HFMA Express News - July 22, 2005

IN THIS WEEK’S ISSUE

1. Proposed Outpatient PPS Rule Offers Mixed Bag for Providers
2. MedPAC: SNF PPS Rule Should Incorporate Nontherapy Ancillary Costs
3. Pricing, Not Quality, Makes U.S. Health Care Costly
4. FASB Proposes Interpretation on Uncertain Tax Positions
5. Wall Street Analysts Disagree on Healthcare Trends
6. HFMA Calls for National Leadership Nominations
7. Quick Links

1. PROPOSED OUTPATIENT PPS RULE OFFERS MIXED BAG FOR PROVIDERS

The effects of the proposed Medicare hospital outpatient PPS update for calendar year 2006 (CY06), released by CMS on July 18 (to be published in the Federal Register on July 25) would vary widely, depending on providers’ demographics. Changes would range from a 2.1 percent decrease for low-volume urban hospitals to a 6.4 percent increase for rural, sole community hospitals.

The proposed rule would reduce the maximum coinsurance rate for any service to 40 percent, down from 45 percent for 2005. It would also limit diagnostic imaging payments when there are multiple procedures of the same “family” performed together, with the first procedure getting Medicare’s full payment while subsequent procedures would be reduced by 50 percent. Even with such reductions, CMS projects total program outlays would increase by 5.4 percent under the rule, due in part to an expected increase in the volume of services.

CMS will accept comments until September 16; the final rule must be published by November 1, 2005.

2. MEDPAC: SNF PPS RULE SHOULD INCORPORATE NONTHERAPY ANCILLARY COSTS

CMS should modify the skilled nursing facility (SNF) PPS to adequately account for payment for nontherapy ancillary services such as prescription drugs and IV therapy, the Medicare Payment Advisory Commission (MedPAC) recommended to CMS in a July 8 letter. The proposed rule, published in the May 19 Federal Register, outlined proposed SNF PPS changes for 2006.

According to MedPAC, the nontherapy ancillary costs were not used to develop the weights that adjust the base payment rates according to patient’s resource use. As a result, the payment system does not distribute payments according to variation in expected costs across the different patient types. MedPAC says that the proposed refinement for nontherapy services would increase payments for patients who qualify for extensive services and rehabilitation, and that payments based on the amount of therapy provided or estimated do not correct incentives to provide therapy to maximize payments.

MedPAC also urged a transition period be given in the change to core-based statistical areas (CBSAs) to permit SNFs a more equitable phase-in of the new labor market designations.

Comments to CMS on the SNF proposed rule will be accepted until July 12.

3. PRICING, NOT QUALITY, MAKES U.S. HEALTH CARE COSTLY

U.S. per capita healthcare spending continues to overshadow that of other Organization for Economic Cooperation and Development (OECD) countries ($5,267 per capita, compared with $3,446 per capita by Switzerland, the second-highest ranked country, and the median of $2,193). A new Health Affairs study attributes the difference to higher prices, rather easier access to services, more malpractice suits, or better quality. Americans have access to fewer resources than citizens of most OECD countries in terms of hospital beds, physicians and nurses, and MRI and CT scanners per capita. Also, an analysis of malpractice costs credits it with only a small effect on U.S. spending.

Missing from this study is an examination of why prices are what they are, but even without that important part of the picture, the paper notes that the more costly care of the U.S. has not resulted in “demonstrably better technical quality of care or better patient satisfaction with care.”

4. FASB PROPOSES INTERPRETATION ON UNCERTAIN TAX POSITIONS

The Financial Accounting Standards Board (FASB) published an exposure draft July 14 of a proposed interpretation, Accounting for Uncertain Tax Positions. FASB says it is seeking to reduce the diversity in practice associated with recognition and measurement in the accounting for income taxes.

The exposure draft requires that a tax position meet a “probable recognition threshold” for the benefit of the uncertain tax position to be recognized in the financial statements. In evaluating whether the probable recognition threshold has been met, this proposed Interpretation would require the presumption that the tax position will be evaluated during an audit by taxing authorities. It would apply to all tax positions accounted for in accordance with FASB Statement No. 109, Accounting for Income Taxes.

As with Statement No. 109, the requirements of this interpretation apply to for-profit enterprises as well as to the activities of not-for-profit organizations that are subject to income taxes.

Comments on the exposure draft are due by September 12, 2005.

5. WALL STREET ANALYSTS DISAGREE ON HEALTHCARE TRENDS

Last week, Wall Street analysts at the 10th Annual Wall Street Comes to Washington Conference, sponsored by the Center for Studying Health System Change, differed on hot healthcare issues, including the outlook for managed care, health savings accounts (HSAs), and healthcare utilization.

One analyst said managed care will prosper under Medicare’s Advantage program, while another said that the long-term view is murky. Analysts also disagreed on whether HSAs will enjoy rapidly growing enrollment and domination of the market down the road, or whether they are a passing fad that will be worked out of our system in a few years. As for utilization, one analyst sees it falling, due to the consumer-directed products, while another saw the opposite trend in rising physician visits and increased use of imaging. There was also a belief that there is a link between the job market and hospitals, which means hospital utilization could increase.

6. HFMA CALLS FOR NATIONAL LEADERSHIP NOMINATIONS

The HFMA Board of Directors and the Governance Committee invite you to participate in HFMA’s governance process by nominating officers for fiscal year 2006-07 and directors for fiscal years 2006-09. Nominees should be individuals who have contributed positively to the healthcare field and/or HFMA and who have demonstrated leadership capabilities, including strategic and systems thinking and change-management skills.

All nominations are strictly confidential and are due August 19. The National Governance Committee will meet in September and October to select a slate of officers and directors. The committee’s recommendations will be presented to the National Board of Directors at the November board meeting.

7. QUICK LINKS

HL7 SEEKS COMMENTS ON EHR. Health Level Seven’s technical committee has enhanced the draft model for electronic health record (EHR) systems and is accepting public comment. The latest draft functional model incorporates changes recommended during the previous public comment period.

HHS SEEKS PRIVATE SECTOR IT ADVISORS. HHS is seeking nominations for the American Health Information Community, an advisory body to be chaired by the HHS Secretary. The 17 voting members will include representatives of state or federal agencies and private sector consumer, purchaser, payer, provider, and IT vendor groups. Nominations are due by August 5.

UPDATED CRIMINAL ENFORCEMENT ACTIONS. The OIG has posted for review criminal enforcement actions for June, as well as the recent and expired corporate integrity agreements (CIAs).

MEDICARE/MEDICAID PLANNING RESOURCES:

The Kaiser Family Foundation has released its “Medicare Chart Book 2005,” which features more than 80 charts and tables with detailed information about the Medicare program and its 42 million beneficiaries.

Statehealthfacts.org, another section of the Kaiser web site, has both Medicare and Medicaid data, with the option of drilling down to the state level.

The Medicare Payment Advisory Commission has just released its “Data Book: Healthcare Spending and the Medicare Program (June 2005).”

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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