HFMA Express News -August 12, 2005

IN THIS WEEK’S ISSUE:

1. CMS to Reject Non-HIPAA-Compliant Claims
2. Correction Gives Proposed Outpatient Payments Slight Boost
3. Hospice Payments to Decrease under FY06 Wage Index
4. Price Tag High on National Health Information Network
5. Senate Bill Includes Some Funding Incentives for Healthcare IT
6. SNF PPS Pricer Updated for FY06
7. CMS Issues Liability Clarification for Home Health Billing
8. NQF Endorses Standards for Ambulatory Care
9. Quick Links
10. New in the Resource Center

1. CMS TO REJECT NON-HIPAA-COMPLIANT CLAIMS

Starting October 1, CMS will no longer process electronic Medicare claims for payment unless they comply with HIPAA. CMS said that non-compliant claims will be sent back to the filer for re-submission in compliant form. As of June, only 1.45 percent of claims from hospitals were non-HIPAA-compliant, the agency reported.

The action announced last week affects claims for services provided under fee-for-service Medicare, ending a portion of the CMS HIPAA contingency plan in effect since October 16, 2003, under which Medicare continued accepting non-compliant electronic claims after the original compliance deadline. Although the contingency continues for other electronic healthcare transactions, CMS said it expects to end the contingency plan for those transactions in the future, beginning with the remittance advice transaction.

2. CORRECTION GIVES PROPOSED OUTPATIENT PAYMENTS SLIGHT BOOST

Medicare PPS payments for hospital outpatient services would be slightly higher than stated in the CY06 outpatient PPS proposed rule, CMS announced late last week. The agency said that the conversion factor and budget neutrality scalar for weights that were published in the proposed rule were incorrect: The rural adjustment of 6.6 percent was inadvertently incorporated as 6.4 percent in the calculation of the conversion factor and budget neutrality scalar, and there was a technical error in the estimate of the total aggregate payments for drugs and the total aggregate payments for services receiving new technology payments.

According to CMS, all payment rates, except those for drugs and those for services receiving new technology payments, increase by 0.4 percent. The corrected scalar is 1.003753831, and the corrected conversion factor is $59.343. These changes also affect the impact table (Table 33) and Table 11 of the preamble that were published in the proposed rule.

3. HOSPICE PAYMENTS TO DECREASE UNDER FY06 WAGE INDEX

Estimated total hospice payments are expected to decrease slightly, by 0.3 percent, under the August 4 final rule establishing the hospice wage index for FY06. Similarly, urban and rural hospices will experience a 0.4 percent and 0.1 percent payment decrease, respectively. These payment estimates reflect the use of a blended wage index, applicable only for FY06, in a one-year transition to the adoption of the new core-based statistical area designations. This is a change of position by CMS from the payment update proposed rule in which CMS had indicated there would be no transition period.

The payment projections in the wage index final rule reflect only the change in the wage index using FY05 payment levels. FY06 payment rates, which CMS notes will actually increase as a result of the increase in the market basket, will be issued at a later date.

The final rule also implements Medicare Modernization Act (MMA) section 408, adding nurse practitioners to the definition of attending physician for beneficiaries who elect the hospice benefit. The new rule also incorporates MMA section 946, which permits a hospice, under extraordinary or nonroutine circumstances, to arrange for another hospice to provide services to beneficiaries.

The final rule is effective October 1.

4. PRICE TAG HIGH ON NATIONAL HEALTH INFORMATION NETWORK

Creating a National Health Information Network (NHIN) would require $156 billion in capital investment over five years, which is equivalent to 2 percent of annual healthcare spending, according to a study published in the August 2 issue of the Annals of Internal Medicine. The network would also require $48 billion in annual operating costs.

Approximately two-thirds of the capital costs would be needed to acquire functionalities and one-third to build interoperability, while ongoing costs would be more evenly divided between functionality and interoperability. By comparison, the US current healthcare system, without the NHIN initiative, would spend $24 billion on functionalities over the next five years, or about one quarter of the cost for functionalities of a model NHIN.

5. SENATE BILL INCLUDES SOME FUNDING INCENTIVES FOR HEALTHCARE IT

A new bipartisan proposal offering provider incentives and the establishment of standards to support an interoperable health IT system was approved July 20 by the Senate Health, Education, Labor, and Pensions Committee. The Wired for Health Care Quality Act (S.1418) would provide grants to not-for-profit hospitals, group practices, and other providers that demonstrate significant financial need and who can provide matching funds of $1 for each $3 of grant money given them. The bill would also provided for competitive grants to states to develop loan programs for providers to buy health IT.

The bill would also provide for the establishment of electronic exchange standards for health records information, establish quality measures for the reporting of provider performance, and offer incentives for providers to create secure electronic health information exchange networks.

The Congressional Budget Office estimates that implementation of all provisions of the bill would cost $652 million from 2006 through 2010.

6. SNF PPS PRICER UPDATED FOR FY06

CMS has updated the Medicare Part A skilled nursing facility (SNF) PPS pricer for the first quarter of FY06, reflecting the updated SNF PPS payment rates, effective for service dates October 1 through December 31, 2005. According to the transmittal, the update methodology is identical to that used in the previous year and will include reimbursement for services to beneficiaries with AIDS.

The SNF wage index notice that will become effective October 1 is yet to be published.

7. CMS ISSUES LIABILITY CLARIFICATION FOR HOME HEALTH BILLING

CMS has updated manual instructions specifying circumstances in which providers and beneficiaries may be liable for payment for services subject to home health consolidated billing. Transmittal 635 states that no changes are being made to the home health consolidated billing policy; instead the manual revisions reflect the current policy more fully and accurately. The transmittal also improves the organization of existing manual sections related to home health consolidated billing.

CMS provides instructions for contractors, and also notes that a provider education article related to this transmittal will be available on its Medlearn Matters website.

8. NQF ENDORSES STANDARDS FOR AMBULATORY CARE

The National Quality Forum (NQF) has endorsed 36 physician care performance measures, called the National Voluntary Consensus Standards for Ambulatory Care. The standards are the result of consensus of more than 260 healthcare providers, consumer groups, professional associations, purchasers, federal agencies, and research and quality improvement organizations. The measures are “for gauging and publicly reporting the quality of ambulatory care.”

From asthma assessment to cholesterol control to pneumonia vaccination, these standards, NQF says, represent measures of structure, process, and outcome that have been linked by evidence to quality of care for ambulatory care. However, the NQF announcement notes that any party may request reconsideration of the recommendations, in whole or part, by notifying NQF in writing no later than September 2.

9. QUICK LINKS

TELECONFERENCE ON SARBANES-OXLEY AND NOT-FOR-PROFIT HOSPITALS. On Monday, August 15 at 2 p.m. ET, Fitch Ratings will discuss its latest report “Sarbanes-Oxley and Not-For-Profit Hospitals: Increased Transparency and Improved Accountability.” (These links require free registration to access.) 

PROPOSED CY06 PHYSICIAN PAYMENT UPDATE. Revisions to Medicare payment policies under the CY06 physician fee schedule were published in the August 8 Federal Register.

FINAL FY06 HOSPITAL INPATIENT PPS RULE. The final rule for the Medicare FY06 hospital inpatient PPS was published in today’s Federal Register.

CORRECTED CBO COST ESTIMATE. On July 28, the Congressional Budget Office (CBO) corrected its estimate of the State High Risk Pool Funding Extension Act of 2005 to recognize an overlooked amendment changing the funding mechanism from appropriation (direct spending) to authorization of appropriation (discretionary spending).

DATA ON UNINSURED HISPANICS. Hispanics make up 15 percent of the U.S. population but nearly 29 percent of the uninsured, reports the Agency for Healthcare Research and Quality. Hispanics constitute 36 percent of all uninsured children.

10. NEW IN THE RESOURCE CENTER

2006 HOSPITAL OUTPATIENT PPS PROPOSED RULE HIGHLIGHTS. Review the main features of the outpatient PPS proposed rule for 2006.

2006 HOSPITAL OUTPATIENT PPS PROPOSED RULE PRESENTATION (PPT, 34 slides). Use this handy presentation to brief staff and board members about the key provisions of the proposed PPS payment rules for 2006.

INTERMEDIATE SANCTIONS FOR EXCESSIVE COMPENSATION IN TAX-EXEMPT ORGANIZATIONS. Executive compensation has been a focus of recent congressional investigations of not-for-profit hospitals. Use these highlights to review the penalties for receiving or approving executive compensation and a summary of the "rebuttable presumption of reasonableness" process for documenting arms-length compensation decisions.

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