HFMA Express News - September 02, 2005

IN THIS WEEK’S ISSUE:

1. HFMA Encourages Help for Hurricane Victims
2. Form 990 Clarification
3. CMS Proposes New DSH Reporting and Auditing Requirements
4. CMS Issues Revisions and Clarification to CoP Issues
5. CMS Says No to CAHs as Part of Multi-Campus Hospital
6. CMS Publishes Advisory Opinion on Stock Owned by Physician-Shareholders
7. OIG: Positives Outweigh Negatives with Building Donation
8. Indications of Growing Healthcare Cost and Access Problems
9. Medicare Drug Benefit to Provide Short-Term Relief for Medicaid Spending
10. Quick Links

1. HFMA ENCOURAGES HELP FOR HURRICANE VICTIMS

HFMA members have always actively supported and cared for those in need. For those who wish to contribute to the hurricane relief efforts, the Federal Emergency Management Agency (FEMA) has provided a list of organizations that are seeking cash and/or volunteers to assist the victims. These organizations provide a wide variety of services, including food, shelter, clean up, child care, housing repair, and crisis counseling.

As part of HFMA’s ongoing efforts to support communities across the country, the proceeds from the golf charity event--to be held during the February 2006 HFMA Executive Summit--will go to benefit the American Red Cross.

HFMA extends its best wishes to the people of the Gulf Coast affected by Hurricane Katrina and subsequent flooding. HFMA applauds the courage, skill, and caring of healthcare professionals throughout that region working under dire circumstances.

2. FORM 990 CLARIFICATION

Last week’s announcement in Express News regarding the release of draft Form 990 should be clarified to specify that the release was draft Form 990 Schedules A and B.

3. CMS PROPOSES NEW DSH REPORTING AND AUDITING REQUIREMENTS

An administrative tool to reduce questionable disproportionate share payments by Medicaid programs is being developed by CMS. On August 26, the agency published a proposed rule that would implement section 1001(d) of the Medicare Modernization Act (MMA), which establishes new reporting and auditing requirements for state disproportionate share hospital (DSH) payments. States must, under the MMA, begin submitting independent certified audit reports that verify information about DSH payments to hospitals. The information to be verified by audit will provide independent verification that state Medicaid DSH payments comply with hospital-specific DSH limits specified in the Social Security Act, and that such limits are accurately computed.

The proposed rule would have each state submit annual certified audits of its DSH program as a condition for receiving federal matching payments, beginning with states’ 2005 fiscal years. Comments will be accepted until October 25. “The Revenue Cycle and Compliance: Where do they begin and end?” on September 14.

4. CMS ISSUES REVISIONS AND CLARIFICATION TO CoP ISSUES

On August 18, CMS provided clarification, and some revisions, to the Interpretive Guidelines for Medicare Hospital Conditions of Participation through a notice to state survey agency directors. The four issues addressed were:

• Governing body: Provides clarification regarding which patients admitted by nurse midwives require physician supervisions
• Patients’ rights: Provides clarification of the patient grievance process, revises the definition of grievance, and clarifies requirements for the provision of a written response
• Lab services: Clarifies CMS requirements for the availability of emergency laboratory services
• Food and dietetic services: Clarifies that therapeutic diets must be prescribed (ordered by) the person responsible for the care of the patient

The changes are effective September 19.

5. CMS SAYS NO TO CAHs AS PART OF MULTI-CAMPUS HOSPITAL

CMS has issued directions to state survey agency directors to return any requests for conversion of one location of a multi-campus hospital to critical access hospital (CAH) status. Any hospital seeking to become a CAH, the directive states, must terminate its provider agreement as a hospital and convert in its entirety to CAH status.

CMS does not recognize a facility that is part of a multi-campus hospital as a separate and independent hospital, and regulations require a facility (with certain exceptions) that converts to a CAH to be a hospital in its own right prior to conversion..

6. CMS PUBLISHES ADVISORY OPINION ON STOCK OWNED BY PHYSICIAN SHAREHOLDERS

On August 22, CMS released a non-specialty hospital advisory opinion that addresses whether the purchase of stock by physician-shareholders who have an ownership or investment interest in a large independent, non-profit group medical practice that owns and operates several outpatient clinical, educational and research sites in a multitude of communities (in a particular state) constitutes a violation under the Stark Law. CMS concluded that the stock held by the physician shareholders in the group does not constitute an ownership or investment interest and thus “does not create a financial relationship” that implicates the Stark Law.

7. OIG: POSITIVES OUTWEIGH NEGATIVES WITH BUILDING DONATION

The proposed donation of a medical office building to a university for use as a family medicine clinic staffed by teaching physicians, residents, fellows, and medical students could potentially generate prohibited remuneration under the anti-kickback statute, the Office of the Inspector General (OIG) said in a recent advisory opinion. However, the OIG felt that the proposed donation would confer a community benefit on the clinic’s patients, many of whom are either Medicaid beneficiaries or uninsured. In addition, the OIG said that the patients would receive enhanced services in a more up-to-date facility, and one that is conveniently located and offers faster access to emergency care. Therefore, the OIG would not impose administrative sanctions on the requestor.

8. INDICATIONS OF GROWING HEALTHCARE COST AND ACCESS PROBLEMS

The Center for Studying Health System Change (HSC) has found growing potential for cost increases and access-to-care problems. During site visits January through June 2005 in Boston; Cleveland; Greenville, SC; Indianapolis; Lansing, MI; Little Rock, AR; Miami; northern New Jersey; Orange County, CA; Phoenix; Seattle; and Syracuse, NY, HSC interviewed stakeholders in health coverage and delivery issues. Some of the findings included:

• Hospital-physician competition for profitable specialty services is driving costly investments in capacity and medical technologies.
• Employer and health plan initiatives are directed more at increasing patient cost sharing than other aspects of rising costs.
• The rising costs are continuing to push private health insurance out of reach for more people, causing states and local governments difficulty in meeting the needs of low-income and increasing the number of uninsured.

HSC reports that “many states now are considering far-reaching changes, such as reducing covered services and eligibility levels—primarily for adults—lowering provider payment rates, introducing patient cost sharing and requiring aged and disabled people to enroll in managed care.”

9. MEDICARE DRUG BENEFIT TO PROVIDE SHORT-TERM RELIEF FOR MEDICAID SPENDING

The Medicaid annual growth rate is projected to drop from roughly 10 percent in 2004 to less than 5 percent in 2005 and just 4 percent in 2006, according to the latest budget and economic outlook by the Congressional Budget Office. This decrease is due to substantial savings as Medicare assumes the cost of prescription drugs for people who are eligible for both programs. However, Medicaid’s growth rate will return to previous levels and average 8.4 percent annually during the last eight years of the projection period.

The introduction of the Medicare drug benefit in 2006 is projected to help boost that program’s federal spending by 31 percent between 2005 and 2007. After this leap, spending will grow at an average annual rate of 7.6 percent over the following eight years, driven by increases in enrollment and in utilization of medical services.

Over the long term, as the baby-boom generation reaches retirement age and healthcare costs rise rapidly, the growing demands of these programs will make the current fiscal policy unsustainable, CBO notes.

10. QUICK LINKS

CMS UPDATES INTEREST CALCULATIONS. CMS updated its manual to reflect changes in the method for calculating interest on overpayments and underpayment to HMOs, CMPs, and HCPPs. According to CMS, effective October 1, 2004, interest will be assessed only for full 30-day periods when payment is not made on time.

CMS TO CONDUCT NURSING HOME IMMUNIZATION WEBCAST. On September 8 from 1:00-3:00 p.m. (EDT), CMS and the Centers for Disease Control will provide a satellite and Internet broadcast approximately two hours in length that will focus on nursing home immunizations. For more information and registration, visit the CMS Survey and Certification Online Course Delivery System web site; it will require free registration. The program may be viewed after September 23 via the web site’s archives.

For customer service, send an e-mail to HFMA’s Member Service Center or call (800) 252-HFMA, and press 2.

PricewaterhouseCoopers is pleased to sponsor this weekly update of critical financial and regulatory issues. Look to this section of HFMA Express News for regular updates on PwC's insightful research into where the health industry is today and where it is heading.