HFMA Express News - July 29, 2005

IN THIS WEEK’S ISSUE:

1. Bush Signs Patient Safety Bill
2. Legislators Urge CMS to Drop Post-Acute Transfer Expansion
3. CMS Clarifies Method II CAH Billing Requirements
4. Credit Benchmarks Rise for Nonprofits
5. Congress Sees IT, Quality, as Key to Value-Based Payment
6. AHIMA Defines Personal Health Records
7. Medicare Billing and Coding Update
8. Quick Links
9. In the Resource Center

1. BUSH SIGNS PATIENT SAFETY BILL

The Patient Safety and Quality Improvement Act of 2005 (S. 544), which will create a voluntary, confidential system for reporting medical errors, cleared Congress July 27. The White House has expressed strong support for the bill.

The bill, which Sen. Jim Jeffords (I-VT) authored and promoted for more than five years, will encourage healthcare providers to report errors and “near misses” to patient safety organizations, which would use that data to craft recommendations and best practices for improving patient safety and quality of care. The bill does not, however, compromise the privacy of patients’ medical information, nor does it mandate a punitive reporting system.

The legislation also promotes the development of national standards to integrate healthcare technology information systems.

2. LEGISLATORS URGE CMS TO DROP POST-ACUTE TRANSFER EXPANSION

Sixty-one Senators have signed a letter to CMS Administrator Mark McClellan urging the agency not to implement an expansion of Medicare’s post-acute transfer provisions, which were included in the FY06 inpatient PPS proposed rule. A similar letter was sent by 127 members of the House of Representatives.

The letters, which voiced concern that expanding the transfer policy to apply to roughly half of all DRGs would reduce Medicare payments by almost $5 billion from FY06 through FY10, were spearheaded by House and Senate rural health groups. “This is an issue that disproportionately affects rural hospitals,” said Senator Craig Thomas (R-WY), Chairman of the Senate Rural Health Caucus. “It puts an undue financial burden on rural hospitals struggling to stay afloat.”

The letter also enumerated flaws in the current policy that the expansion would exacerbate, arguing that the current policy penalizes hospitals for providing efficient treatment and striving to deliver the right care in the right setting. Also, the proposal significantly expands hospitals’ liability under the False Claims Act for decisions not within their control, since patients and their physicians typically order and arrange post-acute care, often without the knowledge of the hospital.

3. CMS CLARIFIES METHOD II CAH BILLING REQUIREMENTS

CMS has revised its prior instruction that required providers to bill their fiscal intermediaries for low osmolar contrast medium (LOCM) with HCPCS codes A4644 - A4646 and to not report codes Q9945 - Q9951. CMS determined that codes Q9945 - Q9951 are reportable for physician involvement in the administration of LOCM in method II critical access hospitals (CAHs).

For the technical component of LOCM for method II CAHs, providers should continue to bill using HCPCS codes A4644 - A4646, CMS said. This change request also provides coding guidance for method II CAHs billing for physician involvement in the administration of other drugs and biologicals.

4. CREDIT BENCHMARKS RISE FOR NONPROFITS

The bar continues to be raised for nonprofit healthcare facilities seeking funding, as the medians of key financial indicators improved, Standard & Poor’s reports. Among the acute care stand-alone facilities’ 2005 medians showing improvement over 2003 were days’ cash on hand (rising from 131 in 2003 to 151 in2005), debt service coverage (from 2.7 to 3.4), days in accounts receivable (from 51.9 to 57.4), and excess margin (from 2.4 percent to 4.1).

Though slightly more favorable, nonprofit health systems’ results mirrored those of stand-alone facilities, in an environment S&P characterizes as positive and likely to continue through 2006. However, there were words of caution about the effects of future health plan design and the pressure of information system and strategic capital initiative implementation. Also, the trend of growing sensitivity to rising health insurance premiums, which is leading to cost shifting and benefit reductions, has contributed to rising bad debt and charity care, and is likely to accelerate in 2006.

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5. CONGRESS SEES IT, QUALITY, AS KEY TO VALUE-BASED PAYMENT

Over the past eight days, the House Ways and Means health subcommittee and the Senate Finance Committee have examined healthcare information technology, quality improvement, and payment for performance as issues they must act on quickly to shift Medicare to a value-based payment system. However, in hearings this week Congress heard there are major hurdles to be overcome before any one of these issues can be addressed, much less all three simultaneously.

Obstructing any serious progress toward a value-based system is the immediate need to fix the current system’s flawed physician payment methodology. The formula-based system will produce a payment reduction of 4.3 percent for 2006; in addition, there has been a trend of steep increases in the volume of Medicare’s physician payments (13 percent for 2004 over 2003). Congress hopes that improved efficiency and reduced cost from a physician pay-for-performance system would help solve the multi-horned dilemma.

On the broader scale, Congress expects savings from better industry-wide use of information technology, but continues to come up against resistance stemming from providers’ lack of funding for adoption of new systems. Similarly, with the issue of greater quality, savings seem inherent, but progress is difficult in the face of data collection burdens and the penalties of lower overall payments to providers if such measures as disease management are successful.

At a press briefing on Monday, CMS administrator Mark McClellan unveiled the agency’s “Roadmap to Quality” that CMS expects will help promote culture changes in healthcare organizations that can lead to quality improvements. Leading the change process will be workgroups for the specific areas of health information technology, performance measurement and pay-for-performance, technology and innovation, prevention, Medicaid and SCHIP, long-term care, cancer care, and methods for breakthrough improvement.

6. AHIMA DEFINES PERSONAL HEALTH RECORD

On July 25, the American Health Information Management Association (AHIMA) released its standard definition of a personal health record (PHR), including attributes and minimum common data elements. Defined as an electronic, universally available, lifelong resource of health information maintained and owned by the individual, AHIMA said that the PHR is critical to the development of a safer, more efficient, consumer-driven healthcare system. The PHR should be maintained in a secure and private environment, with the individual determining rights of access. A PHR would be separate from, and would not replace, the legal record of any provider.

The definition was formulated by an electronic information management (eHIM™) workgroup consisting of health information management professionals and other industry leaders. To ensure proper functionality among different care settings and different providers, AHIMA said, a standardized PHR must include common data elements, some of which include personal demographic information, allergies and drug sensitivities, hospitalizations, and surgeries.

7. MEDICARE CODING AND BILLING UPDATE

New transmittals recently posted to the CMS web site include:

• An update of the hospital outpatient prospective payment system,
• Guidelines for the payment of PPV, influenza virus, and hepatitis B virus vaccines and their administration at renal dialysis facilities, and
• A new modifier to be used for both urban and rural health professional shortage areas.

HFMA staff review CMS notices regularly for transmittals that affect healthcare financial managers, and post links to those transmittals on HFMA’s web site.

8. QUICK LINKS

2006 OUTPATIENT PPS PROPOSED RULE. CMS has published the proposed 2006 outpatient PPS rule in the July 25 Federal Register.

NUBC AGENDA AVAILABLE FOR COMMENTS. The National Uniform Billing Committee (NUBC) has posted the preliminary agenda for its open meeting on August 9 and 10 in Chicago.

9. IN THE HFMA RESOURCE CENTER

HFMA GLOSSARY. The healthcare finance field is rife with jargon and conflicting definitions. Use this handy searchable database to look up healthcare financial management terms and acronyms. Or, purchase a hard copy of the full glossary to help both board members and staff understand healthcare financial management terms and acronyms.

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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