IN THIS WEEK’S ISSUE:
- CMS: Pay-for-Performance Works
- HHS Awards $18.6 Million to Develop Electronic Health Record System
- Uninsured Billing Suits Dismissed in North Carolina, Illinois
- OIG Approves Day Treatment Facility Joint Venture
- CMS Updates 2006 Clinical Lab Fee Schedule
- CMS Clarifies Matching of Electronic Claims and Documentation for Review
- CMS Issues Final Rule on E-Prescribing
- Rise in Physician Executive Salaries Linked to Quality Improvements
- Quick Links
- New in the PFS Forum
1. CMS: PAY-FOR-PERFORMANCE WORKS
The quality of care has improved significantly in hospitals participating in Medicare’s first pay-for-performance demonstration project, the Premier Hospital Quality Incentive, CMS reported November 14. Medicare has awarded $8.85 million to hospitals that showed measurable improvements in care during the first year of the program. Improvement in these evidence-based quality measures is expected to provide long-term savings through improved patient health, fewer complications, and fewer hospital readmissions.
Quality of care improved in all of the five clinical areas for which quality was measured: acute myocardial infarction (heart attack), heart failure, pneumonia, coronary artery bypass graft, and hip and knee replacement. Hospitals received a Medicare payment bonus based on how well they met the relevant quality measures. Hospitals in the top 10 percent for a given condition were given a 2 percent bonus on their Medicare payments for that condition. Hospitals in the second 10 percent were given a 1 percent bonus. Hospitals in the remainder of the top percent got recognition for their quality but no bonus.
The demonstration began in October 2003, with more than 260 hospitals voluntarily participating. It is scheduled to end in September 2006.
2. HHS AWARDS $18.6 MILLION TO DEVELOP EHR SYSTEM
HS awarded $18.6 million to four groups of technology vendors and healthcare organizations to develop prototypes for a nationwide health information network (NHIN) architecture. According to HHS, the groups have one year to develop the architecture and a prototype network to facilitate secure information sharing among hospitals, laboratories, pharmacies, and physicians.
The four consortia, led by Accenture, Computer Science Corporation (CSC), International Business Machines (IBM), and Northrop Grumman, will each design and implement a standards-based prototype to test patient identification and information locator services, user authentication, access control and other security protections, and specialized network functions. The four groups will work together to ensure that information can move seamlessly between each of the four networks, thus establishing a single infrastructure among all the consortia for the sharing of electronic health information. Once created, HHS plans to place the architecture design for each of the networks in the public domain.
3. UNINSURED BILLING SUITS DISMISSED IN NORTH CAROLINA, ILLINOIS
A North Carolina Superior Court judge has dismissed four class-action lawsuits against tax-exempt hospitals that were accused of unfair billing practices because they charged higher rates for uninsured patients than for insured patients, the Winston-Salem Journal reported November 13. Claims were dismissed against Carolinas Medical Center in Charlotte, NorthEast Medical Center in Concord, Rowan Regional Medical Center in Salisbury, and Moses Cone Memorial Hospital in Greensboro.
Chicago circuit court judge Thomas Quinn dismissed a similar suit against Northwestern Memorial Hospital, Chicago, stating that the practice of giving discounts to large buyers was commonplace and legitimate, Modern Healthcare reported November 10.
4. OIG APPROVES DAY TREATMENT FACILITY JOINT VENTURE
A joint venture relationship that would establish a day treatment facility to provide pediatric psychiatric services does not violate regulations on referrals, according to an HHS Office of Inspector General advisory opinion. Under the proposed terms of this joint venture, each psychiatrist will invest one-third of the capital necessary to establish the facility and hold a one-third ownership interest. The vast majority of patients will be referred to the facility by clinicians who are not affiliated with the facility. The facility will treat self-pay patients, those covered by certain private health insurance plans, and patients enrolled in Medicaid health maintenance organizations. No beneficiaries in any of the other federal healthcare programs will be treated at the proposed facility.
The OIG concluded that it appears unlikely that the proposed arrangement is being established to serve as a mechanism to compensate or reward the psychiatrists for referrals of patients enrolled in the Medicaid HMOs, or by the investors to one another. In addition, the OIG stated that the risk of overutilization of items or services reimbursed by Medicaid is “minimal.” While the proposed arrangement could potentially generate prohibited compensation under the anti-kickback statute, the OIG said, it would not impose administrative sanctions on the requestor in connection with the proposed arrangement.
5. CMS UPDATES 2006 CLINICAL LAB FEE SCHEDULE
CMS released the 2006 update for Medicare’s clinical laboratory fee schedule and laboratory services subject to reasonable charge payments. According to the November 10 transmittal, the fees for laboratory travel - code P9603 will be set at $0.935 per mile and code P9604 will be set at $9.35 per flat-rate trip for dates of service beginning September 1, 2005. In accordance with the Medicare Modernization Act of 2003, there is no change in the update to the local clinical laboratory fees.
In addition, carriers will determine the charge for codes identified as payable under the reasonable charge basis. For customary and prevailing charges, carriers will use data from July 1, 2004, through June 30, 2005, updated by the 2006 inflation index of 2.5 percent. However, when these services are performed for hospital-based renal dialysis facility patients, intermediaries will determine payment on a reasonable cost basis. The effective date for this transmittal, number 750, is January 1, 2006.
6. CMS CLARIFIES MATCHING OF ELECTRONIC CLAIMS AND DOCUMENTATION FOR REVIEW
Providers are not required to submit paper claims when they are targeted for prepayment complex medical review, according to a recent CMS transmittal. However, providers that qualify for an Administrative Simplification Compliance Act mandatory electronic billing exception should be allowed to submit paper claims when they are targeted for prepayment review. In addition, contractors must not initiate non-random prepayment review of a provider based on the initial identification of an improper billing practice, unless there is a likelihood of a sustained or high level of payment errors.
Regarding supporting documentation, CMS said if a claim is targeted based on data for prepayment or postpayment medical review, contractors may review unsolicited supporting documentation accompanying the claim, except when clear policy serves as the basis for denial, and in instances of medical impossibility. In addition, contractors must inform providers in their jurisdiction if they choose to allow supporting paper documentation to be submitted with the claim for medical review purposes.
7. CMS ISSUES FINAL RULE ON E-PRESCRIBING
CMS has issued a final rule to adopt uniform standards for electronic prescribing under the MMA. These standards, which become effective January 1, 2006, will allow healthcare providers to transmit a prescription electronically to a patient's pharmacy, thereby improving patient safety and reducing healthcare costs. Under the new Part D program, providers are not required to write electronic prescriptions unless they prescribe or dispense Part D drugs. The uniform standards, which were published in the November 7 Federal Register, are the first set of final standards for the electronic prescription drug program under the MMA.
8. RISE IN PHYSICIAN EXECUTIVE SALARIES LINKED TO QUALITY IMPROVEMENTS
Physician executives’ salaries rose from $225,000 in 2002 to $240,000 in 2004, according to results of the 2005 compensation survey conducted by the American College of Physician Executives (ACPE) and Cejka Search. The percentage of physicians with bonuses tied to quality measurements more than doubled, from 15 to 31 percent, and quality measurements as a bonus component for all physician executive positions increased 107 percent. These findings highlight the growing focus on quality improvement and outcomes.
The highest paid executives were medical directors of single-specialty groups, while some positions, such as chief medical officers and associate and assistant medical directors in multi-specialty groups, experienced salary decreases ranging from 4 to 7 percent. CEOs, presidents, and medical directors with master of medical management (MMM) degrees were paid more than those with MBAs. Also, physicians working in urban settings were compensated at higher levels than those working in suburban and rural settings.
9. QUICK LINKS
ELIMINATION OF SURROGATE UPINS ON CLAIMS. Effective April 1, 2006, Medicare will no longer accept the surrogate unique physician identification number (UPIN) OTH000 on incoming ordering and referring claims which require UPINs. However, contractors can continue to use OTH000 for beneficiary-submitted claims and mass immunization claims.
SNF CONSOLIDATED BILLING EDITS. CMS has changed existing skilled nursing facility (SNF) consolidated billing edits in the common working file to allow the separate payment of evaluation and management service HCPCS codes (99201-99245) representing the facility charge for the hospital’s overhead expense associated with furnishing professional services.
FEDERAL SPENDING ON THE UNINSURED. Federal spending per uninsured person declined 8.9 percent from 2001 to 2004, the Kaiser Commission on Medicaid and the Uninsured reports in one of five papers addressing the growing uninsured population and the strain this is putting on the nation’s healthcare safety net.
10. NEW IN THE PFS FORUM
SAMPLE PATIENT BROCHURES. In an effort to streamline the process of educating patients on the financial services available to all, members of HFMA’s PFS Forum community have been sharing sample brochures via the members-only PFS Forum on HFMA’s web site. PFS Forum members can access the growing list of samples and contribute their own samples.
Not a PFS Forum member? Subscriptions through May are only $48 and enrollment is available on the HFMA web site.
Copyright 2005 Healthcare Financial Management Association, all rights reserved. HFMA Express News ISSN: 1540-0689. Volume 12, Number 45. Editor: Rob Fromberg, rfromberg@hfma.org, (800) 252-HFMA, ext. 385.
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