IN THIS WEEK’S ISSUE:
- MedPAC Makes PPS Recommendations, Extends Moratorium
- Supreme Court Casts Doubt on U.S. Sentencing Guidelines
- Health Spending Growth Decelerates
- TennCare: 25 Percent of Enrollees Cut, Child Coverage Preserved
- Governors Urge Medicaid Reform
- OIG: No Sanctions for Malpractice Insurance Subsidies
- HHS Touts New Preventive-Focused Benefits Now Available To Seniors
- Quick Links
1. MEDPAC MAKES PPS RECOMMENDATIONS, EXTENDS MORATORIUM
The Medicare Payment Advisory Commission (MedPAC) finalized its recommendations to Congress for Medicare's PPS updates for FY06 this week. Those recommendations also included extension of the moratorium on specialty hospitals. For hospitals, the recommendation was for market basket minus 0.4 percent for both inpatient and outpatient payments. Nursing homes would get no update.
2. SUPREME COURT CASTS DOUBT ON U.S. SENTENCING GUIDELINES
Two recent Supreme Court decisions indicate that the U.S. Sentencing Guidelines, a frequent reference in compliance training, have been applied improperly in federal court sentencing of criminal defendants, and, in the future, use of the guidelines will not be mandatory. The action stems from United States v. Booker and United States v. Fanfan.
The guidelines were established to provide greater consistency in sentencing across the court system. The Court’s action modifies the Sentencing Reform Act of 1984 and makes the guidelines “effectively advisory,” requiring a sentencing court to consider the guidelines’ ranges, but permitting the court to tailor the sentence in light of other statutory concerns.
3. HEALTH SPENDING GROWTH DECELERATES
Despite the $1.7 trillion price tag, reflecting a 7.7 percent increase, national health spending growth slowed in 2003 for the first time in seven years, according to an article published in January/February 2005 issue of Health Affairs. The article's authors, economists from CMS's Office of the Actuary, attribute this deceleration to smaller payments from the public sector as a result of state efforts to control Medicaid spending growth and the expiration of legislatively-mandated Medicare payment supplements to hospitals and other providers.
Medicaid experienced the sharpest decline in spending growth, decelerating from 12.1 percent in 2002 to 7.1 percent in 2003. Medicare spending growth increased 5.7 in 2003, compared to a 7.6 percent increase in 2002 and a 10.8 percent increase in 2001. The growth in private-sector spending stabilized in 2003, rising 8.6 percent compared with 9 percent during the previous year. Private health insurance premium growth also declined for the first time since 1996, increasing 9.3 percent in 2003, down from 10.7 percent in 2002.
4. TENNCARE: 25 PERCENT OF ENROLLEES CUT, CHILD COVERAGE PRESERVED
Gov. Phil Bredesen (D-Tenn.) has taken steps to reduce the new revenues needed for TennCare’s 2005-2006 year from $647 million to $75 million. The Medicaid waiver program will cut 323,000 adult enrollees who are not eligible for conventional Medicaid but whose coverage was made possible by a federal waiver of Medicaid restrictions.
Bredesen plans for TennCare to return to a managed care model that will require managed care organizations to assume financial risk. The state had assumed virtually all the risk in 2002 when some of the MCOs failed. “Basic TennCare,” as the reformed program is being called for now, will preserve full coverage for all 612,000 children in the program, but adults remaining in the program will see benefits restricted. The state was to file documents this week to begin implementing the reforms, including a formulary encouraging the use of generic drugs.
Upon its creation in 1994, TennCare was closely watched as a possible model for other Medicaid programs.
5. GOVERNORS URGE MEDICAID REFORM
Medicaid reform is the No. 1 priority for governors, according to the National Governors Association’s recent letter to the Administration and Congress. However, the NGA cautioned federal reform must not shift additional costs to the states.
“Maintaining the status quo is not acceptable,” states the letter, referring largely to increasing caseloads and long-term care costs. “However, it is equally unacceptable in any deficit reduction strategy to simply shift federal costs to the states, as Medicaid continues to impose severe strains on state budgets.”
The NGA letter barely preceded the announcements of major reduction to TennCare’s coverage (see story above) and Gov. Jeb Bush’s (R-Fla.) Florida Medicaid reforms, which include allowing participants to opt out of Medicaid plans and use their state-paid premium to purchase insurance in the private market.
6. OIG: NO SANCTIONS FOR MALPRACTICE INSURANCE SUBSIDIES
In Advisory Opinion No. 04-19, the OIG stated that there would be no sanctions for a hospital’s provision of malpractice insurance subsidies for two neurosurgeons. According to the hospital, there are extreme problems with decreased malpractice insurance availability and an increase in the cost of the premiums. The neurosurgeons’ insurance company told them that their original malpractice insurance would be renewed only if they accepted the tail coverage and retired from their medical practices. According to the hospital, the potential retirement from their medical practices posed an immediate concern for the medical care of the local patient population and prompted the hospital’s plan to provide the neurosurgeons’ coverage.
The OIG concluded that the proposed arrangement could potentially generate prohibited compensation under the anti-kickback statute, but stated that it would not impose administrative sanctions on the requestor under sections 1128(b)(7) or 1128A(a)(7), and those sections that relate to the commission of the acts described in 1128B(b) of the Act in connection with this proposed request.
7. HHS TOUTS NEW PREVENTIVE-FOCUSED BENEFITS NOW AVAILABLE TO SENIORS
HHS is publicizing three important new Medicare benefits, authorized by the Medicare Modernization Act, that provide greater access to prevention-focused care for senior citizens. As of January 1, new Medicare program beneficiaries are eligible to receive a one-time “Welcome to Medicare” physical examination designed to provide education and counseling about preventive services. Beneficiaries may now also obtain screening tests for heart disease and diabetes, in addition to tests that screen for bone weakness, glaucoma, and cancer. Additionally, HHS lists among Medicare’s comprehensive set of preventive benefits include coverage for prescription drugs, scheduled to begin next year.
8. QUICK LINKS
CMS ANNOUNCES 2005 AMBULANCE INFLATION FACTOR. The CY05 ambulance inflation factor is 3.3 percent, according to CMS. This is the last year of the transition from the reasonable charge system to the ambulance fee schedule. Ambulance service payments will be a blend of 20 percent of the reasonable cost and 80 percent of the ambulance fee schedule amount.
ADVISORY OPINION ON NOT-FOR-PROFIT CASH DONATIONS. In Advisory Opinion 04-18, the OIG concluded it would not sanction a charitable foundation for providing cash donations to a not-for-profit hospice, even though the proposed donations could potentially generate prohibited compensation under the antikickback statute.
EVALUATION TOOL FOR COVERAGE EXPANSION PROPOSALS. The online Coverage Expansion Resource Center offers a new approach to assessing and comparing healthcare coverage proposals. The center was developed by the California HealthCare Foundation and the Economic and Social Research Institute.
SNF ARRANGEMENTS WITH OUTSIDE ENTITIES. CMS has provided further clarification on the validity of an arrangement between a Medicare SNF and an outside entity, such as a supplier, that furnishes services subject to consolidated billing. See Transmittal 412. .
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 2.
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