IN THIS WEEK’S ISSUE:
- HFMA Stresses Value of Comprehensive Community Benefit Approach
- National Health Information Network Plans Announced
- UB-04 Specifications Now Available
- Inpatient PPS Data Changes Could Be Significant for Some
- NGA, Democrats Reject Medicaid Commission
- FASB Strives to Improve Accounting Changes Reporting
- Community Health Center Use Is Growing Faster Than Funding
- Uncompensated Care Burden Concentrated in a Few Hospitals
- Medicare Coding and Billing Update
- Quick Links
- New in the HFMA Resource Center
1. HFMA STRESSES VALUE OF COMPREHENSIVE COMMUNITY BENEFIT APPROACH
When evaluating whether hospitals merit their tax-exempt status, legislators should recognize the full range of community services, and not just charity care, HFMA stated in comments submitted for the record of the May 26 Ways and Means Committee hearing, “A Review of the Tax-Exempt Hospital Sector.”
Failure to recognize the broad basis for tax-exemption could lead to a specific trade-off between the amount of charity care provided and the amount of tax-exemption allowed, HFMA explained, which would undermine important and cumulative community benefits that tax-exempt healthcare institutions deliver.
HFMA also asked the committee to recognize that healthcare needs differ greatly by community; therefore any approaches to assessing how well tax-exemption obligations are met, whether legislated or voluntary, must be flexible and consider the needs of the patients and communities hospitals serve. Also, comparable, scaleable reporting standards will greatly help tax-exempt hospitals accurately document and report the entire range of the community benefits provided.
2. NATIONAL HEALTH INFORMATION NETWORK PLANS ANNOUNCED
HHS Secretary Mike Leavitt this week announced development plans for a national health information network. HHS issued requests for four proposals last Tuesday for various elements of the network.
Leavitt also announced that he would chair a new 17-member commission, known as the American Health Information Community, whose primary task will be facilitating development of healthcare IT interconnectivity standards. The commission’s other charges include preparing a short list of projects meant to quickly demonstrate the benefits of IT in health care and making recommendations on the architecture and design of the national network, privacy and security, and product certification. The commission, set to expire in five years, also must select a private-sector organization as its successor.
3. UB-04 SPECIFICATIONS NOW AVAILABLE
The National Uniform Billing Committee (NUBC), of which HFMA is a founding member, unveiled the new UB-04 form at its May 12 meeting. The UB-04 contains a number of improvements that resulted from nearly four years of research, including better alignment with the electronic HIPAA ASC X12N 837-institutional transaction standard.
For information on obtaining full color proofs of the form for testing purposes or a beta release of the corresponding data specifications manual, contact Todd Omundson, NUBC Secretary, at tomundson@aha.org
4. INPATIENT PPS DATA CHANGES COULD BE SIGNIFICANT FOR SOME
CMS reported June 2 that recent changes to several of the tables of the FY06 hospital inpatient PPS proposed rule could significantly affect some hospitals. The changes, which are described under “Acute Inpatient Highlights” on the CMS web site, correct several errors.
As a result of the changes, CMS now estimates that fewer counties will qualify for the outcommuting adjustment. Also, because a hospital cannot qualify for both geographic reclassification and the outcommuting adjustment, a hospital must notify the Medicare Geographic Reclassification Review Board by June 20 if it intends to terminate a reclassification. Hospitals should assess the impact of these changes and revisit any prior decision on reclassification.
5. NGA, DEMOCRATS REJECT MEDICAID COMMISSION
The National Governors Association (NGA) has voted to adopt a new interim policy on comprehensive Medicaid reform and will not participate in the new HHS Medicaid advisory commission, according to a statement released by the association. The interim policy, developed by a bipartisan working group of eleven governors, includes both short- and long-term program reforms.
Democratic Congressional leaders have also declined to participate in the commission because legislators were asked to serve as advisors instead of voting members.
The advisory commission, which was introduced by HHS Secretary Mike Leavitt on May 20, is charged with recommending ways to cut $10 billion from Medicaid over the next five years and reforms to ensure the long-term sustainability of the Medicaid program.
6. FASB STRIVES TO IMPROVE ACCOUNTING CHANGES REPORTING
FASB has issued Statement No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20 and FASB Statement No. 3. The statement applies to all voluntary changes in accounting principles, and modifies the requirements for the accounting for and reporting of a change in accounting principle. FASB believes that Statement 154 improves financial reporting because its requirements enhance the consistency of financial information between periods. The statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005, though earlier application is permitted.
7. COMMUNITY HEALTH CENTER USE IS GROWING FASTER THAN FUNDING
Medicaid spending through federally qualified health centers (FQHCs) has increased from $45 million in 1991 to $778 million in 2004, CMS told the House Energy & Commerce oversight subcommittee on May 25. (That amount excludes expenditures through managed care contracts and the state share of Medicaid funding.) The growth is due in large part to the emphasis given by the President’s health center initiative.
Despite the program’s expansion, however, provider representatives said they don’t have enough money to meet the record-high demand for services. In 2004, it was estimated that there were more than 430 applications for new facilities and expanded FQHCs, but only 91 received funding. A study by the National Association of Community Health Centers (NACHC) and George Washington University estimates that there are approximately 929 poor counties in need of a health center, and more than two-thirds of health centers need to upgrade, expand, or replace their facilities. Witnesses at the hearing suggested that access to HUD’s loan guarantee and mortgage insurance would help facilities deal with current funding issues.
8. UNCOMPENSATED CARE BURDEN CONCENTRATED IN A FEW HOSPITALS
The burden of uncompensated care costs falls substantially more on a relatively small number of nonprofit hospitals, according to a GAO report presented during the May 26 Ways and Means Committee hearing on tax-exempt hospitals (see lead story). The study, which compared hospitals in five states, found that in 2003, government hospitals devoted 11.7 percent of patient operating expenses to uncompensated care, nonprofit hospitals devoted 5.3 percent, and for-profit hospitals devoted 4 percent. Within each group, however, the burden of uncompensated care was concentrated in a small number of hospitals, rather than distributed evenly across the group.
HFMA Vice President Richard Gundling noted that the variation in provision of uncompensated care among tax-exempt hospitals might be due to the fact that some exempt hospitals devote more resources to other charitable activities. The GAO study noted that all hospital types reported providing a variety of community benefits, but the agency couldn’t assess the value of these benefits or make systematic comparisons between hospitals because of the wide variation in the reporting.
9. MEDICARE CODING AND BILLING UPDATE
New transmittals recently posted to the CMS web site include clarifications for coding and payment for outpatient PPS drug administration, updates to the outpatient PPS code editor, and the quarterly update to correct coding initiative (CCI) edits.
10. QUICK LINKS
CMS FORUM ON EXPEDITED REVIEW PROCESS. CMS will provide guidance, by means of a special open door forum, on the new expedited review process for Medicare beneficiaries whose covered home health, hospice, SNF, and CORF care is being terminated. The forum will be June 20 from 2:00-4:00 PM (Eastern Time).
MALPRACTICE PAYMENT GROWTH. The growth of medical malpractice settlement payments were consistent with increases in the cost of health care between 1991 and 2003, and were actually less than previously thought, according to a Health Affairs web article.
NEW MULTI-STATE PURCHASING POOL. According to the May 28 Washington Post, Maryland, Louisiana, and West Virginia have become the second multi-state purchasing pool to procure prescription drugs for Medicaid recipients.
NEW MEDPAC MEMBERS. Two new members have been appointed to the Medicare Payment Advisory Commission: Jennie Chin Hansen, RN, MSN, a member of AARP Board of Directors, and Nancy Kane, DBA, professor of management, Department of Health Policy and Management, Harvard School of Public Health.
11. NEW IN THE RESOURCE CENTER
FY06 INPATIENT PPS PROPOSED RULE HIGHLIGHTS. Use this summary as a quick reference to the key provisions of the Medicare inpatient PPS proposed rule for the coming year.
EHR INVESTMENTS: THE VALUE CASE FOR SENIOR HEALTHCARE FINANCIAL EXECUTIVES. This report captures the discussion of 31 CFOs, who discussed the implementation of electronic health records (EHRs), how hospitals should view EHR investments, and the benefits and returns of such systems.
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 23. Editor: Rob Fromberg rfromberg@hfma.org, (800) 252-HFMA, ext. 385.
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