Medicare Update

CMS Releases Supplemental Materials for Proposed Home Health PPS Rule

On May 4, 2007, the Centers for Medicare & Medicaid Services (CMS) published a Proposed Rule in the Federal Register, which would make the first major refinements to the Medicare home health prospective payment system since 2000.

In conjunction with the Proposed Rule, CMS has released a home health temporary (toy) grouper based on the proposed refinements.  CMS stresses that this tool is not the official grouper software that CMS will add to HAVEN (i.e., the software CMS provides to home health agencies to submit OASIS data), but can be used for educational and planning purposes. CMS has also released "pseudocode" detailing the logic of the new classification algorithm to help software vendors prepare for the revisions that may be required to their programs and systems.

The temporary (toy) grouper, pseudocode and related information can be found on the Home Health Agency Center page of the CMS website, under Spotlights.

CMS to Publish National Plan and Provider Enumeration System Data Dissemination Notice

The Centers for Medicare & Medicaid Services (CMS) has released a display copy of a Notice setting forth the data that will be available from the National Plan and Provider Enumeration System (NPPES).  The Notice will be published in the Federal Register on May 30, 2007. 

In the Notice, CMS describes the policy by which CMS will make certain NPPES health care provider data available to covered entities under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and others. 

According to the Notice, NPPES health care provider data, which is required to be disclosed under the Freedom of Information Act (FOIA), will be made publicly available 30 days after the Notice appears on the Federal Register (i.e., June 28, 2007).  The FOIA disclosable data will be made available in an initial file that may be downloaded from the internet (with downloadable monthly updates) and in a query only database.  In the Notice, CMS addresses the NPPES health care provider data that is required to be disclosed under FOIA.

The Notice also encourages providers, who have been assigned national provider identifiers (NPI), to review their NPPES data and make any necessary changes prior to the end of the 30 day period.  In fact, CMS points out that providers, who are covered entities under HIPAA, are required to update their NPPES data within 30 days of any change.  In the Notice, CMS also indicates that providers who wish to delete any NPPES data, which was not required to obtain a NPI, may do so prior to the end of the 30 day period.

CMS Announces Second Comment Period for Revised Advance Beneficiary Notice

On May 25, 2007, the Centers for Medicare & Medicaid Services (CMS) published a Notice in the Federal Register announcing a second public comment period for the revised Advance Beneficiary Notice of Noncoverage (ABN). 

In the Notice, CMS requests public comments on the revised ABN, which reflects changes made after the first public comment period.  The revised ABN and supporting documentation can be found on the CMS website.  CMS reports that providers and suppliers already required to use ABNs should continue using the currently approved ABNs until the revised ABN is approved.

On February 23, 2007, CMS published a pronouncement in the Federal Register proposing the revised ABN and providing for the first public comment period.  The revised ABN was created by combining the general use advance beneficiary notice (CMS-R-131-G) and an advance beneficiary notice used for physician-ordered laboratory tests (CMS-R-131-L).

The revised ABN is of significance because a provider or supplier participating in the Medicare program, or taking a claim on assignment, may bill for items or services usually covered under Medicare, but denied under specific statutory exclusions, if the provider or supplier informs the beneficiary, prior to furnishing the service, that Medicare is likely to deny payment.

CMS Releases Financial Measures for DMEPOS Competitive Bidding Program

On May 25, 2007, the Centers for Medicare & Medicaid Services (CMS) released the financial measures that CMS and its Competitive Bidding Implementation Contractor (CBIC) will use to evaluate the financial stability of suppliers that bid under the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program.

As part of a bid, suppliers must submit certain financial documentation.  CMS and the CBIC will evaluate that financial documentation, including a supplier's credit history and the following financial measures, to determine whether a supplier will be able to participate in the DMEPOS competitive bidding program:

• Current ratio = current assets/current liabilities
• Collection period = (accounts receivable/sales) x 360
• Accounts payable to sales = accounts payable/net sales
• Quick ratio = (cash + accounts receivable)/current liabilities
• Current liabilities to net worth = current liabilities/net worth
• Return on sales = net sales/inventory
• Sales to inventory
• Working capital = current assets - current liabilities
• Quality of earnings = cash flow from operations/(net income + depreciation)
• Operating cash flow to sales = cash flow from operations/(revenue - adjustment to revenue)

CMS Releases Final Version of the Important Message from Medicare

On May 22, 2007, the Centers for Medicare & Medicaid Services (CMS) posted the final version of the Important Message from Medicare on the CMS website.  According to CMS, hospitals must use this version starting July 2, 2007. 

CMS has also posted an unofficial version of the Detailed Notice of Discharge on the CMS website.  CMS reports that this version of the Detailed Notice of Discharge may only be used for programming and training purposes.  CMS is expected to post the final version of the Detailed Notice of Discharge on the CMS website within the next week.   

Copies of the final Important Message from Medicare and unofficial Detailed Notice of Discharge can be found on the Hospital Discharge Appeal Notices page of the CMS website.

CMS Announces Telephone Conferences on DMEPOS Competitive Bidding Program

The Centers for Medicare & Medicaid Services (CMS) will host a series of telephone conferences on the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program.  The telephone conferences will last approximately 1 hour and are designed to provide suppliers with additional information about the program.

The first telephone conference will take place at 2:00 p.m. (EDT) on June 4, 2007 and assist suppliers in navigating the Competitive Bidding Submission System.  On June 6, 2007 at 2:00 p.m. (EDT), there will be a second telephone conference.  During the second telephone conference, CMS will discuss bidding rules and issues such as common ownership, the financial documents that must be submitted with a supplier's application, the small business provisions, and the bidding evaluation process and time frames.  During a third telephone conference, on June 8, 2007 at 2:00 p.m. (EDT), CMS will address product category issues, including how product categories were selected, what constitutes the mail order diabetic testing supplies category, and what is included in the grandfathering provisions.

To participate in the telephone conferences, one must register through the DMEPOS Competitive Bidding Program website.  A call-in number will be provided upon registration.  CMS will also make an audio recording and transcript available after each telephone conference. 

CMS Posts Transcript from Special Open Door Forum on Physician Quality Reporting Initiative

The Centers for Medicare & Medicaid Services (CMS) recently posted the transcript from the May 14, 2007 Special Open Door Forum on the Provider Quality Reporting Initiative (PQRI) on the CMS website.  During the Forum, CMS discussed the potential use of registries for reporting data on quality measures for PQRI.  Materials associated with this Forum can also be found on the CMS Sponsored Calls page of the CMS website. 

Subcommittee on Health Announces Hearing on Medicare Advantage Fee For Service Plans

On May 22, 2007, the House Ways and Means' Subcommittee on Health announced in a Hearing Advisory that the Subcommittee will hold a hearing on Medicare Advantage Private Fee-For-Service (PFFS) plans.  The hearing will take place at 2:00 p.m. on May 22, 2007.

In announcing the hearing, Chairman Pete Stark stated: "The alarming growth in Private-Fee-For-Service Plans raises serious questions about their effect on the Medicare program.  These plans are paid an average of 119 percent of traditional fee for service, even though beneficiaries are being told PFFS plans are no different than traditional fee-for-service Medicare.  It is our duty to investigate the exponential growth and continued overpayments to PFFS plans, and to ensure beneficiaries are protected and taxpayer dollars are spent wisely." In the Hearing Advisory, the Subcommittee on Health also reports that advocates for senior citizens and insurance commissioners have reported abuses by insurance agents and brokers selling PFFS plans. 

The Hearing Advisory was preceded by a Press Release in which the Centers for Medicare & Medicaid Services (CMS) announced that it will be publishing a proposed rule to strengthen the current oversight and penalties for Medicare Advantage and Medicare Part D prescription drug plans.  It has been reported that the proposed rule will appear in the Federal Register on May 25, 2007. 

CMS to Correct Error in Final LTCH-PPS Rule for RY 2008

On May 11, 2007, the Centers for Medicare & Medicaid Services (CMS) published the Final Rule updating the payment rates and policies for the long-term care hospital prospective payment system for rate year (RY) 2008.  In the Final Rule, CMS increased the high cost fixed-loss outlier amount to $22,954 for RY 2008.  However, CMS reports that it recently discovered an error in the calculation of that high cost fixed-loss outlier amount.  According to CMS, the high cost fixed-loss outlier amount for RY 2008 should be $20,738.  CMS expects to publish a correction notice in the Federal Register shortly.

CMS to Correct Error in Proposed IPPS Rule for FY 2008

On May 3, 2007, the Centers for Medicare & Medicaid Services (CMS) published the Proposed Rule, which would update the hospital inpatient prospective payment system (IPPS) for fiscal year (FY) 2008. 

However, CMS reports that it recently discovered an error in the DRG relative weights that appeared in the Proposed Rule.  To correct the error, CMS has revised the relative weights and recalculated the IPPS standardized amounts.   The recalculation will reportedly increase the IPPS standardized amounts by $0.18.   According to CMS, other calculations will also be affected.  For instance, the proposed outlier threshold for FY 2008 will decrease by $85 to $22,940. 

CMS is expected to publish a correction notice in the Federal Register, which addresses the changes resulting from the error correction.