MHA's Executive Briefing

Medicare Audit Improvement Act introduced in Senate

Sens. Mark Pryor (D-AR) and Roy Blunt (R-MO) on May 22 introduced a Senate companion to the Medicare Audit Improvement Act (S. 1012 /H.R. 1250), legislation strongly supported by the American Hospital Association to improve the Recovery Audit Contractor program and other Medicare audit programs. AHA applauded the action and encouraged quick passage by Congress.

“Hospitals are inundated with multiple auditing programs (Recovery Audit Contractors, Medicare Administrative Contractors and Comprehensive Error Rate Testing Contractors),” said AHA Executive Vice President Rick Pollack. “These duplicative audits, unmanageable medical record requests and inappropriate payment denials are overwhelming hospitals and diverting resources from patient care. According to an AHA survey, when hospitals decide to commit the time and resources necessary to fight RAC denials in the Medicare appeals process, they are successful at overturning the RAC denial 72% of the time. This legislation provides much needed guidance for auditors while keeping them out of making medical decisions that should be between patients and their physicians. It also will improve recovery auditor transparency and allow denied inpatient claims to be billed as outpatient claims when appropriate.”

Reps. Sam Graves (R-MO) and Adam Schiff (D-CA) introduced the bill in the House.

Hospital CMO: Fighting RACs "Not a Level Playing Field"

At an executive briefing hosted by the American Hospital Association on May 21, four health system leaders described their challenges in dealing with undue denials by Medicare Recovery Auditors, formerly known as recovery audit contractors. Read more from Becker's Hospital Review here.

HHS issues payment rate changes to the ACA's temporary "high-risk" plan program

On May 17, the Department of Health and Human Services (HHS) released an interim final rule with comment period setting new payment rates for services delivered to individuals enrolled in the federally-administered Pre-Existing Condition Insurance Plan (PCIP) program effective June 15, 2013. The rule specifies that most covered services furnished to enrollees in the federally-administered PCIP program will be paid at 100 percent of Medicare payment rates or, where Medicare payment rates cannot be implemented by the federally-administered PCIP, 50 percent of billed charges or a rate using a relative value scale.

Furthermore, in most circumstances, the rule prohibits facilities and providers from “balance billing,” or charging the enrollee an amount greater than the enrollee’s cost-sharing amount as calculated by the plan. While the American Hospital Association supports providing access to health care coverage for uninsured individuals with pre-existing conditions, they are concerned about HHS setting mandatory Medicare rates for most services provided to these enrollees.

Highlights of the interim final rule follow.

Background

The Patient Protection and Affordable Care Act (ACA) established a temporary high-risk insurance program to provide health insurance coverage to eligible uninsured individuals with pre-existing conditions. The program took effect June 21, 2010 and will end Jan. 1, 2014 when other ACA health coverage provisions begin, including new qualified health plans offered through the health insurance exchanges.

The ACA directed HHS to establish, directly or through contracts with states or nonprofit entities, the high-risk pool program. HHS contracted with some states to administer a high-risk pool using PCIP funds, known as “state-based PCIPs;” HHS administers a high-risk pool in the remaining states and the District of Columbia, known as “federally-administered PCIPs.”

Funding for the risk pool was set in statute at $5 billion. Since its inception, approximately 135,000 individuals have accessed the plan.

Interim Final Rule

The interim final rule applies only to the federally-administered PCIP.

Insufficient Funds. HHS states that the overall cost of the PCIP program is higher than originally projected and funding will expire unless the department implements policy changes. The ACA requires the HHS Secretary to make adjustments to eliminate any projected deficit. Over the past two years, the administration has implemented a number of provisions to contain costs with the intent of sustaining the program. In addition, on Feb. 15 the federally-administered PCIP suspended its acceptance of new enrollment applications.

New Payment Rate. Most services delivered to enrollees in the federally-administered PCIP program will be paid at: (1) 100 percent of Medicare payment rates, or (2) where Medicare payment rates cannot be implemented by the federally-administered PCIP, 50 percent of billed charges or a rate generated pricing methodology using a relative value scale. Excluded services are: prescription drugs, organ/tissue transplant, dialysis and durable medical equipment benefits. These new rates are effective June 15. The rates will become the new plan allowance for the covered service. The plan will reimburse the facility or provider for a portion of the rate, and the enrollee will be responsible for reimbursing the facility or provider for the remainder, based on current cost sharing rules.

Premiums and Cost-sharing. Also beginning June 15, in most circumstances, the rule prohibits any facility or provider from billing the enrollee an amount greater than the enrollee’s out-of-pocket cost for the covered service as calculated by the plan. In other words, providers will not be able to use “balance billing;” they may not bill a patient for the difference between the plan allowance for a covered service and the amount that the facility would otherwise charge for the service.

Exceptions to this provision are prescription drugs, organ/tissue transplant, dialysis and durable medical equipment benefits.

As a result of the interim final rule, facilities and providers have a choice – continue to treat federally-administered PCIP enrollees and accept the new payment rates, or choose not to provide care for federally-administered PCIP enrollees.

Next Steps

This interim final rule with comment period takes effect June 15. Comments will be accepted until July 19.

CMS: Hospitals can still apply to participate in bundled payment model

The Centers for Medicare & Medicaid Services is accepting additional applications from hospitals to participate in Model 1 of the Bundled Payments for Care Improvement Initiative, the agency announced  May 16. The Medicare demonstration includes four models of care that bundle payments for multiple services received during an episode of inpatient and/or post-acute care.

Model 1, open to acute-care hospitals paid under the inpatient prospective payment system, defines the episode of care as an inpatient stay. Participants agree to provide a standard discount to Medicare from the usual Part A hospital inpatient payments.

The CMS notice was published in the May 17th Federal Register. Interested organizations should submit an Information Intake Form to BPModel1@cms.hhs.gov within 75 days.

[ via AHA News ]

House holds hearing on FHA mortgage insurance programs

The House Financial Services Subcommittee on Housing and Insurance on May 16 held a hearing on the government’s role in providing mortgage insurance for health care and multifamily facilities. Roger Miller, deputy assistant secretary for Federal Housing Administration health care programs, said the Section 242 hospital mortgage insurance program supports underserved hospitals that have sound track records but are unable to secure capital to operate a financially stable facility at reasonable interest rates.

“By insuring mortgages for these hospitals, FHA enables the financing of projects…at rates that ultimately reduce health care costs,” he said. The Housing and Urban Development appropriations bill includes language that would make critical access hospitals eligible for the program.

“Before their eligibility expired in 2011, 29 critical access hospitals received FHA-insured loans, with results that were positive, both in terms of loan performance and the jobs created by hospital construction projects,” Miller noted. In his opening statement, Subcommittee Chairman Randy Neugebauer (R-TX) questioned whether the FHA has extended into areas beyond its historical mission.

AHA urges changes to CMS proposed rule on rebilling

While the Centers for Medicare & Medicaid Services’ proposed rule on Medicare Part B rebilling recognizes that the agency’s prior policy of denying full payment for Part B claims is unlawful, the rule contains a number of restrictions that would compromise hospitals’ ability to rebill for medically necessary patient services, the American Hospital Association told the agency on May 17. “The proposed rebilling rule will require significant modifications in order to provide hospitals with a fair and equitable process for securing payment for the reasonable and necessary services provided to patients when there is a dispute about the setting in which care should have been delivered,” AHA Executive Vice President Rick Pollack wrote in response to CMS’s March 13 proposed rule.

The AHA said the final rule should permit rebilling of any denied claim that originally was timely filed, rather than restrict rebilling to services provided in the prior 12 months; ensure full reimbursement of all reasonable and necessary services provided rather than arbitrarily exclude services that require “outpatient status”; and restore full and fair appeal rights for hospitals that choose to exercise their right to appeal denied claims rather than arbitrarily narrow the scope of that review.

Value-based payments picking up steam

The number of health plans that expect more than half their business will be under value-based models is expected to triple in the next five years according to a new research report released by health information network Availity. Read more from Healthcare Payer News here.

3 Metrics Community Hospitals Should Monitor Every Day

For most towns and cities across America, community hospitals are the nucleus of healthcare. While healthcare reform is putting many of those institutions in tough positions, there are steps that can be taken to create a stronger foundation.

At the Becker's Hospital Review 4th Annual Meeting in Chicago on May 9, Mike Williams, president and CEO of Community Hospital Corp., spoke on the different pressures affecting community hospitals and what financial metrics executives should focus on.

Mr. Williams said several new core competencies are now required of community hospitals: physician integration, becoming profitable on Medicare reimbursements, having strong financial peripherals, bolstering payor relationships, building market necessity and others.

Before hospitals can inundate themselves with those strategies, Mr. Williams said they must conduct an operational assessment, which focuses on productivity, supply chain, clinical quality analysis and general financial measures. "If you're serious about being competitive in future healthcare environment, you must complete an operational assessment," Mr. Williams said.

More specifically, Mr. Williams said there are three metrics that every community hospital C-suite member should track daily.

HHS urged to permanently extend protections for health IT donations

The American Hospital Association on May 13 voiced support for extending federal self-referral (or Stark) and antikickback protections for hospitals that want to help physicians adopt health information technology, but urged the Department of Health and Human Services to make the regulatory protections permanent. “We believe that they will continue for the foreseeable future to be of critical importance to the nation’s efforts to adopt and expand operation of a robust national health IT infrastructure,” AHA said in identical comments submitted to HHS’ Office of Inspector General and Centers for Medicare & Medicaid Services.

Their proposed rules would extend the protections, set to expire at the end of this year, through 2016. Among other recommendations, AHA said the final rule should continue to explicitly include all hospitals and health systems within the scope of donors protected by the regulations; remove a confusing statement about covered technology from the rule’s preamble; and avoid adding unnecessary complexity and administrative burden to the existing regulatory requirements.

Value-Based Healthcare Needs New Bond Rating Metrics

Hospitals and bond rating agencies will likely spend the next decade adjusting to the transition from volume-based to value-based payments. Moody's Investors Service is trialing 20 new value-focused indicators to evaluate hospitals.

Learn more here.