HFMA Express News - September 24, 2004

IN THIS WEEK’S ISSUE:

1. CMS Clarifies Application Process for Redistributed GME Slots
2. HHS “Early Offers” Program Aimed At Reducing Litigation Costs
3. MedPAC Explores Hospital Pricing Practices
4. MMA Cuts More Than Expected from Oncology Services
5. Medicare Coverage Expanded for Alzheimer’s Disease PET Scans
6. GAO Recommends Change To Outpatient PPS Payment Methodology
7. Healthcare Philanthropy Grows in 2003
8. Quick Links
9. New in the HFMA Resource Center
10. New in the Healthcare Compliance Forum Library

1.  CMS CLARIFIES APPLICATION PROCESS FOR REDISTRIBUTED GME SLOTS

Qualifying hospitals that submit timely and relatively detailed applications may receive up to 25 additional full-time equivalent (FTE) resident cap slots from those being redistributed under Section 422 of the Medicare Modernization Act (MMA). Yesterday, CMS clarified two aspects of the application process: the application deadline and demonstrated likelihood criteria.

§ The application deadline for additional FTE cap slots is December 1, 2004, unless the hospitals' FTE counts will be subject to audit. If there is an FTE audit, a deadline of March 1 may be applicable.
§ The MMA requires CMS to take into account the demonstrated likelihood that a hospital will be able to fill the additional FTE cap slots within the first three cost reporting periods beginning on or after July 1, 2005. The application provides three ways that a hospital may meet this "demonstrated likelihood" criteria, including the submission of very specific documentation.

Additional information on section 422 of the MMA and the application process can be found in the August 11, 2004, Federal Register.

2.  HHS “EARLY OFFERS” PROGRAM AIMED AT REDUCING LITIGATION COSTS

HHS secretary Tommy Thompson has announced an "Early Offers" pilot program intended to reduce litigation costs by encouraging settlements of patients claiming to have been injured by medical errors. Thompson suggests the program could become a national model for resolving medical liability cases more efficiently.

The voluntary program, which went into effect September 21, applies to claims made against the HHS by patients who are treated by employees of federally funded community health centers overseen by HHS's Health Resources and Services Administration or by patients who receive service through Indian Health Service programs. A person who has filed a claim with the HHS is permitted to make an offer to settle the case for a specified amount within 90 days after receiving a letter from HHS notifying them their claim has been received and informing them of the program. HHS has the same opportunity to make an offer within the 90 days by stating how much compensation it is willing to provide. Offers are made confidentially to an independent third party, who will compare the offers to determine if settlement has been achieved.

3.  MEDPAC EXPLORES HOSPITAL PRICING PRACTICES

The Medicare Payment Advisory Commission (MedPAC) is focusing on the hospital pricing issue. At its September 10 meeting, MedPAC reviewed findings of a research project that it commissioned from the Lewin Group on hospitals’ charge-setting practices.

Key findings of the project, which consisted of interviews of 251 hospitals, a nonrandom sample that included representation from across the country, included:

Noncost data is just as important as cost data in revising charges. Noncost data includes public data, market information, advice from consultants, and information from payers (including Medicare).

Costs play a large role in setting charges for supplies and pharmaceuticals, where most hospitals use formulas or tables based on acquisition costs of the items.

Formulas for pharmaceutical charges varied the markup by the type of drug or the route of administration (oral or IV), or the preparation.

4.   MMA CUTS MORE THAN EXPECTED FROM ONCOLOGY SERVICES

Beginning in 2005, Medicare funding for chemotherapy services will be reduced by 43 percent, according to a report released September 8 by the American Society of Clinical Oncology (ASCO). The funding reductions were part of the MMA.

In addition, the reductions in reimbursements to oncology practices for cancer drugs will be an average of 15 percent - nearly double the CMS estimate of 8 percent, ASCO estimates based on a survey of its members. ASCO's analysis found that as much as one-quarter of all drugs used for cancer treatment will cost the typical oncology practice more than what is received from Medicare.

5.  MEDICARE COVERAGE EXPANDED FOR ALZHEIMER’S DISEASE PET SCANS

CMS announced September 15 that it has expanded Medicare coverage of positron emission tomography (PET) to include Medicare beneficiaries suspected to have Alzheimer's disease. Coverage also includes other beneficiaries at risk for Alzheimer's disease who are currently enrolled in a clinical trial, and those who meet the diagnostic criteria for fronto-temporal dementia. Medicare beneficiaries who meet specific criteria may continue their participation in the clinical trial and receive a PET scan while CMS continues to review evidence about the benefits of these scans in other populations.

On June 14, 2004, CMS notified the public of its intent to expand coverage of PET scans for those beneficiaries suspected of having Alzheimer’s disease. CMS accepted public comments on the draft decision memorandum through July or for 30 days, and now has rendered the final coverage decision.

6.  GAO RECOMMENDS CHANGE TO OUTPATIENT PPS PAYMENT METHODOLOGY

The Government Accountability Office (GAO), in a recently completed study for the House Ways & Means subcommittee on health, found weakness in the CMS methodology for setting Medicare outpatient payment rates. The GAO concerns centered on the exclusion of more than 40 percent of multiple-service claims (claims that include more than one primary service as well as packaged services) from the calculation of the cost of outpatient services to Medicare patients.

GAO recommended that CMS determine if the types of costs and services excluded from consideration are different from those CMS includes in its rate setting; analyze the effect of hospital charge-setting variation on the rate-setting methodology; and determine whether the outpatient PPS rate-setting methodology results in payment rates that uniformly reflect hospitals’ costs of the services, and if it does not, change the methodology.

7.   HEALTHCARE PHILANTHROPY GROWS IN 2003

Charitable giving to healthcare provider organizations increased 6.5 percent in 2003, to a total of $5.9 billion, according to the Association for Healthcare Philanthropy’s (AHP’s) 2003 Report on Giving. Giving totaled $8 billion in 2001, but then dropped to $5.5 billion in 2002 in the aftermath of September 11 and the economic decline.

Individual donors were the largest group of contributors, comprising 83 percent of all donors and contributing 61.4 percent of all funds. Businesses, including corporate foundations, made up 17.9 percent of all donors and contributed 11.8 percent of all funds.

The increase is a move in the right direction, commented AHP president and CEO William C. McGinly, PhD; however, giving is closely linked to the U.S. economic recovery, around which there is continuing uncertainty.

Changes in philanthropy trends have become increasingly significant to healthcare executives, 45 percent of whom said they planned to rely more on philanthropy dollars to cover future capital expenses, according to HFMA’s Financing the Future project.

Buy the AHP 2003 Report on Giving for $150 from the AHP bookstore.

8. QUICK LINKS

CMS, JCAHO ISSUE HOSPITAL PERFORMANCE MEASURE MANUAL..  CMS and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) issued a technical manual for hospital quality measures that provides common definitions for each of the quality measures that are being collected and reported.

OIG LIST OF EXCLUDED INDIVIDUALS/ENTITIES (LEIE). The OIG posted the full "Updated LEIE" database file reflecting all OIG exclusion and reinstatement actions taken up to and including August 2004.

PAYMENT POLICY FOR NEW LTCHs. A new payment policy will be implemented January 3, 2005, to avoid double payment for new long-term care hospitals (LTCHs) that have crossover patients, according to transmittal number 267.

OIG AUDIT REPORT ON MEDICARE PAYMENT RATES FOR HOME OXYGEN EQUIPMENT. The OIG recently released an audit report recommending methods of calculating payment rates for home oxygen equipment. Payment changes are required by the MMA Section 302(c)(2).

PAYMENT CLARIFICATIONS FOR OUTPATIENT ESRD SERVICES. A September 17 transmittal (300) clarified billing for end-stage renal disease (ESRD)

9.  NEW IN THE HFMA RESOURCE CENTER

STRATEGIES FOR IMPROVING THE REVENUE CYCLE: INDUSTRY VIEWS. Learn how healthcare finance leaders are implementing measurable improvements to their revenue cycle. This report highlights the perspectives of 254 financial executives and revenue cycle leaders who responded to HFMA's 2004 Revenue Cycle Survey.

SELF-ASSESSMENT TOOL: BILLING FOLLOW-UP. Use this self-assessment tool to ensure you have key billing follow-up processes covered for effective revenue cycle management. 
 

10. NEW IN THE HEALTHCARE COMPLIANCE FORUM LIBRARY

SUPPLEMENTAL COMPLIANCE GUIDANCE: STARK AND KICKBACK COMPLIANCE PROCEDURES, by Scott C. Withrow, JD. This article addresses points of "significant concern for hospitals" outlined in the OIG's June 8, 2004, supplemental compliance guidance for hospitals. For Healthcare Compliance Forum members only.

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