IN THIS WEEK’S ISSUE:
- Inpatient PPS Proposed Rule Would Increase Transfer DRGS
- GAO Recommends More Specific Criteria for IRF Classification
- Additional Sarbanes-Oxley Guidance Planned for May
- Committee Continues Patient Billing Investigation
- Second Hearing Considers Long-Term Care Financing Woes
- Studies Focus on Uninsured Workers
- Quick Links
- New in the Resource Center
1. INPATIENT PPS PROPOSED RULE WOULD INCREASE TRANSFER DRGS
CMS would expand the Medicare post-acute care transfer policy to 223 DRGs, thereby reducing program expenditures by $880 million in fiscal year 2006 (FY06), under the hospital inpatient PPS proposed rule posted April 25. The rule would continue to reward institutions for reporting quality data on services to Medicare beneficiaries with a payment update of the full market basket (currently estimated at 3.2 percent); the update for the few hospitals that do not submit data would be market basket minus 0.4 percent.
On average, CMS estimates that the combined changes in the proposed rule would produce the following payment increases:
- Government-owned hospitals: 2.9 percent
- Rural hospitals: 2.6 percent
- Urban hospitals: 2.5 percent
- Large teaching hospitals: 2.1 percent
- All hospitals: 2.5 percent
Comments will be accepted on the proposed rule until June 24, 2005.
2. GAO RECOMMENDS MORE SPECIFIC CRITERIA FOR IRF CLASSIFICATION
Greater clarity is needed about what type of patients are most appropriate for the intensive level of services provided in inpatient rehabilitation facilities (IRFs), according to a GAO report released this month. In FY03, only six percent of IRFs were able to meet a 75 percent threshold of required levels of services; less than half of all IRF Medicare patients were admitted with conditions listed in the 75 percent rule. Further, nearly half of the patients admitted for conditions not on the list had orthopedic conditions, and of those patients, the majority required joint replacements that did not meet the list’s criteria. Very few of these patients had comorbid conditions requiring a need for IRF care.
To help ensure that IRFs are classified appropriately and that only patients requiring IRF services are admitted, GAO recommends that CMS provide a thorough description of the subgroups of patients within a condition that require IRF services, encourage research on the effectiveness of intensive IRF care, and ensure routine review of IRF admissions for medical necessity.
3. ADDITIONAL SARBANES-OXLEY GUIDANCE PLANNED FOR MAY
Plans are underway to release guidance in May 2005 on reducing the cost of implementing the internal controls provisions of Section 404 of the Sarbanes-Oxley Act of 2002, William McDonough, Chairman of the Public Company Accounting Oversight Board (PCAOB), recently told the House Committee on Financial Services.
Among its many provisions, the Sarbanes-Oxley law set new standards for corporate governance, created the PCAOB to oversee public accountants, increased criminal penalties for a broad array of white collar crimes, boosted funding for the Securities and Exchange Commission (SEC), required CEO and CFO certification of corporate financial statements, and created a fund to return civil penalties to harmed investors. Michael Oxley (R-Ohio) chairman of the Committee on Financial Services and co-author of the law, has endorsed efforts at the SEC and the PCAOB to adjust and refine the law’s implementation.
4. COMMITTEE CONTINUES PATIENT BILLING INVESTIGATION
On April 25, the House Energy and Commerce Committee sent follow-up letters to 10 large hospital systems requesting additional information on patient billing issues. The letter, signed by committee chairman Joe Barton (R-TX) and its Oversight and Investigations Subcommittee chairman Ed Whitfield (R-KY), said that the committee is primarily interested in how hospital charges are presented to, explained to, and understood by patients, particularly the uninsured. In addition, the committee is studying how the hospital charge description master affects patients. The letter includes 21 specific requests for documents. This is a continuation of 2004 requests for information to help the committee understand the issue of gross charges, how they are set, and their impact on patients.
5. SECOND HEARING CONSIDERS LONG-TERM CARE FINANCING WOES
House Energy and Commerce Health Subcommittee members fretted on Wednesday over government spending on long-term care and the lack of coverage and cost containment options for the future, echoing fears expressed during last week’s House Ways and Means Health Subcommittee hearing. Witnesses at the recent hearing included Congressional Budget Office director Douglas Holtz-Eakin and CMS administrator Mark McClellan, who presented the current outlook as bleak and demanding action.
McClellan said that increasing home-based care could help contain costs, and that he wants to work with Congress on legislation to:
- Make it easier for states to implement home-care options,
- Revise regulations that permit patients to transfer assets in order to qualify for Medicaid instead of covering the cost of care themselves, and
- Educate those in need of long-term care on the use of reverse mortgages to fund care needs.
In 2004, Holtz-Eakin said, Medicaid spent $47.3 billion on long-term care, of which $10.8 billion went to home-based care, while Medicare paid $33.6 billion, with $17.7 billion spent on home-based care.
6. STUDIES FOCUS ON UNINSURED WORKERS
More than 20 million working adults do not have healthcare coverage, according to a study released Wednesday by the Robert Wood Johnson Foundation in conjunction with “Cover the Uninsured Week,” which begins May 1. The study, which analyzes data from the Centers for Disease Control and Prevention, shows that in eight states, at least one in five working adults is uninsured. In 39 other states, at least one working adult in every 10 does not have healthcare coverage. The report further reveals that nationwide, between one-fourth and one-half of all uninsured adults were unable to see a doctor when needed in the past year because of cost.
Separately, a new report from The Commonwealth Fund shows that most state-level, Federal-funded pilot projects to expand coverage to the uninsured have focused on reforms that build on employer-sponsored insurance. To help states address their uninsured populations, the Health Resources and Services Administration provides state planning and pilot project planning grants. Most pilot project planning grantees found that an overwhelming majority of the uninsured are workers; as a result, most are actively exploring employment-based coverage through publicly funded premium assistance and tax-credits to subsidize employee and employer premium shares, as well as premium assistance through Medicaid and the State Children’s Health Insurance Program.
7. QUICK LINKS
NUBC AGENDA POSTED FOR MEMBER COMMENTS. The National Uniform Billing Committee (NUBC) has posted its preliminary agenda for its open meeting on May 11 and 12, 2005, in Chicago. Comments or suggestions that HFMA members wish to express through HFMA’s participation in this meeting should be addressed to sjohnston@hfma.org
HOSPITAL INFLATION PROJECTIONS. Hospital inflation is projected to decline from 4.5 percent in 2004 to 4.3 in 2007, according to second quarter 2005 inflation projections posted on the R-C Healthcare Management web site (free registration required).
ADVISORY COMMITTEE ON MINORITY HEALTH. HHS Secretary Mike Leavitt has announced the eight people who will serve on the committee that will advise HHS on improving the health of racial and ethnic minority groups.
8. NEW IN THE RESOURCE CENTER
HFMA ROUNDTABLE: A STRATEGY FOR DEFENSIBLE, SUSTAINABLE PRICES. In this article, healthcare providers, consultants, and an attorney discuss some of the issues that can derail pricing strategies in hospitals and healthcare systems. They also provide practical, thoughtful suggestions on how hospital administrators can implement sound pricing strategies.
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 17. Editor: Rob Fromberg rfromberg@hfma.org, (800) 252-HFMA, ext. 385.
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