IN THIS WEEK’S ISSUE:
- PATIENT FRIENDLY BILLING® Project Explores How Hospitals Can Improve Financial Assistance Policies
- CMS Creates Regional Medicare Advantage PPOs
- Medicare Drug Benefit Final Rule Differs From Proposed Rule
- Corrections Made to IPF PPS
- Free IRF Software May Help with Coding Compliance
- 2004 Hospital Payment Growth Slows, Home Health Payments Strengthen
- CMS Instructs Contractors on Medical Review
- CMS Clarifies the Use of Outpatient PPS Modifiers
- Leavitt Approved as HHS Secretary
- Quick Links
1. PATIENT FRIENDLY BILLING® PROJECT EXPLORES HOW HOSPITALS CAN IMPROVE FINANCIAL ASSISTANCE POLICIES
To better serve patients, many hospitals are evaluating their discounting and collections policies and practices for uninsured and underinsured patients. Through a new report, Hospitals Share Insights to Improve Financial Policies for Uninsured and Underinsured Patients, the PATIENT FRIENDLY BILLING® project is sharing knowledge and practical ideas to help hospitals and health systems revise their policies and procedures and implement those revisions quickly and effectively. The report explores seven key questions that hospital leaders find useful when reviewing their financial assistance policies. It also provides tools and practical ideas to help hospitals and health systems revise their policies and procedures and implement those revisions quickly and effectively.
The report was developed through interviews with hospitals and health systems and with input from state hospital associations. The information provided is anecdotal and based on the experiences of the hospitals interviewed for the project. Individual hospitals should use the report and tools within the context of their own institutional and community circumstances.
2. CMS CREATES REGIONAL MEDICARE ADVANTAGE PPOS
Today CMS released the Medicare Advantage final rule, which creates new regional MA PPOs as an additional choice for Medicare beneficiaries, beginning January 1, 2006. The PPO plans are located in 26 regions nationwide, including rural areas, and must offer the same benefits as traditional fee-for-service Medicare, with simplified cost-sharing arrangements. CMS has attempted to address access issues surrounding health plan negotiations with providers that are the only one in their area.
This final rule allows for a new competitive bidding system to help pay for MA plans, in addition to implementation of a full risk adjustment payment system. The MA plans will offer healthcare services to beneficiaries who are dually eligible for Medicaid, severely disabled with chronic conditions, and live in nursing homes or other long-term care institutions.
Most of the regulations go into effect on March 22, 2005. Amendments to §417.600(b), §417.832(d), and §417.840 of the MA law go into effect January 1, 2006. These amendments require that cost plans and healthcare prepayment plans transition to the MA grievance and appeals processes under Part 422 no later than January 1, 2006.
3. MEDICARE DRUG BENEFIT FINAL RULE DIFFERS FROM PROPOSED RULE
CMS responses to public input are evident throughout the final Medicare drug benefit rule published in today’s Federal Register. Because of the extent of the changes, providers – particularly nursing facilities – should carefully assess how they might be affected.
A useful companion documents provided on the CMS web site is a matrix that notes the numerous changes from the proposed to the final rule, including:
- A broadened definition of what counts as beneficiary out-of-pocket spending before the catastrophic coverage begins
- An expanded definition of “long-term care facility” to encompass not only skilled nursing facilities, as defined by the Social Security Act, but also any medical institution or nursing facility for which payment is made for institutionalized individuals under Medicaid, such as ICF/MRs and inpatient psychiatric hospitals
- Refined emergency access standards to enable beneficiaries to get a reasonable supply of prescribed drugs in urgent situations.
- “Any willing pharmacy” standards for long-term care pharmacy services, and incentives for drug plans to contract “broadly” with LTC pharmacies that meet the standards
4. CORRECTIONS MADE TO IPF PPS
CMS has issued clarifications and corrections to its December 1, 2004, inpatient psychiatric PPS transmittal, which provided claims processing instructions for the IPF PPS final rule. Areas addressed include:
- Inconsistency in the labor-related share between portions of the final rule and the December transmittal (CR 3541)
- Teaching status adjustment
- Explanation of the calculation of the electroconvulsive therapy (ECT) payment
- Explanation of how to calculate outlier payments
- The transition and claims filing procedures around the PPS start date
A notice will be published in an upcoming Federal Register to formalize these corrections.
5. FREE IRF SOFTWARE MAY HELP WITH CODING COMPLIANCE
CMS has posted to its web site free grouper software that can take an inpatient rehabilitation facility’s patient assessment instrument data and produce case mix group values and associated information.
CMS also issued a PPS fact sheet on January 21, 2005, that attempts to clarify the IRF classification requirements and elaborates on aspects of the regulations. The fact sheet sections include:
- Special requirements applicable to critical access hospitals
- The effect of the 2005 Consolidated Appropriations Act
- Changes to the compliance percentage threshold
- Changes to the list of conditions requiring intensive rehabilitative services
- Coding the IRF-Patient Assessment Instrument (PAI)
- Applying the presumptive test methodology
- Determining the compliance review period
6. 2004 HOSPITAL PAYMENT GROWTH SLOWS, HOME HEALTH PAYMENTS STRENGTHEN
Payments received for hospital services increased by 4.9 percent in 2004, exhibiting weaker growth than the 5.8 percent annual increase of 2003, according to preliminary Producer Price Index (PPI) data released by the U.S. Bureau of Labor Statistics on January 14.
Home health agency payments showed the largest percentage increase over the previous year, rising from an annual increase of 0.3 percent in 2003 to 2.3 percent in 2004. Physician offices experienced the leanest increase, rising from a 1.6 percent annual increase in 2003 to a 2.0 percent increase 2004. Payments received by nursing homes increased 4.0 percent in 2004.
The PPI for healthcare providers measures average changes in the actual or expected payments that providers receive from all payers for the services they provide.
7. CMS INSTRUCTS CONTRACTORS ON MEDICAL REVIEW
CMS has updated the Program Integrity Manual to clarify that contractors must consider all documentation during a medical review. This documentation includes information such as physical and occupational therapy evaluations, physicians letters, other written physicians evaluations, or any document that provides relevant information about a patient’s clinical condition.
When documentation does not support information in physician progress notes, the physician’s notes will be the determining factor during the review. However, if documentation is provided in place of physician progress notes, contractors will determine if the documentation is sufficient to justify coverage. If it is not, the claim will be denied, CMS said.
8. CMS CLARIFIES THE USE OF OUTPATIENT PPS MODIFIERS
A January 21 transmittal clarifies the use of modifiers -52, -73 and –74. The transmittal states that the modifiers are used to report procedures that are discontinued by the physician due to unforeseen circumstances. Modifier -52 is used to indicate partial reduction or discontinuation of radiology procedures and other services that do not require anesthesia, while modifiers -73 and -74 are used to indicate discontinued surgical and certain diagnostic procedures only. They are not used to indicate discontinued radiology procedures, CMS specified.
Medicare will pay 50 percent of the outpatient PPS amount if modifier -73 is coded for surgical or certain diagnostic procedures that are discontinued after the patient has been prepared for the procedure and taken to the room. However, if modifier -74 is coded and the patient has received anesthesia and the procedure has been initiated, but discontinued, Medicare will pay the full outpatient PPS amount.
9. LEAVITT APPROVED AS HHS SECRETARY
On January 26, the Senate confirmed former Environmental Protection Agency administrator Mike Leavitt as the new HHS secretary. Before joining the EPA in 2003, Leavitt was governor of Utah for 11 years, during which time the Utah enacted its comprehensive, incremental approach to health care improvement. As chairman of the National Governors Association in the late 1990s, Leavitt built a track record of working with other state governors and Congress on welfare reform, Medicaid, and children's health insurance.
Leavitt’s biggest challenge as he moves into his new role, of course, is to implement the Medicare prescription drug benefit. Of that task, he stated during his confirmation hearings, “I have no illusions about the size of the task. It is immense…Our work will not be without flaw, but we will not fail.” Other challenges include the recent series of problems with drugs approved as save through FDA’s drug approval process, which has damaged the agency’s credibility, and the ongoing federal-state tug-of-war over Medicaid funding.
10. QUICK LINKS
DIABETES SCREENING TEST COVERAGE. CMS transmittal 446 contains instructions for contractors regarding the implementation of expanded Medicare coverage of certain diabetes screening tests mandated by the MMA, effective for services furnished on or after January 1.
CMS: PSYCHOTHERAPY NOTES OFF LIMITS
Contractors are not to request that a provider submit psychotherapy notes in seeking documentation that a claim is reasonable and necessary, according to CMS transmittal 98, effective February 22, 2005.
NEW HHS OFFICE OF CIVIL RIGHTS FAQs
HHS’s OCR has added to its frequently asked questions guidance on how the HIPAA privacy rule applies to uses and disclosures of protected health information for judicial and administrative proceedings. Access the new FAQs from the "What's New" column on the OCR web site by clicking on "FAQs on Disclosing PHI in Litigation."
REDISTRIBUTION OF UNEXPENDED SCHIP FUNDS
CMS seeks comments on a January 19 notice of the procedure for the redistribution of states’ unexpended federal FY02 SCHIP allotments to those states that fully expended their allotments.
QUARTERLY UPDATE: 2005 SNF HCPCS CODES
CMS has published the April quarterly update to the 2005 annual update of HCPCS codes that are subject to consolidated billing under the SNF PPS.
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 4.
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