HFMA Express News - January 7, 2005

IN THIS WEEK’S ISSUE:

1. CMS Affirms Uninsured Discounts Won’t Affect Outlier Payments
2. More Uninsured Claims Dismissed in Colorado and Louisiana
3. CMS Introduces New Initiatives to Improve Nursing Home Care
4. Hospitals, SNFs Get Year-End Payment System Corrections
5. Managed Care Rules Included in Year-End Corrections
6. Summary of 2005 Hospital Outpatient PPS Payment Policy Changes
7. Final Rules Issued on Accounting for Stock Compensation
8. CMS To Revisit Wheelchair Coverage and Payment Policies
9. Quick Links
10. In the HFMA Resource Center

1. CMS AFFIRMS UNINSURED DISCOUNTS WON’T AFFECT OUTLIER PAYMENTS

Discounts offered by a hospital to all uninsured patients that are not based on individualized determinations of need, but, rather, are offered solely on the basis of the patient’s uninsured status, will not affect Medicare payment for outlier or new technology cases. That clarification is the latest from CMS on the patient discount issue and is on the agency’s frequently asked questions (FAQ) web page. Only Medicare reimbursable cost and the undiscounted Medicare-covered charges from Medicare claims are used to calculate the cost-to-charge ratio (CCR), according to CMS, and, to the extent that payments under the Medicare program are derived by use of the CCR, the CCR is applied to the undiscounted Medicare covered charges to calculate the Medicare payment amount.

CMS officials had made a similar statement during an Open Door Forum last June, but this is the first time it has been put in writing.

2. MORE UNINSURED CLAIMS DISMISSED IN COLORADO AND LOUISIANA

Federal district court judge Richard Matsch ruled last week that the uninsured billing and collection practices of Catholic Health Initiatives, Centura Health, and Portercase Adventist, do not violate federal and state laws, including those that govern tax-exempt organizations. The American Hospital Association (AHA) was also named in the lawsuit. In the opinion, the judge dismissed with prejudice all federal and state claims based on those allegations, which will prevent plaintiffs from refiling them in state court.

In related news, plaintiffs in Louisiana last week voluntarily dismissed all claims filed against Christus Health and the AHA in federal court.

3. CMS INTRODUCES NEW INITIATIVES TO IMPROVE NURSING HOME CARE

CMS intends to undertake a new phase of initiatives to further enhance the quality of care provided in nursing homes, according to a recent HHS press release. The next phase of the HHS Nursing Home Quality Initiative, started two years ago, includes objectives to improve the accuracy of the Medicare payment systems and direct the appropriate level of resources to nursing homes to furnish high quality care, including performance incentives related to quality. Additional objectives are to expand information to better help families evaluate the quality of care in nursing homes, conduct annual performance reviews of state survey agencies, further decrease the prevalence of patients with pressure sores, and improve fire safety within the facilities.

As part of the quality initiatives, seven states have been identified to participate in comprehensive background check pilot programs for new workers who apply for jobs that require direct patient care duties. CMS is also working with the National Quality Forum to develop quality measures that are considered to be most important to consumers and facilities.

4. HOSPITALS, SNFS GET YEAR-END PAYMENT SYSTEM CORRECTIONS

In the last Federal Register of 2004, CMS issued corrections to the final PPS updates for skilled nursing facilities, hospital inpatient services, and hospital outpatient services. Most of the corrections were related to the wage index. Individual facilities should check these corrections for the changes that may affect them.

Corrections include:

• Hospital inpatient PPS--This is a “corrected amendment” to the final rule of August 11, 2004, which addresses errors in both the final rule and an earlier correction of the final rule (issued October 7, 2004).
• Hospital outpatient PPS--In addition to seven coding corrections, this change to the November final rule with comment period incorporates the inpatient PPS wage index table corrections above.
• SNF PPS and consolidated billing--In addition to some technical corrections, this notice includes the wage index and related tables. The wage index tables were posted to the CMS web site in conjunction with the issuance of an October 7, 2004, correction notice.

5. MANAGED CARE RULES INCLUDED IN YEAR-END CORRECTIONS

On December 30, CMS issued an interim final rule that added a previously omitted description of the $25,000 civil monetary penalty (CMP) to an earlier Medicare managed care rule. This interim final rule with comment period adds to 42 CFR §422.758 determinations of deficiencies and violations by Medicare Advantage plans for which CMPs may be imposed and specifies the amounts of potential penalties, which range from $250 to $100,000. CMS is also correcting §422.752(a), listing intermediate sanctions, to provide that the sanctions may be imposed for any MA organization that has a contract in effect.

The rule becomes effective January 31, 2005. Comments are due February 28, 2005.

6. SUMMARY OF 2005 HOSPITAL OUTPATIENT PPS PAYMENT POLICY CHANGES

CMS has published instructions and policy changes that implement the 2005 outpatient PPS final rule published November 15, 2004. The transmittal provides billing and payment instructions for hyperbaric oxygen therapy, brachytherapy, observation services, and several new services. Also provided are instructions on the use of core-based statistical area designations and blended wage index values to adjust payments for certain hospitals. CMS notes that the HCPCS, APC, HCPCS modifier, and revenue code additions, changes, and deletions identified in the transmittal will be reflected in the January 2005 outpatient PPS code editor and outpatient PPS pricer. All changes addressed in the transmittal are effective for services furnished on or after January 1, unless otherwise indicated.

7. FINAL RULES ISSUED ON ACCOUNTING FOR STOCK COMPENSATION

The Financial Accounting Standards Board has published Statement No. 123 (revised 2004), Share-Based Payment, requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements. Compensation cost, the statement says, will be measured based on the fair value of the equity or liability instruments issued. The statement covers a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights, and employee share purchase plans.

Public entities (other than those filing as small business issuers) will be required to apply Statement 123(R) as of the first interim or annual reporting period that begins after June 15, 2005. Public entities that file as small business issuers will be required to apply Statement 123(R) in the first interim or annual reporting period that begins after December 15, 2005. Nonpublic entities will have until the beginning of the first annual reporting period after December 15, 2005, to apply the statement.

Statement 123(R) replaces FASB Statement No. 123, Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees.

8. CMS TO REVISIT WHEELCHAIR COVERAGE AND PAYMENT POLICIES

CMS has opened a national coverage determination (NCD) to review its criteria for wheelchair coverage under Medicare, to ensure that patients get the equipment they need, providers are paid properly, and potential abuse is curbed, the agency announced in December. CMS decided to reexamine its policies using the NCD process after the Interagency Wheelchair Workgroup (IWWG) drafted recommendations that CMS should use a set of evidence-based clinical and functional characteristics to better predict who will benefit from a power wheelchair or scooter. A public comment period ends January 14, 2005, after which CMS will issue a regulation addressing the requirements for obtaining mobility equipment.

In other action, the agency is reviewing its billing and payment system for power wheelchairs and scooters, making plans to implement competitive bidding for a number of items of durable medical equipment, as authorized by the MMA, and is in the process of developing a proposal for an accreditation program designed to ensure that power wheelchair suppliers meet industry and community standards for power wheelchair utilization.

9. QUICK LINKS

GASB DRAFT STATEMENT ON TERMINATION BENEFITS. The Governmental Accounting Standards Board (GASB) has issued an exposure draft, Accounting for Termination Benefits that would establish accounting standards for termination benefits provided by state and local governmental employers. The deadline for comments is March 11, 2005.

IRS GUIDANCE FOR RETIREMENT PLAN AUTOMATIC ROLLOVERS. IRS Notice 2005-5 provides guidance for the new automatic rollover rules for qualified retirement plans. The new rules, which will take effect March 28, 2005, stipulate that mandatory distributions of more than $1,000 from a qualified retirement plan must be paid in a direct rollover to an individual retirement account unless the distributee elects otherwise.

REVISED CMHC COST REPORT FORMS AND INSTRUCTIONS. CMS appended the electronic cost reporting specifications to Chapter 18, Outpatient Rehabilitation Provider Cost Reporting Form CMS-2088-92, to be completed by community mental health centers (CMHCs). The changes are effective for cost reporting periods ending on or after December 31, 2004.

2005 HCPCS CODE UPDATE FOR SNF CONSOLIDATED BILLING CORRECTED. In transmittal 421, CMS notifies providers that HCPCS code A0999 (unlisted ambulance service) was omitted from the January 2005 annual update of HCPCS codes used for SNF consolidated billing enforcement. CMS also removed duplicates of HCPCS codes 53660, 95974, and G0168, appearing under Major Category I.F, (Outpatient Surgery and Related Procedures-Inclusion).

OIG PUBLISHES ADVISORY OPINION NO. 04-17. A proposed contractual joint venture arrangement for the provision of pathology laboratory services to various physician group practices could potentially generate prohibited compensation under the antikickback statute, the OIG concluded in a December 17 advisory opinion.

10. NEW IN THE RESOURCE CENTER

HIGHLIGHTS: FINAL 2005 MEDICARE PHYSICIAN FEE SCHEDULE. Use this summary as a quick reference to the changes in resource-based practice relative value units (RVUs) and other Medicare Part B payment policies for physician services in 2005.

MEDICARE INPATIENT PSYCHIATRIC FACILITIES PPS -- A READY-TO-USE POWERPOINT PRESENTATION. Use this handy PowerPoint presentation to brief your board or staff on the key points of the new inpatient psychiatric PPS.

MANAGEMENT SOLUTIONS FOR COMBATING WORKFORCE SHORTAGES. Get fresh insights and strategies to address the national healthcare labor shortage with this new HFMA educational supplement.

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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