IN THIS WEEK’S ISSUE:
- OIG: Hospitals Don’t Comply With Transfer Policy
- LTCH PPS Rule Adopts New Labor Market Areas
- CMS Expands ASC List of Procedures
- Hospice Rates to Change Little in FY06
- Budget Resolution to Cut $10 Billion from Medicaid
- Medicare Will Cover Ultrasound Stimulation
- Pay-for-Performance Project Shows Quality Improvement
- Bankruptcy Act Includes Collection Provisions
- Medicare Coding and Billing Update
- Quick Links
1. OIG: HOSPITALS DON’T COMPLY WITH TRANSFER POLICY
Out of a sample of 400 hospital inpatient Medicare claims, 381 were coded improperly as discharges to home rather than transfers to post-acute care, according to a draft final report from the OIG. Because some hospitals lacked the controls to ensure the accuracy of the discharge status codes, Medicare overpaid hospitals included in the investigation by more than $1 million. In total, OIG projected that overpayments cost the program a total of $72.4 million in fiscal years 2001 and 2002, the time period covered in the OIG’s nationwide review.
The report also noted that CMS did not have adequate payment system edits in place to prevent the overpayments. CMS stated that it would work on a strategy to identify and collect the remaining overpayments from hospitals.
2. LTCH PPS RULE ADOPTS NEW LABOR MARKET AREAS
Medicare payment rates for long-term care hospitals (LTCHs) will increase by 3.4 percent for the rate year (RY) July 1, 2005, to June 30, 2006, according to a final rule published in today’s Federal Register. The increase will produce a federal rate of $38,086.04; total program outlays for LTCHs are projected to be $169 million more than in the RY05.
The final rule includes the adoption of new labor market area definitions based on the core-based statistical areas and an outlier threshold of $10,501, down from the current period’s $17,864.
The LTCH rule also extends for an additional year the surgical DRG exception to the three-day or less interrupted stay policy. The LTC-DRGs and relative weights are not revised in this rule, but are part of the proposed hospital inpatient PPS update for FY06 that will become effective October 1, 2005.
3. CMS EXPANDS ASC LIST OF PROCEDURES
CMS has added 65 new procedures to the existing 2,464 procedures that Medicare will cover when performed in ambulatory surgery centers (ASCs), according to a May 4 interim final rule. The rule differs significantly from the November 26, 2004, proposed rule, which would have added 25 procedures and deleted 100 from the ASC list. After considering comments in response to its proposal, the agency only deleted 5 procedures in the interim final rule.
Comments on the rule will be accepted until July 5, 2005.
4. HOSPICE RATES TO CHANGE LITTLE IN FY06
In fiscal year 2006 (FY06), rural hospices would get a modest Medicare payment increase of 0.8 percent, and urban hospices would receive a slight payment decrease of 0.2 percent under a proposed rule published in the April 29 Federal Register.
The changes are based on FY06 wage index values, which CMS calculated using FY05 hospital wage index data. All wage index values for FY06 would be adjusted by either the proposed budget neutrality adjustment factor or the wage index floor adjustment. Because the hospice wage index must reflect metropolitan statistical area definition changes, CMS proposes adopting the revised labor market area designations based on the core-based statistical areas (CBSAs). CMS also proposed to adopt the CBSA definitions and wage indices without transitions. Comments on the proposed rule are due June 28.
5. BUDGET RESOLUTION TO CUT $10 BILLION FROM MEDICAID
On April 28, Congress approved a budget resolution that endorses approximately $10 billion in cuts to Medicaid between 2006 and 2010, with the brunt of the reductions occurring in 2007 and later. The plan also provides for a Medicaid Commission to reform the program. The budget agreement sets a September 16 deadline for legislation to achieve the cuts.
The resolution did not name where the savings would come from. Measures likely to be considered, however, were outlined in March by HHS secretary Mike Leavitt, who said that the administration expected to find Medicaid savings through more aggressive restrictions on state funding mechanisms that rely on intergovernmental transfers, reductions in state expenditures for drugs, and restrictions on patients' ability to qualify for Medicaid by transferring personal assets to family members.
Virginia Governor Mark Warner, chairman of the National Governors Association, told attendees of the American Hospital Association's annual meeting this week that the Congressional action singles out Medicaid for a disproportionate share of budget savings and sets the savings target before considering the policy implications.
6. MEDICARE WILL COVER ULTRASOUND STIMULATION
CMS announced that it intends to expand Medicare coverage of ultrasound stimulation for nonunion bone fractures (fractures that are not healing properly within a normal timeframe). CMS has determined there is enough evidence to conclude that noninvasive ultrasound stimulation for the treatment of nonunion bone fractures prior to surgical intervention is reasonable and necessary. CMS will amend the Medicare National Coverage Determinations Manual Section 150.2 to delete the statement, “indications that the patient failed at least one surgical intervention for the treatment of the fracture.”
7. PAY-FOR-PERFORMANCE PROJECT SHOWS QUALITY IMPROVEMENT
Quality of care has improved significantly in hospitals participating in Medicare’s pay-for-performance demonstration project, according to CMS administrator Mark McClellan. The preliminary reports from more than 270 hospitals that are participating in the Premier Hospital Quality Incentive Demonstration showed that median quality scores for hospitals improved for patients with myocardial infarction, coronary artery bypass grafts, heart failure, hip and knee replacement, and pneumonia. Overall, these conditions account for a substantial portion of Medicare costs. The largest quality score improvements were in care for heart failure, which increased from 64 percent to 76 percent, and pneumonia, which increased from 70 percent to 80 percent.
In the demonstration project, a hospital can receive bonuses or reductions in its Medicare payments based on how well it meets the quality measures for each condition. CMS expects to make payments for the first-year results in September 2005.
8. BANKRUPTCY ACT INCLUDES COLLECTION PROVISIONS
On April 20, President Bush signed into law a bankruptcy bill that potentially will have broad implications for providers’ collection policies, agreements with third-party collections agencies, and contractual arrangements with business partners. According to bill sponsor Senator Charles Grassley (R-IA), The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (P.L. 109-31) will:
- Establish a flexible means test to assess individuals’ ability to repay their debts
- Allow a consumer “special circumstances” to avoid entering a repayment plan if bankruptcy is not the consumer’s fault
- Strengthen enforcement and penalties against creditors for predatory collection practices and for refusing to negotiate out-of-court repayment plans
The act takes effect on October 17, 2005. To prepare, healthcare providers should carefully review the law, then review their collection policies and contractual arrangements with business partners.
9. MEDICARE CODING AND BILLING UPDATE
- Several noteworthy Medicare transmittals were posted recently to the CMS web site, including:
The expansion of various alpha and numeric fields within the Outpatient PPS code editor
- Corrections to the use of group codes for the enforcement of mandatory electronic submission of Medicare claims
- An update to current National Uniform Billing Committee (NUBC) codes
- Billing requirements for physician services rendered in Method II critical access hospitals
HFMA staff review CMS notices regularly for transmittals that affect healthcare financial managers, and post links to those transmittals on HFMA's web site.
10. QUICK LINKS
NUBC AGENDA POSTED FOR MEMBER COMMENTS. The National Uniform Billing Committee (NUBC) has posted its preliminary agenda for its open meeting on May 11 and 12, 2005, in Chicago.
PROPOSED FY06 INPATIENT PPS RULE. The official version of Medicare’s proposed hospital inpatient PPS update for FY06 was published this week in the May 4 Federal Register. See last week’s HFMA Express News for coverage of the proposed rule.
JULY UPDATE TO THE DMEPOS FEE SCHEDULE. CMS has released the July quarterly update for 2005 durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) fee schedule.
CHRONIC HEALTH CONDITIONS AMONG UNINSURED. Uninsured adults with chronic health conditions often forgo needed treatment, are less likely to have a regular source of health care, have higher out-of-pocket expenses, and experience wide gaps in treatment, according to a new report released by the Robert Wood Johnson Foundation.
OIG ADMINISTRATIVE ENFORCEMENT ACTIONS. The OIG has added examples of administrative enforcement actions to the “background” discussion on its Civil Monetary Penalties web page.
UPDATED LIST OF CORPORATE INTEGRITY AND SETTLEMENT AGREEMENTS. The OIG has updated the list of corporate integrity agreements and settlements with integrity provisions. Background and FAQs are available on the OIG’s Corporate Integrity Agreement web page.
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 18. Editor: Rob Fromberg rfromberg@hfma.org, (800) 252-HFMA, ext. 385.
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