Medicare Update

OIG Reports on Government-Long Term Care Industry Roundtable

On January 31, 2008, the Department of Health and Human Services' Office of Inspector General (OIG) and the Health Care Compliance Association released a report arising from a recent government-industry roundtable called Driving for Quality in Long-Term Care: A Board of Directors Dashboard.  The roundtable was held on December 6, 2007 and provided the long-term care industry with an opportunity to inform the OIG of issues surrounding board of directors' oversight of quality of care.

The report includes written summaries of the discussions that took place in breakout groups designed around the following 3 perspectives on the oversight of quality of care: (i) organizational commitment to quality; (ii) processes related to monitoring and improving quality; and (iii) outcome measures related to quality. In the report, a fourth breakout group also considered the benefits of, and challenges to, developing a Quality of Care Dashboard (i.e., a management tool that may provide a way to access and oversee performance on quality of care issues).  In a related Press Release, the OIG indicates that it is considering additional opportunities for government-industry dialogue on quality of care issues. 

Lower Medicare Part D Prescription Drug Costs Projected

On January 31, 2008, the Centers for Medicare & Medicaid Services (CMS) issued a Press Release announcing that the overall projected cost of the Medicare Part D prescription drug benefit is $117 billion lower over the next 10 years than estimated last summer.  In the Press Release, CMS attributes the lower cost projection to slowing drug cost trends, lower plan spending estimates, and higher rebates from drug manufacturers. 

CMS also reports that, following the third open enrollment season, there are 1.5 million more Medicare Part D enrollees, bringing the total number of Medicare Part D enrollees to 25.4 million. Further, according to CMS, about 3.1 million Medicare Part D enrollees (or 12 percent) changed plans in 2008.  Of those who changed plans, 2.1 million were beneficiaries receiving the low-income subsidy and were reassigned so they would not have to pay a premium.

In the Press Release, CMS also reports that recent independent surveys show that beneficiary satisfaction with the Medicare Part D benefit is at more than 85 percent.  Further, citing rising enrollment, high customer satisfaction, and lower cost projections, Department of Health and Human Services Secretary, Michael Leavitt, states in the Press Release that "...Medicare's prescription drug benefit is proving a resounding success."

CMS to Host Ambulance Open Door Forum

The Centers for Medicare & Medicaid Services (CMS) recently announced the first Ambulance Open Door Forum for 2008.  The Open Door Forum will take place at 2:00 p.m. (EST) on February 13, 2008.

There are 2 ways to participate in the Open Door Forum.  To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 18793700.  To participate in person, one must RSVP to AMBULANCEODF-L@cms.hhs.gov by 2:00 p.m. (EST) on February 11, 2008 and include your name, organization, telephone number and "Ambulance" in the subject line. The Open Door Forum will take place at the Hubert H. Humphrey Building, 200 Independence Ave. SW, Washington, D.C.

Beginning 2 hours after the Open Door Forum, CMS will also make an audio recording of the Open Door Forum available. To access the audio recording, one must dial 1-800-642-1687 and reference the conference ID.  The audio recording will be available for 3 business days.

Recovery Audit Contractors: Don't Be Left in the Dark

The Centers for Medicare & Medicaid Services (CMS) intends to implement the nationwide Recovery Audit Contractor (RAC) program in phases beginning in March 2008. Medicare providers should become informed about the RAC program and begin planning for its implementation.  In this post, aspects of the RAC program are highlighted to assist providers and others in understanding CMS's plans for the nationwide RAC program.

CMS Proposes Enrollment Safeguards for DMEPOS Suppliers

On January 25, 2008, the Centers for Medicare & Medicaid Services (CMS) published a Proposed Rule in the Federal Register that would change the enrollment requirements that suppliers of durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) must satisfy to maintain Medicare billing privileges. Among other things, the Proposed Rule would:

• clarify that a supplier must be licensed to provide licensed services and cannot contract with an individual or entity to provide the licensed services.
• require that a supplier maintain business records for 7 years after a claim has been paid and clarify what constitutes an "appropriate site."
• with respect to a supplier's primary business telephone, clarify the use of cellular phones, beepers, pagers, call forwarding, answering machines and services, and facsimile machines.
  
• revise the standard for maintaining comprehensive liability insurance coverage.
• clarify the standard for beneficiary contact by restricting direct patient solicitations (by telephone, email, instant messaging, coercive response internet advertising, or in-person).
• clarify that a supplier is solely responsible for the delivery of Medicare covered items, instructions on how to use such items, and maintaining necessary documentation showing that a beneficiary received such items and appropriate instructions for their use.
• add new supplier standards:
  • requiring that a supplier obtain oxygen from a state licensed oxygen supplier.
  • requiring that a supplier maintain ordering and referring documentation received (including NPI) for 7 years after the claim has been paid.
  • prohibiting a supplier from sharing a practice location with another Medicare supplier.
  • requiring that a supplier be open to the public a minimum of 30 hours per week (except for suppliers working with custom-made or fitted orthotics and prosthetics).
  • requiring that a supplier not have an IRS or state taxing authority tax delinquency.
  • establishing an overpayment from the date an adverse legal action or felony conviction precludes payment.

The deadline for submitting comments on the Proposed Rule is 5 p.m. on March 25, 2008.  The Proposed Rule explains how to submit comments to CMS.

Senators Suggest Enhancements to Physician Quality Reporting Initiative

In a recent letter to Kerry Weems, Acting Administrator of the Centers for Medicare & Medicaid Services (CMS), Senate Finance Committee Chairman Max Baucus and Ranking Member Charles Grassley outline their intentions for improving Medicare payments for physician services by better linking payment to the quality of care provided.  In the letter, Senators Baucus and Grassley identify enhancements to the Physician Quality Reporting Initiative (PQRI) that they believe will "substantially expedite the transformation of this payment system to one that better ensures high-quality, patient-centered care."  The enhancements include:

• use of National Quality Forum endorsed measures;
• reporting on quality measure groups that focus on the care of patients with chronic conditions;
• employing clinical databases to capture more complete information about physician quality; and
• encouraging a team-approach to chronic care by permitting quality reporting by group practices.

Urology Groups Challenge Revised Anti-Markup Rule

On January 24, 2008, a laboratory management company and 3 physician urology groups filed a Complaint for Declaratory and Injunctive Relief (Complaint) in the U.S. District Court for the District of Columbia.

The Complaint seeks to enjoin the Department of Health and Human Services and Centers for Medicare & Medicaid Services (CMS) from applying the revised anti-markup provisions to anatomic pathology diagnostic testing services furnished in a "centralized building" that is not the "same building" under the Stark law definitions. The Complaint also seeks an order that would delay the application of the revised anti-markup provisions to anatomic pathology diagnostic testing services until January 1, 2009.

In the Medicare Physician Fee Schedule Final Rule for 2008 (MPFS Final Rule), CMS revised the anti-markup provisions of 42 C.F.R. 414.50 to provide that, if a physician/physician group bills for the technical component (TC) or professional component (PC) of a diagnostic test ordered by the physician and the test is performed at a site other than the "office of the billing physician or other supplier," the payment for the TC or PC may not exceed the lowest of the following amounts:

• the performing supplier's net charge to the billing physician or other supplier;
• the billing physician or other supplier's actual charge; or
• the fee schedule amount for the test that would be allowed if the performing supplier billed directly.

The MPFS Final Rule defines "office of the billing physician or other supplier" as the medical office space where the physician or other supplier regularly furnishes patient care.  With respect to a physician organization, the MPFS Final Rule defines "office of the billing physician or other supplier" as the space in which the physician organization provides substantially the full range of patient care services that the physician organization provides generally.

However, after publishing the MPFS Final Rule, CMS reported that the definition of "office of the billing physician or supplier" may not be entirely clear and that it may have unintended consequences.  Therefore, CMS published a Final Rule in the Federal Register on January 3, 2008 delaying the applicability of the anti-markup provisions until January 1, 2009. However, CMS did not apply the delay to anatomic pathology diagnostic testing services furnished in a "centralized building" that is not the "same building." 

According to the Complaint, the revised anti-markup provisions will prohibit the plaintiffs from billing for the MPFS amount and require that the plaintiffs bill at an actual loss.  Among other things, the plaintiffs also assert that the Final Rule (effectuating the delay) contravenes the notice and comment requirements of the Administrative Procedure Act and that the revised anti-markup provisions are contrary to the Stark law and contrary to and without authority under the MPFS statute.  For more information see Atlantic Urological Associates, P.A. et al. v. Leavitt, Case No. 1:08-cv-00141-RMC.

GAO Reports on Medicare Improper Payments Estimate for 2007

On January 23, 2008, the Government Accountability Office (GAO) released a report indicating that the major executive branch agencies report a total improper payments estimate of $55 billion for fiscal year (FY) 2007.  In the report, the fee-for-service component of the Medicaid program has an improper payment estimate of $12.9 billion, which is the largest estimate for FY 2007.  The fee-for-service component of the Medicare program follows with the third largest total improper payments estimate of $10.8 billion.   However, the report does not include estimates for 14 Federal programs with outlays totaling about $170 billion for FY 2007.   Among the Federal programs without estimates are the Medicare Advantage program and Medicare prescription drug benefit with combined total outlays of about $124.4 billion for FY 2007.

OIG Solicits Comments on Nursing Facility Compliance Program Guidance

On January 24, 2008, the Department of Health and Human Services' Office of Inspector General (OIG) published a Notice in Federal Register soliciting comments, recommendations and suggestions on how to best revise the nursing facility compliance program guidance.  Specifically, the OIG is seeking comments addressing any changes to existing risk areas and introducing new risk areas.  Comments must be delivered to the OIG by no later than 5 p.m. on February 25, 2008.  The Notice explains how to submit any comments.  The last version of the compliance program guidance for nursing facilities, which is entitled Final Compliance Program Guidance for Nursing Facilities, was published in March 2000.

CMS Proposes 2009 Payment and Policy Changes for Long-Term Care Hospitals

On January 22, 2008, the Centers for Medicare & Medicaid Services (CMS) released a display copy of the proposed rule that would update the Medicare payment rates and policies for long-term care hospitals (LTCH) for rate year (RY) 2009. Taking into account the proposed changes, CMS estimates that aggregate payments under the LTCH prospective payment system (PPS) for RY 2009 will be approximately $4.44 billion.

In the proposed rule, CMS proposes a standard Federal rate of $39,076.28 for RY 2009 and proposes to increase the fixed-loss amount for high cost outliers to $21,199 (from $20,738). CMS also proposes changing the annual update schedule for the LTCH-PPS payment rate and policy changes to coincide with the annual update to the Medicare Severity Long-Term Care Diagnosis Related Group classifications and relative weight recalibrations.  To do so, CMS proposes making the payment rates for RY 2009 effective for a 15 month period (i.e., effective from July 1, 2008 through September 30, 2009).

Further, in the proposed rule, CMS does not propose to implement a one-time budget neutrality adjustment to the Federal rate for RY 2009 because of changes made by the Medicare, Medicaid and SCHIP Extension Act of 2007 (MMSEA).  Instead, CMS presents a possible methodology for evaluating whether such a one-time budget neutrality adjustment may be appropriate.

The proposed rule is scheduled to appear in the Federal Register on January 29, 2008. CMS reports that comments on the proposed rule will be due by March 24, 2008 and that a final rule will be issued later in the spring. CMS also reports that it will issue guidance on other LTCH provisions of the MMSEA at a later time.