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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.

• Court gives hospitals hope on False Claims Act liability in quality cases: Formal rulemaking, legislation should be basis to define parameters of a false claim. A recent federal district court decision supported a hospital’s argument that Medicare conditions of participation (CoPs) cannot serve as the basis for False Claims Act liability, as payment is not condition upon compliance with the CoPs. In this article, the author examines the arguments in this case, the court’s decision and its implications.

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Fourth Quarter 2007, Volume 22, Number 1

• Billing Information. The average discharge-to-bill (DTB) time for all payer types rose to 10.35 days at the end of 2007. This 0.23-day increase in average billing time kept benchmark level performance for this major financial indicator out of reach for three of four quarterly financial reporting periods in 2007. In fact, the first quarter was the only one in which hospitals achieved the benchmark, which is to bill payers within ten business days. Read about it in the HARA Report on Fourth Quarter 2007.

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The Bush Administration has let states know they will work with those that want to expand their Children’s Health Insurance Programs (SCHIP) to higher income families even if they cannot yet prove they already provide coverage to most poor children.

Last August, CMS issued a directive (see ¶51,977) to state health officials saying that any state wanting to enroll children in the SCHIP from families earning more than 250 percent of the federal poverty level ($44,000 for a family of three in 2008) must prove that it covered 95 percent of children in families earning less than 200 percent of the federal poverty level ($35,200 for a family of three in 2008). The directive was scheduled to go into effect on August 17, 2008. CCH Washington Bureau, Aug. 15, 2008.

At press time, HHS announced plans to replace the ICD-9-CM code sets used to report health care diagnoses and procedures with an expanded ICD-10-CM. ICD-9-CM has been used by providers since 2000. ICD-9 has only 15,000 codes; in contrast, ICD-10 code sets contain more than 155,000 codes. HHS proposes that the change to ICD-10 will be effective for fiscal year 2012, starting October 1, 2011.

HHS will issue a proposed rule with more details in the near future; the proposed rule will be published in the CCH Medicare and Medicaid Guide.

CMS seeks to make permanent Medicare RAC program successful

Since the recovery audit contractor (RAC) pilot program will be phased in nationwide beginning this fall, provider organizations should review the results of the demonstration program so that they can become better prepared, according to a CMS representative speaking during an August 13 2008 teleconference/webcast hosted by the American Bar Association.

The Medicare Modernization Act of 2003 (PubLNo 108-173) required a RAC demonstration from March 2005 through March 2008 and the Tax Relief and Health Care Act of 2006 (TRHCA) (PubLNo 109-432) required the program be made permanent and nationwide no later than 2010.

The RAC program mission is to detect and correct past improper payments and to implement actions that will prevent future improper payments. “That’s important so that providers can avoid submitting claims that don’t comply with Medicare rules, CMS can lower its error rate, and taxpayers and future Medicare beneficiaries are protected,” She

Providers can appeal and the appeal process will be virtually the same as the regular appeal process, she said. She added that if a RAC loses on any level of appeal, the RAC will pay back their contingency fee. CCH Washington Bureau, Sept. 10, 2007.

Since the recovery audit contractor (RAC) pilot program will be phased in nationwide beginning this fall, provider organizations should review the results of the demonstration program so that they can become better prepared, according to a CMS representative speaking during an August 13 2008 teleconference/webcast hosted by the American Bar Association.

The Medicare Modernization Act of 2003 (PubLNo 108-173) required a RAC demonstration from March 2005 through March 2008 and the Tax Relief and Health Care Act of 2006 (TRHCA) (PubLNo 109-432) required the program be made permanent and nationwide no later than 2010.

The RAC program mission is to detect and correct past improper payments and to implement actions that will prevent future improper payments. “That’s important so that providers can avoid submitting claims that don’t comply with Medicare rules, CMS can lower its error rate, and taxpayers and future Medicare beneficiaries are protected,” She

Providers can appeal and the appeal process will be virtually the same as the regular appeal process, she said. She added that if a RAC loses on any level of appeal, the RAC will pay back their contingency fee. CCH Washington Bureau, Sept. 10, 2007.

CMS has adopted a Final rule changing the hospice wage index for fiscal year (FY) 2009 and providing for a payment update. The market basket increase is set at 3.6 percent, up from the 3.0 percent estimate in the Proposed rule. The hospice wage index will be based on the inpatient hospital wage index, before the application of any floors, adjustments or geographic reclassifications. Hospices in core-based statistical areas (CBSAs) with an index of 0.8 or below will be protected by the “floor ” on payment rates.

The budget neutrality adjustment factor (BNAF) is to be phased out over three years; the adjustment will be reduced by 25 percent for FY 2009, by 75 percent in FY 2010, and by 100 percent for FY 2011. In response to concerns about the effect of the decreases on hospice reimbursement, CMS noted that the hospice reimbursement will not actually decrease; rather, the BNAF will no longer increase hospice payments beyond the amount of the market basket increase. Final rule, 73 FR 46464, Aug. 8, 2008, ¶180,762.

The 2009 inpatient rehabilitation facilities (IRF) prospective payment system relative weights and average length of stay values have been adjusted with the most current Medicare claims and cost report data to improve the accuracy of payment for services furnished to people with Medicare who need the intensive rehabilitation services provided by IRFs. There are currently more than 1,200 such facilities.

Changes announced in the 2009 Final rule “will make it possible for beneficiaries who are severely impaired by illness or injury, but who are able to participate in an intensive program of rehabilitation, to obtain high quality care in an inpatient setting,” said CMS Acting Administrator Kerry Weems. This includes patients recovering from serious illnesses or injuries, such as stroke, spinal cord injuries, severe burns, amputations and a number of other conditions. CMS projects that Medicare payments to IRFs under this Final rule will be approximately $5.6 billion in fiscal year (FY) 2009. Final rule, 73 FR 46370, Aug. 8, 2008.

The payment rate increase for the skilled nursing facilities (SNF) prospective payment systems (PPS) for fiscal year (FY) 2009 will be 3.4 percent under the PPS Final rule, not 3.1 percent as outlined in the Proposed rule (see ¶220,603). The recalibration of the case-mix adjustments will not be implemented this year.

The 3.4 percent increase in payments is the result of an increase in the annual market basket calculation of the cost of goods and services included in a SNF stay. The price of items in the market basket are annually updated and payments to SNFs are adjusted accordingly. Final rule, 73 FR 46416, Aug. 8, 2008, ¶180,764.

CMS is finalizing several Stark regulation revisions that have been proposed in different rules over the last year, as part of the fiscal year (FY) 2009 inpatient hospital prospective payment system (IPPS) update. The final rule will be published in the Federal Register on August 19, 2008; it is available online at ¶180,744.

The Stark areas affected by the final rule include physician-owned hospitals; the "stand in the shoes" provision; "under arrangements" regulations; period of disallowance; signature requirements; disclosure of financial relationships; percentage-based compensation formulae; "per click" payments; and retirement plans. CCH Chicago Bureau, Aug. 8, 2008.

Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 1571, Aug. 7, 2008, ¶157,459. Premium content

Medicare Program Integrity Manual, Pub. 100-08, Transmittal No. 264, Aug. 7, 2008, ¶157,460. Premium content

Medicare National Coverage Determinations Manual, Pub. 100-03, Transmittal No. 92, Aug. 8, 2008, ¶157,461. Premium content

Medicare Claims Processing Manual, Pub. 100-04, Transmittal No. 1572, Aug. 8, 2008, ¶157,462. Premium content

Medicare Program Integrity Manual, Pub. 100-08, Transmittal No. 265, Aug. 7, 2008, ¶157,463. Premium content

Medicare Contract Beneficiary and Provider Communications Manual, Pub. 100-09, Transmittal No. 22, Aug. 8, 2008, ¶157,464. Premium content

One-Time Notification Manual, Pub. 100-20, Transmittal No. 363, Aug 8, 2008, ¶157,465. Premium content

One-Time Notification Manual, Pub. 100-20, Transmittal No. 364, Aug. 8, 2008, ¶157,466. Premium content

One-Time Notification Manual, Pub. 100-20, Transmittal No. 365, Aug. 8, 2008, ¶157,467. Premium content

A long-term care facility did not adequately supervise its residents, placing them at significant risk of accident and serious injury and out of substantial compliance with 42 C.F.R. §483.25(h)(2). Kenton Healthcare, HHS Departmental Appeals Board, Appellate Division, Doc. No. A-08-27, Dec. No. 2186, July 28, 2008, ¶121,406. Premium content