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HEADLINES
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Monday, July 26, 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
Coding adjustment for IPPS raises concerns
Fifty-two senators sent a letter to CMS Administrator
Donald Berwick expressing their concern over the adjustment that CMS
is proposing to make to payments to inpatient hospitals to account
for what CMS thinks are coding changes that do not adequately reflect
the health of a patient. Three hospital groups also sent a letter
to Berwick, pointing out the results of two recent studies that question
the methodology for CMS’ adjustment to hospital payments. Under
the Proposed rule for the inpatient hospital prospective payment system
update for fiscal year (FY) 2011 (75 FR 23852, May 4, 2010, see ¶220,759),
acute care hospitals will receive a 2.4 percent market basket increase
related to inflation, adjusted by a negative 2.9 percentage points
to recoup one-half of the estimated excess spending in FY 2008 and
2009, due to changes in hospital coding practices that did not reflect
increases in patients’ severity of illness. The Final rule will
be published in August, and the proposed coding offset would take
effect October, 1, 2010. CCH Chicago Bureau, July
21, 2010.
Paid error rate jumps in FY 2009; errors analyzed
The Office of Inspector General (OIG)
found that the national paid claim error rate for FY 2009 was 7.8
percent ($24.1 billion), a significant increase over the FY 2008 error
rate of 3.6 percent ($10.4 billion). The Comprehensive Error Rate
Testing (CERT) contractor found that 19,754 sampled claims resulted
in improper payments valued at approximately $4.7 million, according
to the OIG. The total sample consisted of 99,480 claims valued at
about $71 million. The most significant type of payment errors attributable
to these six provider types was insufficient documentation, e.g.,
missing clinical notes or test results and missing, incomplete, or
illegible physician orders, resulting in $2.6 million in improper
payments. Next were miscoded claims, which resulted in $900,000 in
improper payments. Finally, medically unnecessary services and supplies,
resulted in $800,000 in improper payments. These types of payment
errors accounted for about 98 percent of the $4.4 million in improper
payments associated with these six groups of providers. It was recommended
that CMS use the results of this analysis to identify the types of
payment errors that are indicative of programmatic weaknesses and
take any additional corrective actions necessary to strengthen the
CERT program. OIG Report , A-01-10-01000, July 15,
2010, ¶60,126.
SNF payments to increase 1.7 percent for FY 2011
The Medicare skilled nursing facility
(SNF) payment rate for fiscal year (FY) 2011 will increase 1.7 percent
and will result in an estimated $542 million increase in payments
to nursing facilities nationwide, according to a Proposed rule issued
by CMS. CMS annually updates the payment rates based on a market basket
index that reflects changes in the price of goods and services used
to furnish covered care in nursing homes. CMS also makes a forecast
error adjustment whenever there is a difference between the forecasted
and actual change in the market basket that exceeds a 0.5 percentage
point threshold for the most recently available fiscal year for which
there is final data. The most recently available final fiscal year
data is from FY 2009. For that period the estimated increase in the
market basket index was 3.4 percentage points compared to an actual
2.8 percentage point increase. The actual increase was a 0.6 percentage
point lower than the estimated increase. Based on the difference between
the estimated and actual amount of change that exceeds the 0.5 percentage
point threshold, the payment rates for FY 2011 now includes a negative
0.6 percentage point forecast error adjustment. Combined with the
FY 2011 market basket increase factor of 2.3 percent, it yields a
net update of positive 1.7 percent for FY 2011. CMS also plans to
delay the implementation of Patient Protection and Affordable Care
Act (PPACA) (P.L.
111-148), section 10325, which modifies the FY 2011 implementation
schedule for the Resource Utilization Group (RUG) version 4.0. This
delay is being implemented until system modifications can be completed.
The FY 2011 update was published in the Federal Register as
a Notice on July 22, 2010. The Notice will be published in a later
report, but will be available on-line at ¶262,874. All comments
regarding the Proposed rule must be received by September 14, 2010. CMS
Press Release, July 16, 2010.
Civil money penalties modified for nursing facilities
Civil money penalties assessed
against a skilled nursing facility could be reduced by as much as
50 percent under a provision in a Proposed rule issued by CMS that
would also create a new informal dispute resolution process (IDR)
for resolving findings when a CMP is imposed. In addition, the Proposed
rule would place payments made to satisfy a CMP imposed by an IDR
into an escrow account pending completion of any formal appeal. The
Patient Protection and Affordable Care Act (PPACA)(Pub. L. 111-148), section
6111, amended Soc. Sec. Act §1819(h) and Soc.
Sec. Act §1919(h) authorized these modification in the
Proposed rule. The per day CMPs would be effective and continue to
accrue, but would not be collected while the CMP is subject to the
independent IDR process, and collection of the CMP would occur either
at the completion of an independent IDR or 90 days after notice has
been given that a CMP would be imposed, whichever is earlier. CMS
would have new authority to reduce a CMP by 50 percent when CMS determines
a facility has self-reported the noncompliance, has promptly corrected
its noncompliance, and has waived its right to a hearing. However,
noncompliance that constitutes immediate jeopardy, a pattern of harm,
widespread harm, or results in a resident’s death would not
be eligible for this reduction. Facilities that have repeated noncompliance
for which a penalty reduction under this provision was received during
the previous year would not be eligible for another reduction. Proposed
rule, 75 FR 39641, July 12, 2010, ¶220,803;
CMS
Informational Bulletin, July 12, 2010, ¶53,570.
Use of invalid prescriber identifiers is significant
Recent work by the HHS Office of Inspector
General (OIG) illustrates that due to vulnerabilities caused by limited
CMS oversight, Medicare has paid a substantial number of questionable
claims for prescription drugs under Medicare Part D and durable medical
equipment (DME) under Part B. OIG's June 2010 report, Invalid
Prescriber Identifiers on Medicare Part D Drug Claims, reveals
that CMS and its plan sponsors have not adequately ensured that drugs
were prescribed by a physician. As a result, Part D sponsors and beneficiaries
paid pharmacies $1.2 billion in 2007 for claims in which the prescriber
identifiers listed on the claims did not correspond to practicing
physicians. In its June 2010 report, OIG found that more than 18 million
prescription drug event (PDE) records contained invalid prescriber
identifiers in 2007, representing 2 percent of the one billion PDE
records submitted to CMS. In addition, identifiers on 17 percent of
the drug claims with invalid prescriber identifiers did not conform
to format specifications. These PDE records represented $213 million
in payments by sponsors and beneficiaries in 2007. One invalid prescriber
identifier that did not meet format specifications was a string of
nine zeros (000000000). This single invalid identifier accounted for
almost 40,000 PDE records worth $3.7 million in 2007. In total, approximately
0.50 million different invalid prescriber identifiers were used on
paid Part D claims in 2007. However, just 10 of these invalid identifiers
accounted for almost one-fifth of the questionable PDE records. In
fact, one invalid prescriber identifier (AA0000000) was recorded on
almost 1.8 million PDE records in 2007, representing $105 million
in paid claims for 151,269 beneficiaries who were enrolled with 248
different Part D sponsors. Furthermore, one particular invalid identifier,
ZZ4567890, was used on drug claims submitted by just 37 different
pharmacies. Testimony of OIG Inspector General, July
15, 2010, ¶60,125.
CMS can’t reopen cost report after provider sues
The Seventh Circuit Court of Appeals
has ruled that CMS may not avoid defending a case in court by reopening
the dispute. The court overturned a district court ruling dismissing
a nursing facility’s challenge to the application of the Physician
Fee Schedule to its claims for oxygen level tests. Ordinarily, a party
can sue a federal agency only after the agency has made a final decision.
Once the agency’s action is final and no further agency review
is available, the party may ask a federal court to review the case.
If the agency’s action is not yet final, a court has no jurisdiction
over the subject matter of the case, that is, no legal power consider
or rule on it. In this case a nursing facility contended that the
intermediary improperly applied the Physician Fee Schedule in its
determination of the payment owed for tests for oxygen levels. After
the case had been filed, the agency decided on its own to reopen the
matter. Then the agency asked the court to dismiss the case, arguing
that the court had no power to hear it because the previous order
was not final. The facility argued that the court’s jurisdiction
to hear a case is determined as of the date the case is filed. Because
the agency’s order was final when the facility filed its case,
the court had jurisdiction, and the agency could not act unilaterally
to divest the court of its power to hear the case. The Court of Appeals
agreed. If the agency could reopen the case on its own, there would
be no need for that provision of the statute. The court also noted
that if the agency’s position were upheld, federal agencies
could deprive the court of jurisdiction at any point in the litigation
in order to avoid unfavorable rulings. Doctors Nursing &
Rehabilitation Center v. Sebelius, 7th Cir., July 16, 2010, ¶303,489.
Hospice accreditation program
The
Community Health Accreditation Program (CHAP) hospice accreditation
program’s conditional probationary status was removed, and CHAP
will continue to be recognized as a national accreditation program
for hospices that would like to participate in Medicare and Medicaid
programs. Accreditation by an approved national accreditation organization
(AO) is one alternative for a provider entity to demonstrate that
it meets all requirements necessary to participate in the Medicare
program. Every six years, AOs must reapply for continued approval
of deeming authority, then CMS will review the application and perform
a survey to ensure the AO’s standards and processes are comparable
to CMS requirements. During the evaluation of CHAP’s renewal
application, CHAP was unable to provide accurate, timely, and complete
data regarding deemed providers, facility survey files, and timeliness
of recertification surveys. Consequently, CHAP was conditionally approved
and a 180 day probationary period was imposed, during which an onsite
visit was performed and CHAP’s accreditation requirements were
determined to meet or exceed CMS requirements. Notice,
75 FR 41503, July 16, 2010,¶262,872.
States may expand Medicaid family planning coverage
Effective March 23, 2010, states
may amend their Medicaid plans to cover family planning and related
services for individuals who are not eligible for Medicaid under any
other category, according to a CMS letter to state Medicaid directors.
The eligible group may include individuals with incomes up to the
state’s income limit for pregnant women under Medicaid and CHIP.
The benefits available to individuals in this group are limited to
family planning services and related services. Related services include
those that are usually provided with the family planning service,
such as testing and treatment for sexually transmitted diseases or
other conditions discovered during the family planning visit, or screenings
and vaccination for cancer of the cervix. In states where family planning
programs cover an annual physical examination for men, the physical
may be covered as a related service. States will be reimbursed at
the 90 percent rate for family planning services and at their ordinary
rate for the related services. States may apply presumptive eligibility
to this group as permitted by Soc. Sec. Act §1920C and
must include this eligibility category when reviewing the eligibility
of women who are losing their coverage as pregnant women. The state
may use the same rules applicable to pregnant women, under which only
the income of the applicant is counted even if he or she would ordinarily
be considered part of a household or family or treating the individual
as a household of two. CMS Letter to State Medicaid Directors,
No. SMDL-10-013, July 2, 2010, ¶53,567.
False claims suit against pharmaceutical company proceeds
A qui tam relator’s
allegations that a pharmaceutical company encouraged doctors to write
off-label prescriptions for one of its HIV drugs and therefore caused
them to submit false claims to the Medicare and Medicaid programs
were sufficient to sustain in part his claims under the False Claims
Act (FCA). The relator, a former manager at the pharmaceutical company,
alleged that the company marketed the HIV drug for off-label uses
by, for example, omitting warnings in marketing promotions and misleading
doctors through presentations. The company argued that the relator
failed to plead with particularity his FCA claims under 31 U.S.C. §3729(a)(1)
and therefore, his claims should be dismissed. The relator sufficiently
alleged that the company’s alleged conduct could have played
a substantial role in causing the presentment of false reimbursement
claims to the government. The relator also adequately alleged the
details of the false bills submitted to the government by providing
a sample of fifty-five off-label prescriptions for eight AIDS patients.
The relator’s claim that the company caused third parties to
make false certifications of compliance to obtain payments also survived
dismissal. Under the implied certification theory, the act of billing
the government for something not delivered may constitute a false
claim. If the transaction with the government required adherence to
a statute or regulation, compliance with that statute or regulation
would be implied by virtue of a request for payment. Finally, the
relator’s allegation that the company engaged in a nationwide
scheme was sufficient because he alleged specific facts involving
a single representative state. The relator, who had alleged claims
in twelve other states, was not required to allege specific facts
for off-label prescriptions in each of those states. U.S.
ex rel. Carpenter v. Abbott Laboratories, D. Minn., July
16, 2010, ¶303,490.
Medicaid overpayments, CMPs, and HCAC
States must recover overpayments for Medicaid services within
one year from the date of discovery of the overpayment, before they
make an adjustment to refund the federal portion of the overpayment.
With the exclusion of fraud cases, and whether or not the state recovers
the overpayment, it must make the adjustment to refund the federal
portion of the overpayment by the deadline for the filing of the quarterly
expenditure report for the quarter during which the one-year period
ends. In an attempt to improve efficiency and effectiveness, new provisions
were proposed in the July 12, 2010 Federal Register regarding the
imposition and collection of civil money penalties (CMPs) for nursing
home facilities that do not meet Medicare and Medicaid participation
requirements. The public has 30 days to comment on the Proposed rule
(reported at ¶220,803),
which is entitled Civil Money Penalties for Nursing Homes.
Additionally, a survey has been issued for states to provide information
on the states’ current Medicaid program practices for prohibiting
payments for health care acquired conditions (HCAC). Federal regulations
barring payments to states for HCACs may integrate successful practices
already utilized in states. The survey may be viewed at http://www.hhs.gov/news/press/2010pres/07/20100713a.html,
and an all-state call will be conducted on July 22, 2010 to discuss
the survey and obtain feedback. CMS Letters to State Survey
and Certification Agencies, July 12, 2010, ¶53,571,
and July 13, 2010, ¶53,572.
EMTALA violation
A patient
who left an emergency room against the advice of a physician can recover
damages under the Emergency Medical Treatment and Active Labor Act
(EMTALA) only for personal harm that he in fact did suffer. Since
the patient acknowledged that he suffered no physical harm, he must
prove by direct evidence that he suffered severe emotional
distress when the physician refused to see him again after his wife
brought him back to the hospital. The existence of the injury cannot
be inferred from the fact that he was denied service, even if he was
aware of the denial of service at the time. There was some question
whether he was aware that his wife was told to take him to another
hospital. EMTALA imposes two duties on hospital emergency rooms:
(1) the hospital must conduct an appropriate medical screening within
the capability of the hospital's emergency department and (2) if the
hospital detects an emergency condition, it must stabilize the patient
before transferring or discharging him. The evidence showed the patient
was in the car when his wife was arguing with the physician during
the second visit and the patient did not speak to the physician at
that time. Nothing in his wife’s deposition shows that the patient
displayed any sign of emotional distress either through his conduct
or statements when they went to another hospital to seek treatment.
The patient himself testified he had no recollection of the events
that occurred during the second visit to the hospital. Accordingly,
summary judgment was granted to the hospital. Pugh v. Doctors
Medical Center, N.D. Cal., July 16, 2010, ¶303,491.
Decisions and Developments
CMS Manuals
New interest rate of 11.00 percent, effective
July 21, 2010, for Medicare overpayments and underpayments
Medicare Financial Management Manual, Pub.
100-06, Transmittal No. 172, July 14, 2010, ¶159,168.
Outpatient Prospective Payment System conversion
factor and Inpatient Rehabilitation Facility outlier threshold for
the first half of FY 2010 revised due to Affordable Care Act (ACA)
along with other ACA updates on the Inpatient Prospective Payment
System and Long Term Care Hospital PPS
One-Time
Notification Manual, Pub. 100-20, Transmittal No. 728, July
15, 2010, ¶159,169.
Chapter 10 reorganized into more Manageable
content units by moving information to Chapter 15 and adding new definitions
Program Integrity Manual, Pub. 100-08, Transmittal
No. 347, July 15, 2010, ¶159,170.
Quarterly changes to Laboratory National Coverage
Determination (NCD) edit software, effective October 1, 2010
Medicare Claims Processing Manual, Pub. 100-04,
Transmittal No. 2001, July 16, 2010, ¶159,171.
Appendix V, Regulations and Interpretive Guidelines
for Emergency Medical Treatment and Labor Act (EMTALA), updated to
include revisions to regulations from FY 2010 Inpatient Prospective
Payment System (IPPS)
Medicare Claims Processing
Manual, Pub. 100-04, Transmittal No. 2001, July 16, 2010, ¶159,172.
New physician specialty code for geriatric
psychiatry
Medicare Claims Processing Manual,
Pub. 100-04, Transmittal No. 2003, July 19, 2010, ¶159,173.
DAB Decisions
Nutrition requirements
CMS
correctly determined that a skilled nursing facility (SNF) was not
in substantial compliance with Medicare participation requirements
related to maintenance of residents’ nutritional status and
food service conditions. While the SNF claimed that two incidents
of residents’ considerable weight loss were unavoidable and
adequately monitored, the administrative law judge (ALJ’s) conclusion
of substantial noncompliance with 42 C.F.R. §483.25(i)(l) was supported
by substantial evidence. The SNF had identified both residents as
being at risk for a decline in nutritional status, however, the SNF
failed to consult with the residents’ dieticians and physicians
to perform timely assessments of the weight loss, and to implement
appropriate interventions to improve their nutritional status. Interventions
were either begun late or started and stopped without the SNF seeking
advice from a dietician or physician. Alternative theories as to why
the weight loss occurred including reactions to medications, hospitalization
and other disease could not be supported by the SNF and were as easily
countered as they were offered. Substantial evidence also supported
CMS’ finding that the SNF did not store and serve food in compliance
with 42
C.F.R. §483.35(i)(2). Carrington Place of Muscatine,
HHS Departmental Appeals Board, Appellate Division, Doc. No. A-10-29,
Dec. No. 2321, June 25, 2010, ¶122,243.
Untimely hearing request
An
administrative law judge (ALJ) correctly dismissed a SNF’s untimely
hearing request and found no justification for an extension of time
for filing. The SNF failed to file its request for hearing within
60 days after it received a notice of the determination of noncompliance
with Medicare and Medicaid participation requirements, as required
by 42
C.F.R. §498.40(a)(2). The SNF’s contention that
the notice letter which imposed a denial of payment for all new admissions
(DPNA) had ambiguous language that failed to adequately inform the
SNF of its due process requirements was without merit.
The letter’s language plainly informed the SNF of its
due process rights by clearly communicating that CMS imposed the sole
remedy of DPNA, by recommending that the SNF be terminated, and by
recommending that the SNF could file a written request for a hearing
on the remedy imposed in the letter within 60 days of receipt of the
letter. The SNF reframed its due process argument, which had already
been rejected, to argue that the ALJ abused her discretion by not
granting an extension of time for the SNF to file its hearing request,
and it failed to present any other explanation why it could not file
its request within the 60 day period. Waterfront Terrace, Inc.,
HHS Departmental Appeals Board, Appellate Division, Doc. No. A-10-52,
Dec. No. 2320, June 21, 2010, ¶122,242.
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