IN THIS WEEK’S ISSUE:
- HFMA Compensation Survey Released
- IASB and FASB Publish Proposals on Business Combinations
- QIO Programs May Not Yield Better Care for Medicare Patients
- Nonprofit Panel Seeks Improved Oversight and Reporting
- Home Health Beneficiaries to Receive Adult Day-Care Services
- CMS Announces Competitive Bidding Process for Part B Drugs
- OIG Releases Inspection Reports on Medicaid Drug Pricing
- Quick Links
1. HFMA COMPENSATION SURVEY RELEASED
Healthcare CFOs and midlevel financial managers saw their compensation increase to reflect rising levels of education, experience, and expertise, according to the 2005 HFMA Compensation Survey, released last week at HFMA’s Annual National Institute. Average total compensation for hospital and healthcare system CFOs was $172,000 in 2005, up from $151,000 in 2003. Top earners reported they had more years of healthcare and CFO experience, advanced degrees, and CPA designation; managed more revenue; and oversaw larger departments or health systems.
For the first time ever, the average compensation for a middle manager broke into six figures with directors/managers of managed care earning an average of $100,300, including bonus, in 2005. This position and that of director/manager of reimbursement (average annual compensation of $98,200) both gained more over the past two years than the CFO position did—the first time any director-level position has done so.
Also for the first time, the survey showed a negligible gap ($300) between the genders for CFOs with the 16 to 22 years of professional experience. Overall, the compensation gap between male and female CFOs is 23 percent, with much of the gap attributable to male respondents reporting higher levels of qualifications (such as having an MBA or CPA), responsibility, and years of healthcare experience.
The Biennial Career and Compensation Guide, Featuring Results of HFMA’s Compensation Survey, was published in the July hfm.
2. IASB AND FASB PUBLISH PROPOSALS ON BUSINESS COMBINATIONS
The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) each published an Exposure Draft containing joint proposals to improve and align the accounting for business combinations. The objective of the project is to develop a single standard for business combination accounting that can be used for both domestic and cross-border financial reporting. The proposed standard would replace the existing requirements of the IASB’s IFRS 3 Business Combinations and the FASB’s Statement No. 141, Business Combinations.
The proposed new Statement, like Statement 141, does not apply to not-for-profit organizations. FASB is addressing the accounting for combinations involving not-for-profits in a separate project. The IASB and the FASB also published Exposure Drafts that propose that noncontrolling interests be classified as equity within the consolidated financial statements and that acquisitions of noncontrolling interests be accounted for as equity transactions. The comment period for the Exposure Drafts ends October 28, 2005.
3. QIO PROGRAMS MAY NOT YIELD BETTER CARE FOR MEDICARE PATIENTS
Hospitals that participate in the Medicare QIO program are not more likely to show improvement on quality indicators than hospitals that do not participate, according to a study in the June 14, 2005, issue of The Journal of American Medical Association (JAMA). Data were taken from 750 medical records of Medicare beneficiaries per state related to clinical indicators related to atrial fibrillation, acute myocardial infarction, heart failure, pneumonia, and stroke.
The researchers concluded that the “findings from this study do not support the hypothesis that the QIO program improves the quality of care for Medicare beneficiaries in the inpatient setting and that additional efforts to assess and improve the QIOs effectiveness may be needed.”
4. NONPROFIT PANEL SEEKS IMPROVED OVERSIGHT AND REPORTING
The Panel on the Nonprofit Sector recently released a series of recommended actions to be taken by charitable organizations, Congress, and the Internal Revenue Service that, the Panel asserts, would strengthen nonprofits’ transparency, governance, and accountability. Among its proposals in the report, the Panel recommends that charitable organization boards approve executive compensation each year, that Congress strengthen the penalties on board members who approve and executives who receive excessive compensation, and that the IRS revise the Forms 990 to make the total compensation of executives clearer to the public and regulators.
The Panel on the Nonprofit Sector was convened in October 2004 at the request of the Senate Finance Committee Chairman Charles Grassley (R-IA) and Ranking Member Max Baucus (D-MT). Concerned about lapses in governance, fundraising, and other practices, both the Senate Finance Committee and the House Ways and Means Committee have held hearings over the past year about the operations of nonprofit organizations. The IRS is also reviewing the practices of charities and foundations.
5. HOME HEALTH BENEFICIARIES TO RECEIVE ADULT DAY-CARE SERVICES
Medicare home health beneficiaries can receive medical adult day-care services under a new demonstration project, CMS announced in a notice published in the June 24 Federal Register. Testing an alternative service delivery approach, the demonstration permits home health beneficiaries to receive a portion of the medical services included in their home health plan of care in a medical adult day-care facility (MADCF). CMS says that the demonstration will provide opportunities to test potential improvements in quality of care, outcomes, and program efficiency related to the provision of home health services in an MADCF setting. Participating home health agencies will be paid 95 percent of the prospective payment system rate that otherwise would have been paid for the care had the services been provided in the beneficiary’s home. CMS intends to use a competitive application process to select up to five sites to participate in the project. Further, the demonstration is restricted to HHAs that provide services in states that license or certify MADCFs. Up to 15,000 beneficiaries at any one time will be eligible to enroll in the three-year demonstration, which is scheduled to begin in February 2006. Applications must be received by September 22.
6. CMS ANNOUNCES COMPETITIVE BIDDING PROCESS FOR PART B DRUGS
Beginning January 1, 2006, physicians will have the option to either purchase part B drugs from vendors selected through a new competitive bidding process or continue to purchase these drugs directly and be paid under the Average Sales Price system, according to an interim final rule published in the July 6 Federal Register. The new competitive acquisition program (CAP) will apply to physician-injectable drugs covered under Part B that are commonly provided incident to the physician’s service.
Currently, a physician purchases drugs for a beneficiary from a distributor or manufacturer. The physician then bills Medicare for the drug and is paid at the statutorily mandated payment rate of 106 percent of the manufacturer’s average sales price). Medicare pays 80 percent of this rate and the physician collects a 20 percent coinsurance from the beneficiary.
CMS said it would evaluate CAP’s implementation and use that information to decide if and how the program will be modified in the future. Comments on the rule will be accepted until September 6, and bidding by potential vendors will begin on July 6. Participating vendors should submit bids showing the prices at which they propose to furnish the drugs included in CAP.
7. OIG RELEASES INSPECTION REPORTS ON MEDICAID DRUG PRICING
After the Senate Committee on Finance concluded two days of hearings on Medicaid, the OIG, in conjunction with Senate testimony released three inspection reports on Medicaid drug pricing:
- Medicaid Drug Price Comparisons: Average Manufacturer Price to Published Prices (OEI-05-05-00240) examines prices for Medicaid-reimbursed drugs (24,101 national drug codes).
- Medicaid Drug Price Comparison: Average Sale Price to Average Wholesale Price (OEI-03-05-00200) examines prices for Medicare-covered drugs (2,077 national drug codes) since the Medicaid program may also cover these drugs.
- Comparison of Medicaid Federal Upper Limit Amounts to Average Manufacturer Prices (OEI-03-05-00110) includes the OIG’s finding that overall, federal upper limit amounts were five times higher than the average manufacturer prices (AMP) for generic drug products in the third quarter of 2004.
8. QUICK LINKS
OIG POSTS CORRECTION WITH COMMENT PERIOD. In the June 24 Federal Register, the OIG posted a proposed correction to the October 26, 1999, final rule establishing a national healthcare fraud and abuse data collection program for adverse actions taken against certain healthcare providers. Comments regarding the proposed correction are due July 25, 2005.
FDA ISSUES NATIONWIDE DEFIBRILLATOR RECALL. The Food and Drug Administration (FDA) has issued a nationwide notification of recall on certain Guidant implantable defibrillators and cardiac resynchronization therapy defibrillators. These devices can develop an internal short circuit without warning, resulting in failure to deliver a shock when needed.
OIG REQUESTS COMMENTS ON SAFE HARBOR AND REGULATORY STANDARDS. The OIG has released for comment a proposed rule that would establish a new safe harbor and regulatory standards for certain goods, items, services, donations, and loans provided by individuals and entities to certain health centers funded under section 330 of the Public Health Service Act.
CIRCULAR 230 REGULATIONS. In a recent advisory bulletin issued by Davis Wright Tremaine LLP, finance professionals are reminded that new rules on written tax advice under Treasury Circular 230 were effective on June 21, 2005. As part of the ongoing attempt to improve ethical standards for tax professionals, the Treasury Department and the IRS amended Circular 230 in December 2004.
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 26. Editor: Rob Fromberg rfromberg@hfma.org, (800) 252-HFMA, ext. 385.
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