HFMA Express News - July 3, 2003

IN THIS WEEK’S ISSUE 

1. CMS CANCELS PHYSICIANS’ JULY 2003 MASS CLAIMS ADJUSTMENTS
2. NEGOTIATIONS BEGIN ON MEDICARE PRESCRIPTION DRUG BILLS
3. HOME HEALTH PAYMENT RATES INCREASE BY 3.3 PERCENT
4. NURSING HOME MARKET REPORT PAINTS BLEAK PICTURE
5. AICPA ISSUES TECHNICAL PRACTICE AID ON OTHER-THAN-TEMPORARY IMPAIRMENT
6. HFMA AND CRANEWARE PARTNER TO HELP REDUCE CHARGEMASTER ERRORS
7. Quick Links
8. - JCAHO Unveils Revised Accreditation Standards
9. New in the HFMA Resource Center
10. - Highlights: Medicare Outlier Final Rule
11. - New Resource Center Layout
12. - 2003 HFMA Compensation Survey

1. CMS CANCELS PHYSICIANS’ JULY 2003 MASS CLAIMS ADJUSTMENTS

CMS has canceled the automatic mass physician claims adjustments that were to begin July 2003. CMS had originally determined the adjustments were necessary to correct payment errors resulting from the delay of the implementation of the Medicare Physician Fee Schedule (MPFS), which became effective March 1, 2003. CMS had directed Medicare carriers to automatically adjust claims under the MPFS, beginning in July 2003, and to recover any applicable overpayment. However, CMS has now determined that the amount that could be recovered does not justify the cost of collecting the overpayments.

2. NEGOTIATIONS BEGIN ON MEDICARE PRESCRIPTION DRUG BILLS

The House and Senate conference committee is set to begin negotiations to reconcile the differences between the two versions of the Medicare modernization and prescription drug bills passed by the two houses. The committee, as well as the public, will be sorting out numerous last-minute amendments to the drug benefits and provider payment improvements.

Senate Majority Leader Bill Frist (R-TN) is reported to have stated the committee’s work could stretch into months. If so, providers might not receive badly need help prior to the October 1 start of the federal 2004 fiscal year.

3. HOME HEALTH PAYMENT RATES INCREASE BY 3.3 PERCENT

Medicare payment rates to home health agencies will increase by 3.3 percent in 2004, CMS announced in a notice which appeared in the July 2, 2003, Federal Register. Under the home health PPS, Medicare pays higher rates for care of beneficiaries with greater needs. In addition, payment rates are based on relevant data from patient assessments conducted by clinicians.

Home health payment rates are updated annually by the percentage change in the home health market basket index, which measures inflation in the prices of an appropriate mix of goods and services included in home health services.

4. NURSING HOME MARKET REPORT PAINTS BLEAK PICTURE

A new wave of bankruptcies may soon sweep the nursing home industry, according to some members of the investment community. The investors’ views are cited in CMS’s second annual market report, which projects a negative outlook overall for the industry. Two factors are prompting most of the negative forecasting: a marked decline in government payment and the rising cost of liability insurance. The nursing home industry no longer receives about $1.4 billion in add-on payments, a provision that sunset last October. There also are widespread fears of what states’ fiscal crises and budget adjustments will do to Medicaid programs, which are a major source of payment to nursing homes. An even greater concern to many is the effect of aggressive litigation on insurance costs. Nursing facility margins have declined due to increases in patient care liability cases, average claim sizes, and insurance premium costs. Many chains are divesting nursing facilities in states where liability costs are disproportionately high.

Average profit margins of the publicly traded, for-profit nursing facility companies, which were declining before the add-on sunset, have gone from 2.8 percent in the first quarter of 2002 to 1.1 percent in the first quarter of 2003. Some analysts believe the not-for-profit and smaller facilities may be hit harder by the sunset than the for-profits.

5. AICPA ISSUES TECHNICAL PRACTICE AID ON OTHER-THAN-TEMPORARY IMPAIRMENT

The AICPA has issued a technical practice aid (TPA) on other-than-temporary (OTT) impairment for not-for-profit healthcare entities. The AICPA seeks to clarify the guidance in Health Care Organizations, the AICPA Audit and Accounting Guide.

The TPA doesn’t differ substantially from the OTT issue analysis that HFMA's Principles and Practices (P&P) Board published in December. In that analysis, which was based on a review of current accounting literature, the board determined that when an OTT decline occurs, losses are to be recognized through the income statement and belong in the performance indicator. Following this view, temporary unrealized losses on investments that are not considered trading securities would be recognized as other changes in net assets and belong outside the performance indicator.

Healthcare financial managers should stay alert for final census on the issue, since the FASB’s Emerging Issues Task Force (EITF) is also considering guidance on “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments.” The task force has cited HFMA’s issue analysis as a resource for its background work on this topic.

6. HFMA AND CRANEWARE PARTNER TO HELP REDUCE CHARGEMASTER ERRORS

HFMA and Craneware announced June 23 that they are cobranding the Active Chargemaster Professional Toolkit, a software application that identifies missing charges and outdated or incorrect CPT codes in chargemasters. HFMA’s peer review process identifies the software as a chargemaster solution worthy of consideration by hospitals regardless of size, classification, or geographic region. For more information or to order, contact HFMA at (800) 252-4362, ext. 330. HFMA members will receive special HFMA pricing.

7. QUICK LINK

JCAHO UNVEILS REVISED ACCREDITATION STANDARDS. The Joint Commission on Accreditation of Healthcare Organizations (JCAHO) unveiled its revised accreditation standards. The revised standards are effective July 1, 2004.

8. NEW IN THE HFMA RESOURCE CENTER

HIGHLIGHTS: MEDICARE OUTLIER FINAL RULE. This rule revises the policies that govern payments to hospitals for services to inpatients for whom the costs of treatment greatly exceed the fixed payment under the inpatient PPS.

NEW RESOURCE CENTER LAYOUT. HFMA has streamlined key Resource Center navigation pages to make it easier for you to quickly find the information you need, including HFMA research, the latest Federal Register notices, ready-to-use presentations, and internet guides.

2003 HFMA COMPENSATION SURVEY. Read the results of HFMA's biannual national survey covering 10 key healthcare finance positions, ranging from chief financial officer to accountant. Results are also published in the July 2003 hfm.

For customer service, send an e-mail to HFMA’s Member Service Center or call (800) 252-HFMA, and press 2.

Deloitte & Touche is pleased to sponsor this weekly update of critical financial and regulatory issues. The firm serves as a business advisor to many leading healthcare organizations and invests in the research and development of new practices to assist its clients in leading the next generation of healthcare.