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Tuesday, July 26, 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

July 2011, vol. 26, no. 11

In the July 2011 issue Dennis Barry's Reimbursement Advisor, authors examine the new occupational mix adjustment that will be in place for federal fiscal year 2013, Medicare's finalized value-based purchasing program and time lag between Provider Reimbursement Review Board hearings and decisions.
  • New occupational mix (OM) survey could be friend or foe: Hospitals need to pay careful attention.
    A new occupational mix (OM) adjustment will be in place for federal fiscal year 2013, based on survey data from hospital pay periods that ended in calendar year (CY) 2010. A 60-day review period that coincides with the annual wage data review period is expected in early October, which will allow hospitals to request changes to their CY 2010 OM survey data. In this article, the author examines the importance of the OM survey data, how the adjustment works, the impact of the OM adjustment and the issues that could arise with the new survey data.

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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.

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Receivables Report

Receivables Report

June 2011, Volume 26, No. 6

  • More Employers Get Flexible
    Speaking of benefits, more employers of all types have begun to allow their employees to use a flexible work schedule. In some cases, that includes allowing people to work from home. See what human resources expert Joan Lloyd has to say about this growing phenomenon and whether it’s a good fit for you. Read the June issue to read more about it.

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

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    HARA

    Hospital Accounts Receivable Analysis

    4th Quarter 2010, vol. 25 no. 1
    • Discharge-to-Bill Time Climbs
      At the end of the 4th quarter of2010, the national discharge-to-bill (DTB) average for all payer types was 9.82 days. This key indicator has been steadily rising since the first quarter of the year, when it was 8.91 days. Read more about it in the HARA Report on the Fourth Quarter 2010.
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    Headlines
    from Medicare and Medicaid Guide

    Court broadens reach of False Claims Act

    A whistle-blower suit against sponsors of Medicare managed care plans must be allowed to proceed on a theory of implied certification of compliance with the anti-kickback statute, the Third Circuit Court of Appeals has ruled, reversing the district court decision dismissing the case.

    The plan sponsors

    Medicare Advantage (MA) or Medicare Part C, is the managed care option for Medicare beneficiaries. Part C plan sponsors, which are insurance companies, are awarded contracts to provide Medicare benefits through health maintenance organizations or other managed care plans, in return for capitated payments from Medicare. CMS regulations govern many aspects of the plans, including marketing to potential beneficiaries and grievance procedures.

    Two former employees of the plan sponsors sued under the False Claims Act, alleging that the employer paid providers to enroll their patients in the employer’s MA plans, paid others for leads and referrals, and made gifts to potential enrollees exceeding the $15 limit. They contended that the employers’ practices violated both the marketing regulations and the anti-kickback law. Requests for payment of federal funds usually include a certification of compliance with federal legal and regulatory requirements.

    The relators argued that compliance with legal requirements is implied in every claim for federal payment. Because the MA organizations submitted claim for federal funds from CMS while it was engaging in these unlawful practices, the claims were false claims under the Act.

    Defining false claims

    The court distinguished between factual falsity and legal falsity; factual falsity involves statements about the goods or services under the contract, while legal falsity involves statements of compliance with the law. When a federal contractor certifies that it has complied with legal requirements and has not, the claim is legally false. The complaint alleged that the MA organizations falsely certified that they were in compliance with federal law and regulations, specifically, the anti-kickback laws and marketing restrictions.

    The trial court dismissed the complaint on the ground that it contained no allegations of specific false statements made to obtain payment of specific claims. A false certification of compliance with federal law could not be the basis for recovery unless the law was specifically mentioned in the certification and compliance was a requirement for payment.

    In addition, the trial court ruled, neither the violation legal limits on the marketing practices of MA plan sponsors nor the alleged kickbacks could be the basis of a False Claims lawsuit because compliance was not a condition of payment.

    The marketing regulations

    The Court of Appeals agreed that compliance with the marketing regulations was not a condition of payment. The regulations include an enforcement mechanism that usually requires an opportunity for correction before sanctions may be imposed and condition of participation, but not a condition of payment provides for further review.

    The court reasoned that these provisions reflected an intention to allow violators to continue to receive payments while the violations were addressed. Put another way, compliance was not material because it did not affect the decision whether to pay. On the other hand, compliance with the anti-kickback law was a condition of payment.

    Implied false certification

    The court specifically recognized implied false certification of compliance as a basis for suits under 31 U.S.C. §3729(a)(1), which does not specifically require an express false statement. Under an implied false certification theory, the statement is implied from the statutes, regulations, contracts and other material governing the parties’ transactions. CMS MA guidelines specify that compliance with the anti-kickback statute is a condition required for payment.

    To plead implied false certification, the relators must allege only that the other party knowingly: (1) submitted claims for payment to the federal government, while it (2) violated the anti-kickback statute. More specificity regarding the claims will be required to defeat a motion for summary judgment, however.

    U.S. ex rel. Wilkins v. United Health Group, Inc., 3rd Cir., June 30, 2011, 303,816.

    Amended complaint is needed for challenge to outlier rules

    A challenge to the validity of Medicare regulations that provide additional payments for costly hospital care is dismissed in part, with instructions from the court that an amended complaint be filed. The complaint filed by twenty-nine organizations that own or operate hospitals participating in the Medicare program identifies the issue as the amount of Medicare outlier payments due to them for services provided under the Medicare program for fiscal years 1998 - 2006.

    The issues in the case, however, are not ordinary payment appeals. The U.S. District Court for the District of Columbia said that the hospital organizations admitted that, at the heart of the case is a wide-ranging challenge to the way the Secretary of HHS implemented the outlier payment system.

    The issues to be clarified

    Outlier payments are authorized by law to compensate hospitals for the care of some patients whose hospitalization is extraordinarily costly or lengthy. Each fiscal year, the Secretary determines a fixed dollar amount that, when added to the DRG prospective payment, serves as the cutoff point triggering eligibility for outlier payments.

    The court granted a motion to dismiss from the Secretary insofar as it seeks dismissal of (a) claims under the Medicare Act based upon allegations challenging the Secretary’s “implementation” and “enforcement” of the outlier payment system that are unconnected to any discrete agency action, and (b) a claim under the Mandamus Act. The motion is otherwise denied.

    The complaining organizations are required to file a “notice of claims” with the court identifying each circumscribed, discrete agency action that they intend to challenge. This submission must include references to each iteration of the outlier payment regulations and fixed loss threshold regulations that are challenged in this action, with citations to the Code of Federal Regulations or the Federal Register, as appropriate. In response, the Secretary must serve and file an answer to the amended complaint.

    On or before Wednesday, August 10, 2011, the parties must file a joint status report with the court proposing a schedule for proceeding in this action.

    Banner Health v. Sebelius, July 15, 2011, ¶303,823.

    HHS proposes standards for health insurance exchanges

    HHS has taken a significant step toward the implementation of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) by proposing requirements for the creation and operation of Affordable Insurance Exchanges.

    Under PPACA, individuals who lack access to affordable minimum essential coverage will be able to purchase them through the Exchanges, which will serve as a kind of clearinghouse for information about the qualified health plans available. Small employers will have the opportunity to obtain group coverage for their employees through the small business health options program (SHOP).

    Excvanges must be established for every state and territory. States have the option to establish and set requirements for the Exchanges. HHS will establish Exchanges in states that choose not to do so.

    Formation of the exchanges

    A state may combine with one or more other states to establish a regional Exchange, or it may form one or more subsidiary Exchanges to operate in geographically distinct areas, as long as one Exchange operates in every area of the state. The entity administering an Exchange may be a state agency or a nonprofit organization organized under and subject to the law of the state.

    If it is not an existing state agency, it must have an independent, clearly defined governing board meeting certain requirements. The entity must have expertise in health insurance and benefits administration but may not be an issuer or be treated as an issuer of health insurance.

    States that intend to operate an exchange must present an Exchange plan to HHS for its approval. The insurers also must submit their proposed QHPs to HHS so that the Secretary may determine whether the plans meet the requirements for qualified health plans (QHPs). The Exchanges must receive either full or conditional approval by January 1, 2013, in order to be operational in time to begin the first open enrollment period October 1, 2013. If a state will not have an operational Exchange by that date, HHS may create it or hire a contractor to do so.

    Functions of the exchanges

    The Exchange in each area would certify the compliance of QHP issuers with exchange requirements. States could impose taxes or user fees or other charges to cover the costs of the exchange program, which must become self-sustaining; the Exchange could receive no federal funds on or after January 1, 2015.

    Additional functions of the Exchange include

    determination of individuals’ eligibility to purchase coverage from a QHP through the exchange;

    issuance of exemption certificates;

    oversight of the financial integrity and financial disclosure requirements applicable to issuers of QHPs; and

    evaluation of quality improvement strategies and assessment and ratings of the QHPs’ health quality and outcomes, information disclosures and data reporting.

    To help consumers, each Exchange must develop and operate a toll-free call center to take questions and an internet web site with detailed information about each QHP available in the state. The site must include an exchange calculator to allow consumers to determine costs after the application of any premium tax credits to be paid in advance. Tools on the site also would allow consumers to compare QHPs’ benefits, cost sharing, customer satisfaction and medical loss ratios. States also could receive grant funds to develop a Navigator, an independent entity with expertise to perform outreach, education and referrals to help individuals enroll in QHPs and direct their grievances or complaints to the appropriate officials.

    SHOPs

    The Exchange plan must provide for the establishment of the small business health options programs (SHOP). The SHOP may be operated by a separate entity, although states are encouraged to combine the exchanges for individual QHPs and the SHOPs in one entity. SHOPs would determine the eligibility of employers and employees to purchase group QHP coverage.

    Until January 1, 2016, states may limit the availability of SHOPs to employers with 50 or fewer employees. Thereafter, small employers will be those with 100 or fewer employees. At a minimum, qualified employers must make the coverage available to all full-time employees.

    Qualified employers would be permitted to seek coverage through SHOP at any time during the year. Each year, before the employees’ open enrollment period, the employers would have an election period, during which they could change their contributions or the QHPs they make available to their employees. The employees’ open enrollment period would occur after the election period but before the end of the plan year, the 12-month period during which the plan is effective.

    QHP issuers could offer coverage at four levels, referred to as bronze, silver, gold and platinum. The Proposed rule would require them to offer at least one plan at the silver level and one at the gold level as well as child-only policies. Issuers would be required to make disclosures to the exchange of their claims denial and payment policies, enrollment and disenrollment data, financial information, number of claims denied, rating practices and cost sharing.

    QHP issuers also would be required to submit justifications for their proposed rate increases to the exchange and place them prominently on the issuers’ web site. Rates must remain the same for the entire benefit year (for individual coverage) or plan year for SHOP policies. The HIEs also could set requirements for network adequacy.

    Submission of comments

    CMS must receive any written comments on the Proposed rule by 5:00 p.m. eastern time, September 28, 2011. The Proposed rule is included as Part 4 of this report.

    Proposed rule, 76 FR 41866, July 15, 2011, ¶229,012.

    HHS proposes risk-spreading programs for insurance reform

    HHS has proposed a new set of regulations to be added to Title 45 of the federal regulations to establish standards for the establishment and operation of a transitional reinsurance program, temporary risk corridors, and a permanent risk adjustment program for private health insurance plans, as required by the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148).

    Health insurance reform

    Starting in 2014, individuals and small businesses will be able to purchase private health insurance through state-based competitive marketplaces called Affordable Insurance Exchanges. The risk-spreading mechanisms required by the Act, which will be implemented by the Secretary of HHS and the states, are designed to mitigate the potential impact of adverse selection and provide stability for health insurance issuers in the individual and small group markets.

    In its Proposed rule, HHS explains that, to reach the goals of high quality, affordable health insurance coverage, the possible negative effects of adverse selection need to be minimized. Adverse selection occurs when each new health insurance purchaser understands his or her own potential health risk better than health insurance insurers do, and health insurance issuers are therefore less able to accurately price their products.

    To avoid adverse selection, issuers may set premiums higher than necessary in order to offset the potential expense of high-cost enrollees. This uncertainty could also result in an issuer being more cautious about offering certain plan designs in an Exchange. This risk will be greatest in the first years of the Exchange, and become less as the new market matures and issuers learn more about new enrollees.

    To minimize the negative effects of adverse selection and foster a stable marketplace from year one, the Affordable Care Act establishes transitional reinsurance and temporary risk corridor programs, and a permanent risk adjustment program to provide payments to health insurance issuers that cover higher-risk populations and to more evenly spread the financial risk borne by issuers.

    Program oversight for the transitional reinsurance program, which provides funding to plans that enroll highest cost individuals, would be provided by the state and HHS would provide oversight for the temporary risk corridors, which limit issuer loss (and gains). The state also would provide oversight for the permanent risk adjustment program, which would transfer funds from the lowest risk plans to highest risk plans.

    Comments

    Comments must be received by HHS no later than 5 p.m. Eastern Standard Time on September 28, 2011.

    Proposed rule, 76 FR 41930, July 15, 2011, 220,844.

    CMS must ensure implementation of fraud detection systems

    Medicare and Medicaid are high-risk programs, according to the Government Accountability Office (GAO), because of their susceptibility to improper payments due to fraud, waste, and abuse and the submission of duplicate claims. According to the GAO, CMS must extensively implement the information technology system programs it developed, specifically the Integrated Data Repository (IDR) and One Program Integrity (One PI).

    CMS plans to gather data from IDR about beneficiaries, providers, and procedures to find billing aberrancies or outliers. CMS plans to use the One PI system to provide access to IDR data, analytical tools, and portal functionality. Although both the IDR and PI are currently in use, not all IDR data has been incorporated as planned and extensive implementation of One PI has not been accomplished.

    Although CMS has made progress towards creating a centralized data repository and enhancing analytical capabilities for detecting improper payments, currently, the use of IDR and One PI does not allow CMS to identify, measure, and track financial benefits realized from the reduction of improper payments as a result of the implementation of either system.

    GAO recommends that CMS:

    finalize plans and develop schedules for incorporating additional data into IDR that will identify all resources and activities needed to complete tasks and identify risks and obstacles to the IDR program;

    implement and manage plans for incorporating data in IDR to meet schedule milestones;

    establish plans and schedules for training all program integrity analysts who will use One PI;

    establish deadlines for program integrity contractors to complete training and use One PI in their work;

    define any measurable financial benefits expected from the implementation of IDR and One PI; and

    establish measurable, outcome-based performance measures for IDR and One PI that measure progress toward meeting program goals.

    GAO Report, GAO-11-475 and GAO-11-822T, June 30, 2011, and July 12, 2011, ¶68,029
    and ¶68,030.

    Criminal fraud convictions against Medicaid agency upheld

    A federal appeals court upheld the health care fraud and conspiracy convictions of two employees of a supplier of personal care services to children with disabilities and a parent whose children were clients of the supplier. All three falsified documentation of claims for services that were not provided. The supplier’s employees paid the parent for certifying the times, dates and services furnished.

    The court rejected the parent’s defense that cognitive disabilities that prevented her from forming the intent to commit fraud because of expert testimony that she knew right from wrong and that lying, stealing and pretending to be someone else were wrong, and because of other evidence that she had a driver’s license, wrote and cashed checks, and took the tests posing as the employee and that others who knew her did not suspect she had any cognitive deficiencies.

    The court ruled the trial court improperly admitted testimony that one of the employees took children to her house and allowed them to use marijuana and alcohol because these facts were not intrinsic to the crime of fraudulent Medicaid claims; however, the error was harmless because it was a small part of the evidence presented and the court gave an appropriate jury instruction.

    The two-level enhancement of the parent’s sentence for using her minor children to complete the false documents was appropriate because the children actively participated in the fraud when they copied the forms with their mother and an employee. The enhancement for obstruction of the investigation was appropriate because the parent lied to investigators with the intent to impede the investigation, notwithstanding that the investigators already had much of the information they needed.

    United States v. Girod, 5th Cir., July 11, 2011, ¶303,817.

    Specialist care difficult for Medicaid children

    Children whose healthcare is covered by Medicaid or the Children’s Health Insurance Program (CHIP) have more difficulty obtaining access to specialists’ services than those with private insurance. Most primary care physicians (PCP) who treat children accept Medicaid and CHIP beneficiaries, and PCPs are less likely to exclude or limit new patients with public benefits. However, 84 percent of the PCPs who accepted Medicaid and CHIP patients had difficulty referring them to specialists, with 34 percent reporting great difficulty.

    In contrast, 75 percent of physicians experienced no difficulty referring privately insured children, and less than 1 percent reported great difficulty.

    According to the GAO, nationwide, physicians participating in Medicaid and CHIP are generally more willing to accept privately insured children as new patients than children enrolled in Medicaid or CHIP. About 79 percent of physicians who participate in Medicaid and CHIP accept all privately insured children as new patients, compared to about 47 percent for children in Medicaid and CHIP.

    Nonparticipating physicians—those not enrolled or not serving Medicaid and CHIP children—most commonly cite administrative issues such as low and delayed reimbursement and provider enrollment requirements as limiting their willingness to serve children in these programs.

    GAO recommended that CMS change its reporting requirements so that state agencies would track the extent to which the children received the specialists’ services they needed. HHS, in its reply, clarified some of the data in the report. It noted that according to GAO’s figures, 47 percent of physicians are accepting all new Medicaid and CHIP patients, and 44 percent of physicians say they will accept some new Medicaid or CHIP patients, leaving only 9 percent who say they will not accept any new Medicaid patients.

    HHS also pointed that in the sample of physicians reported on in the study, 60 percent had patient loads that were less than 20 percent children.

    GAO Report No. GAO-11-624, June 30, 2011, ¶68,028.

    Average time for PRRB decisions? 425 days

    This story was excerpted from the July 2011 “Dennis Barry’s Reimbursement Advisor.”

    Providers going before the Provider Reimbursement Review Board (PRRB) are always anxious to receive the Board's decision, and often ask how long it will take for the Board to issue a decision. As a very rough rule of thumb, it takes approximately a year for the PRRB to issue a decision after a hearing has been completed, but there is substantial variation.

    We examined PRRB decisions issued from January 2010 to early May 2011. Of the 67 decisions analyzed, the average time elapsed between the original hearing date (or the last day of multiday hearings) and the date of the PRRB decision was 425 days.

    The fastest turnaround time was PRRB Decision Number 2010-D36, which took 13 days from hearing to decision. The longest turn-around time was PRRB Decision Number 2011-D7, which took 953 days.

    Both ends of the spectrum are very unusual, and the average is distorted by a few decisions for which there was a very long delay in their issuance. While we are not aware of the reasons why any particular decision since January 2010 has been delayed, one reason that the PRRB may have difficulty in issuing a decision is that a new appointee is required to break the tie.

    Decisions and Developments
    CMS Manuals

    Influenza virus vaccine

    Medicare Benefit Policy Manual, Pub. 100-02, Transmittal No. 145, July 8, 2011, ¶159,661.

    cellular immunotherapy treatment of metastatic prostate cancer

    Medicare National Coverage Determinations Manual, Pub. 100-03, Transmittal No. 133, July 8, 2011, ¶159,662.

    Influenza virus vaccine

    Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2253, July 8, 2011, ¶159,663.

    Autologous cellular immunotherapy treatment of metastatic prostate cancer

    Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2254, July 8, 2011, ¶159,664.

    Notice of new interest rate for Medicare overpayments and underpayments - 4th notification for FY 2011

    Medicare Financial Management Manual, Pub. 100-06, Transmittal No. 190, July 12, 2011, ¶159,665.

    Add physician specialty codes for cardiac electrophysiology (21) and sports medicine (23) to CROWD Forms F (ParDoc) and 8 (OptOut)

    Medicare Financial Management Manual, Pub. 100-06, Transmittal No. 191, July 13, 2011, ¶159,666.

    Quarterly update to the end-stage renal disease prospective payment system

    Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 2255, July 15, 2011, ¶159,667.

    Affordable Care Act, Section 3113 - laboratory demonstration for certain complex diagnostic tests (This CR fully rescinds and replaces CR 7278)

    Demonstrations Manual, Pub. 100-19, Transmittal No. 74, July 15, 2011, ¶159,668.

    Implementing the recompetition award for the jurisdiction D DME Medicare Administrative Contractor (MAC) workload

    One-Time Notification Manual, Pub. 100-20, Transmittal No. 911, July 15, 2011, ¶159,669.

    Durable medical equipment national competitive bidding: correction to permit payment for certain grandfathered accessories and supplies

    One-Time Notification Manual, Pub. 100-20, Transmittal No. 912, July 15, 2011, ¶159,670.
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