IN THIS WEEK’S ISSUE:
- IRS Issues Executive Compensation Audit Guidelines
- CPOE Systems Could Cause Medical Errors
- Sarbanes-Oxley Compliance Costs Exceed Estimates
- CMS Rescinds “Incident-To” Instructions
- Hospital Price Disclosure Bill Introduced
- Medicare Trust Funds to Run Out in 2020
- Medicare Coding and Billing Update
- Quick Links
- New from the Patient Friendly Billing Project
1. IRS ISSUES EXECUTIVE COMPENSATION AUDIT GUIDELINES
The IRS recently issued seven audit technique guides for agents to use when examining compliance with employment and income tax requirements. These guidelines are part of the IRS’s goal to improve compliance by corporations and high-income taxpayers, especially in light of the increased complexity and dollar value of executive compensation.
Topics include deferred compensation plans, fringe benefits, and other "non-cash" alternative forms of compensation that are becoming increasingly popular and making up larger parts of not-for-profit organization executives' overall compensation packages. The guides highlight particular areas of concern for each form of compensation, as well as recommendations for how to conduct the examination.
2. CPOE SYSTEMS COULD CAUSE MEDICAL ERRORS
Although computerized physician order entry may be instrumental in reducing the occurrence of medical errors, these systems should be tested thoroughly, implemented wisely, and refined when necessary to ensure certain types of medical errors are avoided, according to a study supported by the Agency for Healthcare Research and Quality and published in the March 9 Journal of the American Medical Association. The study, which examines clinicians’ experiences with using a CPOE system at a major urban teaching hospital, identified 22 situations in which the use of the CPOE system increased the probability of medication errors. The study also highlights some CPOE system flaws that could result in medication errors or delays in the delivery of medications to patients.
In related news, according to a March 21 article in the Washington Post, Cedars-Sinai Medical Center in Los Angeles stopped using its $34 million computer system after three months when physicians and other staff complained about several problems they encountered.
3. SARBANES-OXLEY COMPLIANCE COSTS EXCEED ESTIMATES
Total costs for the first year of compliance with Section 404 of the Sarbanes-Oxley Act averaged almost 40 percent more than was expected, according to a survey of 217 public companies conducted by Financial Executives International. This result stems from higher than anticipated costs for consulting, software, and fees charged by external auditors. The number of work hours required averaged 4 percent more than the amount companies had estimated. An overwhelming majority of respondents stated that the costs of Section 404 compliance exceed the benefits. The original survey was conducted in July 2004; the survey of actual costs was completed this month.
SOA Section 404 requires management to report on the adequacy of internal controls over financial reporting and an external auditor’s attestation of that report. SOA does not apply to not-for-profit organizations, but many have increased their corporate responsibility efforts in response to the legislation.
4. CMS RESCINDS “INCIDENT-TO” INSTRUCTIONS
CMS recalled transmittal 3460, which provided instructions on how to submit incident-to claims on electronic claim forms. According to a CMS official, the September 17, 2004, transmittal was rescinded because the agency wanted to ensure that the information conforms to the electronic claims guidelines. “The guidelines are under review and it would be best if we could coordinate our instruction with the guideline changes so the new guide doesn’t require new instructions” the official said. CMS has no anticipated date for re-issuance of the transmittal. In the meantime, physicians should follow previously existing guidance.
5. HOSPITAL PRICE DISCLOSURE BILL INTRODUCED
As healthcare policywatchers have expected, the first effort to regulate hospital price disclosure was quietly introduced last week in the House. The “Hospital Price Disclosure Act” (H.R. 1362), sponsored by Rep. Dan Lipinski (D-Ill.) and Rep. Bob Inglis (R-S.C.), would require hospitals to report to HHS the average and median prices of their 25 most common inpatient and outpatient procedures and 50 most prescribed medications. Hospitals would have 45 days following the end of each calendar quarter to report their prices and the frequency with which they perform a procedure or administer a drug in an inpatient setting. Hospitals would also have to prominently post a notice on the availability of the data at each admission site. So far, the bill has not gathered steam, with just one cosponsor and no committee action.
6. MEDICARE TRUST FUNDS TO RUN OUT IN 2020
The Medicare hospital insurance trust fund is projected to be depleted by 2020, a year later than estimated last year, according to the 2005 Medicare trustees report. The report attributes the changes to slightly lower expenditure growth projections of 6.6 percent per year over the next 10 years. Total spending on Medicare is projected to increase from 2.6 percent of gross domestic product today to 13.6 percent by 2079, and Medicare spending will surpass spending for Social Security by 2024.
7. MEDICARE CODING AND BILLING UPDATE
Recent Medicare transmittals posted to the CMS web site include hospital outpatient prospective payment system policy changes, including a new status indicator M, updated payment rates for certain drugs and biologicals, new and deleted HCPCS codes, and updates to the cost-to-charge ratio threshold.
8. QUICK LINKS
NUBC PATIENT STATUS CODES FAQs. The National Uniform Billing Committee has issued FAQs to help providers identify the correct patient discharge status code—an important but often confusing task.
MEDICARE OMBUDSMAN. Veteran health policy analyst Dan Schreiner has been named Medicare’s first ombudsman, a role created by the Medicare Modernization Act. Schreiner will oversee all beneficiary concerns, focusing on appeals, complaints, grievances, and requests for assistance.
FY05 HEALTHY START PROGRAM FUNDING. The Health Resources and Services Administration announced that funding preference for the FY05 Healthy Start programs will be given to current and former program grantees, including those whose grant applications were approved but not funded in FY04.
9. NEW FROM THE PATIENT FRIENDLY BILLING PROJECT
PRESENTATION ON FINANCIAL POLICIES FOR UNINSURED AND UNDERINSURED PATIENTS. Download this presentation to brief your institution’s executives or board on the February 2005 Patient Friendly Billing Project report on improving financial policies for uninsured and underinsured patients, plus additional practices discussed by participants at a March 2005 HFMA workshop on the uninsured.
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 12.
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