Medicare Update

OIG Issues Compendium on Unimplemented Recommendations for FY2007

The Department of Health and Human Services' Office of Inspector General (OIG) recently released its Compendium of Unimplemented Office of Inspector General Recommendations (Compendium) for fiscal year (FY) 2007.  The Compendium provides information regarding the outstanding monetary and non-monetary recommendations, which have the potential to result in cost savings and improvements in program efficiency and effectiveness.  For FY 2007, the Compendium includes a list of unimplemented "priority recommendations." Some of those priority recommendations involve the Medicare program, such as:

• Ensure durable medical equipment suppliers' compliance with Medicare standards
• Modify payment policy for Medicare hospital bad debts (estimated savings $340 million)
• Reduce the rental period for Medicare home oxygen equipment (savings $5 billion)
• Modify payments to managed care organizations (estimated savings $1.97 billion)
• Improve Centers for Medicare & Medicaid Services performance evaluation process for program safeguard contractors
• Improve oversight of Medicare hospices

CBO Releases Issue Brief on Medicare and Medicaid Spending

On May 29, 2008, the Congressional Budge Office (CBO) released an Economic and Budget Issue Brief entitled Accounting for Sources of Projected Growth in Federal Spending on Medicare and Medicaid.  In the issue brief, the CBO projects that federal spending on Medicare and Medicaid will grow from 4 percent of gross domestic project in 2007 to 9 percent in 2032 and 19 percent in 2082.  The CBO also reports that the spending growth will depend on trends in the cost of health care and the aging of the population. However,the CBO projects that most of the growth will come from rising costs per beneficiary rather than the rising number of beneficiaries. 

CMS Publishes Final Rule on Reimbursement Determinations and PRRB Appeals

On May 23, 2008, the Centers for Medicare & Medicaid Services (CMS) published a Final Rule in the Federal Register clarifying and revising regulations governing provider reimbursement determinations and appeals before the Provider Reimbursement Review Board (PRRB).

In the Final Rule, CMS cites a number of reasons for clarifying and revising the regulations, including the fact that some of the central regulatory provisions are over 30 years old. CMS also points out that it has an interest in reducing the backlog of cases (and forestalling substantial additions to it) by regulatory changes creating a more effective and efficient appeals process. 

The Final Rule also contains a number of clarifications and revisions. For instance, the Final Rule provides that, in order for a provider to preserve its appeal rights, the provider must either claim an item on its cost report where it is seeking reimbursement that it believes to be in accordance with Medicare policy, or self-disallow the item (by following applicable procedures for filing a cost report under protest) where it is seeking reimbursement that it believes may not be allowable or in accordance with Medicare policy.  According to the Final Rule, this self-disallowance element will apply to cost reporting periods that end on or after December 31, 2008. 

In addition, the Final Rule contains provisions that limit the time frame in which a provider may add an issue to an appeal.  In fact, the Final Rule generally requires that an issue be added to an appeal within the 60 day period following the expiration of the 180 day period for filing a hearing request. Although this rule is applicable to appeals pending before the PRRB on the effective date of the Final Rule, CMS will apparently apply a special rule. Under the special rule, a provider, that wishes to add an issue to a pending appeal, will have to do so by the expiration of the later of the following periods: (i) 60 days after the expiration of the applicable 180 day period for PRRB hearing requests; or (ii) 60 days after the effective date of the Final Rule.

The Final Rule also contains other clarifications and revisions in areas such as:

• Calculating time periods and deadlines
• Provider hearing rights
• Requests for a good cause extension for requesting a hearing
• Group appeals
• Amount in controversy
• PRRB jurisdiction
• Expediting judicial review
• Parties to the proceeding
• Quorum requirements
• Discovery and subpoenas
• Record of administrative proceedings
• Actions in response to the failure to follow PRRB rules
• Scope of PRRB's authority in hearing decisions
• Administrator review
• Judicial review
• Reopening procedures

Finally, in the preamble to the Final Rule, CMS indicates that, to the extent there is a conflict between the provisions of the Final Rule and the PRRB's current instructions, the former will control. CMS also anticipates that the PRRB will make revisions to the PRRB's current instructions as a result of the Final Rule.

CMS Releases Final Rule on Medicare Part D Claims Data

On May 22, 2008, the Centers for Medicare & Medicaid Services (CMS) released a display copy of a Final Rule to permit Medicare Part D claims data to be used for program monitoring, research, public health, care coordination, quality improvement, population of personal health records, and other purposes. 

The Final Rule allows CMS to disclose certain Medicare Part D claims data to other federal governmental agencies, states and external researchers.  However, such disclosures will be subject to certain protections for beneficiary privacy and commercially-sensitive plan information.  CMS has also released a Fact Sheet on the Final Rule.  The Final Rule is scheduled to appear in the Federal Register on May 28, 2008.

On May 22, 2008, the Department of Health and Human Services also issued a Press Release announcing collaborative efforts between the Food and Drug Administration (FDA) and CMS to improve patient safety and the quality of care. Specifically, HHS announced the Sentinel Initiative and reported that the Final Rule will allow CMS to share Medicare claims data with the FDA for purposes of the new initiative. 

The FDA is launching the Sentinel Initiative with the goal of creating and implementing a Sentinel System, which will be a national, integrated, electronic system for monitoring medical product safety.  According to the Press Release, the system will enable the FDA to analyze significantly more information than it can today by using vast databases of health information to detect early signs of emerging safety problems.

During a press conference on May 22, 2008, HHS also reported that the Sentinel Initiative will start with a database of more than the 25 million beneficiaries enrolled in the Medicare Part D prescription drug benefit and later include private databases through partnerships with private firms.

Senators Baucus and Grassley Announce Health Reform Summit

On May 23, 2008, Senate Finance Committee Chairman Max Baucus and Ranking Member Charles Grassley issued a Press Release announcing the Prepare for Launch: Health Reform Summit 2008 (Summit) for Senators and Representatives to discuss options for health care reform in 2009. 

The Summit will be held at the Library of Congress on June 16, 2008 and be part of a year long series of Senate Finance Committee hearings, roundtables and events to prepare for congressional action on health care reform. According to the Press Release, the Summit will include:

• Keynote remarks by Federal Reserve Chairman Ben Bernanke on health care and American economic competitiveness
• Keynote remarks by Dr. J. Craig Venter, genomic research pioneer, on research advances and signposts for reform
• Open, bipartisan discussions with major experts to learn about issues including:
  • State-based reform efforts
  • Employer-sponsored coverage trends
  • Rising health care costs and demographic shifts
  • Insurance market reform
  • The role of public programs
  • Delivery system reform

The Press Release indicates that there will also be an additional session on lessons that can be learned from international health systems, which will feature FRONTLINE correspondent T.R. Reid on his documentary "Sick Around the World."

CMS to Host Provider Education Call on DMEPOS Competitive Bidding

The Centers for Medicare & Medicaid Services (CMS) recently announced that it will host a second national conference call on the implementation of the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program, which is scheduled to begin on July 1, 2008.

The national conference call will take place from 1:00 p.m.- 2:30 p.m. (EDT) on May 27, 2008.  During the conference call, CMS is expected to answer questions and address some of the exceptions and situations suppliers may encounter in the DMEPOS competitive bidding program implementation.   

To participate in the conference call, registration is required.  Registration will close at 1:00 p.m. (EDT) on May 26, 2008 or when available space has been filled.  CMS will also make an audio recording of the conference call available from 4:00 p.m. (EDT) on May 27, 2008 until 11:59 p.m. (EDT) on June 4, 2008.  The audio recording may be accessed by calling 1-800-642-1687 and using passcode 47261135.

Senator Baucus Comments on Medicare Physician Payment Legislation

On May 21, 2008, Senate Finance Committee Chairman, Max Baucus, issued a News Release following a meeting with the bipartisan membership of the Senate Finance Committee to discuss upcoming Medicare legislation.  In the News Release, Chairman Baucus states the following:

"In an effort to reach consensus on Medicare legislation before the Memorial Day recess, I've met repeatedly in recent days with Finance Committee colleagues and with other congressional leaders.  We've found some areas of agreement surrounding an 18-month physician payment update, extensions of expiring provisions, and stopping unscrupulous marketing of plans to Medicare beneficiaries.  But 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 preventative care and other beneficiary services, appropriate fixes to increase access to the prescription drug benefit, and sufficient savings from bloated parts of the program."

"With the expiration of the current physician payment fix approaching on June 30, I will spend the Memorial Day recess crafting legislation that my Democratic colleagues and I believe is in the best interest of America's seniors - including an increase in physician payments - and I expect that legislation to move directly to the Senate floor in the early part of June.  I will continue to reach out to all of my colleagues to find agreement as the legislation advances, but it is essential to get moving now on a good Medicare bill for seniors who need this vital program to work better."

On December 29, 2007, President Bush signed the Medicare, Medicaid and SCHIP Extension Act of 2007 into law preventing a 10.1 percent reduction in Medicare physician payments that was scheduled for 2008 and giving physicians a 0.5 percent increase through June 30, 2008. The 10.1 percent reduction in Medicare physician payments was driven by the statutory sustainable growth rate (or SGR) formula, which is intended to control the growth in aggregate Medicare expenditures for physician services.

As reflected in Transmittal 312, the Centers for Medicare & Medicaid Services intends to implement a 10.6 percent reduction in physician payments (i.e., the 0.5 percent update will no longer apply and a negative 10.1 percent update will take effect) for dates of services on or after July 1, 2008 unless Congressional action is taken.

HHS Launches Advertising Campaign on Hospital Quality

On May 20, 2008, the Centers for Medicare & Medicaid Services (CMS) announced in a Press Release that the U.S. Department of Health and Human Services (HHS) has launched a national print advertising campaign focusing on the quality of care in U.S. hospitals.  According to the Press Release, the ads were placed in the May 21, 2008 edition of 58 major daily newspapers and promote the Hospital Compare website.  Further, the ads provide scores for 2 of the 26 quality and patient satisfaction measures on the Hospital Compare website for a sample of hospitals in the newspapers' area.  The ads also invite readers to "Compare the Quality of Your Local Hospitals" and provide the following information:

• The percentage of patients at each hospital who:
  
  • always received help when they requested it, as reported by the patients themselves, and
  • were given antibiotics 1 hour prior to surgery, as reported by hospitals.
• The state average for each of the above 2 measures.

CMS Announces Acute Care Episode Demonstration Teleconference

On May 20, 2008, the Centers for Medicare & Medicaid Services (CMS) announced that there will be an informational telephone conference for applicants and other interested parties on the Acute Care Episode (ACE) demonstration project. 

The telephone conference is scheduled to take place from 3:00 p.m.- 4:30 p.m. (EST) on June 4, 2008. The telephone conference will be an opportunity for participants to ask questions and for CMS to clarify issues in the solicitation and ACE demonstration project.  CMS reports that the call-in number for the telephone conference is 1-888-982-4492 and that the passcode is Acute Care. 

On May 16, 2008, CMS issued a Press Release announcing the ACE demonstration project.  The stated goal of the ACE demonstration project is to use a global payment to better align the incentives for both hospitals and physicians leading to better quality and greater efficiency in care. According to CMS, the ACE demonstration project will also test the effect that transparent price and quality information has on beneficiary choice and provider referrals for select inpatient care. The select sets of procedures included in the demonstration will reportedly be 28 cardiac and 9 orthopedic inpatient surgical services. 

CMS reports that participation in the ACE demonstration project is only open to health care groups located in Texas, Oklahoma, Colorado and New Mexico.  CMS defines a health care group as an affiliation between a hospital with at least one physician group.

CMS Updates Hospital Acquired Conditions and Present on Admission Webpages

The Centers for Medicare & Medicaid Services (CMS) recently updated the web pages associated with the Hospital Acquired Conditions and Present on Admission Indicator section of the CMS website to describe the changes published in the hospital Inpatient Prospective Payment System Proposed Rule for fiscal year 2009.