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Tuesday, March 8, 2011

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  • 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.
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Reimbursement Integrated Library

Reimbursement Advisor

Dennis Barry’s Reimbursement Advisor

February 2011, vol. 26, no. 6

In the February 2011 issue of Dennis Barry's Reimbursement Advisor, authors examine the ongoing controversy swirling around hospice cap regulations, the 2011 outpatient prospective payment system (OPPS) final rule, and risk management payments and write-offs as they relate to Medicare secondary payer (MSP) reporting requirements and provisions.
  • Risk management payments and write-offs:
    Medicare billing and reporting requirements. A common risk management tool to write off certain charges or make payment for medical services as a gesture of goodwill or in an attempt to lesson the probability of a liability lawsuit carries Medicare implications. In this article, the author examines these implications regarding Medicare secondary payer (MSP) reporting requirements and provisions.

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    • March 2011 Highlights --- Among the articles coming in the March issue::

    • medical necessity and inpatient rehabilitation
    • Medicare secondary payer application to research-related injuries, and
    • CMS's proposed rule for the value-based purchasing program.

Read this month's Advisor on IRN. Subscribers only

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Receivables Report

Receivables Report

February 2010, Volume 26, No. 2

  • Financial Counselor Qualities
    In the February "Management Corner" we're featuring an article that coincides with our contest winner profile about the qualities of a good financial counselor. Along those lines, we asked one hospital financial manager what he thinks are the most important qualities of a financial counselor. Number one was compassion, followed by a strong understanding of the patient's situation as it relates to finances, history of debts, and willingness to cooperate. See what you think!

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    • Read this month's Advisor on IRN. Subscribers only

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    HARA

    Hospital Accounts Receivable Analysis

    2nd Quarter 2010, vol. 24, no. 3
    • GDRO Improves
      In the second quarter of 2010, hospitals shaved two days from the average gross days revenue outstanding, bringing it to just over 40 days. Get more specifics about this key indicator when you review the HARA Report on Second Quarter 2010.
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    Headlines
    from Medicare and Medicaid Guide

    Implementation of new provider/supplier enrollment rules

    In pursuit of its continuing goal of reducing fraud, waste, and abuse in federal health care programs, effective March 25, 2011, CMS (1) will begin determining the level of screening to be conducted during provider and supplier enrollment based on the level of risk posed to the Medicare system, and (2) will require Medicare Administrative Contractors (MACs) to begin collecting application fees with the enrollment applications submitted by institutional providers and suppliers.

    Newly-enrolling and revalidating providers and suppliers will be placed in one of three screening categories for risk of fraud, waste, and abuse to the Medicare program – limited, moderate, or high. These categories will determine the degree of screening to be performed by the MAC processing the enrollment application. Screening procedures for the “limited” screening category will largely be the same as those currently in use; screening procedures for the “moderate” screening category will include all current screening measures, as well as a site visit; screening procedures for the “high” screening category will include all current screening measures, as well as a site visit and, at a future date a fingerprint-based criminal background check.

    CMS plans to continuously evaluate the assignment of categories of providers and suppliers to the various risk categories. Reassignment certain groups of providers and suppliers to a different category will be proposed in the Federal Register. CMS, however, does not plan to publish a notice in the Federal Register when an individual provider or supplier is reassigned based upon meeting one or more of the triggering events.

    Also effective March 25, 2011, MACs will begin collecting application fees with provider or supplier enrollment applications (both paper and online applications) for institutional providers or suppliers. The application fee is set at $505 for calendar year 2011. The application fees do not apply to physicians, non-physician practitioners, physician organizations, and non-physician organizations. Institutional providers include any provider or supplier that submits a paper Medicare enrollment application using the CMS-855A; CMS-855B, not including physician and non-physician practitioner organizations; CMS-855S; or the associated Internet-based Provider Enrollment, Chain, and Ownership System (PECOS) enrollment applications.

    CMS Press Release, March 5, 2011; Final rule with comment period, 76 FR 5862, February 2, 2011, ¶189,005

    Insurance mandate does not violate religious freedom

    The individual insurance mandate under Section 1501 of the Patient Protection and Affordable Care Act (P.L. 111-148) does not violate the Religious Freedom Restoration Act of 1993 (RFRA), according to the District Court of the District of Columbia. Under §1501 individuals must ensure that they and any dependent have minimum essential coverage after December 31, 2013. If an individual fails to obtain the minimum essential coverage, he or she must include with their annual federal tax payment a “shared responsibility payment,” which is a “penalty” consisting of a fixed dollar amount, codified under 26 U.S.C. §5000A.

    The district court held the individuals challenging §1501 must allege sufficient facts that show the mandate imposed a substantial burden their exercise of religion. The district court explained that under the RFRA, “religious exercise” includes “any exercise of religion, whether or not compelled by, or central to, a system of religious belief.” To determine an RFRA violation, the focus is on whether the adherent’s sincere religious exercise was substantially burdened. A substantial burden occurs when government action puts substantial pressure on an adherent to modify his or her behavior and to violate his or her beliefs, the district court explained.

    The district court held that the burden on the religious freedom of the individuals who brought this complaint did not rise to the level of a substantial burden. It was unclear to the court how Section 1501 put substantial pressure on the individuals to modify their behavior and to violate their beliefs, as §1501 allows them to pay a shared responsibility payment in lieu of actually obtaining health insurance. The district court noted that, as the government pointed out, the individuals already routinely contributed to other forms of insurance, such as Medicare, Social Security, and unemployment taxes, which present the same conflict with their belief that God would provide for their medical and financial needs.

    Even if §1501 did substantially burden the exercise of the individuals’ Christian faith, the court held, they failed to state a claim for relief under RFRA because the individual mandate provision serves a compelling public interest and is the least restrictive means of furthering that interest. Congress made clear that the goal of §1501 was to achieve universal health insurance coverage.

    Mead v. Holder, D. D.C., February 22, 2011, ¶303,686

    Resident training costs denied for lack of written agreement

    Reimbursement for shared medical education costs claimed by two hospital systems was properly denied by an intermediary because the hospitals did not have a written agrement that identified cost shares between the hospitals and a nonhospital site where their medical residents cared for patients, according to the Eighth Circuit Court of Appeals. The hospitals requested reimbursement for the shared training expenses of medical residents at the nonhospital facility for the period 1999 to 2001. The fiscal intermediary had partially denied the reimbursement request, but the district court ruled for the hospitals.

    Court’s reasoning

    The 8th Circuit held that for the years at issue a written agreement between the hospitals and the nonhospital site was required by 42 C.F.R. §413.86(f)(4)(ii) (1988). The written agreement had to specify: (1) the hospital would incur the cost of the residents’ salary and fringe benefits while the residents were training in the nonhospital site; (2) the hospital was providing reasonable compensation to the nonhospital site for supervisory teaching activities; and (3) the compensation the hospital was providing to the nonhospital site for supervisory teaching activities.

    The hospitals did not provide any written agreement that complied with the regulation’s specific requirements. A letter from a hospital’s chief executive officer did not indicate that covering the operating deficits was “compensation,” nor did the letter indicate how it was to be calculated. A 1994 “Statement of Agreement” provided the hospital would be fiscally responsible for the program only to the level no greater than the per resident actual reimbursement from Medicare or an all payer pool, but it expired in 1997 and did not place responsibility on the hospitals for the cost of the resident's salary and fringe benefits.

    The Statement of Agreement had actually absolved the hospitals of the responsibility for unreimbursed costs, the court explained. Accordingly, the lack of a written agreement alone sustained HHS denial, and, the district court’s judgment for the hospitals was reversed.

    Medcenter One Health Systems and St. Alexius Medical Center v. Sebelius, 8th Cir., February 25, 2011, ¶303,688

    Drug company’s rebate arrangement violated anti-kickback law

    Several claims included in consolidated qui tam complaints against a pharmaceutical manufacturer were dismissed, but allegations that the manufacturer’s rebate program with the nation’s largest provider of pharmacy services violated anti-kickback safe harbor requirements were sufficiently pled to survive a motion to dismiss. The consolidated case includes the complaints of several relators, the United States government and several states.

    The relators were former employees of the provider of pharmacy services. The relators alleged that the drug manufacturer and the provider had engaged in an agreement that required the provider's consulting pharmacists to recommend to the physicians of nursing home residents, that the use of the manufacturer’s name brand drugs would be better for the patients, therefore bypassing cheaper brands or generic equivalents. In exchange for the recommendations the provider would receive rebates that would be based on the provider’s purchases of a particular drug that met a threshold share of the market compared to the provider’s purchases of similar drugs from the manufacturer’s competitors. Also the drug manufacturer was monitoring how successful the implementation of similar programs would be in further shifting market share to the manufacturer’s products.

    The manufacturer does not deny that the payments to the pharmacy service provider were made, but disputes that they were unlawful, arguing that the payments all fell within the safe harbor provision of the statutory discount exception of the anti-kickback statute.

    Disclosure of rebate terms

    The district court denied the manufacturer’s motion to dismiss claims based on the False Claims Act, because, although the raw amounts of the rebates were disclosed to the government, the actual terms and conditions of the payments were not. According to the United States, the provider of pharmacy services submitted false claims to state Medicaid programs from 1999 to 2004, when it did not disclose the “kickback arrangement” with the drug manufacturer. The government contends that by not disclosing the kickback arrangements, the provider of pharmacy services violated multiple certifications in its claims for the manufacturer’s drugs.

    The district court held that compliance with the anti-kickback statute is not merely a condition of participation in federal health care programs but is also material to the government’s decision to pay any claim resulting from a kickback. The Tenth Circuit Court of Appeals has held that some regulations or statutes may be so integral to the government’s payment decision as to make any divide between conditions of participation and conditions of payment a “distinction without a difference,” the court said.

    The district court held that the government’s complaint was sufficiently pled according to Federal Rule 9(b). In addition, although several states claims were dismissed for various reasons, Kentucky and Virginia’s claims were allowed, as were two of Indiana’s claims based on Medicaid fraud and the state anti-kickback statute. Two relators’ claims were dismissed because one was barred by the public disclosure rule and the second relator’s claims failed to provide evidence that he was a person with direct and independent knowledge of the fraud regarding the “best price” allegations. Accordingly, the drug manufacturer’s motions to dismiss were granted in part and denied in part.

    United States of America v. Johnson and Johnson, D. Mass., February 25, 2011, ¶303,692
    Decisions and Developments
    CMS Manuals

    Updates to the Internet Only Manual Pub. 100-04, Chapter 1 - General Billing Requirements, Chapter 15 - Ambulance, and Chapter 26 - Completing and Processing Form CMS-1500 Data Set

    Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2162, February 22, 2011, ¶159,498.

    Screening for the human immunodeficiency virus infection

    Medicare National Coverage Determinations Manual, Pub. 100-03, Transmittal No. 131, February 23, 2011, ¶159,499; Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2163, February 23, 2011, ¶159,500.

    Healthcare Provider Taxonomy Codes update April 2011

    Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2164, February 25, 2011, ¶159,501.

    Use of claims history information in claim payment determinations

    Medicare Program Integrity Manual, Pub. 100-08, Transmittal No. 367, February 25, 2011, ¶159,502.

    Incentive payment program for primary care services, Section 5501(a) of the Affordable Care Act

    Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2161, February 25, 2011, ¶159,503.

    Update for Pub. 100-04, Medicare Claims Processing Manual, Chapter 31—ANSI X12N Formats Other Than Claims or Remittance

    Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2165, February 25, 2011, ¶159,504.

    Clarification to Change Request 6686 - Outpatient Mental Health Treatment Limitation

    Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2166, February 25, 2011, ¶159,505.

    April update to the calendar year 2011 Medicare Physician Fee Schedule database

    Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2167, February 25, 2011, ¶159,506.

    Recovery audit program underpayments instruction alteration

    Medicare Financial Management Manual, Pub. 100-06, Transmittal No. 184, February 25, 2011, ¶159,507.
    Medicaid

    Covered services and cost sharing

    The Secretary of the Vermont Medicaid agency properly overturned the decision of the Human Services Board increasing the beneficiary’s personal care services (PCS) from five to seven days per week plan of care and reducing her contribution to the cost of her care, called the “spend-down” requirement. The beneficiary had not requested additional hours of PCS; rather, she appealed an increase to her spend-down requirement. Specifically, the beneficiary contended that payments to her daughter for two days of PCS per week should be deducted from her spend-down requirement. Under the state spend-down rules, a beneficiary’s payments for noncovered services are deducted from the spend-down requirement. The payments were for PCS, which were covered and provided to her under the plan. Because the beneficiary had never requested seven days of PCS per week, the agency had never determined that the additional PCS were not covered. Therefore, the payments were not deductible under the state’s rules. In re: Brett, Vt., February 25, 2011, ¶303,690.

    FFP for case management services

    The Departmental Appeals Board (DAB) (see ¶122,060) ruled properly when it upheld CMS’ disallowance of about $44 million in expenditures for targeted case management (TCM) services by the Maine Medicaid agency. CMS’ action was based on the audit findings of the Office of Inspector General (OIG) that the claims for federal financial participation (FFP) included: (1) administrative expenses supporting the programs of the child welfare agency; (2) activities that did not fall within the agency’s definition of TCM, but were direct social services; and (3) a flat rate charged by the agency for TCM that was not based on costs as required. The auditors’ standards were based on CMS’ interpretation of the statute set forth in a Letter to State Medicaid Directors (see ¶50,537), which specified that TCM included assessing the beneficiary’s needs for services, making arrangements for the beneficiary to receive the services, and monitoring to assure that the needed services were provided. The letter specifically excluded direct social or medical services from the definition of TCM. Medical services arranged through TCM would be reimbursable as medical services, and social services were the responsibility of the agency that provided them. The CMS letter was a reasonable interpretation of the statute and entitled to deference.

    The state agency never produced evidence challenging the auditors’ findings after CMS and the OIG submitted a more detailed explanation as ordered by the DAB. Although the state disputed an item from the OIG sample, the disputed service did not qualify as TCM because the activity documented in the social worker’s notes was arranging a ride to court for the beneficiary’s abuser. The state agency also did not present any evidence, such as confirming letters or affidavits, that CMS agreed to the flat rate, and any such agreement would have violated Soc. Sec. Act §1903(a)(1)because the rate was not based on the state’s costs. Maine Department of HHS v. U.S. HHS, D. Me., February 25, 2011, ¶303,691.

    MOE requirements

    CMS has clarified the “maintenance of effort” (MOE) requirements for states’ methodologies and standards for eligibility for Medicaid and the Children’s Health Insurance Program (CHIP). The Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) requires states to maintain the eligibility standards, methodologies and procedures in effect on March 23, 2010. States that covered childless, nonpregnant, nondisabled adults under their Medicaid state plan or a waiver may not adopt more restrictive requirements for adults with incomes up to 133 percent of the federal poverty level (FPL) until the Secretary finds that the health insurance exchanges created under PPACA §1311are fully operational, expected to be January 1, 2014. If they covered adults at higher incomes, the states may amend their plans or waivers to reduce the income limit to 133 percent of FPL. Regarding the coverage of children, states must maintain the eligibility standards, methodologies and procedures in effect on March 23, 2010, until September 30, 2019.

    The PPACA MOE requirements apply to waivers under Soc. Sec. Act §1115as well as state Medicaid plans. If a waiver expires while the MOE requirement remains in effect, a state agency is not required to apply for a renewal or extension of the waiver.

    States that have or project a budget deficit either for the current or the next fiscal year may request that the Secretary determine that the Medicaid MOE requirements not apply for either or both fiscal years. The nonapplication period may begin no earlier than January 1, 2011, and may end no later than December 31, 2013. However, the MOE requirements of the American Recovery and Reinvestment Act of 2009 (ARRA) (P.L. 111-5) remain in effect through June 30, 2011, so states certifying a deficit before July 1, 2011 must be careful to avoid violating that requirement and losing the temporary increase in federal matching funds.

    The MOE requirements for CHIP are the same, except that after September 30, 2015, states may enroll children in qualified health plans certified by the Secretary on a showing that CHIP allotments are insufficient to cover the cost. States also may not reduce their eligibility limits below the levels in effect on June 1, 1997. CMS Letter to State Medicaid Directors, No. SMDL-11-001, February 25, 2011, ¶53,651.

    PPACA implementation

    CMS has released a Proposed rule to implement section 2401of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), which added attendant services under the Community First Choice (CFC) program as an optional Medicaid benefit. CFC is a more comprehensive form of the home- and community-based services (HCBS) benefit. States that amend their Medicaid plans to add this benefit must establish a Development and Implementation Council comprising a majority of elderly or disabled individuals and/or their representatives. Individuals whose incomes exceed 150 percent of the federal poverty level must be eligible for long-term institutional services under the state plan and must need the CFC services in order to avoid institutionalization. CFC will not be available to individuals living in a residential facility in the same building as or on the grounds of an inpatient care facility. CMS plans to apply this restriction to other forms of HCBS. Proposed rule, 76 FR 10736, February 25, 2011, ¶220,824.

    Health insurance exchanges

    The Arkansas Attorney General has issued an opinion that proposed legislation governing coverage of abortions in policies issued through the health insurance exchanges (HIE) does not conflict with either the requirements of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) or the state constitution. The legislation as originally proposed would prohibit policies offered through the HIE from covering any abortion services whatsoever. Anyone seeking coverage of abortion services would be required to buy a rider outside the exchange. A proposed amendment would permit coverage of abortion if the pregnant woman’s life is in danger or the pregnancy resulted from rape or incest.

    Neither version of the proposed law conflicts with PPACA because PPACA specifically allows states to ban coverage of abortion in policies offered through the HIE. In addition, neither law conflicts with the provision in the state constitution prohibiting the use of any state funds to pay for abortions except when the pregnant woman’s life is endangered. No state funds are spent on HIE policies. Although PPACA authorizes federal subsidies for individuals’ premiums for policies purchased through the HIE, no state funds are spent on the subsidies. Any requirements of federal Medicaid law concerning the funding of abortions do not apply to the policies sold through HIEs.

    The state senator who requested the opinion also asked whether the proposed amendment nullified the constitutional ban on use of state funds for abortion services. However, no state legislation can nullify the state constitution. Arkansas Atty. Gen. Op., No. 2011-20, February 23, 2011, ¶60,285.

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