IN THIS WEEK’S ISSUE:
1. HHS: Flat Funding in 2006 Is “A Pretty Good Deal”
2. Medicare Contractor Reforms Announced
3. HFMA Joins Initiative To Improve Eligibility Transmissions
4. CBO: Health Care Still a Budget-Buster Despite Stronger Economy
5. Expanded Wheelchair Coverage Criteria Proposed
6. Billing Requirements Clarified for Critical Access Hospitals
7. Medicare Oxygen Payments to be Temporarily Based on 2004 Amounts
8. Fourth-Quarter Healthcare Employment Costs Moderate
9. Quick Links
10. New In The HFMA Resource Center
11. New in the PFS Forum
1. HHS: FLAT FUNDING IN 2006 IS “A PRETTY GOOD DEAL”
Seeking to put President Bush’s proposed 2006 HHS budget in perspective during it’s roll-out on February 7, HHS deputy assistant secretary Kerry Weems commented that programs that get little or no increase for 2006 would have “a pretty good deal” compared with the approximately 150 programs the administration would eliminate if Congress approved the budget proposal. The overall CMS budget increase for CMS is 11.4 percent, with much of the increase driven by mandatory spending growth.
Also during the budget presentation, CMS administrator Mark McClellan said that current law would be followed for Medicare’s hospital and physician payment updates, meaning the full market basket for most hospitals and a projected 4 to 5 percent physician payment cut. Therefore, a physician payment fix for 2006 will have to come from Congress. Other Medicare providers should budget their 2006 updates with caution, however, as a “budget neutral” approach to preventing the physician payment reduction would require commensurate cuts in the updates for other providers.
The budget includes a commitment to make refinements to the hospital payment system to “ensure a more level playing field between specialty and non-specialty hospitals.”
The 2005 budget does not include programmatic Medicaid cuts, according to HHS secretary Michael Leavitt. However, he says HHS plans on substantial savings from tightening down on state funding mechanisms such as intergovernmental transfers and provider taxes (targeted for $5.9 billion and $3.17 billion in savings, respectively, over five years).
Get links to the HHS 2006 budget proposal and Secretary Leavitt’s remarks.
2. MEDICARE CONTRACTOR REFORMS ANNOUNCED
CMS has announced action on contracting reforms that could significantly change relationships between providers--particularly multi-location provider organizations—and Medicare fiscal intermediaries and carriers. The reforms, mandated by MMA Section 911, require consolidation and competitive bidding for contractors. The Medicare fee-for-service (FFS) environment, currently comprised of 51 contractors, will ultimately be comprised of 23 MACs, 15 that process both Medicare Part A and Part B, four specialty MACs serving home health and hospice, and four other specialty MACs servicing DME suppliers.
This week, CMS issued its report to Congress, “Medicare Contracting Reform: A Blueprint for a Better Medicare,” released the DME request for information, and announced plans for a town hall meeting February 25 to gather stakeholder feedback (meeting information has not yet been posted to the CMS web site). First to be overhauled are the DME regional carriers (DMERCs), which will become DME Medicare administrative contractors (DME MACs) in 2006 (contract awards to take place in December 2005).
For more details, including links to the CMS report to Congress and the DME fact sheet, visit the CMS contracting reform web page. Read the CMS report to Congress for an overview of the contracting reforms.
3. HFMA JOINS INITIATIVE TO IMPROVE ELIGIBILITY TRANSMISSIONS
HFMA has joined a new industry-wide initiative to develop operating rules for transmitting eligibility and benefits information. The Operating Rules Committee (ORC), spearheaded by the Council for Affordable Quality Healthcare (CAQH), is a self-governing body comprised of representatives from health plans, providers, technology vendors, and other stakeholders.
The rules will build on the HIPAA 270/271 transactions for eligibility benefits and address which health plan covers the patient and confirmation of service type, copay amount, coinsurance levels, and base deductible levels. They will also define other requirements, such as response time, exception processing, and error management.
4. CBO: HEALTH CARE STILL A BUDGET-BUSTER DESPITE STRONGER ECONOMY
The increasing resources needed for Social Security, Medicare, and Medicaid will make current fiscal policy unsustainable, the Congressional Budget Office reported in its annual budget and economic outlook. In the absence of any changes to current law, costs for Medicare are projected to rise through 2015 at an average annual rate of 9.0 percent, and at 7.8 percent for Medicaid.
CBO expects the U.S. economy to continue to grow at a healthy pace in 2005 and 2006, followed by moderate growth from 2007 through 2015. The unemployment rate is forecast to average 5.2 percent annually through 2015. Inflation is expected to be 2.4 percent in 2005 and 1.9 percent in 2006.
5. EXPANDED WHEELCHAIR COVERAGE CRITERIA PROPOSED
CMS continues to develop new coverage criteria for power wheelchairs and scooters, relying on clinical guidance for evaluating whether a beneficiary needs a device for mobility. The evaluation would consider whether the equipment would improve the beneficiary’s ability to function within the home and any conditions that would affect the beneficiary’s ability to use the equipment effectively.
Additionally, CMS plans to use new billing codes for these devices to ensure that beneficiaries receive the right products and suppliers receive proper payment for these products. To better reflect the range of power mobility products available, the number of billing codes will be expanded from 5 to 49. The new codes, scheduled to go into effect January 1, 2006, will incorporate “testing standards” in several areas, and each code will have a payment ceiling. CMS plans to hold an Open Door Forum on the proposal on Feb. 24 from 1 to 4 p.m. (details were unavailable at HFMA Express News deadline). CMS will publish the final NCD in March and provide guidance on how to document and use the new criteria.
6. BILLING REQUIREMENTS CLARIFIED FOR CRITICAL ACCESS HOSPITALS
Medicare intermediaries are required to pay the facility amount for physician services rendered to a critical access hospital (CAH) under the method II payment category, CMS clarified in a recently published transmittal. Under this category, physician services are paid to the CAH at 115 percent of the applicable Medicare physician fee schedule payment amount, and payment is based on the facility rate for the applicable HCPCS codes. However, intermediaries have been incorrectly making payments based on nonfacility rates because the supplemental file only contained nonfacility fee schedule amounts, CMS contends.
CMS also corrected an earlier misstatement on the type of bill requirement for outpatient services (85x) and clarified that CAHs, when billing for an off-site clinic, must place a “V” in the third position of their provider number. Additionally, the off-site clinic’s address and zip code should be placed in the 2310E loop of the 837I for electronic claims, and for the UB-92 and DDE, the address should be placed in the “Remarks” category. The effective dates, which vary by provision, are January 2005 and earlier.
7. MEDICARE OXYGEN PAYMENTS TO BE TEMPORARILY BASED ON 2004 AMOUNTS
Medicare claims for oxygen and oxygen equipment identified by certain HCPCS codes, and furnished on or after January 1, 2005, will be temporarily paid based on the 2004 monthly payment amounts, according to a notice in the February 4 Federal Register. MMA Section 302(c) requires that Medicare’s monthly payment amounts for oxygen and oxygen equipment for 2005 be reduced based on the percentage difference between Medicare’s 2002 monthly payment amounts for each state and the median 2002 Federal Employee Health Benefit (FEHB) plan price reported by the OIG.
According to the notice, the OIG needs to collect additional information before the FEHB medians for oxygen and oxygen equipment are finalized. Once it has received the FEHB medians, CMS will calculate and implement the 2005 payment amounts and begin paying claims with dates of service on or after January 1 using these amounts, which will apply prospectively only.
8. FOURTH-QUARTER HEALTHCARE EMPLOYMENT COSTS MODERATE
Fourth-quarter 2004 compensation costs for health services rose 0.6 percent, down from 1.3 percent in the third quarter, according to Bureau of Labor Statistics Employment Cost Index data released January 28. For hospital services, employment costs rose 0.7 percent, down from 1.3 percent in the third quarter.
Healthcare service compensation costs increased 4.1 percent for the year ended December 2004, compared with a 3.8 percent rise for the year ended December 2003. Compensation costs in hospitals increased at 4.0 percent for the year ending December 2004, compared with a 4.3 increase for the year ending December 2003.
9. QUICK LINKS
MEDICARE OVER/UNDERPAYMENTS INTEREST RATE. The interest rate for Medicare over/underpayments dropped from 12.00 percent to 11.875 percent, effective February 8, CMS announced in a February 2 transmittal.
NUBC AGENDA POSTED FOR MEMBER COMMENTS. The National Uniform Billing Committee (NUBC) has posted its preliminary agenda for its open meeting on February 22 and 23, 2005, in Baltimore. Comments or suggestions that HFMA members wish to express through HFMA’s participation in this meeting should be addressed to sjohnston@hfma.org
PRELOADED SYRINGES WARNING. The Food and Drug Administration has issued a second notice regarding possible contamination of IV Flush Brand Preloaded Syringes containing heparin or sodium chloride.
NEW WAIVED TESTS FOR CLINICAL LABS. CMS has published the latest tests approved by the Food and Drug Administration as waived tests under the Clinical Laboratory Improvement Amendments (CLIA).
OPEN DOOR FORUM ON EMPLOYER SUBSIDY OF DRUG BENEFITS.
CMS will conduct an Open Door Forum February 14, from 12:30 to 2:30 p.m. (Eastern) to discuss the different options regarding the drug benefit subsidy available to employer and union plan sponsors.
KEY SENIOR LIVING FINANCIAL INDICATORS.
Loan volume for the senior housing and care industry rose from $336 million in the second quarter of 2004 to $783 million in the third quarter, according to the National Investment Center for the Seniors Housing & Care Industries’ latest key financial indicators.
10. NEW IN THE HFMA RESOURCE CENTER
IMPROVING CLINICAL, OPERATIONAL, AND FINANCIAL PERFORMANCE IN CARDIOVASCULAR SURGERY. Download this educational report to learn about two key opportunities for not-for-profit hospitals to implement process improvement initiatives: coronary artery bypass graft (CABG) patients and suspected heart attack patients. Developed by HFMA and McKesson.
11. NEW IN THE PFS FORUM
SAMPLE PATIENT FINANCIAL SERVICES BROCHURES. Members of the PFS Forum have come together in a project to share sample patient brochures and other communications that educate patients on the facility's billing procedures and other key financial services information. (Available to PFS Forum Members only.)
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 6. For customer service, send an e-mail to HFMA’s Member Service Center or call (800) 252-HFMA, and press 2.
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