IN THIS WEEK’S ISSUE:
- Proposed IRF PPS Rates Would Rise 2.9 Percent
- Senator Seeks Exempt Hospitals’ Evidence of Charitable Activities
- Changes Proposed to Hospice Conditions of Participation
- Bill Would Revise Physician Payment Formula
- Hospital Charity Care May Be Underreported, Survey Finds
- FASB Proposes GAAP Hierarchy
- Employers May Extend FSA Deadline
- Medicaid Advisory Commission Chartered
- Quick Links
- New in HFMA’s Resource Center
1. PROPOSED IRF PPS RATES WOULD RISE 2.9 PERCENT
Aggregate Medicare PPS payments to inpatient rehabilitation facilities (IRFs) would increase by 2.9 percent in FY06 under a proposed rule published May 25. IRFs would receive a market basket increase of 3.1 percent, and rural facilities would get a 24.1 percent payment rate adjustment (compared to the current 19.1 percent), which is intended to cover their higher costs per case.
The rule also proposes a reduction to the outlier threshold for cases with an unusually high cost and a 1.9 percent reduction in the standard payment amount, based on evidence that upcoding has caused increases in IRF payments. Comments on the proposed rule will be accepted until July 18, 2005.
2. SENATOR SEEKS EXEMPT HOSPITALS’ EVIDENCE OF CHARITABLE ACTIVITIES
In a May 25 letter, Senate Finance Committee Chairman Charles Grassley (R-IA) requested voluminous information on the charitable activities and patient billing practices of some of the nation’s largest tax-exempt hospitals and health systems. The chairman also seeks information on their ventures with for-profit entities and the salaries, benefits, and travel expenses for each hospital’s five top salaried employees. The information, due July 11, is to help Congress consider "the duties and requirements of public charities in relation to the billions of dollars in tax benefits that tax-exempt organizations receive at the federal, state and local level."
The letter was sent to:
- The Cleveland Clinic, Cleveland, Ohio
- New York Presbyterian Hospital System, New York, N.Y.
- Advocate Health Care Network and Advocate Health and Hospitals Corporation, Oak Brook, Ill.
- Resurrection Medical Center and Resurrection Health Care, Chicago, Ill.
- Phoebe Putney Health Systems, Inc., Phoebe Putney Memorial Hospital, Inc., Albany, Ga.
- William Beaumont Hospital and Beaumont Properties, Royal Oak, Mich.
- North Mississippi Health Services, Inc., North Mississippi Medical Center, Tupelo, Miss.
- Sutter Health, Sacramento, Calif.
- Fairview Health Systems, Minneapolis, Minn.
- Banner Health, Phoenix, Ariz.
3. CHANGES PROPOSED TO HOSPICE CONDITIONS OF PARTICIPATION
CMS has published a new rule today proposing changes to the Medicare hospice conditions of participation (CoP), which the agency says would ease regulatory burdens on hospice providers and provide quality care to Medicare beneficiaries. Some of the proposed changes include:
- Adding a patient assessment requirement to ensure that all patient needs are identified in a timely manner
- Replacing the quality assurance requirement with a more comprehensive quality assessment and performance improvement CoP
- Allowing hospices to contract for core services in certain situations
- Eliminating requirements that a registered nurse provide patient care in an inpatient facility on a 24-hour basis
- Adding guidance for hospices that care for residents of nursing facilities.
4. BILL WOULD REVISE PHYSICIAN PAYMENT FORMULA
A bill has been introduced in the House of Representatives that would permanently fix the flawed Medicare physician payment formula. Under the “Preserving Patient Access to Physicians Act of 2005” (H.R. 2356), the current formula for calculating Medicare physician payments, based on a sustainable growth rate (SGR), would be replaced with an annual update that reflects practice cost increases. The bill would give physicians a payment update of at least 2.7 percent in 2006. Under the SGR formula, CMS estimates a decrease of 4.3 percent in the physician fee schedule for 2006. The bill, introduced by Clay Shaw, Jr. (R-Fla.) and Benjamin Cardin (D-Md.), is currently before the Energy and Commerce Committee.
In the Senate, a bill of the same title (S. 1081) has been introduced by Jon Kyl (R-Ariz.) and Debbie Stabenow (D-Mich.). However, it would not repeal the SGR but only provide a two-year update to the Medicare physician payment schedule, based on recommendations of the Medicare Payment Advisory Committee.
5. HOSPITAL CHARITY CARE MAY BE UNDERREPORTED, SURVEY FINDS
Hospitals may be providing far more charity care as a component of total uncompensated care than previously thought, according to a report released this week by PricewaterhouseCoopers. Total uncompensated care includes charity care and bad debt, which amounted to nearly $25 billion in 1993. While no one knows the exact value of charity care provided by the nation’s hospitals, the survey showed that hospitals provide an average of 5 percent of net operating income in charity care, though some provide a substantially higher amount.
Charity care amounts may be underestimated because of the “burdensome and expensive process that hospitals must go through to classify a patient as charity care,” the report concludes, noting that 92 percent of the hospitals surveyed said at least part of their bad debt could be classified as charity care.
6. FASB PROPOSES GAAP HIERARCHY
FASB recently published an exposure draft, The Hierarchy of Generally Accepted Accounting Principles, in connection with its effort to improve the quality of financial accounting standards and the standard-setting process. The GAAP hierarchy ranks the relative authority of accounting principles issued from multiple standard-setters; this exposure draft carries forward the GAAP hierarchy as set forth in the American Institute of Certified Public Accountants Statement on Auditing Standards No. 69, subject to certain modifications that are not expected to result in a change in current practice. The comment period for this document ends June 27.
7. EMPLOYERS MAY EXTEND FSA REIMBURSEMENT DEADLINE
On May 18, the Treasury Department and the IRS issued Notice 2005-42, which allows employers to modify their flexible spending arrangements (FSAs) with a grace period of two and a half months at the end of the plan year, during which unused benefits or contributions remaining at the end of the year may be paid or reimbursed to plan participants for qualified benefit expense incurred during the grace period. In the past, the “use it or lose it” requirement meant any unspent funds at year’s end were forfeited. "The new rule will give workers with FSAs more time to pay for medical and dependent care expenses and will ease the year-end spending rush prompted by the prior rule," stated Treasury Secretary John Snow when announcing the notice.
8. MEDICAID ADVISORY COMMISSION CHARTERED
On May 20, HHS secretary Mike Leavitt announced the charter for the advisory commission charged with identifying Medicaid cost-savings and reforms. Congress directed HHS to form the commission as part of the FY06 Federal budget resolution that endorsed $10 billion in cuts to Medicaid between 2006 and 2010, with the brunt of the reductions occurring in 2007 and later. The first report from the commission, due Sept. 1, will recommend sources for the savings, long-term program enhancements that can better serve beneficiaries, and potential Medicaid performance goals. The second report, due Dec. 31, 2006, will provide recommendations to help ensure the long-term sustainability of Medicaid.
9. QUICK LINKS
JULY OCE UPDATE. CMS has published the July update to the Medicare Outpatient Code Editor, version 20.3, for non-PPS hospitals.
QUARTERLY CCI UPDATE. CMS has released the quarterly update to the correct coding initiative, version 11.2, effective July 1, 2005.
UPDATED CORPORATE INTEGRITY, SETTLEMENT AGREEMENTS. On May 20, the OIG updated the list of corporate integrity agreements and settlements with integrity provisions.
10. NEW IN HFMA’S RESOURCE CENTER
FY06 INPATIENT PPS PROPOSED RULE PRESENTATION. Download this ready-to-use PowerPoint presentation to brief staff and board members on key provisions of the proposed inpatient PPS rule for the upcoming fiscal year.
FY06 HOSPICE PAYMENT PROPOSED RULE FACT SHEET. Use this summary as a quick reference to key changes proposed for the hospice wage index for FY06.
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume XII, Number 21. Editor: Rob Fromberg rfromberg@hfma.org, (800) 252-HFMA, ext. 385.
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