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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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August 2008, Volume 23, No. 12

As the Centers for Medicare and Medicaid Services (CMS) continuously clarifies, amends and revises rules governing the myriad aspects of the Medicare regulations, so do the rules and their transformations continuously receive scrutiny. In the August 2008 issue, authors examine CMS’ final rule revising Provider Reimbursement Review Board (PRRB) appeals as well as the agency’s new additional criteria to define what is considered a new graduate medical education program. In addition, authors examine two recent federal district court decisions in which hospitals’ scrutiny of CMS policy results in rulings with favorable implications for providers.

• CMS issues final rule on PRRB appeals: An overview of changes and practical tips MA final rule issued in May revising the regulations governing Provider Reimbursement Review Board (PRRB) appeals makes significant changes that are effective August 21. Gone are the days a provider could mail its appeal to the PRRB on the 180th day after receiving its notice of program reimbursement and add issues up to the day of the hearing. In this article, the author examines the changes, as well as practical tips in managing the changes and new requirements in the PRRB appeals process.

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Fourth Quarter 2007, Volume 22, Number 1

• Uncollectibles. In the fourth quarter 2007, write-offs fell to 4.59 percent, a 0.20 percentage point improvement from the prior quarter. With improved uncollectibles performance in the fourth quarter, hospitals responding to the HARA Report secured better than benchmark level performance for this major financial indicator in three of the four quarterly financial reporting periods of 2007. The uncollectibles benchmark is to hold the percent of gross revenue written off as charity or bad debt to 5 percent or less of total gross revenue. For more on bad debt and charity, please see the HARA Report on Fourth Quarter 2007.

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The International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) and the International Classification of Diseases, Tenth Revision, Procedure Coding System (ICD-10-PCS) would be concurrently adopted as standard code sets for coding diagnoses and inpatient hospital procedures, respectively under certain provisions of the Administrative Simplification subtitle of the Health Insurance Portability and Accountability Act (HIPAA) of 1996 (PubLNo 104-191). When adopted as final, the ICD-10 codes would replace volumes 1, 2, and 3 of the ICD-9-CM. The functionality of ICD-9 codes has been exhausted and the code set can no longer add classification specificity, newly identified disease entities, and other advances that the ICD-10 codes would address. Official coding guidelines for coding diseases, injuries, impairments, other health problems and their manifestations, and causes of injury, disease, impairment, or other health problems would be affected by the proposed change. In addition, standards for eight electronic transactions mandated by the HIPAA and originally adopted in the regulations entitled “Health Insurance Reform: Standards for Electronic Transactions,” (¶180,103) would be modified for usage in dental, professional, and institutional health care transactions. Proposed rule, 73 FR 49795, Aug. 22, 2008, ¶220,677; and Proposed rule, 73 FR 49741, Aug. 22, 2008, ¶220,676.

CMS is adding more information to its Hospital Compare consumer Web site to allow people to better compare the quality of care provided by their local hospitals. The new additions bring the total to 26 process of care measures, three outcome of care measures, two children’s asthma care measures, and 10 patient experience of care measures. Hospital Compare also contains information about the number of certain elective hospital procedures provided to patients and what Medicare pays for those services. The site is http://www.hospitalcompare.hhs.gov. For mortality rates, hospitals are placed in one of three categories based on their performance in relation to a national rate – “no different than the U.S. national rate,” “better than the U.S. national rate” or “worse than the U.S. national rate” – to provide results that are clear to patients and consumers, according to the Hospital Quality Alliance. In addition to the mortality data, hospitals also are sharing information on how many times they took the appropriate steps in treating pediatric asthma patients, it said. CCH Washington Bureau, Aug. 20, 2008.

A district court issued a preliminary injunction prohibiting the California Department of Health Services from implementing a 10 percent reduction in the Medi-Cal fee-for-service (FFS) reimbursement rate paid to providers for services on or after July 1, 2008. The prohibition of the cut was not applicable to services provided at acute care hospitals or reimbursements to managed care organizations. The healthcare providers argued that Federal law was superior to state law and prohibited the implementation of California Assembly Bill X3 5 (AB 5) because it was preempted by 42 USC 1396a(30)(A) , which according to the Ninth Circuit in Orthopaedic Hospital v. Belshe (see ¶45,001), requires the Department to conduct reasonable cost studies that provide reliable data for rate-setting. The record showed that the Department did not conduct the appropriate studies to determine if the rate cut would result in reduced access of care if AB 5 is implemented and that irreperable harm would come to Medi-Cal enrollees and providers if the cut was implemented. The court held that the public's access to health care outweighs fiscal concerns, which in this case include California's $14.3 billion budget deficit. Independent Living Center of Southern California v. Shewry, W.D. Cal., Aug. 18, 2008, ¶302,604.

The evidence did not support a reasonable inference that a durable medical equipment (DME) supplier knowingly submitted false or fraudulent claims because there was substantial confusion created by contradictory instructions given by CMS and its contractors to that supplier. The district court's summary motion in favor of the DME supplier was affirmed.  The DME supplier rented special mattress overlays to be used over hospital mattresses as a way to prevent or to relieve patients' bedsore or pressure ulcers. The mattress overlays should have been billed using a miscellaneous code; however, the Medicare carrier instructed the DME supplier to bill under a more lucrative code that is usually used for more expensive powered mattresses. Carriers in other states said the power mattress code was not to be used. CMS also issued contradictory and confusing statements as to which code to use. The DME supplier attempted to resolve this confusion by writing letters to the durable medical equipment regional carriers (DMERCs) after the transition from carriers to DMERCs for payment, but did not receive clear instructions. U.S. v. Medica Rents Company, Ltd., 5th Cir., Aug. 19, 2008, ¶302,603.

Enrollees who filled one or more prescriptions, 26 percent had spending high enough to reach the coverage gap. Fifteen percent of these reached catastrophic coverage limits, according to a study by the Henry J. Kaiser Family Foundation. The share of enrollees who reached the gap ranged from 25 percent of enrollees age 65-74 to 33 percent of those age 85 and older. Half of all enrollees who reached the coverage gap did so by the end of August. Averaged across enrollees using drugs in one or more of the eight drug classes, 20 percent who reached the coverage gap either stopped taking a medication in that drug class, reduced their medication use, or switched to a different medication in that class. Of those who reached the gap: 15 percent stopped taking their medication; five percent switched to an alternative drug in that class, and one percent reduced their medication use. CCH Chicago Bureau, Aug. 27, 2008.

New Jersey improperly received $162,548 in federal Medicaid reimbursement for 111 of 161 claims for family planning services provided on an inpatient basis paid at the enhanced 90 percent rate. Of the 111 improper claims, 103 should have been paid at the blended rate because services other than family planning services were provided at the same time, and 7 claims for cesarean delivery and sterilization did not have the required sterilization consent form. The improper reimbursements occurred because the state Medicaid management information systems (MMIS) did not have edits or controls to identify all claims for which a family planning service was performed with a non-family planning procedure during a single inpatient hospital stay. It was recommended that the state agency: (1) refund the $162,548 to the federal government; (2) develop edits and controls so MMIS can identify claims for which a family planning service was performed with a non-family planning procedure during a single inpatient hospital stay; (3) reinforce guidance to hospitals that a properly completed sterilization consent form must be prepared and submitted in accordance to federal requirements for all Medicaid sterilizations; and (4) determine the amount of federal Medicaid funds improperly reimbursed at the 90 percent rate for inpatient hospital services subsequent to the audit and refund that amount to the federal government. OIG Report, No. A-02–06–01020, Aug. 11, 2008, ¶52,378.

The Secretary of the Treasury has certified a rate of 11 percent for the quarter ended June 30, 2008, for overdue debts subject to collection by HHS. The rate will remain in effect until HHS is notified of any change. The rate generally cannot be lower than the Department of Treasury's current value of funds rate or the applicable rate determined from the “Schedule of Certified Interest Rates with Range of Maturities.” Notice , 73 FR 49676, Aug. 22, 2008, ¶262,126.

Twelve of 285 drug codes had average sales prices (ASP) that exceeded average manufacturer prices (AMP) for Medicare Part B prescription drugs by at least 5 percent in the fourth quarter of 2007. The Office of Inspector General (OIG) estimated that Medicare expenditures would have been reduced by $20 million during the second quarter of 2008 if the reimbursement amounts for all 12 codes had been based on 103 percent of the AMPs. Under the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) (PubLNo 110-173), the OIG must compare ASPs to AMPs and if the ASP for a drug exceeds the AMP by a certain percentage (currently 5 percent), then the Secretary may disregard the ASP for the drug when setting reimbursement amounts. For over half of the 12 drug codes, the ASPs exceeded AMPs by 20 percent or more; three ASPs were more than double the AMPs. The OIG made no additional recommendations. OIG Report, OEI-03-08-00340, Aug. 12, 2008, ¶52,376.

A district court does not have subject matter jurisdiction to hear a challenge to a CMS Administrator's decision when the administrative appeals process is still ongoing and has not yielded a final agency action. In 1997, a skilled nursing facility in Plymouth, Mass., applied for a new provider exemption, which was denied by CMS. On appeal, the Provider Reimbursement Review Board (PRRB) reversed CMS' determination and granted the exemption. After reviewing the record, however, the CMS Administrator vacated the PRRB's decision and remanded the matter back to CMS to consider criteria set forth in an earlier decision. The facility then filed its complaint with the court, challenging the remand and alleging that the Administrator had violated the Medicare statute and exceeded its authority. The HHS Secretary moved to dismiss the complaint, arguing that the Administrator's remand was an interim decision and not a final agency action subject to judicial review; thus, the Court lacked subject matter jurisdiction to hear the dispute. The Court granted the Secretary's motion, concluding that the matter was still moving through the agency's administrative review process and that once a final decision had been reached, the facility would be free to have its claims heard by a federal court. After the remand was ordered, CMS issued a "final determination" denying the exemption request, and the facility again appealed to the PRRB. That appeal is pending. Jordan Hospital v. Leavitt, D. D.C., Aug. 15, 2008, ¶302,601.

Sections of the Final rule pertaining toprovider reimbursement determinations and appeals enacted on May 23, 2008 (see ¶180,742)regarding the usage and filing of mandatory group appeals and intermediary hearing procedures have been corrected. Final rule, corrected, 73 FR 49355, Aug. 21, 2008, ¶180,826.

The Accreditation Commission for Health Care (ACHC) has applied for continued recognition as a national accrediting organization for home health agencies (HHAs) under Medicare and Medicaid. Comments on whether ACHC's survey procedures identify whether an HHA meets or exceeds the Medicare and Medicaid conditions of participation are due by September 21, 2008. Notice, 73 FR 49681, Aug. 22, 2008, ¶262,130.

Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 1579, Aug. 21, 2008, ¶157,651. Premium content

Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 1580, Aug. 22, 2008, ¶157,652. Premium content