HFMA Express News - January 21, 2005

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IN THIS WEEK’S ISSUE:

House Committee Looks to Hospitals for Medicaid Data
Final Rule Addresses Health Coverage Portability Issues; Agencies Request Comments On Benefit-Specific Waiting Periods
MedPAC On Specialty Hospitals: Moratorium and Payment Change
CMS Announces Oxygen Claims Payment, Corrected Physician Fee Schedule
CMS: July 1 Mandatory Submission of Medicare Electronic Claims on the Horizon
Instructions Direct MMA’S CWF Change for SNF Consolidated Billing Edits
Rural Air Ambulance Services Reviewed
CMS Proposes to Expand Medicare Coverage for Cochlear Implants
Not-For-Profit Hospital Margins Improved in 2004, but Credit Gap Widens
Quick Links
HFMA Web Site Spotlight: Security Rule Compliance Resources

1. HOUSE COMMITTEE LOOKS TO HOSPITALS FOR MEDICAID DATA

Citing possible Medicaid funding abuse, House Energy and Commerce Committee chair Rep. Joe Barton (R-Tex.) has asked 20 hospitals in 10 states to provide Medicaid-related information by Jan. 26 as part of the committee's investigation into how the hospitals’ states might have generated additional federal Medicaid matching funds. The letter asks for data from 2000 on, to include:

The facility's net patient revenue
Gross Medicaid revenue
Overall cost-to-charge ratio
Total Medicaid funds received
Details of any “state/provider financing mechanism” it has considered or engaged in since 2000, including “the use of intergovernmental transfers”

Barton referred to one state that gave one of its largest Medicaid service providers $377 million in Medicaid funds when the facility’s net Medicaid revenues for the year amounted to only $17 million. Subsequently, $348 million was returned to the state through an intergovernmental transfer.

2. FINAL RULE ADDRESSES HEALTH COVERAGE PORTABILITY ISSUES; AGENCIES REQUEST COMMENTS ON BENEFIT-SPECIFIC WAITING PERIODS

The December 30, 2004, Federal Register included a final HIPAA regulation that governs portability requirements for health plans, and completes portions of the interim final regulation published on April 8, 1997, that limits the use and duration of preexisting condition exclusions imposed by group health plans and group health insurance issuers.

The final regulation requires the group health plans and insurance issuers to:

Provide, with certificate of creditable coverage, a statement outlining the individuals’ rights under HIPAA when members lose coverage under a specific health plan
Provide sample model language that can be included in new educational statements that group health plans and issuers can provide and use to notify its members regarding preexisting condition exclusions

The final regulation is effective February 28, 2005, and applies to plan years beginning on or after July 1, 2005.

Appearing with the rule above was a “request for information” asking the public to comment on aspects of HIPAA group health plan benefit-waiting period requirements. The regulation specifically asks for help with criteria for determining whether a benefit-specific waiting period amounts to a preexisting-condition exclusion under HIPAA. Comments are due by March 30, 2005.

3. MEDPAC ON SPECIALTY HOSPITALS: MORATORIUM AND PAYMENT CHANGE

Last week, the Medicare Payment Advisory Commission (MedPAC) recommended payment updates for 2006 and also concluded (for now) its consideration of specialty hospitals with several recommendations to Congress. Regarding the specialty hospitals, MedPAC recommended:

The HHS secretary should refine DRGs to more fully capture differences in severity of illness.
The secretary should base relative weights on the estimated cost of furnishing care in each refined DRG, rather than average charges.
The secretary should base the weights on the national average of hospital-specific relative costs within each refined DRG.
Congress should extend the moratorium on physician-owned specialty hospitals by 18 months (January 2007)
Congress should give the secretary the authority to allow and regulate gainsharing arrangements between physicians and hospitals so that quality of care is protected and financial incentives that could affect physician referrals are minimized.

The commissioners stopped short of recommending repeal of the whole-hospital exception, but there was clearly strong support for that action. The Commission vowed to continue studying the issue and offer further advice to Congress and HHS, possibly before the next annual update recommendations next March.

4. CMS ANNOUNCES OXYGEN CLAIMS PAYMENT, CORRECTED PHYSICIAN FEE SCHEDULE

CMS earlier announced that Medicare claims for oxygen and oxygen equipment, as well as portable oxygen equipment, would be held by Medicare contractors until information could be received from the Office of Inspector General for calculation of fee schedule amounts. Under the MMA, there are to be reductions to the oxygen/oxygen equipment monthly payments with the median 2002 Federal Employees Health Benefit plan price reported by the OIG used in the calculations. CMS now says there has been a delay in getting the OIG information and that it will start paying oxygen claims with 2005 dates based on the 2004 Medicare fee schedule amounts. Claims with dates of service beginning January 1, 2005, and paid using the 2004 fee schedule amounts will not be retroactively adjusted after the 2005 fee schedule amounts are implemented, according to CMS.

In another fee schedule development, CMS announced that 2005 physician fee schedules posted by carriers prior to November 19, 2004, might be incorrect. CMS assures providers the fee schedule included in the CD-ROM as part of the 2005 annual participation enrollment mailing contains the correct fees and they can also be found on the CMS Files for Download web page (formerly called the public use or PUF page).

5. CMS: JULY 1 MANDATORY SUBMISSION OF MEDICARE ELECTRONIC CLAIMS ON THE HORIZON

The Administrative Simplification Compliance Act (ASCA) of 2001 prescribes that “no payment may be made under Part A or Part B of the Medicare Program for any expenses incurred for items or services” for which a claim is received in a non-electronic form.

There can be exceptions, but beginning July 1, Medicare will deny any paper claim submitted by providers that do not respond within 90 days to a letter from CMS requiring them to prove that they are eligible to submit paper claims.

If a provider does prove eligibility to submit paper claims and is interested in filing electronic claims, contractors are required to supply free billing software, notify the provider of commercial billing software and clearinghouses, obtain an electronic data interchange agreement, and test the provider as applicable.

6. INSTRUCTIONS DIRECT MMA’S CWF CHANGE FOR SNF CONSOLIDATED BILLING EDITS

The common working file (CWF) is to bypass skilled nursing facility (SNF) consolidated billing edits for claim line items for physician services provided in a Method II Payment Option critical access hospital's outpatient department, according to CMS transmittal 429. CMS notes that the bypass will ensure that outpatient claims billed to the intermediary that contain revenue codes 96x, 97x, or 98x (identifying the professional component of physician services) on bill type 85x are excluded from the consolidated billing requirement.

7. RURAL AIR AMBULANCE SERVICES REVIEWED

When performing medical review of rural air ambulance claims, intermediaries must determine that a physician or other qualified personnel made a reasonable determination that transport was necessary, according to a CMS transmittal. An ambulance transport is necessary when the services are requested by a qualified medical practitioner who determines that ambulance transport by land poses a threat to the patient’s survival or health, or when the service is provided pursuant to an approved state emergency medical services protocol.

CMS also said intermediaries should not apply the “deemed reasonable and necessary” determination if there is a business or financial relationship between the person or entity rquesting the service and providing the service

8. CMS PROPOSES TO EXPAND MEDICARE COVERAGE FOR COCHLEAR IMPLANTS

On January 17, CMS announced proposed expansion of the current Medicare coverage policy for cochlear implant devices. The proposed coverage policy would lower the threshold for Medicare coverage of the implants, CMS notes. Currently, Medicare covers cochlear implants for beneficiaries with severe sensorineural hearing loss determined by scoring 30 percent or less on a sentence recognition test. Under the new policy, Medicare would liberalize the scoring requirement.

9. NOT-FOR-PROFIT HOSPITAL MARGINS IMPROVED IN 2004, BUT CREDIT GAP WIDENS

The Standard & Poor’s recent not-for-profit health care report found a widening gap in hospitals’ credit quality in 2004, a gap that is expected to expand further in 2005. Median ratios generally improved across the sector, with improvement more pronounced at the higher end of the rating spectrum. This year may look a lot like 2004, but it may also represent a “period of calm before more turbulent times” expected in 2006. Key drivers of above-inflation costs are pharmaceuticals, labor and pensions.

The challenges for not-for-profits in 2005 include the financing of large capital plans, particularly from the stronger organizations striving to maintain their competitive advantages. Capital spending is expected to remain “buoyant during the coming year.” Renewed focus on strategic capital spending, S&P says, calls for enhanced planning and analysis. Curtailing capital spending, the report cautions, can be a useful short-range strategy to preserve liquidity, but will create long-term problems that are hard to solve.

Meanwhile, the outlook for investor-owned hospital companies ranges mostly from negative to stable, as admissions have generally declined and significant operating pressures have come from larger bad-debt expenses and declining margins.

10. QUICK LINKS

HFMA'S ONLINE JOB BANK. Whether you're climbing the ladder, or you've reached the top, it's important to continually focus on your career. Check out HFMA's Online Job Bank for new career opportunities.

CALL FOR COMMENTS ON NEW UB-04 DATA SET. The NUBC seeks feedback on the new UB-04 data set via an online survey to better understand the timelines and transition issues surrounding UB-04 implementation. The NUBC will review the survey results at its next public meeting in Baltimore on February 22 and 23 and consider an implementation schedule for the UB-04.

MEDICARE PROVIDER REIMBURSEMENT MANUAL UPDATES. Transmittal 30 contains revisions, additions, and clarifications to Chapter 27, of the Medicare Provider Reimbursement Manual, Part 1, pertaining to reimbursement for ESRD and transplant services, effective January 1.

SNF NO PAY FILE UPDATES. Transmittal 431 contains updates to the SNF No Pay File for April 2005. HCPCS codes 94760, 94761, and Q4078 are payable in a SNF setting and have been removed from the list. The corrections are retroactive to April 1, 2003.

VA HEALTHCARE ELIGIBILITY PROPOSED FOR FILIPINO VETS. VA has published a rule proposing to amend its healthcare service eligibility requirements to include certain Filipino veterans residing in the United States. Comments are due March 14.

11. HFMA WEB SITE SPOTLIGHT: SECURITY RULE COMPLIANCE RESOURCES

The HIPAA security rule goes into effect in 3 months – on April 20, 2005 (April 20, 2006, for small health plans). HFMA offers several resources to help you make sure key processes are implemented on time.

The latest resource on HFMA’s web site is a set of newly updated HIPAA final security rule worksheets, which you can use to document your implementation efforts and ensure your bases are covered. These worksheets are provided in rich text format (RTF) so that they can be downloaded into most word processing applications.

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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