IN THIS WEEK’S ISSUE:
- Wisconsin Seeks Order on Hospitals’ Uninsured Pricing Practices
- Physician Fee Update Revises ESRD, Imaging, Inhalation Drug Policies
- Outpatient PPS Update Significantly Redistributes Payments
- States’ Katrina Waivers Accessible on Web
- OIG Issues Bulletin on Part D Patient Assistance Programs
- Reasonable Charge Update for Splints, Casts, and Dialysis Supplies
- 2006 Update to Medicare Deductibles and Coinsurance
- HFMA Supports Simplified Physician Credentialing System
- CMS Announces New ESRD Demonstration
- Quick Links
- New In The Resource Center
1. WISCONSIN SEEKS ORDER ON HOSPITALS’ UNINSURED PRICING PRACTICES
On November 7, the Wisconsin attorney general announced action to seek special orders prohibiting two Milwaukee-area hospitals from charging excessive prices to uninsured patients. According to the complaints, St. Joseph Regional Medical Center, which is a member of the not-for-profit Covenant Healthcare System, and the Wisconsin Heart Hospital, which is a joint venture affiliate with Covenant Healthcare, have unfairly charged uninsured patients prices that far exceed the discounted prices the hospitals regularly charge the vast majority of insured patients.
2. PHYSICIAN FEE SCHEDULE REVISES ESRD, IMAGING, INHALATION DRUG POLICIES
The final Medicare physician fee schedule update for 2006, which CMS posted to its web site last week, makes several changes to end-stage renal disease (ESRD) treatment payments. Under the new methodology, the payment rate for separately billable ESRD drugs and biologicals will be set at the average sales price (ASP) plus 6 percent, consistent with the Medicare Part B payment rates for most other drugs. At the same time, the rule increases the drug add-on adjustment to the composite rate. The final rule also revises geographic designations and wage index adjustments with respect to ESRD payment, but provides for a four-year transition.
In addition, the final rule implements payment reductions for certain diagnostic imaging procedures when performed on contiguous body parts in the same session. However, the changes will be implemented over two years, with a 25 percent reduction in 2006 and 50 percent reduction in 2007.
The final rule also modifies Medicare payment for dispensing inhalation therapy drugs using nebulizers, which are covered by Medicare Part B. In 2005, CMS established an interim dispensing fee of $57 for a 30-day supply and $80 for a 90-day supply of these inhalation drugs. The rule, which will be published in the November 21 Federal Register, goes into effect January 1, 2006.
3. OUTPATIENT PPS UPDATE SIGNIFICANTLY REDISTRIBUTES PAYMENTS
The average calendar year 2006 Medicare outpatient PPS update across all hospitals will be 2.2 percent, even with the full market basket adjustment of 3.7 percent, CMS has projected. However, large urban hospitals should average a 1.2 percent increase, while sole community hospitals will see a 7.6 percent increase. Low-volume hospitals’ outpatient PPS payments are expected to drop by 1 percent in urban areas, 2.2 percent in rural areas.
The redistribution in the 2006 update comes from changes in the policy for drug payments, the ambulatory payment classification (APC) weights, and the wage indices, as well as the Medicare Modernization Act’s 7.1 percent payment adjustment for rural sole community hospitals--all changes that must be budget neutral.
The outlier payment pool drops from 2 percent of total payments under the outpatient PPS to 1 percent. The outpatient PPS conversion factor goes to $59.11 from $56.983, while the outlier fixed dollar threshold will be $1,250, up from $1,175 for 2005. As a result of changes in beneficiary liability for copayments (see last week’s coverage of the rule), CMS expects the copayments, as a percentage of total payments, to drop from 33 percent in 2005 to 29 percent in 2006, a $400 million decrease.
4. STATES’ KATRINA WAIVERS ACCESSIBLE ON WEB
The 12 Hurricane Katrina-related Medicaid program waivers are now posted on the CMS Medicaid web pages, providing access to the approval letter from CMS, details of the terms and conditions, and related attachments. Puerto Rico and the District of Columbia received the waivers, along with the states of Alabama, Arkansas, Florida, Georgia, Idaho, Indiana, Mississippi, South Carolina, Tennessee, and Texas.
The “terms and conditions” document defines evacuee and evacuee status, and describes the evacuee status eligibility determination process. Other key sections include the temporary eligibility period and the host state assurances, which describe what the Medicaid program of the state hosting the evacuees is committing to do.
5. OIG ISSUES BULLETIN ON PART D PATIENT ASSISTANCE PROGRAMS
A special bulletin released by the OIG provides guidance to pharmaceutical manufacturers and others on the application of the OIG anti-kickback and other fraud and abuse laws to patient assistance programs (PAPs) that help Medicare enrollees acquire outpatient prescription drugs. The bulletin makes clear there are lawful avenues that exist for pharmaceutical manufacturers and others to assist financially needy Medicare enrollees who voluntarily enroll in Medicare Part D.
As indicated in the bulletin, some of the options available include:
- Making cash donations to bona fide independent charity PAPs that are not affiliated with a manufacturer and operate without regard to donor interests
- Directing enrollees who are currently participating in pharmaceutical manufacturer PAPs to alternative assistance models once they have elected to enroll in the Medicare Part D program
- Other arrangements that are properly structured that offer free drugs to uninsured enrollees
Nothing in the bulletin precludes pharmacies from waiving cost-sharing amounts owed by a Medicare beneficiary on the basis of a good faith, individualized assessment of the enrollee’s need, so long as the waiver is neither routine or advertised. However, a pharmacy has not waived a cost-sharing amount if the amount has been paid to the pharmacy, in cash or in kind, by a third-party, including a PAP.
6. REASONABLE CHARGE UPDATE FOR SPLINTS, CASTS, AND DIALYSIS SUPPLIES
CMS has issued instructions on calculating reasonable charges for payment of claims for splints, casts, dialysis supplies and equipment, and intraocular lenses furnished in 2006. The 2006 payment limits for splints and casts will be based on the 2005 limits that were announced last year (CR 3430), increased by 2.5 percent and the percentage change in the consumer price index for all urban consumers for the 12-month period ending June 30, 2005.
According to CMS, HCPCS codes A4215, A6216, and A6402 have been added to the dialysis supplies that require an AX modifier for payment. Suppliers are required to use modifier AX with these codes when billing for dialysis supplies. This transmittal (749) is effective January 1, 2006.
7. 2006 UPDATE TO MEDICARE DEDUCTIBLE AND COINSURANCE
CMS has updated its standard systems with the new 2006 Medicare deductible, coinsurance and premium rates. The deductible for Part A is $952 per benefit period, and for Part B is $124 per year. The Part A coinsurance rate is $238 a day for days 61-90, $476 a day for days 91-150 for each “lifetime reserve” day used. The Part B coinsurance rate is 20 percent. The rates go into effect January 1, 2006.
8. HFMA SUPPORTS SIMPLIFIED PHYSICIAN CREDENTIALING SYSTEM
HFMA has signed a coalition letter urging CMS acting medical director Barry Straube, MD, to adopt the Council for Affordable Quality Healthcare (CAQH) Universal Credentialing DataSource® (UCD) for the Medicare program. UCD enables healthcare providers, at no charge, to complete a single, standardized, online application that fulfills most payers’ provider data requirements, rather than completing multiple credentialing applications for different organizations. Widespread adoption of a standardized credentialing system would result in a dramatic reduction in paperwork, which is a significant source of dissatisfaction and cost among both physicians and the participating organizations.
The goal of the Healthcare Administrative Simplification Coalition, convened by the American Academy of Family Physicians, the American Health Information Management Association and the Medical Group Management Association, is for CMS to integrate the Medicare physician enrollment process into the CAQH service, thereby further reducing a significant physician credentialing burden.
9. CMS ANNOUNCES NEW ESRD DEMONSTRATION
CMS has announced a new ESRD disease management demonstration, which seeks to improve the quality of care for ESRD patients by using quality indicators to determine payment.
Two models will be used. In the capitation model, organizations will receive a risk-adjusted ESRD payment rate currently under development for this demonstration. In addition, capitation models will be responsible for all Medicare-covered services for participating beneficiaries. In the fee-for-service model, demonstration organizations will be at risk, with an incentive to provide cost-effective services to patients receiving disease management care. Organizations participating in the fee-for-service model will provide an expanded bundle of dialysis services, which includes items additional to those under the Medicare composite rate of payment for outpatient dialysis.
Applicants may propose cost-sharing arrangements with beneficiaries; however, the levels should be set so that the demonstration is attractive to beneficiaries. Participating organizations using cost-sharing arrangements will be able to bill any supplemental insurance that the beneficiary still maintains. The demonstration payment method includes a 5 percent incentive payment for quality.
10. QUICK LINKS
RAC DEMONSTRATION FORUM. CMS is holding a special Open Door Forum from 1:00 to 3:00 p.m. (Eastern), November 18, to provide healthcare providers, suppliers, and beneficiary advocates with a chance to review the recovery audit contractors (RACs) demonstration project and discuss the RACs’ roles and responsibilities. To participate, dial (800) 837-1935 and give conference ID 1661424.
NEW CONDITION CODES 49 AND 50. CMS has announced two new condition codes, 49 and 50, to reflect an item that is provided without cost to a provider to replace items under warranty or defective. Hospitals are required to report these codes on all relevant inpatient and outpatient claims.
CCI EDITS VERSION 12.0 UPDATES. CMS has released the quarterly update to correct coding initiative (CCI) edits, version 12.0. The latest edits include all previous versions and updates from January 1, 1996, to the present. The edits are effective January 1, 2006, and will be available via the CMS data center. The final file will be available November 17, 2005.
CIA WITH KING PHARMACEUTICALS. The OIG has entered into a corporate integrity agreement (CIA) with King Pharmaceuticals, Inc.
FLORIDA QUALITY DATA WEB SITE. On November 8, Florida became the latest state to launch a consumer web site with performance data on selected medical conditions and procedures in Florida's short-term acute care hospitals and ambulatory surgery centers.
11. NEW IN THE RESOURCE CENTER
HFMA EXECUTIVE ROUNDTABLE: BUILDING JOINT VENTURES THAT WORK. As payments continue to shrink and costs continue to rise, hospitals and physician groups are seeking new ways to cooperate in tough business environments. In this roundtable, a group of finance executives discuss how they build business relationships that are mutually beneficial.
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume 12, Number 44. Editor: Rob Fromberg, rfromberg@hfma.org, (800) 252-HFMA, ext. 385.
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