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HEADLINES
from Medicare and Medicaid Guide Monday, June 2, 2008
Click on a headline below for the full story.
Decisions and Developments
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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Reimbursement Integrated Library
Dennis Barry’s Reimbursement Advisor
May 2008, Volume 23, No. 9
The May 2008 issue of Dennis Barry’s Reimbursement Advisor takes a closer look at the “patient inducement” statute, particularly as it relates to providers’ consideration of the waiver or discounting of Medicare beneficiary financial obligations. In addition, this issue examines a new regulatory provision that allows for prior medical necessity determinations of certain physician services. The Centers for Medicare and Medicaid Services (CMS), however, has limited the use of this prior determination provision to such a small number of select services that the agency expects only 5,000 such requests per year out of the millions of physician services performed annually.
- Waiving or discounting Medicare beneficiary payment obligations: Statutory prohibition on “patient inducement.” As a general rule, providers, physicians and suppliers may not furnish any remuneration—including the waiver or discounting of beneficiary copayment, deductible or other coinsurance payment obligations—to Medicare patients due to the risk of being found in violation of the “patient inducement” statute. A provider may be found in violation of this statute if the government shows the inducement affected beneficiary decisions, regardless of provider intent. That said, not every copayment waiver or discount will subject a provider to liability. In this article, the author examines the statute and its application and implications on prompt payment discounts, negotiating discounts with Medigap payers, and the failure to secure an advance beneficiary notice (ABN) for services that may be denied coverage by Medicare.
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Receivables Report
May 2008, Volume 23, Issue 5
Why Is Cash Low? Guest columnist T. T. Mitchell tackles this oft-posed question. He states that preparation is always vital to knowing what's going on with your receivables. Reports don’t do you any good if you're not sure what you're looking for. This month, he spells out some issues that you should be looking at, which could be affecting receivables and cash. See the article inside the May issue for these valuable tips.
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Hospital Accounts Receivable Analysis
Fourth Quarter 2007, Volume 22, Number 1
- Major Indicators. At the end of 2007, US hospitals reported seeing mixed results among their key indicators. In the HARA Report on Fourth Quarter 2007, we break it down for you.
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Headlines
from Medicare and Medicaid Guide
Final rule revises PRRB appeals procedures
Effective for cost reporting periods that end on or after
Dec. 31, 2008, providers will have more time to evaluate whether they wish
to file a cost report item under protest and to eliminate the transitional
administrative burden for intermediaries under amendments to 42 C.F.R. §§405.1811(a)(1)
and 405.1835 (a)(1). A new §405.1835(b)(4) has been added to require
a provider under common ownership or control to furnish the name and address
of its parent corporation and to submit a statement that to the best of the
provider's knowledge, no other provider to which it is related by common ownership
or control has pending a request for a PRRB hearing on any of the same issues
contained in the provider's hearing request. If a pending appeal exists the
provider must submit the provider name and provider number, and the case number
for the appeal. Final rule, 73 FR 30190, May
23, 2008, ¶180,742.
Senate Democrats hope to move Medicare reform bill in June
Senate Democrats are crafting legislation
to avert a cut in Medicare physician payments scheduled to take effect at
the end of June with the hopes of advancing a bill after the Memorial Day
recess. They hope the bill will ensure low-income and rural seniors’
access to care and to medicines, stop unscrupulous marketing of Medicare Advantage
plans to Medicare beneficiaries, make other improvements to Medicare, and
provide an 18-month update to physician payments, according to Senator Max
Baucus (D- Mont. ). Although he plans to continue reaching out to all of his
colleagues to find agreement, Baucus has decided to advance the bill without
GOP support, after talks with Republicans stalled. “It’s clear
to me that in the time left to complete a bill, we’re unlikely to get
a bipartisan agreement with sufficient improvements in preventive care and
other beneficiary services, appropriate fixes to increase access to the prescription
drug benefit, and sufficient savings from bloated parts of the program,”
he said on May 21, 2008. He hopes to move such legislation directly to the
Senate floor in early June. CCH Washington Bureau, May 22, 2008.
Limitation on bad debt reimbursement upheld
A regulation regarding the reimbursement of bad debts
associated with qualified Medicare beneficiaries takes precedent over the
"cross-subsidization" requirement at 42 USC 1395X(v)(1)(A), according to the court
for the Eastern District of Michigan. The "cross-subisidization" principle
of the Medicare statutes say that non-Medicare patients should not subsidize
the costs of serving Medicare beneficiaries and Medicare should not subsidize
the costs of serving non-Medicare patients. The Benefits Improvement and Protection
Act of 2000 (BIPA) (PubLNo 106-554) amended the Medicare bad debt requirements to provide
that only a fraction of bad debt will be reimbursed to providers starting
in fiscal year 2001. The providers in this case argued that this limitation
on bad debt collection, is ambiguous and conflicts with “cross-subsidization”
requirement. However, the ban on "cross-subsidization" is not total and the
court has not strictly interpreted the ban. Hospitals may attempt to collect
from the individual debtors and Congress has allowed the Medicare program
to pay some costs attributable to non-Medicare patients by subsidizing charity
care for non-Medicare beneficiaries, as long as the use of Medicare dollars
has been used to benefit the greater community. Detroit Receiving
Hospital, et al. v. Leavitt, E.D. Mich., May 14, 2008, ¶302,416.
Medicaid regulations delay
The administration
has delayed the effective date of two Medicaid rules, one on graduate medical
education and one on the change in the definition of public provider, until
August 1, 2008. Originally these rules were to become effective on May 26,
2008. In addition, the Senate has sent a bill back to the House that would
delay seven controversial Medicaid regulations, including these two, until
April 2009. The delay, contained in an amendment to the Supplemental Appropriations
Bill of 2008 (H.R. 2642) that passed by a veto-proof 75 to 22 vote, would
postpone rules issued by the administration that would reduce spending by
$13 billion over five years. The other regulations would result in cuts to
school-based, rehabilitation, and case management services. Among other things,
the rules would also change the definition of outpatient services, the policy
on intergovernmental transfers, and the ability of states to impose taxes
on health care providers. In addition, the legislation contains a provision
to prevent new physician-owned specialty hospitals from participating in Medicare.
President Bush has issued a veto threat on the supplemental. CCH Washington
Bureau, May 22, 2008.
CMS rule violated Congressional moratorium
Nearly a year after CMS published a final rule limiting Medicaid
payments to government-operated providers (see ¶180,644) a federal court in the District of
Columbia has held the rule invalid because its publication violated a moratorium
imposed by Congress. Section 7002(a) of the U.S. Troop Readiness, Veterans’
Care, Katrina Recovery and Iraq Accountability Appropriations Act of 2007
(PubLNo 110-28)
withdrew the authority of the HHS Secretary to take any action to implement
or finalize the proposed rule (see ¶220,503) or any similar policy for one year
from the date of enactment. Congress passed the legislation on May 24, 2007,
and sent it to the president for signature. Later the same day, the agency
delivered the final rule to the Office of the Federal Register (OFR) with
a request for “emergency display and publication.” The court
noted that the emergency cited was the imminent moratorium, which would become
effective when the president signed the legislation.The court found that the
Secretary had violated the statutory moratorium in three ways: (1) by notifying
Congress of the rule by email on May 25th in accordance with the Congressional
Review Act (5 U.S.C. §801 et seq.); (2) by opening a
period for public comment on the rule; and (3) by causing the rule to be published
in the Federal Register on May 29, 2008. Although HHS argued
that it had lost control over the publication process after submitting the
rule to the OFR, the court disagreed. The Administrative Procedure Act assigns
the responsibility for publication to the agency promulgating a rule, not
to the operator of the presses. In addition, OFR regulations permit an agency
to withdraw a document from publication. Therefore, the court reasoned, the
publication was an act of the Secretary that violated the moratorium.
Alameda County Medical Center v. Leavitt, D. D.C., May 23, 2008, ¶302,427.
LTCHs facilities and payment
Satellite
facility establishment and payment adjustments for long-term care hospitals
(LTCHs) would be revised to conform with provisions in §114 of the Medicare,
Medicaid and SCHIP Extension Act of 2007 (MMSEA) (PubLNo 110-73). A 3-year delay
in the application of payment policies which apply payment adjustments for
discharges from LTCHs and LTCH satellites that were admitted from certain
referring hospitals in excess of various percentage thresholds would be implemented.
Beginning with cost reporting periods beginning on or after Dec. 29, 2007,
the “25 percent threshold” payment adjustment as described in 42 C.F.R. §412.534
for LTCH hospitals-within-hospitals and satellite facilities for discharges
that were admitted from their co-located hosts will no longer be exempt from
payment adjustments. During this 3-year period, the application of “
any similar legislation” would be prohibited. Additionally a moratorium
on new LTCHs, LTCH satellite facilities, and an increase in beds in existing
LTCHs and LTCH satellite facilities would be established beginning on Dec.
29, 2007. Interim final rule, 73 FR 29699, May 22, 2008, ¶180,754.
ASC injection practices
CMS has released
a memorandum to ensure that ambulatory surgical centers (ASCs) are aware of
infection control requirements and well informed about basic infection control
practices, including injection safety. Under 42 C.F.R. §416.44, ASCs are required to establish
programs for identifying and preventing infections, maintaining a sanitary
environment, and reporting the results to appropriate authorities. Recently,
Nevada and federal epidemiologists identified a group of individuals with
hepatitis C infections who all had procedures in the same ASC. A subsequent
survey of that ASC revealed unsafe injection practices related to the reuse
of syringes and multiple reuse, among multiple patients, of single-use anesthesia
medication vials. As a result, over 40,000 individuals who were treated in
that ASC in recent years were notified of a potential exposure to bloodborne
infectious diseases. Nevada also has identified other ASCs in the state that
employ deficient infection control practices. Surveyors who examine ASC compliance
should be aware of current infection control practices and use the Center
for Disease Control guidelines when reviewing infection control practices.
CMS Memo to State Survey & Certification Agencies, No. S&C-08-20,
May 16, 2008, ¶52,231.
EMTALA inpatient ruling
A hospital
was not liable under the Emergency Medical Treatment and Active Labor Act
(EMTALA) with respect to a patient who developed an emergency condition after
17 days of an inpatient stay because the hospital's obligation under EMTALA
ended when it admitted the patient as an inpatient in good faith for further
treatment. The patient was admitted to the hospital for hemodialysis and rehabilitation.
After 17 days, the patient developed an emergent condition. After the hospital
staff informed the patient's family that it could not perform dialysis on
the patient until the next day, the family demanded that the patient be transferred
by ambulance to another hospital for immediate stabilization and dialysis.
The patient died, and the family brought an EMTALA claim against the hospital.
HHS regulations state that if a hospital admits an individual as an inpatient
in good faith, the hospital's EMTALA obligation ends. Because the regulation
is: (1) legislative or substantive in nature insomuch as it delineates the
boundaries of liability under EMTALA, and (2) a valid exercise of delegated
congressional authority based on a permissible construction of the EMTALA
statute, the regulation has the force of law. Accordingly, the EMTALA claim
was dismissed. Anderson v. Kindred Hospital, E.D. Tenn.,
March 24, 2008, ¶302,426.
Subpoena for new investigations
A “
cold comfort letter,” that was simply an assurance from the government,
based on the facts relevant and known at the time of the letter, stating that
the federal government did not have any additional open or pending civil or
criminal investigations or cases against the provider, did not preclude a
later federal investigation of the provider based on new facts. A provider
of a medication, which reduces or eliminates anemia in dialysis patients,
improperly billed Medicare for the drug administered to patients. In May 2002,
the provider paid the government $1.6 million and obtained a release along
with the “cold comfort letter.” The representations made in the
letter were based on surveys conducted by the HHS Inspector General prior
to May 2002. In 2005 two federal subpoenas were served seeking more specific
information about the provider's policies. The provider moved to quash or
modify the subpoenas based on the previous settlement and “cold comfort
letter.” The subpoenas were found to be a valid exercise of the investigatory
power and not overly burdensome. Fresenius v. U.S., 8th Cir.,
May 16, 2008, ¶302,415.
Bona fide sale of assets
A statutory
merger between two hospitals did not qualify as a bona fide sale and the merging
hospital was not eligible for reimbursement of the depreciation of losses
as a result of the statutory merger. The HHS Secretary's determination that
the hospital's statutory merger was not a bona fide sale was based on the
lack of reasonable consideration for assets being transferred. The transfer
of approximately $50 million in assets for $30.5 million in liabilities, meant
the new healthcare organization paid almost nothing for the hospital's buildings
and equipment, despite their appraised value of approximately $12 million.
In addition, the hospital made no other attempts to obtain fair market value
for its assets other than seeking this particular merger. Providers are entitled
to reimbursement only for the cost actually incurred in servicing Medicare
patients to insure that Medicare reimburses actual costs instead of giving
a windfall to providers. Robert F. Kennedy Medical Center v. Leavitt
, 9th Cir., May 19, 2008, ¶302,420.
Routine cost limit exception
The denial
of a hospital's appeal regarding its request for an exception to its prospective
payment reimbursement rate because it provided atypically intense services
was neither arbitrary nor capricious. The hospital had failed to submit documentation
for the costs of nursing personnel showing the amount that each employee was
paid as required by 42 C.F.R. §413.184(b)(2)(i)(A). The court held that the Provider
Reimbursement Review Board's (PRRB) decision to deny the hospital's request
was supported by substantial evidence and the refusal of the PRRB to infer
or derive the required information from other data submitted was neither arbitrary
nor capricious. St. Joseph Hospital v. Leavitt, 9th Cir.,
May 21, 2008, ¶302,423.
QIS brochure updates
An updated brochure
explaining the Quality Indicator Survey (QIS) and the QIS training process
for state certification surveys will assist in national implementation of
the QIS program. The QIS program, which was implemented to improve the quality
of care and provide timely feedback for surveyors and managers, gives health
care providers information for improvement. The QIS provides SNF oversight
by creating a two-step process for surveyors that allows them to assess nursing
home requirements and to target specific regulatory areas that need to be
reviewed. Although the federal regulations and interpretative guidance have
not changed, the survey process has been revised to use customized software
on tablet computers. CMS Letter to State Survey & Certification
Agencies, No. S&C-08-21, May 16, 2008, ¶52,230.
Medicaid managed care payment to emergency room doctors
The trial court properly dismissed a class action against
Medicaid managed care organizations (MCOs) by noncontracted providers who
had furnished emergency services to Medicaid managed care recipients. The
contract between the state Medicaid agency and the MCOs required the MCOs
to pay out-of-network providers of emergency services the same rate that the
Medicaid agency would have paid on a fee-for-service basis. The providers'
rights were governed by their contracts with the Medicaid agency, which stated
that the Medicaid fee-for-service rate must be accepted as payment in full.
The only basis for the providers' compensation by the MCO is the contract
between the MCO and the state. Midwest Emergency Associates-Elgin
Ltd. v. Harmony Health Plan of Illinois, Inc., Ill. App. Ct., May
15, 2008, ¶302,419.
SCHIP allotments
The following changes
and additions to the allotments of funds to states for the State Children's
Health Insurance Program (SCHIP) have been announced: (1) final allotments
for fiscal years (FY) 2008 and 2009; (2) retrospective adjustment to shortfalls
in funding for FY 2007; (3) redistribution of unused allotments from FY 2005;
and (4) additional allotments for FY 2008. Notice, 73 FR
30112, May 23, 2008, ¶261,917.
Accreditation for clinical laboratories
AABB, formerly the American Association of Blood Banks, has been granted
deeming authority as an accrediting organization for clinical laboratories.
Notice, 73 FR 30109, May 23, 2008, ¶261,912.
Senior Medicare Patrol Projects
In 2007, recovered Medicare funds attributable to the Senior Medicare Patrol
Projects were $302,318, and actual savings to beneficiaries attributable
to the projects were $140,219. The Senior Medicare Patrol Projects
recruit retired professionals to educate beneficiaries on detection and reporting
of fraud, waste, and abuse in the Medicare program. OIG Report,
No. OEI-02-08-00120, May 9, 2008, ¶52,238.
New MedPAC members
The Medicare Payment
Advisory Commission (MedPAC) recently announced the addition of three new
members and the reappointment of two existing members to the commission. MedPAC
is an independent organization established in 1997 to analyse access to care,
cost and quality of care, and other key issues affecting Medicare. MedPAC
advises Congress on payments to providers in Medicare's traditional fee-for-service
programs and health plans participating in the Medicare Advantage program.
GAO News Release, May 22, 2008.
Hospice conditions of participation
The deadline for publication of a Final rule amending the
hospice conditions of participation has been extended for one year, to May
27, 2009. Proposed rule, 73 FR 30355, ¶220,604.
Decisions and Developments
CMS Manuals
Indian health service hospital payment rates for calendar
year 2008
Medicare Claims Processing Manual,
Pub. 100-04, Transmittal No. 1511, May 23, 2008, ¶157,364.
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Average sales price drug pricing update
Medicare Claims Processing Manual, Pub. 100-04, Transmittal
No. 1513, May 23, 2008, ¶157,365.
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Ambulatory surgical center payment system update
Medicare Claims Processing Manual, Pub. 100-04, Transmittal
No. 1514, May 23, 2008 ¶157,366.
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Clinical laboratory and pathology specimens date of
service update
Medicare Claims Processing Manual
, Pub. 100-04, Transmittal No. 1515, May 23, 2008, ¶157,367.
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Durable medical equipment fee schedule quarterly update
Medicare Claims Processing Manual, Pub.
100-04, Transmittal No. 1516, May 23, 2008, ¶157,368.
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Correct coding initiative edits and update
Medicare Claims Processing Manual, Pub. 100-04, Transmittal
No. 1517, May 23, 2008, ¶157,369.
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Contractor workload numbers
One-Time Notification Manual, Pub. 100-20, Transmittal No. 343,
May 23, 2008, ¶157,370.
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Common electronic data interchange system
One-Time Notification Manual, Pub. 100-20, Transmittal
No. 344, May 23, 2008, ¶157,371.
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DAB Decisions
Provider-based status
A hospital emergency
center met the requirements for Medicare provider-based status but it was
erroneous for CMS to use a state agency determination in denying provider-based
status when the state agency had no jurisdiction or authority to determine
whether facilities are “provider-based.” Under a Medicare waiver,
Maryland hospitals are reimbursed for the inpatient and outpatient services
they provide to Medicare beneficiaries under rates established by the state.
In this case, the state determined that its jurisdiction for rate-setting
purposes only includes hospital outpatient services provided at a hospital.
Because the emergency center was physically separate from the hospital, the
state could not regulate rates at the emergency center. The state notified
CMS, however, that it makes findings as to its jurisdiction over outpatient
services in accordance with Maryland law and takes no position on whether
facilities are “provider-based” under federal regulations. There
must be two prongs met to deny provider-based status: (1) a cost review commission
with the authority to regulate rates for a facility, and (2) a determination
by that body that the facility in question is not a part of the provider.
Although a cost review commission reviewed the emergency facility, it did
not have the power to regulate rates at the facility and made no finding that
the emergency center was not part of the hospital. In fact, state law requires
that such a facility be an administrative part of a hospital, which makes
it a “provider-based” facility under Medicare rules.
Shady Grove Adventist Hospital Emergency Center of Germantown v. CMS,
HHS Departmental Appeals Board, Civil Remedies Division, Doc. No. C-07-371,
Dec. No. CR1783, May 8, 2008, ¶121,371. Premium content
Penalties for abuse by SNF resident
A per instance civil money penalty (PICMP) of $7000 was properly imposed against
a skilled nursing facility (SNF), and withdrawal of the SNF's nurse aide training
and competency evaluation program (NATCEP) for a period of two years was required
based upon the PICMP amount, because the SNF failed to implement policies
to protect residents from another, abusive resident (Resident 1). The SNF
was informed on January 6, 2006, that its provider agreement would be terminated
on March 3, 2006, if it failed to be in substantial compliance by that date.
The termination of participation in federal programs and the denial of payment
for new admissions against the SNF were rescinded, and the PICMP was adjusted
from $8000 to $7000. The SNF had established policies to prevent neglect and/or
mistreatment of residents, but failed to implement those policies in the face
of the ongoing abusive behavior of Resident 1. Pursuant to 42 C.F.R. §483.13(c),
the SNF's failure to implement these policies and to prevent abuse of its
residents provides a basis for the PICMP of $7000 and the revocation of the
SNF's NATCEP. The statute's authority to prevent abuse is not limited to a
specific actor, such as a particular staff person, visitor, or resident, but
instead imposes a general obligation upon the SNF to prevent abuse.
Hilltop Haven Nursing Home v. CMS, HHS Departmental Appeals Board,
Civil Remedies Division, Doc. No. C-06-297, Dec. No. CR1782, May 2, 2008, ¶121,370.
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Immediate jeopardy
A long-term care
facility placed residents in immediate jeopardy when it disabled door alarms
that had been designed to protect residents from eloping and failed to supervise
residents with known elopement risks. The facility had a practice of disarming
door alarms to allow vendors to make deliveries to the facility, and staff
members were unaware of the proper operation and monitoring of the alarm system.
The staff's incompetence in operating the alarm system was a systemic flaw
that permeated all levels of the facility's administration. Under 42 C.F.R. §483.75, the
facility failed to provide for the highest well-being of its residents and
therefore a civil money penalty of $8,050 per day was proper. Harlan
Nursing Home, HHS Departmental Appeals Board, Appellate Division,
Doc. No. A-08-22, Dec. No. 2174, May 7, 2008, ¶121,367.
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Scope of deficiency
A skilled nursing
facility (SNF) is permitted to appeal the scope and severity of an alleged
noncompliant deficiency, but not the classification of severity of deficiency.
Under 42 C.F.R. §488.430(a)
CMS may impose a civil money penalty (CMP) for “either” the
number of days of noncompliance “or” for each instance of noncompliance.
During a survey by a state health agency, the SNF was determined to be non-compliant
with four participation requirements that posed immediate jeopardy, resulting
in a $9,000 per instance CMP. In communications with the provider, CMS unambiguously
indicated that the CMP was a per-instance CMP; therefore an appeal to the
classification was not appropriate. Evergreen Commons, HHS
Departmental Appeals Board, Appellate Division, Doc. No. A-08-44, Dec. No.
2175, May 16, 2008, ¶121,368.
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Federal financial participation required
CMS' disallowance of Texas' claims for federal financial participation
(FFP) for increased rates paid to primary care physicians, dentists, and specialists
who served a high volume of Medicaid patients was improper. A state plan amendment
adopted in 1992 authorized the state agency to pay access-based reimbursement
fees, described as “fees for individual services … adjusted,
where [the agency] deems necessary, to account for deficiencies
relating to the adequacy of access to health care.” The broad language
of the amendment and state legislation directing the agency to establish a
reimbursement methodology to expand access to care in certain areas supported
the state's payment of the high-volume adjustments. An increase in payments
to existing providers who served a high volume of Medicaid patients was consistent
with the language of the plan requiring the agency to remedy deficiencies
in access through adjustments to fees for individual services. The state's
adoption of an amendment that defined “high volume” and made
the rate adjustments more specific did not imply that the agency's earlier
adjustments were inconsistent with the plan. Texas Health and Human
Services Commission, HHS Departmental Appeals Board, Appellate Division,
Doc. No. A-07-93, Dec. No. 2176, May 16, 2008, ¶121,369.
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