HFMA Express News - March 11, 2005

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IN THIS WEEK’S ISSUE:

NUBC Approves New UB-04
CMS Clarifies Aspects of IPF PPS
MedPAC Specialty Hospital Report: Field-Leveling Payment Changes And Moratorium Extension
CMS Issues Changes to Rural Hospital Demonstration
Draft Guidance Provided on National Coverage Determinations
CMS Offers IRF Training Session
High-Income Families Compose 18 Percent of Uninsured
Summit on Uninsured Heavy on Guidance
Quick Links
HFMA Updates Internet Guide on Medicare Coding and Billing
Featured in the HFMA Resource Center

1. NUBC APPROVES NEW UB-04

The National Uniform Billing Committee unanimously approved the draft version of the UB-04 data set to replace the current UB-92 paper form. The draft will now be submitted for review by the Office of Management and Budget. The implementation dates for the UB-04 will be March 1, 2007, for receivers of the UB-04 (including clearinghouses) and May 23, 2007, for submitters. HFMA is a founding and current member of NUBC.

The draft version of UB-04 will be available soon on the NUBC home page under “What’s New.”

2. CMS CLARIFIES ASPECTS OF IPF PPS

CMS has clarified several aspects of the inpatient psychiatric facility PPS based on questions received from providers and fiscal intermediaries. Included in the clarifications are the following corrections to change request (CR) 3678, dated January 21:

Blood-clotting factors are not considered a pass-through cost paid outside of the IPF PPS
Nursing and allied health education costs are pass-through costs paid outside of the IPF PPS

For periodic interim payment (PIP) providers, electroconvulsive therapy (ECT) and outlier payments are not included in the PIP payment amount but are paid on the discharge claim for ECT, and on a discharge, benefits exhausted, or “last day of a Medicare covered level of care” claim for outliers.
Additionally, CMS clarified that to be considered a new IPF provider, a facility must not have received payment under the Tax Equity and Fiscal Responsibility Act (TEFRA) for the delivery of IPF services before the IPF PPS went into effect January 1. Further, its first cost report period as a psychiatric hospital or a distinct unit in an acute care hospital must have begun no earlier than the January 1 effective date. If the provider had an established TEFRA limit, CMS notes that it will go back and update that TEFRA limit. The IPF will not be considered a new provider and will therefore receive the blended payment.
CMS has also explained that split billing will not be used for the transition to the IPF PPS. Those who used split billing must cancel the pre-transition bill and re-bill showing all services from the admission date through discharge, as described in CR 3541.

3. MEDPAC SPECIALTY HOSPITAL REPORT: FIELD-LEVELING PAYMENT CHANGES AND MORATORIUM EXTENSION

Improving the accuracy of the Medicare’s payment system would help make competition more equitable between community hospitals and physician-owned specialty hospitals, as well as make payments more equitable among community hospitals currently advantaged or disadvantaged by their mix of DRGs or patients, Medicare Payment Advisory Commission chairman Glenn Hackbarth told the House Ways and Means health subcommittee on March 8. MedPAC has just issued its special report on specialty hospitals.

MedPAC’s recommended inpatient payment system changes, all of which are deemed to be within the HHS secretary’s current authority, would:

Refine the current DRGs to more fully capture differences in severity in illness among patients
Base the DRG relative weights on the estimated cost of providing care rather than on charges
Base the weights on the national average of hospitals’ relative values in each DRG

In order for Congress to properly address the issue with legislation and HHS to make the payment changes, MedPAC recommended the current moratorium (scheduled to end June 8) be extended to January 1, 2007.

4. CMS ISSUES CHANGES TO RURAL HOSPITAL DEMONSTRATION

Payment for inpatient services furnished by the 13 hospitals participating in the rural community hospitals demonstration project will be based on reasonable cost beginning October 1, 2004, according to CMS. The project, mandated by the Medicare Modernization Act, changes the way payments are calculated and administered for rural hospitals that don’t qualify for critical access hospital status. Hospitals that have certified swing-beds will have those services also paid based on costs.

In the first cost reporting period of the demonstration, the hospitals’ payment for covered inpatient services will be the reasonable cost of providing such services. For subsequent cost reporting periods, payment will be the lesser of reasonable cost or a target amount, defined as the first year’s reasonable cost updated by the market basket percentage increase in the second year, and the target amount increased by the market basket percentage increases for later years. The demonstration will run for five years.

5. DRAFT GUIDANCE PROVIDED ON NATIONAL COVERAGE DETERMINATIONS

CMS has released a draft document outlining its proposed process for making a national coverage determination. This is the first in a series of guidance documents required under section 731 of the Medicare Modernization Act, which requires the Secretary of HHS to make available to the public the factors considered in making national coverage determinations (NCDs) of whether an item or service is reasonable and necessary. Also included are criteria for referring topics to the Medicare Coverage Advisory Committee and for commissioning external technology assessments to evaluate the risks and benefits associated with a healthcare technology. Comments on the draft will be accepted until May 8.

6. CMS OFFERS IRF TRAINING SESSION

CMS will provide a free audio teleconference training session on the inpatient rehabilitation facility (IRF) “75 percent” rule that will focus on transmittals CR 3334 and CR 3503, the Medicare IRF classification requirements and the procedures used to determine compliance with the 75 percent rule.

CMS has placed a slide presentation on its IRF web page that will be referred to during the training. No registration is required for the call, which will be March 23, 2:30 to 4:30 Eastern Time. The dial-in number is 800-811-0667; the pass code is 4225450.

7. HIGH-INCOME FAMILIES COMPOSE 18 PERCENT OF UNINSURED

Although government data indicate that individuals with an annual family income of $50,000 or more account for about 25 percent of the U.S. uninsured population, a new analysis by the Employee Benefit Research Institute finds that a more realistic share of the “high-income uninsured” is about 18 percent.

The difference in estimates is because the Census Bureau definition of “family income” combines all income of all members of a family living together, including the 3.2 million nonstudent adult children living with their parents but earning less than $50,000 a year. EBRI did not include these individuals in their calculations.

8. SUMMIT ON UNINSURED PROVIDES PRACTICAL SOLUTIONS

The HFMA executive summit on the uninsured was rich in guidance for those involved in leading provider organizations to the best policies and procedures for services to the uninsured, as well as underinsured, populations. Speakers included:

Karen Davis, president of the Commonwealth Fund, who looked at the future for hospitals and their patients through the eyes of Congressional leaders and others, and advised hospital leaders to be proactive in addressing issues of cost, quality and accountability.
Ken Weixel of Deloitte & Touche and Larry Gage of Powell Goldstein Frazer & Murphy, whose governance best practices included action steps to ensuring ethical behavior and responsible leadership, such as conducting anonymous, confidential values surveys of employees and increasing the representation of human resources on the board.
Bill Cleverley, long-time hospital finance expert, who shared his views on defensible pricing for healthcare services, presented his pricing model, and provided a framework for assessing cost reasonableness and necessary profit.

9. QUICK LINKS

SAVINGS FROM DIABETES–RELATED HOSPITALIZATIONS. Reducing hospital admissions for the treatment of severe complications resulting from diabetes could result in annual savings of $2.5 billion, according to the Agency for Healthcare Research and Quality.

MEDICARE SPENDING PROJECTIONS INCREASED. The Congressional Budget Office increased its Medicare spending estimate for 2006-2015 by $70 billion, primarily due a revision of the prescription drug benefit costs.

10. HFMA UPDATES INTERNET GUIDE ON MEDICARE CODING AND BILLING

To help HFMA members keep track of the most significant Medicare transmittals from CMS, HFMA staff are updating the Internet Guide on Medicare Coding and Billing Instructions weekly (rather than monthly), and will summarize these topics in a notice in the weekly HFMA Express News.

This week’s transmittals include billing for blood products, updates on claims status and category codes, and corrections to HCPCS code A4217.

11. NEW IN THE HFMA RESOURCE CENTER

HOSPITAL FINANCIAL MANAGEMENT CHALLENGES IN 2005: AN HFMA PLANNING TOOL (PPT, 70 slides). This presentation covers the major challenges facing hospital financial managers in the coming year, and is a handy tool for starting your budget planning cycle. You can also modify it to brief your board and executive team on upcoming challenges.

For customer service, send an e-mail to HFMA’s Member Service Center or call (800) 252-HFMA, and press 2.

PricewaterhouseCoopers is pleased to sponsor this weekly update of critical financial and regulatory issues. Look to this section of HFMA Express News for regular updates on PwC's insightful research into where the health industry is today and where it is heading.

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