Rating Intact
- Medicare Hospice Payments Increase In FY05
- Coding Instructions Issued For Psychiatric Transfers
- Physician Compensation Survey Shows Modest Increases
- Quick Links
- New in the HFMA Resource Center
1. PROPOSED 2005 OUTPATIENT PPS RULE INCLUDES 3.3
PERCENT UPDATE
Medicare’s proposed hospital outpatient PPS rule for 2005, posted to the CMS website on August 9, would allow a full market basket increase of 3.3 percent to most payment rates and reflects the emphasis on preventive services also seen in the proposed physician payment rule.
- Proposed provisions would:
- Cover physicals for new beneficiaries
- Increase payment rates to hospitals for screening examinations covered by Medicare
- Implement an MMA requirement for diagnostic mammograms to be removed from payment under the outpatient PPS and paid, like screening mammograms, under the Medicare physician fee schedule
- Reduce the maximum coinsurance rate for any service to 45 percent of the total hospital payment in 2005, down from 50 percent this year
- Pay for new drugs and biologicals as soon as they are approved by the FDA. Continue the hold-harmless payments for small rural hospitals with fewer than 100 beds and sole community hospitals in rural areas
- Simplify observation service payments for patients with asthma, congestive heart failure, or chest pain
Additionally, the proposed rule would tighten outlier payments. A fixed dollar threshold would be added to the current threshold based on a percentage relationship between the cost of the service and the payment for the ambulatory payment classification (APC). To be eligible for an outlier payment, the cost of furnishing a service would have to exceed both thresholds. The proposed methodology sets the thresholds at 1.5 times the payment of the APC and $625 over the APC payment rate.
CMS will accept comments until October 8. The proposed rule will be published in the August 16 Federal Register, with the final rule required by November 1, 2004.
2. IRS TARGETS NOT-FOR-PROFIT COMPENSATION PRACTICES
The IRS announced a new initiative to end abuses by tax-exempt organizations that award excessive compensation and benefit to their officers and other insiders. Under the new Tax-Exempt Compensation Enforcement Project, the IRS will request from nearly 2,000 charities and foundations detailed information and supporting documents on their compensation practices and procedures for specific executives. The project will scrutinize insider transactions such as loans and the sale, exchange, or leasing of property to officers and others in the organization.
The IRS will require organizations to provide detailed information on the independence, duties, and responsibilities of the governing body that approved the compensation. The IRS will also be looking at how organizations report Form 990, and specifically how they answer question 89(b) regarding excess benefit transactions. Because one of the objectives is to gather information about current practices, the notice stated, IRS contact will not necessarily connote wrongdoing.
3. FOR-PROFIT HOSPITALS SUED
Three for-profit hospitals now face lawsuits over what they charge uninsured patients, news sources reported August 6. Lawyers associated with those who filed for class action status lawsuits against not-for-profit hospitals over billing issues filed separate suits against HCA and Universal Health Services (UHS) in Nevada and Health Management Associates (HMA) in Florida.
HMA spokesman John Merriwether told HFMA that HMA provides hundreds of millions of dollars in free care for the poor and that the patient named as plaintiff in the lawsuit actually settled the significantly discounted bill about two months ago. HMA will vigorously defend against the allegations, he said.
Jeff Prescott, speaking for HCA, told HFMA the real issue was the growing number of uninsured. He noted that HCA is in the process of implementing a revised system-wide discount plan. Steve Filton of UHS commented, "We have not been served with a complaint, nor have we had the opportunity to review the allegations with counsel. We feel strongly, however, that our hospitals are in compliance with all applicable laws relating to matters of billing and collection."
4. NOT-FOR-PROFIT SYSTEM AGREES TO SETTLEMENT, BOND RATING INTACT
North Mississippi Health Services (NMHS), a not-for-profit health system of north Mississippi and western Alabama chose to settle, rather than litigate, a lawsuit over discounts to uninsured patients. NMHS was not a defendant in recent widely publicized suits against a number of not-for-profit systems, but took action, CEO John Heer said, to avoid lengthy litigation over discounts NMHS considered reasonable.
The settlement includes changes to NMHS’s existing policy of providing discounts to patients with no insurance, and refunds to uninsured patients who received services during the past three years and who would have qualified for discounts under the revised policy. The financial impact is not expected to be significant. Herr stated that NMHS has, since its inception, had charity policies in place to provide care at no cost, or at reduced cost, to patients unable to pay the full cost of their care. Further addressing the impact of the settlement, Standard & Poors issued a statement August 10 that affirmed the NMHS “AA” bond rating. S&P noted management’s assessment that the financial effect should be less than $1 million per year.
5. MEDICARE HOSPICE PAYMENTS INCREASE IN FY05
Effective October 1, Medicare hospice rates for FY05 will increase 3.3 percent, according to a recent CMS transmittal. The increase equals the total market basket increase projected for FY05.
Annual updates to the hospice wage index will be published in a Federal Register notice before October 1. The revised wage index and payment rates will be incorporated in the hospice pricer and forwarded to intermediaries following publication of the notice. An updated metropolitan statistical area table will also be installed in the pricer to reflect the hospice wage index.
6. CODING INSTRUCTIONS ISSUED FOR PSYCHIATRIC TRANSFERS
CMS has published a transmittal that will implement patient status code 65 in January 2005 for reporting acute inpatient hospital PPS discharges and transfers to a psychiatric hospital or a psychiatric distinct part unit of a hospital. Psychiatric hospitals and psychiatric distinct part units have been included in patient status code 05, but will now have their own code. CMS said the change addresses the potential for payment error when an inpatient PPS hospital transfers a patient to a psychiatric hospital, because psychiatric hospitals are included in the postacute care transfer policy.
When the change is implemented, the common working file (CWF) will look for patient status code 65 on an IPPS claim when either the history or incoming claim contains a psychiatric hospital provider number, within the range xx-4000 through xx-4499. Providers are to be instructed to continue to use patient status code 05 when billing Medicare until 65 becomes available. Providers do not need to resubmit bills, but begin billing with 65 when directed by the fiscal intermediary.
7. PHYSICIAN COMPENSATION SURVEY SHOWS MODEST INCREASES
In 2003, there was a modest increase in compensation for most physician specialties, according to findings in the American Medical Group Association’s 2004 Medical Group Compensation & Financial Survey. Median compensation and gross productivity for physicians have typically increased over the past four years; however, only certain high-demand specialties saw major increases in median compensation during 2003.
For the period 2003 to 2004, the survey found that physicians specializing in cardiology, dermatology, gastroenterology, and pathology experienced the largest increases in compensation. Specialties with the lowest increases included neurology, general surgery, and orthopedic surgery. During the past four years, the rate of increase has been particularly low in specialties such as family medicine, neurology, gynecology and obstetrics, and orthopedic surgery.
8. QUICK LINKS
CMS SPECIAL FORUM—DRUG BENEFIT AND MEDICARE ADVANTAGE. On August 16, a CMS open door forum will focus on clarification and discussion of the MMA Title I and Title II regulations published in the Federal Register on August 3, 2004.
CMS SPECIAL FORUM: THE MEDICARE PRESCRIPTION DRUG BENEFIT RETIREE SUBSIDY. On August 19, CMS will host an open door forum for discussion of the technical aspects of implementing the MMA’s drug benefit subsidy, including how CMS can best help employers and unions utilize the federal subsidy options in the most valuable and least burdensome manner for the benefit of Medicare retirees.
GAO CHANGES NAME. Effective July 7, 2004, the General Accounting Office (GAO) became the Government Accountability Office and launched a revised website.
GRANTS AVAILABLE FOR ALLIED HEALTH TRAINING. Under the Allied Health Projects Grants Program, the Health Resources and Services Administration (HRSA) has released $4.4 million to 34 projects to help fund the expanding or establishing of programs to increase the number of trained allied health professionals.
9. NEW IN THE HFMA RESOURCE CENTER
HFMA EXECUTIVE ROUNDTABLE: OPERATIONALIZING STANDARDS OF CARE: THE CFO'S ROLE IN CLINICAL PATHWAYS. Read the real-world insights of CFOs and chief medical officers who recently gathered to discuss their efforts to standardize clinical care pathways.
UPDATED: HFMA’S INTERNET GUIDE TO MEDICARE CODING AND BILLING Use this handy billing compliance reference to be sure you are up to date on important Medicare coding and billing instructions.
Copyright 2004 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XI, Number 32.
For customer service, send an e-mail to HFMA’s Member Service Center or call (800) 252-HFMA, and press 2.