Washington Report –August/September, 2011
Bill Finerfrock, David Connolly, Christina DeSimone and Zhaneta Mansaku
HBMA Submits Physician Fee Schedule Comments
Higher Premiums, Less Benefits
The “Branding” of Healthcare: Coming to a Practice Near You?
MedPAC Weighs in on SGR but will Congress Listen?
OIG Submits “Place of Service Report” to HHS Secretary
5010 (the standard, not the year) is Coming, Are You Ready?
Up Next, the Supremes!
If you liked Medicare RAC, you’ll love Medicaid RACs
New Resources (money) to Fight Medicare Fraud
CMS Transmittals
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HBMA Submits Physician Fee Schedule Comments
In late August, HBMA, along with dozens of other healthcare organizations, submitted comments on the 2012 Physician Fee Schedule Proposed Rule. The following are some of the highlights of HBMA comments and recommendations.
SGR related reduction to the Medicare Conversion Factor
We are aware that CMS was obligated, by law, to publish the formulaic recalculation of the Medicare Conversion Factor (CF). HBMA recognizes that CMS has little latitude in making legislatively mandated cuts in physician payments due to the Sustainable Growth Rate (SGR) formula. We encourage CMS to do all it can, within the agency’s authority, to prevent the projected 29.5% cut from taking place.
Reducing the Conversion Factor from its current level to $23.9635 would have a devastating impact on physician income and, ultimately, access to care for Medicare beneficiaries. In our communication with the thousands of physicians served by HBMA’s member companies, we have been told, almost universally, that such a cut would be a proverbial “show stopper,” forcing practices to cease serving Medicare patients entirely, or drastically reducing their Medicare patient load – simply to survive.
The oft-repeated 11th hour Congressional intervention to prevent the scheduled CF reduction has, unfortunately, also had more than one “13th hour” intervention, resulting in retroactive payment adjustments after “reduced” claims had been processed. The subsequent claim reprocessing and payment adjustments have caused significant and costly rework by providers, billing companies, clearinghouses and software vendors, without any meaningful income to even match the additional costs created. We are certain the same – or greater – expenses fell upon Medicare contractors, as well.
HBMA encourages CMS to develop a better, more efficient process for making future payment adjustments in the event Congress allows the SGR cut to take effect on January 1, 2012, only to subsequently rescind the cut, retroactively.
HBMA SGR Recommendation:
HBMA recommends that CMS convene a workgroup of representatives from the provider community, medical billing and compliance professionals to develop a more administratively reasonable, cost efficient and compliant mechanism for reprocessing under/over-paid claims, should there be events similar to the ones that occurred in the past and in 2010 – 2011.
Quality Reporting Initiatives – Physician Quality Reporting System (PQRS)
HBMA member experiences have left many in our industry highly disappointed, as well as skeptical of the integrity of the PQRI/PQRS program. When asked by clients about possible participation, our members feel, reluctantly, obliged to truthfully report on their actual experiences and caution practices about the economic and operational value of additional work associated with this program.
HBMA PQRS Recommendation:
Based on HBMA member feedback, the “carrot” and “stick” incentives associated with PQRS are, currently, neither. We recommend that, despite well-known budget challenges, CMS investigate how PQRS incentives might be made more financially relevant. It is our observation and belief that unless or until the incentives are, truly, incentives – either way – meaningful participation will not occur.
Expansion of the Multiple Procedure Payment Reduction (MPPR)
Current Medicare policy reduces the Technical Component (TC) payment for certain “families” of diagnostic imaging procedures by 50 percent for the second and subsequent procedures provided during the same “session.” CMS proposes to expand the MPPR to the Professional Component (PC) of certain Advanced Imaging Services (CT, MRI, and Ultrasound), that is, the same list of codes to which the MPPR on the Technical Component (TC) already applies in calendar year 2012.
If adopted, the MPPR would apply to both the PC and the TC of the specified codes. Full payment would be made for the PC and TC of the highest paid procedure and payment would be reduced by 50 percent for the PC and TC for each additional procedure furnished to the same patient in the same session. In theory, this proposal is based on the expected efficiencies in furnishing multiple services in the same session due to duplication of physician work in the pre- and post-service period, with less work reduction intra-procedure.
CMS provides no research or analytical data to support the contention that this MPPR is similar to the surgical MPPR, or that similar savings are achievable, or excess payments are currently made, for the provider of the professional component, as may be achievable on the technical component cost of performing advanced imaging procedures. For the vast majority of diagnostic radiology interpretations, the physician does not have pre- or post-procedure work and the intra-service work is identical for all interpretations. Each image must be individually and completely interpreted based on the unique medically necessary indications for that specific test. For example, the fact that an MRI of the brain was interpreted does not equate to any less work, malpractice risk or time to interpret a CT of the thorax on the same day or at the same session or encounter, nor is there any identifiable component for which the interpreting physician is being paid twice.
HBMA MPPR Recommendations
CMS should withdraw this recommendation as it relates to the PC of currently identified imaging procedures until such time as there is research data to support the underlying assumption or reduce the reduction amount from CMS 50% to the figures identified in the JACR study.
Any consideration of expansion of the MPPR policy to the professional component of diagnostic testing and the technical component of other diagnostic modalities or procedures should be suspended until such time as there is research data to support the underlying assumption.
CMS should ask industry stakeholders to obtain relevant cost data to objectively test the assumptions regarding provider cost savings and associated discount to the program.
Provide specific clarification of the definitions applicable to the technical and professional components. While the technical component may occur on a single date or during a single date, encounter or “session,” the professional interpretations may occur at various times that are not always contemporaneous with the technical services and are frequently performed by multiple providers. In fact, the most common scenario is interpretations by physicians with expertise in a specific modality and therefore by multiple radiologists. In the proposed rule, it does not appear that CMS considered, or was aware of, these variables when assuming cost savings. Clear definitions of session and encounter for both the technical and professional components should be published. All publications should be revised and incorporate consistent terminology.
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Higher Premiums, Less Benefits
The Kaiser Family Foundation released a new study indicating that employers are paying high premiums. Employees are experiencing higher deductibles and the benefit packages provide lower comprehensive coverage.
According to the survey, approximately 1 – 2% of the premium increase was directly attributable to the 9% average increase in premiums. In addition, according to a report by both the New York Times and NBC news, some small businesses are reporting that they have “been forced to choose between hiring new employees or continuing to offer healthcare coverage to current employees.”
The Kaiser survey also noted that over the last 10 years, health insurance premiums have risen by an average of 113% while employee wages have increased only 34%.
The authors of the Kaiser study did note that the bulk of the reforms included in the Patient Protection and Affordable Care Act have yet to take place. Most of the benefit expansions and improvements do not take effect until 2014. In a press release, the authors said, “it's too early to tell what will happen in 2014, which is when the key elements of President Obama's healthcare reform take effect.”
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The “Branding” of Healthcare: Coming to a Practice Near You?
According to recent reports, several large group practices that have traditionally been regional in nature, are seeking to establish a national presence. Mayo Clinic, which had previously moved outside it’s Minnesota base to establish a presence in both Florida and Arizona, is now looking to get a foothold in other regions of the county. Johns Hopkins, a Baltimore, Maryland based healthcare powerhouse has recently moved into the Washington, DC market purchasing hospitals there and seeking to purchase medical practices in DC and potentially Virginia suburbs. Similarly, the Cleveland Clinic, is seeking to expand it’s reach well beyond it’s Cleveland base of operations.
Large Health systems that have established a certain level of “brand familiarity” are banking on their good name to entice employers to select health plans that provide access to their provider networks. This latest expansion is different than previous efforts by some of these groups in that unlike earlier expansions which involved the acquisition of the hospital or group practice, this current waive is being done largely through “affiliations”.
Although it has been speculated that this latest waive of expansions is occurring in anticipation of becoming Accountable Care Organizations (ACOs), all of the major health systems appear to be taking a “wait and see” approach with regard to this step. After the near universal panning of the ACO proposed rule published by CMS earlier this year, many of these organizations said that unless the requirements and incentives were changed in the final rule, they would not pursue ACO status.
Their disappointment over the ACO proposed standards has not, however, diminished the desire to create large, well-integrated networks.
It appears that once these “brand name” systems have identified a desirable market, they will they will seek out smaller community hospitals who appear very interested in affiliating with these systems. The attractiveness of a potential affiliation appears particularly acute if there is already a large health system in that market with whom the community hospital or physicians are not affiliated.
Unlike the Johns Hopkins experience, most of the health systems do not appear to be purchasing the hospitals or physician practices, but rather they seek to “affiliate” with them. This gives the hospitals and physicians the marketing value of being affiliated with a well-known healthcare organization, which allows the “affiliated” hospital or group to use the “brand name” providers signage but the affiliated providers remain independent of the “brand name” organization in their business operations.
The business model being used almost appears like the franchising operations of major restaurant chains. The community hospital and physicians get to use the “branding” and consumer familiarity of the major healthcare organization, agree to adhere to certain clinical standards, but remain an independently operated business.
Despite the similarity with the franchising model, experts do not believe physicians will be required to ask their patients, “would you like fries with that” when patients come in for an x-ray!
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MedPAC Weighs in on SGR but will Congress Listen?
The Medicare Payment Advisory Commission (MedPAC) recently sent Congress a series of recommendations for possible alternatives to the SGR formula, as well as possible “savings options” for paying for a permanent fix to the SGR problem.
MedPAC is a Congressionally charted body, created to advise the House and Senate on possible changes in Medicare payment and coverage policy. The Commission is made up of more than a dozen “experts” appointed by the Government Accountability Office (GAO).
In submitting it’s recommendations, the commission report stated, “the Commission is offering a set of savings proposals for the purpose of assisting the Congress in offsetting the budgetary cost of the SGR repeal. The items on the list are preliminary and subject to change...”
The proposals were divided parts. Part I listed savings of approximately $50 Billion over 10 years. These options have been previously recommended by MedPAC but never enacted by Congress. The fact that these savings ideas have been previously shared with Congress but not enacted does not bode well for their adoption by the current Congress.
The second set of options (Part II) would save approximately $180 billion over 10 years and represent “proposals informed by outside groups (e.g., HHS OIG, CBO options) and MedPAC staff analysis.
All of the savings numbers identified below are over 10 years. Some of the more significant proposals include:
1. Limiting certain provider updates to 1%: Saves: $17 Billion
2. Rebase Home Health payments and Freeze for 12 Saves: $10 Billion
3. Encourage generic substitution of Part D benefits Saves: $17 Billion
4. Prior authorization for imaging for “outlier” physicians Saves: $ .1 Billion
5. Apply and “excise” tax on Medigap Plans Saves: $12 Billion
6. Reduce Clinical Lab payments by 10% Saves: $21 Billion
7. Pay E&M visits in hospital outpatient departments at Saves: $10 Billion
physician fee schedule rates
8. Require manufacturers to provide Medicaid-level rebates Saves: $75 Billion
for “dual eligibles”
9. Rebase SNF payments Saves: $23 Billion
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OIG Submits “Place of Service Report” to HHS Secretary
On September 7th, the Office of the Inspector General (OIG) for the Department of Health and Human Services submitted a report entitled, “Review of Place-of-Service Coding for Physician Services Processed by Medicare Part B Contractors During Calendar Year 2008”
The report provides the results of the OIGs review of place-of-service coding for physician services processed by Medicare Part B carriers during calendar year 2008.
Based on their review, the OIG estimated that Medicare contractors nationwide overpaid physicians $19.3 million for incorrectly coded Part B services provided during 2008. Furthermore, physicians incorrectly coded the place of service on 89 of the 100 services that the OIG sampled. The most common error was using non-facility place-of-service code for services that were actually performed in hospital outpatient departments or ambulatory surgical centers (ASC).
This finding was significant because in order to account for the increased overhead expense that physicians incur by performing services in non-facility locations, Medicare reimburses physicians at a higher rate for certain services performed in these locations. However, when physicians perform these same services in facility settings, such as hospital outpatient departments or ASCs, Medicare reimburses the overhead expenses to the facility, and the physician receives a lower reimbursement rate. The effect of this “error” is that Medicare pays twice for overhead expenses.