HFMA Express News - March 4, 2005

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IN THIS WEEK’S ISSUE:

Administration Outlines Medicaid Funding Framework
New Medicare Claims Appeals Process Established
CMS Proposes Competitive Bidding for Physician-Administered Drugs
MedPAC Publishes 2006 Recommendations to Congress
Not-For-Profit Sector Panel Makes Charity/Foundation Recommendations
OIG: New Advisory Opinions on Gainsharing, Ambulance Services
2006 HEDIS Measures Target Drug Overuse
Manual Update Clarifies Medicare Secondary Payer Changes
Quick Links
Featured in the HFMA Resource Center

1. ADMINSTRATION OUTLINES MEDICAID FUNDING FRAMEWORK

There will be no block grants for Medicaid, President Bush and HHS secretary Mike Leavitt told attendees of the National Governors Association winter meeting this week. Additionally, the administration wants to provide more flexibility in Medicaid program management and aims to generate about $60 billion in federal 2006 budget savings through:

More aggressive restrictions on state funding mechanisms that rely on intergovernmental transfers
Reductions in state expenditures for drugs
Restrictions on patients’ ability to qualify for Medicaid by transferring personal assets to family members

The administration also included the use of co-pays, improvements to home and community care, Medicaid payment for performance, and electronic health records as ways to reduce costs. Meanwhile, the governors continue to develop their own slate of Medicaid reforms.

2. NEW MEDICARE CLAIMS APPEALS PROCESS ESTABLISHED

CMS has posted to its web site an interim final rule establishing new regulations for implementing structural and procedural changes to the existing Medicare claims appeals process required by BIPA and the Medicare Modernization Act. Implementation of the new procedures will take place in two stages, depending on whether a fiscal intermediary (FI) or carrier handles the redetermination (first level appeal), according to the rule. Beginning May 1, all FI redeterminations will be subject to reconsideration by qualified independent contractors (QICs).

The new QIC reconsideration procedures will take effect for all redeterminations beginning January 1, 2006. Thus, the new Medicare appeals process will take effect for all Part A and B claims in 2006. CMS notes that phasing in the transition from the current process eliminates any unnecessary risk in terms of its ability to manage major appeal transitions for all FIs and carriers simultaneously. The final rule also sets forth, for the first time, Medicare-specific procedures for carrying out administrative law judge (ALJ) hearings. MMA section 931 requires transfer of the ALJ functions from the Social Security Administration to HHS by October 1. The rule, effective May 1, will be published in the March 8 Federal Register.

3. CMS PROPOSES COMPETITIVE BIDDING FOR PHYSICIAN-ADMINISTERED DRUGS

Beginning January 1, 2006, physicians will be given the option to either obtain physician-administered Part B drugs from vendors selected through a competitive bidding process or purchase drugs directly, according to a CMS proposed rule published in today’s Federal Register. Participating physicians would order drugs from a winning vendor and only bill Medicare for the administration of the drug, the proposed rule states.

To qualify for a contract, a vendor would first have to demonstrate that it meets standards for quality, program integrity, financial stability, and service. Vendors would be selected based on their bid price. Comments will be accepted until April 26, 2005.

4. MEDPAC PUBLISHES 2006 RECOMMENDATIONS TO CONGRESS

The Medicare Payment Advisory Commission (MedPAC) published its annual recommendations to Congress for the payment systems covering services provided by hospitals, physicians, skilled nursing facilities, home health agencies, and outpatient dialysis facilities. As expected from the commission’s public discussion in January, the recommendations stress the need for payments based on providers’ quality of care.

The commission now wants hospitals, home health agencies, physicians, Medicare Advantage plans, and dialysis providers to be paid through a quality-based system. The commission has also recommended that providers who perform imaging studies, and physicians who interpret these studies, meet quality standards as a condition of Medicare payment. The payment update recommendations were: hospitals, market basket minus 0.4 percent; physicians, market basket less 0.8 percent; and, no change for skilled nursing facilities and home health. For each of the recommendations, the report presents the commission’s rationale, as well as the implications for beneficiaries, providers, and program spending. A bound copy is free upon request, or the entire report can be downloaded.

5. NOT-FOR-PROFIT SECTOR PANEL MAKES CHARITY/FOUNDATION RECOMMENDATIONS

On March 1, Sen. Charles Grassley (R-IA), chairman of the Senate Finance Committee, received recommendations from the Panel on the Nonprofit Sector for the improvement of governance and oversight of charities and foundations. Considered an interim report with the final part due in the spring, the comprehensive document is the product of more than 175 experts and leaders from the nonprofit organization sector. Grassley said the Finance Committee will benefit from the views as it drafts reforms of charitable governance and donations. The 14 recommendations include:

Suspension of the tax-exempt status of any charitable organization failing to comply with 990 filing requirements for two or more consecutive years
That Congress increase the resources allocated to the IRS for oversight and enforcement of charitable organizations

The interim report lists issues expected to be addressed in the spring report, such as:

Periodic review of tax-exempt status
Disclosure of performance data
Facilitating the public’s access to data on charities and foundations

6. OIG: NEW ADVISORY OPINIONS ON GAINSHARING, AMBULANCE SERVICES

On February 25, the OIG released new advisory opinions on gainsharing and ambulance services. In OIG opinions 05-05 and 05-06, the agency stated that there would be no sanctions for gainsharing arrangements in which a hospital and a group of cardiologists and cardiac surgeons would share in savings from a number of cost reduction measures for certain surgical procedures. All of the first six advisory opinions of calendar 2005 have pertained to gainsharing arrangements.

In opinion 05-07, the OIG declared no sanctions for an exclusive five-year contract between an ambulance company and a municipality, in which the city would provide dispatch services at no charge to the ambulance company. Although the agency said the proposed arrangement could generate prohibited remuneration, no sanctions would be imposed because the parties have essentially bartered services of equal value, and the arrangement would improve patient care by facilitating fast, effective response to emergency situations.

7. 2006 HEDIS MEASURES TARGET DRUG OVERUSE

New measures related to the overuse of drugs are among the new proposed new Health Plan Employer Data and Information Set (HEDIS®) measures released February 22. These measures include antibiotics prescribed for viral illnesses and the use of medications that are contraindicated in older persons. Other new measures emphasize accurate diagnoses, health among the elderly, and the monitoring of medications used for attention deficit hyperactivity disorder in children. The new measures were developed with the input of the Committee on Performance Measurement of the National Committee on Quality Assurance. Comments on the draft are due by March 22, 2005.

8. MANUAL UPDATE CLARIFIES MEDICARE SECONDARY PAYER CHANGES

CMS has updated the Medicare Secondary Payer Manual (Pub. 100-05) to reflect changes made to MSP regulations by the Medicare Modernization Act. According to MMA Section 301:

Primary insurers must reimburse Medicare for conditional Medicare payments (made because of no-fault or liability insurance or because workers’ compensation does not pay promptly)
Entities that engage in a business, trade, or profession are deemed to either have purchased liability insurance or be self-insured
A primary payer’s obligation to repay Medicare is established when it is demonstrated that the primary plan has, or had at the time the services were provided, an obligation to make primary payment
Employers that purchase group health plan coverage from an insurer are responsible for resolving debts to Medicare arising when that group health plan did not make required primary payments

9. QUICK LINKS

REVISED TRANSITIONAL CORRIDOR PAYMENT-TO-COST RATIOS.
CMS has changed the calculation of payment-to-cost ratios for purposes of determining transitional corridor payments under the outpatient PPS. The change, which will affect only providers with the CRNA exception, goes back to hospital cost reporting periods ending on or after January 1, 1996 and instructs FIs to retroactively adjust cost reports for FY2000 to FY2004 and make any additional TC payments.

CORPORATE INTEGRITY AGREEMENT UPDATES . The OIG has updated its list of corporate integrity agreements (CIAS) and settlement agreements with integrity provisions.

10. IN THE HFMA RESOURCE CENTER

UPDATED! HFMA’S INTERNET GUIDE TO BUSINESS STATISTICS.
Use this useful guide to retrieve a broad range of healthcare business statistics on margins, labor costs, the uninsured population, inflation, expenditures, and more.

UPDATED THROUGH FEBRUARY! HFMA’S INTERNET GUIDE TO MEDICARE CODING AND BILLING INSTRUCTIONS. Use this handy billing compliance reference to be sure you are up to date on important Medicare coding and billing instructions.

UPDATED! HFMA POSITIONS AND ACTIVITIES. Learn how the Association is working to help members excel in their jobs and careers by developing and promoting ethical, high-quality healthcare finance practices.

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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