Washington Report - June, 2002
Bill Finerfrock
Capitol Associates
Medicare Reform Moves - Slowly
The House of Representatives has passed a Medicare Reform bill, H.R. 4954, entitled, “Medicare Modernization and Prescription Drug Act of 2002". The bill was passed by a vote of 221-208. All but 8 Republicans voted for the bill and all but 8 Democrats voted against the bill. The two independents split their votes with one voting in favor and one voting against.
The bill would establish a voluntary prescription drug benefit under the Medicare program, enhance physician and hospital payments, and authorize major administrative and contractor reforms of the Medicare program.
A more detailed description of the proposal adopted by the House is available on the HBMA website. If you would like to review the entire bill, it is available on Congress’ website: thomas.loc.gov . Enter H.R. 4954 where it says you can search by bill number. You should then get two options: H.R. 4954IH (Introduced in House) and H.R. 4954RH (Reported in House). You want to select the RH version. This is a very large document.
Senate Majority Leader Tom Daschle (D-SD) has indicated that he would like to begin Senate debate on a Medicare prescription drug/reform bill by mid-July. However it is not clear what bill he intends to bring up for consideration. It is unlikely that given the current split on the Senate Finance Committee, the committee with jurisdiction over Medicare issues, that the Committee could report out a bill. This would mean that the Majority Leader would take a new bill directly to the floor of the Senate without benefit of prior Committee consideration. While not unprecedented, such tactics have generally been unsuccessful because the full Senate gets bogged down debating issues that are better left to the Committees to work out.
If, as expected, the Senate is unable to pass a Medicare prescription drug/reform bill, then it is expected that the Majority Leader will take the legislation off the Senate’s calendar and try to go back to the Committee process and see if the Finance Committee can report out a Medicare reform bill that is limited to physician and hospital payments and administrative/contracting reform.
Once Was Not Enough
Included in the Medicare Modernization and Prescription Drug Act of 2002 was language identical to a bill passed in late 2001 by the House entitled, “Medicare Regulatory and Contracting Reform Act of 2001 (H.R.3391). The details of that legislation have been previously reported in HBMA Washington Reports. In approving this legislation - again - House Commerce Committee Chairman Bill Tauzin (R-LA) said that he wanted to reinforce the importance the House placed on passing Contractor reforms. He also wanted to express his disappointment that the Senate had failed to act on similar legislation. While there have been bi-partisan statements of support for administrative and contractor reforms, the Senate has not acted on legislation authorizing these reforms. Due to other issues on the Senate agenda between now and the August “recess”, it is not expected that Congress will act on Medicare contractor reforms until September. Senator Max Baucus (D-MT) Chairman of the Senate Finance Committee has stated that he is committed to passing Medicare contractor/administrative reform legislation this year.
HBMA staff and member companies have met on several occasions with Congressional staff to discuss these reforms and offer input into this process.
Medicare Fee Schedule Update Published
On June 28, the Center for Medicare and Medicaid Services (CMS) published proposed changes to the Medicare Physician Fee Schedule. According to the Federal Register, “The proposed rule would refine the resource-based practice expense relative value units (RVUs) and make other changes to Medicare Part B payment policy.” In addition to the physician RVU changes, the proposed rule would make changes affecting the Medicare Economic Index, pricing of the technical component for positron emission tomography (PET) scans, Medicare qualifications for clinical nurse specialists, a process to add or delete services to the definition of telehealth, definition for ZZZ global periods, global period for surface radiation, and an endoscopic base for urology codes. Finally, the proposed rule discusses, “the refinement of anesthesia work values, clinical social worker services, and how drugs are accounted for in the sustainable growth rate.”
These rule changes are part of an on-going effort by CMS to ensure that the RBRVS payment system reflects changes in medical practice and the value of services. CMS is interested in receiving comments on these proposals. If you would like to comment, you should write to:
Center for Medicare and Medicaid Services
Department of Health and Human Services
Attention: CMS-1204-P
P.O. Box 8013
Baltimore, MD 21244-8013
In the same issue of the Federal Register, CMS published a Notice of Proposed Rule Making which would set forth an update to the 60-day national episode rates and the national per-visit amounts under the Medicare prospective payment system for home health agencies.
If you would like to review these proposed rules, on-line, go to:
and go to the CMS section of the document. Once there, you will see the various documents. As this is a lengthy report, it is broken up into sections approximately 50 pages in length.
CMS Releases 4th Industry Report
The Center for Medicare and Medicaid Services (CMS) recently released the fourth health care industry report entitled: HEALTH CARE INDUSTRY MARKET UPDATE - Home Health. This analysis focuses on the home health care and home respiratory and infusion therapy industry sectors. Previously, CMS reports examined hospitals and managed care. According to CMS Administrator Tom Scully, “Future reports will review the financial and market performance of device manufacturers, pharmaceutical companies, specialty hospitals, hospice providers, durable medical equipment manufacturers, and virtually every other major provider and supplier sector.
Some of the findings of the report are:
Small, local, and regional providers comprise the majority of the home care market.
Home health agencies struggled post-BBA but are recovering under the new prospective payment system.
The number of Medicare home health agencies has leveled-off in the last two years after three years of significant declines following the implementation of the interim payment system.
Large publicly-traded respiratory therapy companies continue to perform well and are profitable.
Home health agencies have difficulty attracting investors while large respiratory and infusion therapy providers have better access to capital.
Wall Street believes that Medicare is a profitable payor for many publicly-traded providers in the home health industry.
To review the entire report, go to:
These reports have been well received and you are encouraged to review this document, particularly if you are involved with the home health industry.
New ABN Form Approved
According to a report in the AHA News, the federal Office of Management and Budget has approved the new Advanced Beneficiary Notice (ABN) form: CMS-R-131. Although the final version of the ABN has not been published, AHA indicates that the form is “nearly identical” to the draft form currently available and in use since June of 2001. That form is available on the CMS website at:
OIG Releases Audit Reports
The Department of Health and Human Services Office of Inspector General (OIG) has released a series of audit reports analyzing various providers in the Medicare program. Links to each of the reports are listed within the summaries. These reports are:
Review of Medicare Payments for Beneficiaries with Institutional Status-Blue Care Network, Southfield, Michigan (A-05-01-00079)
The objective of this audit was to determine if payments to Blue Care Network (Contract
H9009) were appropriate for beneficiaries reported as institutionalized. We determined that Blue Care received Medicare overpayments totaling $100,692 for 54 beneficiaries incorrectly reported as institutionalized during the period January 1, 1998 through December 31, 2000. The majority of the beneficiaries did not meet the 30-day residency requirement in a qualifying institutional facility. Blue Care Network should not have received payment at the enhanced institutional rate.
Review of Medicare Inpatient Bad Debts at Mercy Catholic Medical Center, Conshohocken,PA
for Calendar Year 1999 (A-03-02-00002)
The objective of our audit was to determine if Medicare inpatient bad debts claimed by Mercy Catholic Medical Center (MCMC) on its cost report for calendar year (CY) 1999 met Medicare requirements. The MCMC claimed inpatient bad debts of $543,285. Our audit found that, for the most part, MCMC claimed inpatient bad debts on its CY 1999 cost report that met Medicare reimbursement requirements. We noted some minor exceptions to the amounts claimed and questioned $1,848 in bad debt claims. We recommended that MCMC: (1) coordinate with the Fiscal Intermediary (FI) to adjust their CY 1999 cost report by $1,848 for overstated inpatient bad debts and (2) use the results of our audit to stress to its employees the need to use correct data in generating Medicare claims.
Review of Graduate Medical Education And Indirect Medical Education At Saint Elizabeth's
Medical Center For Fiscal Year Ending September 30, 1999 (A-01-02-00505)
The objective of this review was to determine the accuracy of resident Full-Time Equivalents (FTE) counts used by the Saint Elizabeth's Medical Center (SEMC) during Fiscal Year (FY) 1999 to calculate Graduate Medical Education (GME) and Indirect Medical Education (IME) payments. We determined that SEMC overstated its calculations for IME and GME by 2.84 and .47 FTEs, respectively. These overstatements occurred because SEMC claimed reimbursement for residents: 1) who spent time in unallowable research activities; 2) who exceeded their initial residency period yet were counted as if they were within their initial residency period; 3) whose time was not supported with adequate documentation; 4) who rotated to non-hospital settings; and 5) who were misclassified as primary care residents. We also identified a cost reporting error involving the Per Resident Amounts update factor. As a result of these errors, the hospital overclaimed GME and IME reimbursement by $121,395 on it’s FY 1999 Medicare cost report.
Review of Medicare Outlier Payments at Bridgeport Hospital for Fiscal Year 1999
(A-01-01-00515)
The objective of this review was to determine whether fiscal year 1999 Medicare outlier
payments to Bridgeport Hospital were reimbursed in accordance with Medicare laws and
regulations. Our review determined that Bridgeport Hospital received $23,409 in overpayments relating to services that were not ordered by a physician, were not properly documented, represented duplicate billing, resulted from submission of incorrect DRG codes and involved charges not related to an inpatient stay. We recommended a financial adjustment and procedural improvements. Bridgeport Hospital concurred with our findings and identified corrective actions they have taken.
The findings of these reports may be instructive for you or your clients.
New Commissioners Appointed to MedPAC
The Medicare Payment Advisory Commission is an independent group of Commissioners appointed by the Comptroller General of the United States. MedPAC was created by Congress to serve as an independent advisory board of health care experts. They are to advise Congress on matters affecting the Medicare and Medicaid programs.
On June 5th, David Walker, Comptroller General of the U.S. and head of the General Accounting Office (GAO) announced the appointment of the following individuals to MedPAC. The new Commissioners will be:
NancyAnn Min DeParle - Former Administrator of the Health Care Financing Administration during the Clinton Administration. DeParle is a senior advisor for JP Morgan Partners. In addition, she is an Adjunct Professor at the Wharton School of the University of Pennsylvania.
David Durenberger - Former United States Senator from Minnesota. While a Senator, Durenberger served on the Senate Finance Committee and was very active on Medicare and Medicaid payment issues. Since leaving the Senate, he has been President of his own consulting firm, Public Policy Partners, Inc., with offices in Minnesota and Washington, DC.
Nicholas Wolter - a pulmonary and Critical Care physician from Montana. Wolter also serves as the Chief Executive Officer of the Deaconess Billings Clinic.
In addition to these new members, Walker reappointed Commissioners Mary Wakefield, Director of the Center for Rural Health at the University of North Dakota and Carol Raphael, CEO of the Visiting Nurse Service (VNS) of New York. According to MedPACs website, this is “the largest voluntary home health care organization in the United States.” Commissioners whose terms have expired are Janet Newport with Pacificare Health Systems, Beatrice Braun, MD a Board member of AARP and Floyd Loop, MD with the Cleveland Clinic.
There are 17 Commissioners with staggered terms. Terms are typically for 3 years and it is not uncommon for Commissioners to be reappointed.
Medicare Program Memos issued Since May 30
The following Program Memoranda have been issued by CMS since May 30th. These issuance's are official agency transmittals used for communicating reminder items, request for action or information of a one time only, non-recurring nature. To obtain a copy of these documents, you can go on-line to:
AB-02-086Change in Procedure for State Requests for Retrospective Medicare Claims Effective: 7/26/02
AB-02-087Delay in Enforcement of National Coverage Determinations (NCDs) for Clinical Diagnostic Laboratory Services. Effective: 1/1/03
A-02-055Extended Repayment Schedules (ERSs) for Home Health Providers Who Received the Special Periodic Interim Payment (PIP). Effective: 6/24/02
AB-02-084Additional Information Regarding Medicare Payment Allowance for Flu Vaccine
AB-02-085Medicare Contractor Annual Update of the International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM). Effective: 10/1/02
A-02-054Use of Medical Review Indicators for Comprehensive Error Rate Testing (CERT)
Effective: 6/19/02
A-02-051Health Insurance Portability and Accountability Act (HIPAA) Testing and Certification Requirements and Date Changes. Effective: 6/18/02
B-02-038HIPAA Testing and Certification Requirements and Date Changes. Effective: 7/18/02
A-02-053Indian Health Service (IHS) Hospital Payment Rates for Calendar Year 2002. Effective: 6/18/02
A-02-052July Outpatient Code Editor (OCE) Specifications Version (V3.1). Effective: 7/1/02
AB-02-083Effective Date Revision for Medicare Intermediary Manual (MIM), Transmittal 1855, dated April 26, 2002, Change Request 2057, and Medicare Carriers Manual (MCM), Transmittal 1749, dated April 26, 2002, Change Request 2057. Effective: 7/1/2002
A-02-050July 2002 Update to the Hospital Outpatient Prospective Payment System (OPPS). Effective: 7/1/02
A-02-049Installation of Version 27.3 of the Provider Statistical and Reimbursement (PS&R) Report. Effective: 7/1/02
AB-02-082Coding Changes for Sodium Hyaluronate. Effective: 10/1/02
AB-02-081Core Security Requirements (CSR) and Associated Responsibilities. Effective: 6/11/02
B-02-037New Medicare Medical Review Guidelines for Claims for Diabetic Testing Supplies. Effective: 10/1/02
AB-02-080Payment for Services Furnished by Audiologists. Effective: 7/7/02
AB-02-079Customer Service Representative (CSR)Response to Physician and Provider Correct Coding Initiative (CCI) Questions. Effective: 6/6/02
A-02-048Extension of the Deadline for Hospitals to Make Elections to Reduce Beneficiary Coinsurance for 2002 Under the Outpatient Prospective Payment System (OPPS)
Effective: 6/4/02
A-02-047July Medicare Outpatient Code Editor (OCE) Specifications Version 17.2 for Bills from Hospitals that are not Paid Under the Outpatient Prospective Payment System (OPPS). Effective: 7/1/02
A-02-044Announcement of Medicare Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) Payment Rate Increases, Changes to the RHC Benefit Made by the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 and Clarification Regarding Drugs Furnished by RHCs/FQHCs.
AB-02-077Common Working File (CWF) Beneficiary Other Insurer (BOI) Auxiliary (aux) File. Effective: 10/1/01
AB-02-078Provider Education Article: Medicare Coverage of Rehabilitation Services for Beneficiaries With Vision Impairment. Effective: 5/29/02
AB-02-076Registration Process for, and Expectations for Use of, the Healthcare Integrity and Protection Data Bank (HIPDB). Effective: 6/18/01
A-02-043Audit Guidance Pertaining to Write-offs of Small Debit Balances in Patients’ Accounts Receivable. Effective: 10/1/02
B-02-036Changes to Correct Coding Edits, Version 8.3, Effective October 1, 2002. Effective: 10/1/02
A-02-046Clarification of Part B Medicare Payment for18 HCPCS Codes to Skilled Nursing Facilities (SNF). Effective: 5/23/02
A-02-045Frequently Asked Questions (FAQs) About Home Health Advance Beneficiary Notice (HHABN, Form CMS-R-296). Effective: 5/23/03
AB-02-074Healthcare Provider Taxonomy Codes (HPTC) Crosswalk. Effective: 5/22/02
AB-02-075Payment Limit for Drugs and Biologicals. Effective: 5/22/02
A-02-042Clarification to Periodic Interim Payments (PIP) For Home Health Providers and Clarification on Extension of Due Dates for Filing Provider Cost Reports. Effective: 6/1/02
A-02-039Coverage and Billing of the Diagnosis and Treatment of Peripheral Neuropathy with Loss of Protective Sensation in People with Diabetes. Effective: 7/1/02
B-02-035Elimination of Certificate of MedicalNecessity (CMN) Requirement for Continuous Positive Airway Pressure (CPAP) Device - Clarification. Effective: 7/1/02
A-02-041New Patient Status Code 64. Effective: 10/1/02
A-02-040Scheduled Release for July Updates to Software Programs and Pricing/Coding Files.
AB-02-073Installation of a New Medicare Customer Service Center (MCSC) Next Generation Desktop (NGD) Application.