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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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September 2006, Volume 22, No. 1

At every turn, it appears, health care provider organizations’ financial struggles only seem to get worse. Among the latest items added to providers’ bag of financial challenges: the Centers for Medicare and Medicaid Services (CMS) is floating the idea of health savings accounts for Medicare beneficiaries (read, increase in uncompensated care). An overview of this and other issues in the upcoming edition of Dennis Barry’s Reimbursement Advisor include:

• Administrative decisions as precedent. Although administrative decisions may not technically be considered precedent, the Provider Reimbursement Review Board (PRRB) has made it clear it does expect fiscal intermediaries to attempt to re-litigate issues for which prior administrative decisions apply. Providers, however, operate on a different plane regarding this issue. Indeed, providers can and should pursue appeals if the provider has a good faith belief that a court may disagree with an agency decision.

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Fourth Quarter 2005, Volume 20, Number 1

Despite some increases in key performance indicators, US hospitals are still performing relatively well, according to data from the fourth quarter of 2005, which we are reporting in this issue of HARA, the Benchmark in Hospital Receivables.

• Major Indicators. Hospitals strive to achieve an average gross days revenue outstanding (GDRO) of fewer than 60 days. Those facilities responding to the HARA survey reported that average GDRO rose slightly from 51.18 days to 51.55 days. So, while there was an increase, it was still well under the benchmark.

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Although Medicare Part A and Part B premiums and deductibles will increase in 2007, the increases are modest in comparison to recent health care cost trends, according to CMS. For 2007, the Medicare Part A premium will be $410, an increase of $17 from 2006. The Medicare Part A deductible will be $992 in 2007, an increase of $40 from 2006.

The Part B deductible will be $131 in 2007, an increase of $7 from 2006. The Medicare Part B premium will increase only $5 to $93.50 in 2007, the smallest percentage increase in the Part B premium since 2001. Moreover, one-fourth of beneficiaries can receive assistance that will pay for their entire Part B premium. The premium amount is dependent upon a scheduled 5 percent reduction in Medicare physician reimbursements in 2007. If the cut is reversed, as it has been for the past four years, the monthly premium will increase by $1.50. CMS Release, Sept. 12, 2006, ¶51,577.

The Eleventh Circuit Court of Appeals upheld the conviction of an owner of several home health agencies (HHAs) for conspiracy to submit false claims to the government under the Medicare related organizations regulations. In addition to owning the HHAs, the owner exerted an extensive amount of control over the management consulting agency he hired to provide management services to his HHAs. Failure to accurately report on the HHA's cost reports that a related party is providing management consulting services is actionable as a false statement under the Medicare related party regulation because the related party has the ability to influence significantly the terms of the ultimate agreement. If a provider receives services from a related organization, the reimbursement is limited to the supplier's cost rather than the amount paid by the provider.

According to the allegations, the owner of the HHAs set up a friend as the figurehead owner of a management consulting agency to maximize the amount billable to Medicare and circumvent the regulation. The evidence showed that the HHAs' owner created the consulting company, managed its day-to-day affairs, and directed the work of the employees. The owner took steps to conceal the relationship including dummy employment contracts, false corporate minutes, straw owners, forged contracts, and backdated correspondence. Furthermore, none of the HHAs indicated that the consulting firm was a related party on their cost reports. United States v. Gupta, 11th Cir., Sept. 5, 2006, ¶301,883.

A federal court in Connecticut has ruled that Connecticut's productivity requirements for the usual payment rate for federally qualified health centers (FQHCs) violates federal Medicaid law, despite CMS' approval of the system in the state plan.

The state's rate system used a “productivity screen”, by which the clinics where physicians saw fewer than 4,200 patients per year received a reduced payment. CMS had approved the state plan amendment implementing the Benefit Improvement and Protection Act (BIPA) (PubLNo 106-554) requirements and including the 4,200-visit requirement. Several FQHCs sued the state, contending that the productivity screen violated the BIPA requirement that the rate cover 100 percent of the average per patient cost of providing services. The agency argued that CMS' approval of the state plan amendment was a determination that the plan complied with the law, and that the court should defer to the agency's interpretation.

The court examined the extent of the authority that Congress had granted the agency and found that the CMS interpretation was entitled to deference. Noting that deference is “not a rubber stamp,” the court first considered whether the statute addressed the issue directly. The statute directed the agency to consider the costs which are “reasonable and related to the cost of furnishing such services,” describing alternative methods of determining which costs were reasonable, but it did not address the use of productivity screens.

The court found that CMS had never actually considered whether the screen developed in the 1970's for RHCs accurately measured the costs of FQHC services either in 1996 or in 2001, when it approved the state plan amendment. The agency had approved the state plan amendment using CMS' standard and assumed that the standard was reasonable because CMS had been using it. Under those circumstances, the court was not obligated to follow CMS' interpretation of the statute. Because the relationship of the productivity screen to the costs of providing services had not been established, the state could not use it, and the clinic was entitled to reimbursement without the reduction. Connecticut Primary Care Association v. Wilson-Coker, D. Conn., Sept. 1, 2006, ¶301,885.

A federal court in New York has ruled that Medicaid recipients may proceed with their claims that the agency misrepresented the amount of its lien against their personal injury settlements. The recipients are children with disabilities resulting from birth-related injuries caused by medical malpractice. Each child brought a personal injury claim and was ultimately awarded damages. Each had received medical assistance related to the injuries, for which the Medicaid agency, claimed a lien against the damage awards. After the liens had been paid in full, the parents of the recipients learned that they had reimbursed Medicaid for special education and related services that the Individuals with Disabilities Education Act (IDEA) (20 U.S.C. §1400 et seq.) required the state to provide at no charge.

The city and state raised several technical defenses. First, argued that the recipients could not challenge the amount of the liens because those claims could only have been raised in the personal injury cases. However, the court found that the recipients' dispute with the Medicaid agency was not so closely related to the malpractice claims against the health care providers as to preclude the recipients from raising them later in a different case. The agencies also argued that the recipients did not have standing to challenge the liens because they had assigned their claims to Medicaid as a condition of receiving assistance, so that they had no right to the Medicaid payments. The court ruled, however, that their assignment of the claims for medical care, and therefore, the Medicaid liens, included only the cost of the medical care.

Finally, the states argued that the recipients had no claims because the time designated under the statute of limitations had passed. The court ruled that the limitations period had passed only as to the parents' personal claims, because the children, being minors, were not subject to the requirement. Therefore, the court dismissed the claims under the state social services law and the parents' personal claims, but denied the motion to dismiss the children's claims under federal law. Green v. City of New York, E.D. N.Y., July 17, 2006, ¶301,884.

The lien of a state Medicaid agency for its expenditures for the care of a recipient injured in an auto accident could not be enforced after the widow amended her complaint, changing the suit from a personal injury claim to wrongful death, according to a Utah federal court. The agency must sue the party who caused the injuries.

The recipient was injured in an auto accident in which a Ford vehicle rolled over. He received medical assistance from the Nevada Medicaid agency. He and his wife brought a personal injury claim against Ford, and the agency submitted a claim for its lien. He died four years after bringing his lawsuit. After his death, his widow amended her complaint to change the legal theory from a personal injury claim to one for wrongful death. The Medicaid agency asked the court for permission to participate in the lawsuit to enforce its lien. The widow acknowledged that the agency had a lien against any settlement paid to her husband or to his estate. She opposed the motion, arguing that the legal rights to any damage award belonged to the heirs personally, not to the decedent or his estate.

The agency argued that the widow was simply manipulating the distribution of settlement proceeds in order to avoid the lien. The court acknowledged that the only significant change to the complaint was in the request for relief. Nevertheless, the amendment was permissible under state law, and the decision to pursue one claim or the other belonged entirely to the widow. Dexter v. Ford Motor Co., D. Utah, July 31, 2006, ¶301,889.

The Congressional Budget Office (CBO) has released preliminary estimates for recommended physician payment and sustainable growth rate (SGR) reform proposals, most of which continue to rise in cost. Since 2002, the SGR mechanism has called for a reduction in payment rates for physicians' services. Spending has consistently exceeded projections, and at the end of 2005, total spending since the SGR was put into place was approximately $30 billion above the cumulative target. As a result, under current law, the SGR mechanism will substantially reduce payment rates. The CBO estimates that payment rates could decline by a total of 25 to 35 percent during the next several years if physicians continue to provide services at their current rate.

Reducing payment rates for physicians will prompt doctors either to increase the volume and intensity of their services or to drop out of the Medicare program, according to the CBO. In the CBO's report, overriding the formula with a 1 percent rate increase in 2007 would raise outlays by $6 billion over the next 10 years if the update is not treated as a law or regulation, and by potentially $31 billion over the next decade if it is put in place by a change in the law or regulation. Replacing the formula with an inflation index would cost as much as $218 billion by 2016. CBO Report, Sept. 6, 2006, ¶51,576.

Hospital quality reporting programs encourage quality improvement, but are poorly coordinated and require large amounts of resources, according to a study published in the journal Health Affairs. The study of 36 hospitals found that the hospitals participated in multiple reporting programs. While all hospitals participated in the CMS and Joint Commission on Accreditation of Healthcare Organizations reporting programs, each hospital participated in an average of 3.3 additional programs. These reporting programs play complimentary roles. Due to their regulatory and payment leverage, national programs are able to involve hospitals that would not otherwise consider quality reporting a high priority. Smaller, specialized programs can be more responsive to the needs of individual organizations. Voluntary programs focus priorities at hospitals that seek more involvement with quality reporting. Although recent studies suggest that quality reporting has improved performance, no causal link has yet been demonstrated. Health Affairs, September/October 2006.