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HEADLINES
What's New in Medicare and Medicaid
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Monday, August 16, 2010
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Decisions and Developments
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Reimbursement Integrated Library
Dennis Barry’s Reimbursement Advisor
July 2010, Vol. 25, No. 11
In the July 2010 issue of Dennis Barry’s Reimbursement Advisor, authors examine the ongoing controversy revolving around the disproportionate share hospital statute, recommendations in the final wage index report and the interim final rule that codifies and clarifies ordering physician enrollment requirements.
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Receivables Report
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Hospital Accounts Receivable Analysis
1st Quarter 2010,
vol. 24, no. 1
- Hospital Collectors.
Despite an increase in the fourth quarter of 2009, hospital collectors were working on fewer open accounts at the beginning of 2010, according to the survey. The average number of open accounts being worked by collectors in the first quarter was 5,200.00, a substantial drop, according to those responding to the HARA survey. See how your numbers compare by reading the HARA Report on First Quarter 2010.
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Headlines
from Medicare and Medicaid Guide
CMS finalizes error report changes under CHIPRA
CMS has adopted a Final rule in response to the Children's Health
Insurance Program Reauthorization Act (CHIPRA) (P.L. 111-3) mandate to
simplify and ease overlapping requirements for states to report error
rates in eligibility determinations and payments. The rule becomes
effective September 10, 2010.
Both the State Medicaid Eligibility Quality Control (MEQC) and
the payment error rate measurement (PERM) programs require states
to measure erroneous determinations affecting payments. The MEQC,
required under Soc. Sec. Act §1903(u),
is limited to determinations of Medicaid eligibility and the permitted
error rate is 3 percent per fiscal year. PERM arises from the Improper
Payments Information Act of 2002 (P.L. 107-300), and applies to federal
agencies with programs found to be susceptible to significant erroneous
payments, specifically, erroneous payments exceeding both 2.5 percent
and $10 million. Affected agencies must estimate their payment errors
and report the error rate, the actions taken to correct the causes
of the errors, targets for future error levels, and the timeline for
completion. MEQC reviews must be performed annually, while PERM reviews
take place every three years.
CHIPRA required CMS to harmonize the requirements of PERM and
MEQC to prevent duplication and reduce the burden on state agencies.
States must be allowed to use PERM data for MEQC or MEQC data for
PERM reports. CHIPRA required CMS to publish a final rule meeting
certain requirements before publishing any state or national error
rates or reducing state payments as a result of PERM.
Changes to MEQC requirements
The Final rule requires states to use MEQC data that meets the
more stringent PERM requirements during the year of their PERM review.
They may use the PERM data for that year’s annual MEQC review.
The two programs define the universe of eligibility determinations
differently; PERM criteria allow states to classify some cases as
undetermined. The MEQC regulations now permit states to exclude those
cases if they meet criteria for exclusion under the State
Medicaid Manual. They must exclude all cases where another
agency determined eligibility, such as the Social Security Administration,
child welfare agencies for children in foster care, and express lane
agencies.
CHIPRA requirements
CHIPRA required the Final rule to establish clearly defined:
(1) state-specific requirements for sampling for CHIP reviews; (2)
criteria for both state and provider errors, (3) processes for appealing
error determinations; and (4) responsibilities and deadlines for states’
implementation of corrective action plans. In the Final rule, CMS
assumes that the universe to be sampled exceeds 10,000 determinations,
and therefore, may be considered infinite. States with less than 10,000
determinations may ask to reduce their sample size by the finite population
correction factor, a term not defined either in the Final rule or
in existing regulations. The sample size for eligibility determinations
in a state’s base year must be 504 active cases and 204 denials
or terminations. Depending on the error rate in that year’s
PERM sample, the sample size may be reduced or increased but will
not exceed 1,000 for active and negative cases.
The claims to be reviewed are drawn from a universe of fee-for-service
(FFS) and managed care payments and denials. The sample size for the
first PERM year is 500 FFS payments and 250 managed care payments.
In later years, depending on the first year’s error rate, the
sample size may be reduced or increased up to a maximum of 1,000 FFS
claims or managed care claims. Both MEQC and PERM sampling plans must
be approved by CMS.
Final rule, August 11, 2010, ¶181,046.
CMS oversight of Medicaid managed care inconsistent: GAO
CMS’ oversight of states’ rate-setting for Medicaid
managed care is inconsistent in frequency, thoroughness, documentation
and tracking, according to a report of the Government Accountability
Office (GAO). GAO recommended that CMS adopt nationwide protocols
such as tracking the effective dates of approved rates, the standards
that states’ documentation should meet to establish compliance,
and the events that trigger either a full or a partial review.
As an example, in the eight years since the effective date of
the agency’s regulations requiring actuarially sound rates,
CMS had never reviewed Nebraska’s managed care rates. Since
Tennessee began a transition to risk-based contracts in 2007, the
state has submitted two reports to its regional office, but neither
triggered a CMS review, even though the new rates had not been certified
by an actuary as required by regulations.
Actuarial soundness
Medicaid law and regulations require that capitation payments
under risk-based contracts and any mechanisms for adjustment of the
risk, be actuarially sound. The law defines “actuarially sound
capitation rates” as capitation rates that: (1) have been developed
in accordance with generally accepted actuarial principles and practices;
(2) are appropriate for the populations to be covered, and the services
to be furnished under the contract; and (3) have been certified,
as meeting the requirements of the law by actuaries who meet the qualification
standards established by the American Academy of Actuaries and follow
the practice standards established by the Actuarial Standards Board.
The Actuarial Standards Board has no standards specific to CMS
requirements for Medicaid managed care, but it has published a practice
note which proposed to define “actuarially sound rates” to
mean that for the period of time covered by the certification, the
projected premiums provide for all “reasonable, appropriate
and attainable costs,” but it is not necessary that the premiums
cover all of the costs that a health plan might incur.
The practice standards state that an actuary who is involved
in developing the rate would be expected to analyze all reasonably
available sources of data, such as fee-for-service expenses, encounter
data, Medicaid managed care financial reports and financial statements.
The actuary would be expected to analyze the data for reasonableness,
check data sources for consistency and choose the more reliable sources,
but would not need to audit the data. The actuarial standards of practice
related to data quality address the actuary’s use of the data
and appropriate disclosures, but provide that the responsibility for
completeness and accuracy of the data belongs to those who supplied
it, the Medicaid agency and/or health plan.
GAO recommended that CMS: (1) implement a mechanism for tracking
state compliance, including tracking the effective dates of approved
rates; (2) clarify guidance for CMS officials on conducting rate-setting
reviews, such as the evidence needed to determine a requirement satisfied
and how reviewers should document their finding; and (3) scrutinize
the quality of the data supporting rate change using available information,
such as audits, and require states to document the actions they took
to assure the quality of the data and the results of those actions.
GAO Report, No. GAO-10-810, August 4,
2010, ¶68,002.
Chief Actuary signals caution in annual trustee report
The 2010 Annual Report of the Medicare Board of Trustees shows
substantial improvement in the financial status of the Hospital Insurance
(HI) and Supplemental Medical Insurance (SMI) Trust Funds as a result
of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148).
The Chief Actuary of CMS, however, included a cautionary note in the
report regarding the Board’s long-term growth assumptions, and
suggests that the Board consider these matters when they convene an
independent panel of expert actuaries and economists to determine
assumptions for their 2011 report.
2010 report
The 2010 report indicates the HI Trust Fund (Part A) is now
projected to remain solvent until 2029, 12 years longer than reported
last year. The HI long-range actuarial deficit has been reduced to
0.66 percent of taxable payroll. HI Trust Fund surpluses are expected
to begin during 2014-2022. Projected costs for the Medicare Part B
account in the SMI Trust Fund are also much lower. Part B spending
is now projected to reach only 2.5 percent of gross domestic product
by the end of the 75-year projection period.
Actual Part B costs are expected to exceed the current projections
because Congress is expected to continue to override the substantial
reductions in Medicare payments for physicians over the next three
years. As a result of annual updating of enrollee premiums and payment
rates, Medicare Part D is also in financial balance. Other legislative
provisions also reduce costs through lower payments to private Medicare
Advantage health plans.
Projected savings and tax
increases
The largest amount of projected savings comes from lower annual
payment increases to hospitals, skilled nursing facilities, home health
agencies, and other providers. The 0.9 percent payroll tax increase
on earnings above $200,000 for single taxpayers or $250,000 for married
couples filing joint returns also directly benefits the HI Trust Fund.
And because the earnings thresholds are not indexed, more workers
will be affected by the additional HI payroll tax over time.
Long-range imbalance seen
While the Trustees believe that the legislative changes will
bring the HI Trust Fund closer to financial balance, additional policy
initiatives are needed for short-range financial adequacy and long-range
actuarial balance. The time gained by postponing the depletion of
the HI Trust Fund should be used to determine effective solutions
to the remaining long-range HI financial imbalance.
Actuarial opinion
While the CMS Chief Actuary agreed that the techniques and methodology
used by the Board of Trustees to evaluate the financial status of
the HI and SMI Trust Funds are based upon sound principles, and the
principal assumptions used and the resulting actuarial estimates are
reasonable, he expressed caution. For example, he noted that the Part
B projections of the trustees, which reasonably portray future costs
under current law, are not reasonable as an indication of actual future
costs.
For example, current law would require physician fee reductions
totaling an estimated 30 percent over the next three years, an “unlikely
result,” according to the Chief Actuary. Further, there is a
strong likelihood that certain PPACA changes will not be sustainable
in the long range. For example, the annual price updates for most
categories of non-physician health services will be adjusted downward
each year by the growth in economy-wide productivity. As a result
of the labor-intensive nature of these services, most health care
providers cannot improve their productivity to this degree without
major changes in health care delivery systems.
Without changes in these delivery systems, by the end of the
long-range projection period, Medicare prices would be less than half
of their level under the prior law, according to the Chief Actuary.
Congress would be required to intervene to prevent the withdrawal
of Medicare providers and the beneficiary access problem that would
result. Overriding the productivity adjustments would lead to far
higher costs for Medicare in the long range than those currently projected.
Consequently, the Chief Actuary believes that the financial
projections shown in the Trustees report are not reasonable expectations:
(1) in either the short range (due to the unsustainable reductions
in physician payment rates) or (2) in the long range (due to the likelihood
that the statutory price reductions in most categories of Medicare
provider services will not be viable).
2010 Annual Report of the Boards of Trustees
of the Federal Hospital Insurance and Federal Supplemental Medical
Insurance Trust Funds, August 5, 2010, ¶60,144.
Analysis of HAI laws reveals successes and challenges
The National Conference of State Legislatures (NCSL) analysis
of the implementation of health care-associated infection (HAI) public
reporting laws in nine states revealed the successes and challenges
states may face when implementing such reporting programs in the future.
Currently, 27 states have laws in place that require health care facilities
to report HAIs, also known as nosocomial infections, which constitute
one of the leading causes of death in the United States. Legislators
anticipate that the encouragement of transparency regarding HAIs will
increase patient safety, reduce costs, and improve measures to prevent
infection. Public spending on HAI prevention has been increased by
the American Recovery and Investment Act, which approved $50 million
in funding for relevant state measures, including reporting programs.
Program successes
The NCSL discovered certain common successes, including the
benefits obtained by states that incrementally phased in their reporting
requirements. Since the reporting systems are intricate and utilize
a great number of facility time and resources, by phasing in requirements
over time, the NCSL found that facilities were better able to create
a strong foundation for the implementation of the remaining phases
of the program. All states surveyed had developed multidisciplinary
advisory committees to assist with the development and execution of
the reporting programs. These groups helped adjust programs to meet
local concerns, provide the state with technical information regarding
HAIs, and bring cohesiveness to those involved in the program’s
implementation.
Program challenges
The NCSL learned that the implementation of effective and meaningful
reporting programs is difficult in many ways. Certain HAIs are challenging
to report due to the inaccuracy of billing codes and impediments to
objective reporting. While these problems can be eased by having health
care facilities report HAIs through the National Healthcare Safety
Network (NHSN), a government surveillance system, enrollment in NHSN
is complex and can strain the infection prevention resources of smaller
facilities. States are also apprehensive about the susceptibility
of reporting programs once federal monetary support concludes and
the states are left to fund the continued programs alone.
The NCSL noted that since most states are in the early stages
of developing HAI reporting programs, this study only offers limited
insight into the challenges of program implementation. Data that will
be gathered over the next several years will also be investigated
to determine the broader effects of public reporting laws.
National Conference of State Legislatures Report,
July 1, 2010.
RAC reveals list of medical necessity reviews
CGI Technologies and Solutions Inc., the Medicare Recovery Audit
Contractor (RAC) for Region B, has issued a list of the 18 medical
necessity reviews recently approved for audit by CMS, according to
a report from the American Hospital Association. CGI issued this list
of medical necessity reviews to the state hospital associations in
the RAC Region B states (Illinois, Indiana, Kentucky, Ohio, Michigan,
Minnesota and Wisconsin); the list also will be posted on its website— http://racb.cgi.com/Default.aspx.
It will then start requesting medical records for these audits. CMS'
New Issue Review Board on August 6 gave approval to RACs to begin
auditing the 18 inpatient hospital claims.
The medical necessity reviews include the following: chest pain
MS-DRG 313; other circulatory system diagnoses w MCC, MS-DRG 314,
315, 316; other vascular procedures w CC, w/o CC/MCC MS-DRG 253, 254;
syncope & collapse MS-DRG 312; red blood cell disorders w MCC
MS-DRG 811; atherosclerosis w MCC MS-DRG 302; heart failure &
shock w/MCC, w CC and w/o CC/MCC DRG 127 MS-DRG 291, 292, 293; esophagitis,
gastroenteritis & miscellaneous digestive disorders w/MCC DRG
182 MS-DRG 391; musculoskeletal disorders MS-DRG 539, 540, 541, 545,
546, 547, 548, 549, 550, 551, 552, 553, 554, 555, 556, 557, 558, 564,
565 and 566; chronic obstructive pulmonary disease DRG 88 MS-DRG 190,
191; respiratory 175, 176, 180, 181, 182, 183, 184, 185, 186, 187,
188, 192, 196, 197, 198, 199, 200, 201, 202, 203, 204, 205, 206; nutritional
and metabolic disorders DRG 296 MS-DRG 640; kidney & urinary tract
infections w/MCC DRG 320 MS-DRG 689; GI Disorders 368, 369, 370, 374,
375, 376, 380, 381, 382, 383, 384, 385, 386, 387, 388, 389, 390, 392,
393, 394 and 395; percutaneous cardiovascular procedures MS-DRG 247,
249, 251; renal failure DRG 316 MS-DRG 682, 683, 684; nervous system
disorders MS-DRG 052, 053, 054, 055, 056, 057, 058, 059, 060, 061,
062, 063, 067, 068, 069, 070, 071, 072, 073, 074, 077, 078, 079, 080,
081, 082, 083, 084, 085, 086, 088, 089, 090, 091, 092, 093, 097, 098,
099, 101, 102; and cardiac arrhythmia & conduction disorders w/MCC
or w/CC DRG 138, MS-DRG 308, 309.
CCH Chicago Bureau, August 12, 2010.
Decisions and Developments
CMS Manuals
Acceptable risk safeguards must include separation
of duties to eliminate conflicts of interest
One-Time
Notification Manual, Pub. 100-20, Transmittal No. 732, July
29, 2010, ¶159,190.
Revised instructions implementing new occurrence
code billing requirement for assessment-related dates under IRF, SNF,
and swing bed PPS
Medicare Claims Processing
Manual, Pub. 100-04, Transmittal No. 2011, July 30, 2010, ¶159,191.
Address of where service was provided must
now be included under Medicare physician fee schedule
Medicare
Claims Processing Manual, Pub. 100-04, Transmittal No. 2015,
July 30, 2010, ¶159,192.
January 2011 version of HIPAA institutional
and professional edits spreadsheets to specific Part A and Part B
MACs
One-Time Notification Manual,
Pub. 100-20, Transmittal No. 735, July 30, 2010, ¶159,193.
Suppliers of competitively bid DME must bill
DME MACs and may no longer bill for competitive bid items to Medicare
contractors processing home health claims
One-Time
Notification Manual, Pub. 100-20, Transmittal No. 741, July
30, 2010, ¶159,194.
Multi-Carrier System review and system changes
for IRS reporting (Form 1099) where providers have been paid under
current and historic EIN in same calendar year
One-Time
Notification Manual, Pub. 100-20, Transmittal No. 742, July
30, 2010, ¶159,195.
Common working file unsolicited response adjustments
for certain claims denied due to open Medicare Secondary Payer Group
Health Plan record
Medicare Claims Processing
Manual, Pub. 100-04, Transmittal No. 2014, July 30, 2010, ¶159,196.
Implementation of 5010 837I transaction in
January 2011 will allow providers to report up to 25 ICD-9-CM diagnosis
and procedure codes
Medicare Claims Processing
Manual, Pub. 100-04, Transmittal No. 2016, July 30, 2010, ¶159,197.
Expanded alternative feedback report request
process for quality initiatives
One-Time Notification
Manual, Pub. 100-20, Transmittal No. 740, July 30, 2010, ¶159,198.
Merge of the Part B Alabama, Georgia, and
Tennessee CICS production and user acceptance test regions
One-Time Notification Manual, Pub. 100-20,
Transmittal No. 744, August 2, 2010, ¶159,199.
Further instruction for implementation of
HIPAA version 5010 for transaction 835
One-Time
Notification Manual, Pub. 100-20, Transmittal No. 733, July
30, 2010, ¶159,200.
Table attachment revisions to new, revised,
and invalid diagnosis and procedure codes of ICD-9-CM in Medicare
contractor annual update
Medicare Claims Processing
Manual, Pub. 100-04, Transmittal No. 2017, August 4, 2010, ¶159,201.
Indian Health Services hospital payment rates
for calendar year 2010
Medicare Claims Processing
Manual, Pub. 100-04, Transmittal No. 2018, August 6, 2010, ¶159,202.
Instruction to add, modify and deactivate
such claim adjustment reason codes and remittance advice remark codes
Medicare Claims Processing Manual, Pub. 100-04,
Transmittal No. 2019, August 6, 2010, ¶159,203.
Clarification of billing requirement related
to technical component and global fees for ancillary services performed
in ambulatory surgical center (ASC) by entities other than ASCs
Medicare Claims Processing Manual, Pub. 100-04,
Transmittal No. 2020, August 6, 2010, ¶159,204.
Implantable tissue markers (HCPCS code A4648)
and implantable radiation dosimeters (HCPCS code A4650) separately
billable and payable when used in conjunction with CPT® codes
19499, 32553, 49411 and 55876 on claim for physician services
One-Time Notification Manual, Pub. 100-20,
Transmittal No. 745, August 6, 2010, ¶159,205.
Changes to Medicare fraud edit modules regarding
Medicare summary notice messages and provider appeal rights
One-Time Notification Manual, Pub. 100-20,
Transmittal No. 746, August 6, 2010, ¶159,206.
Identify all beneficiaries in common working
file with dual eligibility
One-Time Notification
Manual, Pub. 100-20, Transmittal No. 748, August 6, 2010, ¶159,207.
Medicare Part A skilled nursing facility prospective
payment system pricer update FY 2011
Medicare
Claims Processing Manual, Pub. 100-04, Transmittal No. 2023,
August 6, 2010, ¶159,208.
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