HFMA Express News - April 1, 2005

IN THIS WEEK’S ISSUE:

1. Proposed Rule Would Loosen Medicare Hospital Conditions of Participation
2. Auditors to Assess Payment Accuracy in Medicare Demonstration
3. McClellan Seeks to Curb Physician Spending Growth
4. Part B Premiums to Increase 12 Percent
5. OPPS Update Changes Observation Services Testing Requirements
6. CMS Clarifies RHC/FQHC Billing for Off-Site Services
7. Nonprofit Health Systems Are Adopting Corporate Practices
8. Study Shows Limited Use of Electronic Medical Records
9. First HFMA Charity Golf Outing Benefits Phoenix Clinic
10. Quick Links
11. New in the Federal Register

1. PROPOSED RULE WOULD LOOSEN MEDICARE HOSPITAL CONDITIONS OF PARTICIPATION

Certain hospital requirements for completing history and physical examinations, authenticating verbal orders, securing medications, and completing post-anesthesia evaluations as part of Medicare conditions of participation would be relaxed under a proposed rule published in the March 25 Federal Register. According to CMS, the proposed revisions are intended to remove burdensome regulations for clinicians. The revised requirements include:

• Additions to the practitioners who may perform the H&P
• Less stringent H&P required completion times
• Permitting the authentication of verbal orders by “whomever is responsible for providing or evaluating a service provided,”
• Allowing the post-anesthesia evaluation report to be written by an individual qualified to administer anesthesia

The proposed rule also would add flexibility in how hospitals may secure medications. Comments on the proposed rule are due by May 25.

2. MEDICARE DEMO WOULD USE AUDITORS TO ASSESS PAYMENT ACCURACY

CMS is launching a 3-year demonstration project that will use “recovery audit contractors” to search for improper Medicare payments made to California, Florida, and New York healthcare providers that were not detected through existing program integrity efforts. Prompted by MMA Section 306, which authorized audit recovery contracts, the RACs will verify any billing errors and begin recovery of any overpayments. They will request claim history and medical records, if necessary, to determine if overpayments or underpayments exist. If an overpayment is detected, the contractor will pursue payment and will be reimbursed a percentage of the recovery. For underpayments, the RAC will provide the necessary documentation to the Medicare contractors for processing an additional payment to the provider.

3. MCCLELLAN SEEKS TO CURB PHYSICIAN SPENDING GROWTH

CMS administrator Mark McClellan has advised the Medicare Payment Advisory Commission (MedPAC) that CMS foresees an estimated negative 4.3 percent physician fee schedule adjustment for 2006, but will consider options to reward physicians for better and more efficient care. The administrator made the announcement in a teleconference with the press yesterday. In a letter to MedPAC detailing the factors contributing to high spending on physician services (which will lead to the negative payment update for 2006), CMS discusses the quality improvement efforts which, McClellan says, will give better healthcare for the money.

There is a big discrepancy between spending on physician services and what the law allows, McClellan noted. The fee schedule adjustment takes into consideration the Medicare economic index and an update adjustment factor based on spending. Without the minus 7 percent limitation imposed by current law, the update adjustment factor would be a negative 21.1 percent. That spending may, CMS estimates, lead to an additional $1.50 in monthly beneficiary Part B premiums over that projected in the Medicare Trustees report, and is in large part due to additional services being covered (See next story).

4. PART B PREMIUMS TO INCREASE 12 PERCENT

Monthly Medicare Part B premiums will increase from $78.20 to $87.70 next year, a 12 percent increase, the recent Medicare and Social Security trustees report found. Part B of the Supplementary Medical Insurance fund pays for physician visits and outpatient services, and beneficiaries’ premiums finance approximately 25 percent of Part B costs. The trustees attribute the need for higher premiums to payment increases to physicians and other Part B providers mandated by the Medicare Modernization Act (MMA), combined with expenditure growth from greater utilization of services. Part B spending has averaged almost 11 percent increase per year over the last five years and is expected to nearly double over the next 10 years.

5. OPPS UPDATE CHANGES TESTING REQUIREMENTS FOR OBSERVATION SERVICES

In its April 2005 update (Transmittal 514) to Medicare’s hospital outpatient PPS, CMS has restated its January 6 summary of eliminated requirements for payment for observation services and added one that was omitted, that the following diagnostic tests are no longer necessary to receive payment for APC 0339:

• For congestive heart failure: chest x-ray and electrocardiogram and pulse oximetry
• For asthma: breathing capacity test or pulse oximetry test
• For chest pain: two sets of cardiac enzymes tests; either two CPK or two troponins and two sequential electrocardiograms

Other changes in the outpatient PPS update include payment changes for drugs and biologicals approved by the FDA, an update to the cost-to-charge ratio threshold, and a new status indicator code “M” for services not billable to the fiscal intermediary and not payable under the outpatient PPS.

CMS has rescinded the original April 2005 outpatient PPS update, transmittal number 508 and replaced it with R514CP, which was not on the CMS web site when today’s HFMA Express News was transmitted.

6. CMS CLARIFIES RHC/FQHC BILLING FOR OFF-SITE SERVICES

The services of rural health clinic and federally qualified health center physicians, physician assistants, and nurse practitioners caring for patients in skilled nursing homes or swing beds, may be billed by the RHC or FQHC rather than included in the skilled care consolidated bill. CMS staff provided that clarification at the March 30 rural health Open Door Forum. It is immaterial whether the swing bed is part of a CAH or other facility, said CMS staff. CMS is currently developing a transmittal to address this issue.

The professionals can, however, bill for themselves for such off-site services as independent practitioners, CMS noted, if such an arrangement is documented in an agreement and any related costs are excluded from the RHC/FQHC cost report. That flexibility has existed since the inception of the program, CMS said.

7. NONPROFIT HEALTH SYSTEMS ARE ADOPTING CORPORATE PRACTICES

The governing boards of large, not-for-profit health systems are adopting practices normally associated with publicly traded corporations, but the changes stop short of full acceptance of a corporate model, according to a new white paper by The Governance Institute. Many of the changes are in response to regulatory risks, marketplace competition, and economic stress.

Among the most widespread changes identified in the survey of health system board leaders, 86.5 percent of the 52 health system survey respondents said their boards have adopted changes consistent with Sarbanes-Oxley Act provisions that may be relevant to not-for-profit organizations, and also strengthened the process and documentation for executive compensation decision making. Another 11.5 percent of respondents said they anticipated doing so.

8. STUDY SHOWS LIMITED USE OF ELECTRONIC MEDICAL RECORDS

Only about one-third of the nation’s hospital emergency departments and outpatient departments use electronic medical records, while an even smaller percentage of physicians’ offices use them, according to survey findings from the Centers for Disease Control and Prevention (CDC).

According to the findings, about 31 percent of hospital emergency departments and 29 percent of outpatient departments use electronic medical records, while only 17 percent of physicians’ offices have such systems. Only 8 percent of physicians reported using computerized physician order entry (CPOE) systems.

9. HFMA FIRST CHARITY GOLF OUTING BENEFITS PHOENIX CLINIC

HFMA’s first charity golf outing, held in Phoenix, Arizona on March 6 in conjunction with its Spring Summit, “The Uninsured, Your Community, Your Role as a Financial Leader,” generated a $5,000 donation for the Community Asset & Resource Enterprise (CARE) Partnership, which provides healthcare services to uninsured Phoenix-area residents. The Pointe Hilton Tapatio Cliffs Resort, where the summit was held, donated an additional $1,000, plus soap, shampoo, and other amenities to be distributed to CARE Partnership’s clients.

10. QUICK LINKS

EMERGING BEST PRACTICES IN NURSING HOMES. The OIG has released a report detailing its review of emerging practices used by nursing homes to improve staffing, quality of care and quality of life for residents.

MEDICARE SMOKING CESSATION COUNSELING COVERAGE. CMS is adding coverage for smoking and tobacco use cessation counseling for beneficiaries who have an illness caused or complicated by the use of tobacco and beneficiaries whose medications are compromised by tobacco use.

MEDICARE CAROTID ARTERY STENTS COVERAGE. CMS is expanding coverage of carotid artery stenting to high-risk patients and patients who meet the FDA-label criteria for carotid stents in the category B investigational device exemption.
DISAPPROVED NEW TECHNOLOGY IOL PAYMENT ADJUSTMENTS. CMS disapproved Medicare payment adjustments for certain new technology intraocular lenses furnished by ambulatory surgical centers because the lenses failed to meet FDA’s requirements.

11. NEW IN THE FEDERAL REGISTER

HFMA staff comb through the Federal Register daily for notices that affect healthcare financial managers, and post links to those notices in the Resource Center’s “New in the Federal Register” database. Additions to the database this week include a Medicare physician fee schedule rule correction, extensions of the comment periods for organ procurement organization and transplant center proposed rules, and an interim final rule on fire and safety requirements for nursing homes.

Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 13.

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