HFMA Express News - October 22, 2004

IN THIS WEEK’S ISSUE:

1. Hospital Lawsuits Consolidation Rejected
2. Home Health Payment Rates To Increase in 2005
3. CMS Speeds Up Medicare Appeals Process
4. Jobs Act Lacks Overtime Regs, Tightens Leasing Restrictions
5. Hospitals Receive Slightly Higher Payments in September
6. State Spending Controls Hinder Medicaid, SCHIP Enrollment
7. Quick Links
8. In the HFMA Resource Center

1.HOSPITAL LAWSUITS CONSOLIDATION REJECTED

Editor's Note: This story was revised on October 28, 2004.

Lawsuits coordinated by Richard Scruggs against more than 40 hospital systems will not be consolidated, a panel of judges in Philadelphia ruled Wednesday. The hospitals were alleged to have used unfair billing practices against uninsured patients. The defendants, along with the American Hospital Association (AHA), argued the motion to consolidate all of the cases, asking the court to consolidate the cases was simply a legal maneuver to benefit trial lawyers at the expense of hundreds of local hospitals, according to the AHA. The U.S. Panel on Multidistrict Litigation concluded that, "Centralization would neither serve the convenience of the parties and witnesses nor further the just and efficient conduct of this litigation." The cases must now be tried individually, generally within the hospitals' communities.

2. HOME HEALTH PAYMENT RATES TO INCREASE IN 2005

Medicare home health payment rates will increase by 2.3 percent in 2005, CMS announced in an October 22 final rule. The increase is expected to provide an additional $250 million in payments to home health agencies next year. Under the home health PPS, Medicare pays higher rates for the care of beneficiaries with greater needs.

Home health payment rates are updated annually based on the percentage change in the home health market basket index. The MMA required the CY05 update to be the market basket increase minus 0.8 percentage points. In the final rule, CMS rebased and revised the home health market basket to reflect the changes in the costs of efficiently providing home health services. Additionally, CMS will reduce the fixed dollar loss ratio, allowing more home health episodes to qualify for outlier payments under the PPS.

The final rule, effective January 1, 2005, is the first update of the home health PPS payment rates on a calendar year update cycle, as a result of MMA provisions.

3. CMS SPEEDS UP MEDICARE APPEALS PROCESS

CMS announced a new program that should allow beneficiaries to more quickly resolve Medicare claims appeals for denied Medicare fee-for-service claims. The agency has contracted with eight qualified independent contractors (QICs) to promptly perform second-level claims appeals, replacing the current fair hearing process. CMS expects to issue implementing regulations by the end of this year.

Along with other improvements, CMS will adopt a 60-day decision deadline and improved notices for first–level appeals performed by intermediaries and carriers. The improved notices will include the specific reasons for the decision and a summary of relevant clinical or scientific evidence used in making the decision. The Social Security Act requires that reconsiderations must be completed within 60 days from the day the request is filed.

4. JOBS ACT LACKS OVERTIME REGS, TIGHTENS LEASING RESTRICTIONS

A provision to bar the Department of Labor (DOL) from implementing controversial regulations on overtime exemptions has been dropped from the final version of the American Jobs Creation Act of 2004 (HR 4520). These regulations revised and updated exemptions from the Fair Labor Standards Act’s (FLSA’s) minimum wage and overtime pay requirements. Provisions in the Senate version of the bill would have banned the overtime exemption for anyone not exempt under the regulations that were in effect March 31, 2003. According the ANA, the Senate bill would have been “a step in the right direction for protecting the pay for nurses.”

Also of interest to healthcare providers, the bill includes new restrictions on leasing to tax-exempt entities. According to one lessor’s estimate, the changes could add as much as 5 percent to tax exempt organizations’ cost of certain leases. The bill is awaiting the president’s signature.

5. HOSPITALS RECEIVE SLIGHTLY HIGHER PAYMENTS IN SEPTEMBER

The Producer Price Index (PPI) for hospital services rose by 0.2 percent in September, recovering from the slight 0.1 percent dip in August, the Bureau of Labor Statistics reported October 15. Payments received by hospitals have increased 5.2 percent over the last 12 months.

Payments received by physician offices and medical laboratories saw no change for the second month in a row. The physician office PPI has remained essentially flat since January, and increased by a lean 1.6 percent over the last 12 months.

Payments received by nursing care facilities increased by 0.2 percent in September, slowing from the 0.8 percent growth of July and August. Payments for home health agencies declined by 0.1 percent for both September and August.

The PPI for healthcare providers measures average changes in the actual or expected payments that providers receive from all payers for the services they provide.

6. STATE SPENDING CONTROLS HINDER MEDICAID, SCHIP ENROLLMENT

States that are striving to provide health insurance coverage to low-income populations are still burdened by pressures to reduce spending according to a recent report released by the Kaiser Commission on Medicaid and the Uninsured. Total Medicaid spending increased by 9.5 percent in FY04, according to the report, which surveyed state Medicaid officials. Enrollment growth, caused by the large increase in poverty, was most frequently cited by states as the primary driver of this spending growth. Other drivers include prescription drug costs and overall healthcare costs. In response to budget pressures, all 50 states and the District of Columbia implemented at least one new Medicaid cost containment strategy in FY04 and planned to implement such strategies in FY05.

A second report, presenting findings from a survey of Medicaid and State Children’s Health Insurance Program (SCHIP) enrollment and eligibility policies, reveals that state efforts to reduce program spending may threaten SCHIP enrollment. Nearly half of states took actions that made it more difficult for eligible children and families to acquire and retain health coverage.

7.QUICK LINKS

COMMUNITY HEALTH CENTER GRANTS. HHS intends to award 76 new health center grants, totaling $49 million, to help create new and expanded community health centers under HRSA’s Consolidated Health Center Program.

CMS FORUM ON HCPCS REVISION PROCESS. CMS plans to changed the way the Healthcare Common Procedure Coding System (HCPCS) code sets are updated for the payment of new healthcare services and technologies. Hear more about these changes at a CMS open door forum at 2 p.m. (EST) on October 27.

PREDICTING FUTURE MEDICAL TREATMENT COSTS FOR THE ELDERLY. A new Rand study identifies possible medical breakthroughs that could greatly affect the future health of the elderly and provides a model for estimating health spending projections.

EMPLOYERS AND RETIREE DRUG COVERAGE UNDER THE MMA. A CMS webcast at 2 p.m. (EST) on October 26 will provide information on the clarified provisions dealing with retiree drug coverage, including discussion of opportunities for employers to provide coverage and receive a government subsidy toward the cost.
 

8. IN THE HFMA RESOURCE CENTER

hfm TOOLBOX: KEY REVENUE CYCLE METRICS. Gain insight into your revenue cycle and overall financial performance with these guideline metrics for patient access quality, case management, patient accounting, and more.
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MEDICAL NECESSITY DENIALS: PREVENTION PAYS OFF. Download this educational supplement, sponsored by 3M Health Information Systems, to learn how to decrease the number of medical denials at your facility.

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