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HEADLINES
What's New in Medicare and Medicaid
Answers Now
Monday, July 12, 2010
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Decisions and Developments
CCH® Reimbursement Integrated Library
The Reimbursement Integrated Library delivers the key performance indicators for maximizing reimbursement. The Library includes three invaluable titles:
- Dennis Barry's Reimbursement Advisor - This monthly newsletter provides all the facts about reimbursement strategies to minimize the adverse effects of DRGs, RBRVs, APCs and capitation to optimize hospital reimbursement.
- Receivables Report - This monthly newsletter includes actual profit-improvement examples from facilities nationwide, secrets for successfully challenging denials, tips for using automation to increase cash flow, and strategies your colleagues are using now to prepare for health care reform.
- Hospital Accounts Receivable Analysis - This quarterly journal is a synopsis of statistical data related to hospital receivables.
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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
July 2010, Volume 25, No. 7
Avoid Eligibility Denials
Health care providers commonly face a variety of claim denials based on patient eligibility. This month, we look at some of those common denials and how best to avoid them. For example, if a payer has a preferred plan that is processed in, say, Virginia specifically for the exempt staff of an employer, the claim may be denied if the claim is submitted to the local third-party administrator who processes the claims for the hourly workers. Learn more about these problems so you can prevent them in your office by reading the July Receivables Report.
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Hospital Accounts Receivable Analysis
1st Quarter 2010,
vol. 24, no. 1
- Write-offs Rise Again.
US hospitals wrote off more gross revenue as uncollectible in first quarter 2010 than in the final quarter of 2009, with an increase in charity write-offs driving up the percentage. Hospitals reported 5.60 percent of total first quarter 2010 gross revenue was written off as charity or bad debt, up from 5.29 percent of gross revenue written off as uncollectible in the final quarterly financial reporting period of 2009. Get all the details in the HARA Report on First Quarter 2010.
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Headlines
from Medicare and Medicaid Guide
CY 2011 OPPS and ASC include health reform changes
Reimbursement for services provided under the outpatient prospective
payment system (OPPS) will increase by 2.15 percent beginning January
1, 2011; reimbursement for services provided under the ambulatory
surgical centers (ASC) payment system will receive no increase, according
to an advance release copy of a Proposed rule issued by CMS. For services
provided during calendar year (CY) 2011 CMS is expecting to reimburse
$40 billion for services covered under OPPS at an estimated 4,000
providers and $4 billion for services provided at an estimated 5,000
ASCs.
The annual increases include a reduction to the market basket
increase as prescribed by he Patient Protection and Affordable Care
Act (PPACA) (P.L.
111-148). The market basket increase for OPPS was 2.4 percent
reduced by 0.25 percent as required by PPACA. The market basket increase
for ASC services was 1.6 percent and the PPACA productivity reduction
was 1.6 percent resulting in no increase for services provided in
2011.
Provisions in PPACA waived the deductible and copayment for
preventive services that are paid under OPPS and the ASC payment system.
This waiver applies not only to the 20 percent coinsurance for physician
services, but also to any cost-sharing related to payments for the
facilities. Services included in this waiver are the Initial Preventive
Physical Examination as well as mammography screenings, pap smears
and screening pelvic exams, prostate cancer screening tests, colorectal
cancer screening tests, diabetes outpatient self-management training
services, bone mass measurement services, glaucoma screenings, medical
nutrition therapy services, cardiovascular screening blood tests,
diabetes screening tests, ultrasound screening for abdominal aortic
aneurysm, electrocardiogram and any other services given a grade of
A or B by the United States Preventive Services Task Force.
Quality and supervision requirements
For the CY 2012 payment determination, CMS is proposing to validate
data from 800 randomly selected hospitals. For each hospital, CMS
is proposing to randomly select up to 12 cases per quarter. CMS is
proposing to request the corresponding medical records for the cases,
perform its own abstraction of the chart-abstracted measures for the
cases, and compares the results with the measures reported by the
hospital. Hospitals would be required to achieve a minimum 75 percent
validation score to receive the full OPPS update in CY 2012.
Six additional quality measures would be added to the current
list of 11 measures that must be reported in CY 2011. These new measures
include one structural health information technology (HIT) measure,
four claims-based imaging efficiency measures, and one chart-abstracted
measure for the emergency department. In addition, the Proposed rule
identifies quality measures that may be adopted for 2012 and 2013.
Providers that fail to report these quality measures will have their
annual update reduced by 2 percent.
Under the Proposed rule, CMS would require direct supervision
for the initiation of a service followed by general supervision after
the initiation period for a limited set of “non-surgical extended
duration services,” including observation services. Under current
policy, direct supervision is required for the duration of all outpatient
therapeutic services in both hospitals and critical access hospitals
(CAHs), although CMS issued instructions to contractors to not enforce
the direct supervision requirement in CAHs for CY 2010. The proposal
to require direct supervision followed by general supervision for
certain non-surgical extended duration services would apply to both
hospitals and CAHs for CY 2011.
For services beginning in CY 2011, the wage adjustment factor
applicable to a OPPS provider that is located in a state in which
at least 50 percent of the counties have a population per square mile
of less than 6 (excluding Alaska and Hawaii ) may not be less than
1. For CY 2011, CMS is proposing to adjust the wage index for all
OPPS hospitals located in a frontier state in a non-budget neutral
manner as specified by PPACA.
ASC changes
The Proposed rule is adding five surgical procedures to the
list of procedures for which Medicare would pay when performed in
an ASC. CMS is also proposing to newly designate six procedures as
office-based procedures (subject to payment at the lesser of the national
office practice expense payment to the physician or the national standard
ASC rate) and to update the list of covered ancillary services to
reflect the proposals in the OPPS update.
An advance copy of the Proposed rule is available online at ¶220,762.
The Proposed rule is expected to be published in the Federal
Register on August 3, 2010 and will be reproduced as a pamphlet
in a report after that date. Comments are being accepted on the Proposed
rule until August 31, 2010.
CMS Release, July 2, 2010.
Obama names Berwick as new CMS Administrator
President Obama on July 7 used his “recess appointment” authority
to name Dr. Donald Berwick as the new CMS Administrator. The president
nominated Berwick for the position in April, but Congress had not
yet scheduled confirmation hearings. CMS has not had a permanent administrator
since 2006.
Under Article II, section 2 of the U.S. Constitution, the president
has the authority to fill “all vacancies that may happen during
the Recess of the Senate, by granting Commissions which shall expire
at the End of their next Session.” As a result, Berwick will
serve as Administrator at least until the end of 2011.
Dan Pfeiffer, White House communications director, justified
the use of the recess appointment on his blog, noting that “Many
Republicans in Congress have made it clear in recent weeks that they
were going to stall the nomination as long as they could, solely to
score political points.”
Berwick is president and chief executive officer of the Institute
for Healthcare Improvement, Clinical Professor of Pediatrics and Health
Care Policy at the Harvard Medical School and Professor of Health
Policy and Management at the Harvard School of Public Health. He is
also a pediatrician, adjunct staff in the Department of Medicine at
Boston’s Children’s Hospital and a consultant in pediatrics
at Massachusetts General Hospital. He has served as Chair of the
National Advisory Council of the Agency for Healthcare Research and
Quality, and as an elected member of the Institute of Medicine (IOM).
He served on the IOM’s governing Council from 2002 to 2007.
In 1997 and 1998, he was appointed by President Clinton to serve on
the Advisory Commission on Consumer Protection and Quality in the
Healthcare Industry.
CCH Chicago Bureau, July 8, 2010.
HHS issues rule on health information privacy, security
The Department of Health and Human Services, along with the
National Coordinator for Health Information Technology (ONC) and the
HHS Office of Civil Rights (OCR) will publish a Proposed Rule in the Federal
Register July 14 to modify health information regulations
issued under the Health Insurance Portability and Affordability Act
of 1996 (HIPAA). The proposed regulations implement statutory amendments
of the Health Information Technology and Clinical Health Act (HITECH),
which was part of the American Recovery and Reinvestment Act of 2009
(P.L. 111-5).
The proposed rule will expand individual rights to access personal
health information and restrict certain disclosures of protected health
information to health plans; require business associates of HIPAA-covered
entities to be covered by most of the same rules as covered entities;
set new limits on the use and disclosure of protected health information
for marketing and fundraising; and prohibit the sale of protected
health information without patient authorization
Further details of the proposed rule, as well as a pamphlet
containing the text of the proposed rule, will appear in an upcoming
report.
CCH Chicago Bureau, July 9, 2010.
Bona fide sale required for depreciation adjustments
The CMS Administrator’s imposition of a bona fide sale
requirement on consolidating hospitals as a condition of permitting
the payment of depreciation adjustments was not arbitrary or capricious
nor did it constitute a regulatory reversal, according to the U.S.
district court for the District of Columbia. Substantial evidence
supported the Administrator’s conclusion that the consolidation
did not result in a bona fide sale, the court said.
The Secretary’s interpretation of 42 C.F.R. §413.134(l)(3) to
permit depreciation adjustment payments only if there has been a bona
fide sale is consistent with the text of the regulations
and has been repeatedly upheld by the courts. The consolidated hospital
contended that, at the time the consolidation took place, consolidating
providers were not subject to the bona fide sale
requirement, and that the imposition of the requirement represented
a reversal of position. The hospital cited letters from former CMS
officials, which do not carry the force of law, to support its argument,
which courts have rejected this same argument in the past.
Bona fide sale
The hospital argued that even if it was subject to the bona
fide sale requirement, the sale did not require the payment
of reasonable consideration, but only the payment of any consideration.
Even though Medicare regulations at the time of the consolidation
did not define a bona fide sale, they did communicate
that a bona fide sale would involve a price that
approximated market value. The purpose of the bona fide sale
requirement is to ensure that any depreciation adjustment will reflect “economic
reality,” so courts have consistently held that reasonable
consideration is necessary for a bona fide sale.
The CMS Administrator was correct to examine the reasonableness
of consideration in its analysis of whether a bona fide sale
had occurred, the court ruled. When the consolidation took place,
the consolidated hospital gained title to all of the consolidating
hospitals’ assets and assumed responsibility for all of their
liabilities. While the consolidated hospital contended that the assumption
of the liabilities constituted reasonable compensation, evidence illustrated
that the consolidated hospital assumed considerably less in liabilities
than the current worth of the assets and investments it received.
While the consolidated hospital argued that it also assumed additional
unknown and contingent liabilities, the possibility that those additional
liabilities could account for such a large discrepancy between the
consideration given and the market value of the assets does not invalidate
the Administrator’s finding of “substantial evidence” that
a bona fide sale did not take place.
Pinnacle Health Hospitals v. Sebelius,
U.S. District Court, D. District of Columbia, June 28, 2010, ¶303,480.
SNF’s noncompliance put resident in immediate jeopardy
CMS correctly imposed an immediate jeopardy-level civil monetary
penalty and a denial of payment for new admissions on a skilled nursing
facility (SNF) for failing to notify a resident’s physician
and family when a significant change occurred in his condition and
for failing to provide each resident with sufficient fluid intake
to maintain proper hydration and health, according to the U.S. Court
of Appeals, Sixth Circuit. Additionally, it was not arbitrary or capricious
for an Administrative Law Judge to conclude that it would only review
those deficiencies that had a material impact on the outcome of the
dispute, in the interests of judicial economy.
Significant change and
immediate jeopardy
While the SNF argued that there was not a “significant
change” in the resident’s condition (see 42 C.F.R. §483.10(b)(11)),
substantial evidence supported the finding of fact that a substantial
change had occurred in the resident’s physical condition when
he lost 18.5 pounds over a three week period, which triggered the
regulatory obligation to notify the resident’s physician and
family. The SNF argued against the finding of a significant change
because the Department Appeals Board did not refer to a specific date
or benchmark when such a change would have occurred. The resident
suffered a significant change in his condition when his food intake
sharply declined over a three week period because the SNF had previously
decided that the resident was at high risk for malnutrition and that
his food intake was to be closely monitored.
Nothing in the record suggested that the resident’s doctor
or his family was informed of the decrease in food intake at any point
during this period of time. Given these particular circumstances,
no date or benchmark was needed to find that a significant change
in the resident’s condition had occurred. The SNF’s noncompliance
with this regulation put the resident in immediate jeopardy despite
the impossible determination that a more timely intervention or more
timely notification of the resident’s physician and family would
have prolonged the resident’s life. The fact that the resident
had experienced a similar condition earlier in his stay at the facility
where his family refused the insertion of a feeding tube does not
change the SNF’s notification obligations in this recurrence.
Federal regulations require SNFs to “provide each resident
with sufficient fluid intake to maintain proper hydration and health” (see 42 C.F.R. §483.25(j)),
and the SNF failed to substantially comply with this requirement by
not following its own hydration policies, the court stated. Even though
the regulations did not specifically require the SNF’s procedure
of calculating resident hydration needs, once a facility chooses a
method of assuring sufficient fluid intake, a CMS surveyor is permitted
to rely on that chosen method as its standard of compliance, according
to the court. Substantial evidence showed that the SNF’s staff
was not knowledgeable of or compliant with the facility’s hydration
monitoring policies and procedures.
Claiborne-Hughes Health Center v. Sebelius,
U.S. Court of Appeals, Sixth Circuit, June 25, 2010, ¶303,479.
Council begins developing national health strategy
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