Medicare Update

CMS Redesigns Medicare Provider Statistical & Reimbursement System

Over the last week, I have received a few inquires about a Medicare provider's responsibility with respect to obtaining a Provider Statistical & Reimbursement (PS&R) system report for cost report filing purposes.

On June 12, 2009, the Centers for Medicare & Medicaid Services (CMS) issued Transmittal 153 (Change Request 6519) announcing that the redesigned PS&R system (PS&R Redesign) is available for use.

According to Transmittal 153, the PS&R Redesign is to be used for filing and settling all cost reports with fiscal years ending on January 31, 2009 and later. Further, Transmittal 153 states in part:

"The PS&R Redesign will allow all users (Providers, FIs/MACs, CMS) the ability to download summary PS&R reports via the internet. Users will be able to log on to the system and request their summary reports on an as-needed basis.  FIs/MACs will no longer have to produce and distribute these summary reports to their providers. It will be the provider's responsibility to obtain their own reports needed for their cost report..."

To gain assess to the PS&R Redesign, Transmittal 153 indicates that users must establish an Individuals Authorized Access to CMS Computer Systems (IACS) account and be approved for PS&R access. Transmittal 153 also states that "[t]he Provider IACS verification process...may take weeks to complete the entire process." So, providers (that file cost reports) should not delay registration.

Information on the IACS process can be found here. Transmittal 153 also contains information regarding IACS registration including a web link.  Also, see MLN Matters article MM6519.

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CMS Directs Medicare Contractors to Take Action on OIG Reports

The Centers for Medicare & Medicaid Services (CMS) recently issued Transmittal 574 and alerted various Medicare contractors (including Part A/B Medicare Administrative Contractors) about 4 Department of Health and Human Services' Office of Inspector General reports (OIG Reports).

Among other things, Transmittal 574 instructs certain Medicare contractors to "review the claims data particularly for services mentioned in the OIG reports" and "take appropriate action consistent with their individual prioritized strategy (e.g., establish automated prepayment edits, develop pre and postpayment reviews, educate physicians/suppliers), if the data warrants any action." 

Transmittal 574 has an effective/implementation date of November 9, 2009.

The OIG Reports identified in Transmittal 574 are set forth below.

• Medicare Part B Chemotherapy Administration: Payment and Policy (OEI-09-08-00190)
• Prevalence and Qualifications of Nonphysicians Who Performed Medicare Physician Services (OEI-09-06-00430)
• Inappropriate Medicare Payments for Chiropractic Services (OEI-07-07-00390)
• Medicare Part B Billing for Ultrasound (OEI-01-08-000100)

Certain Medicare providers and suppliers may want to take a look at the OIG Reports.

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OIG Work Plan Reveals Possible Risk Areas for Medicare Providers and Suppliers

On October 1, 2009, the Department of Health and Human Services' Office of Inspector General (OIG) released its Work Plan for fiscal year 2010 (Work Plan).

The Work Plan addresses the areas and issues the OIG intends to audit, evaluate and inspect during fiscal year 2010.  The Work Plan also provides some insight into the areas and issues that may evolve into future OIG enforcement activities. Therefore, health care providers and suppliers should consider the Work Plan in relation to their operations.

This post briefly highlights some of the Work Plan priorities for hospitals, physicians and other health care providers with respect to Medicare Parts A and B. Work Plan priorities for Medicare provider and supplier types not addressed in this post (e.g., home health agencies) will be covered in subsequent posts.

CMS Releases Revised ICD-10-CM/PCS Fact Sheet

The Centers for Medicare & Medicaid Services (CMS) recently released a revised publication titled ICD-10-CM/PCS: An Introduction Fact Sheet (August 2009).

According to CMS, the revised publication provides general information about ICD-10-CM/PCS, including the benefits of adopting the new coding system, structural differences between ICD-9-CM and ICD-10-CM/PCS, and implementation planning recommendations.  The revised publication can be found here.

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CMS Releases Transcript of ICD-10-CM/PCS Physician Specialty Group Conference Call

The Centers for Medicare & Medicaid Services (CMS) has released the written and audio transcript summaries of the Introduction to ICD-10-CM/PCS for Physician Specialty Group Representatives Conference Call, which occurred on June 23, 2009. They are available in the "downloads" section of this CMS webpage.

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CMS to Host National Provider Conference Call on ICD-10-CM/PCS

The Centers for Medicare & Medicaid Services (CMS) recently announced that it will host a national conference call regarding ICD-10-CM/PCS from 1:00 p.m. - 2:30 p.m. (EDT) on May 19, 2009.

According to CMS, the conference call will include a discussion of the following topics:

• An overview of the ICD-10 final rule, which requires the implementation of ICD-10-CM/PCS on October 1, 2013;
• The differences between ICD-9-CM and ICD-10-CM/PCS codes;
• The use of the General Equivalence Mappings that have been created to assist in converting policies, edits and trend data from ICD-9-CM to ICD-10-CM/PCS; and
• The resources that are available to assist in planning for the transition from ICD-9-CM to ICD-10-CM/PCS.

CMS reports that discussion materials and registration information can be accessed here.

CMS Revises Instructions on Good Cause and Medicare Claim Reopenings

On January 16, 2009, the Centers for Medicare & Medicaid Services (CMS) released Transmittal 1671, which revises part of the Medicare Claims Processing Manual (Pub. 100-04) and addresses what constitutes new and material evidence as it relates to good cause for reopening a Medicare claim.

In Transmittal 1671, CMS also establishes policies related to good cause reopenings, including a requirement that a Medicare contractor clearly document in the case file the new and material evidence that represents good cause for reopening. CMS also states that "[a] contractor's decision to reopen based on the existence of good cause, or refusal to reopen after determining good cause does not exist, is not subject to appeal." In doing so, CMS cites 42 CFR 405.926(l) and 405.980(a)(5), which indicate that the decision to reopen (or not reopen) is not an initial determination, is final and not subject to appeal.

In making such a statement, CMS may be reinforcing at least 2 recent Medicare Appeals Council (MAC) decisions (See In the case of Providence St. Joseph Medical Center and In the case of Memorial Hospital of Long Beach) in which the MAC found that CMS expressly declined to establish an evidentiary burden of proof for reopenings in the Interim Final Rule, which revised the Medicare appeals process. The MAC also found that the enforcement mechanism for good cause standards lies with CMS's evaluation and monitoring of Medicare contractor performance, not the appeals process.

Bottom line. Medicare providers and suppliers may find it difficult to successfully challenge a Medicare contractor's good cause finding as part of the Medicare appeals process unless there is a change in Medicare policy or the MAC decisions are overturned or superseded. 

Background:

Pursuant to 42 CFR 405.980(b), a Medicare contractor may reopen and revise an initial determination or redetermination between 1 year and 4 years from such determination for good cause.  According to 42 CFR 405.986(a)(1), "good cause" may be established when there is new and material evidence that:

• Was not available or known at the time of the determination or decision; and 
• May result in a different conclusion.

As reflected in 42 CFR 405.986(a)(2), "good cause" may also be established when the evidence considered in making a determination or decision clearly shows on its face that an obvious error was made at the time of the determination or decision.

CMS Posts Transcript from ICD-10-CM/PCS National Provider Conference Call

The Centers for Medicare & Medicaid Services (CMS) has posted the transcript from the November 17, 2008 ICD-10-CM/PCS national provider conference call for physicians on the ICD-10/CMS Sponsored Calls page of the CMS website. Visit the ICD-10/Overview page and the related pages of CMS's website to keep up to date on ICD-10-CM/PCS developments. 

CMS Revises Anti-Markup Provisions in 2009 Final Physician Fee Schedule Rule

On November 19, 2008, the Centers for Medicare & Medicaid Services (CMS) published the Final Rule in the Federal Register, which revises the payment policies and rates for the Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2009.

As part of the Final Rule, CMS revises the anti-markup provisions.  Under the Final Rule, the anti-markup provisions will apply if a physician or other supplier bills for the technical component (TC) or professional component (PC) of a diagnostic test that was ordered by the physician or other supplier (or by a party related through common ownership or control) and the diagnostic test is performed by a physician who does not "share a practice" with the billing physician or other supplier. 

In the Final Rule, CMS adopts a hybrid approach to determining whether a physician "shares a practice" with the billing physician or other supplier. In doing so, CMS adopts "Alternative 1" and "Alternative 2" from the MPFS Proposed Rule for CY 2009 with modifications. In the Final Rule, CMS also indicates that arrangements should be first analyzed under Alternative 1 and, if the performing physician does not satisfy the requirements of Alternative 1, an analysis under Alternative 2 may be applied on a test-by-test basis to determine whether the anti-markup payment limitation applies.

Alternative 1 (Substantially All Test)

Under Alternative 1, a performing physician "shares a practice" with the billing physician or other supplier if he or she furnishes "substantially all" (i.e., at least 75 percent) of his or her professional services through such billing physician or other supplier. Further, the "substantially all" requirement will be satisfied if, at the time the billing physician or other supplier submits a claim for service furnished by the performing physician, the billing physician or other supplier has a reasonable belief that:

• for 12 months prior to and including the month in which the service was performed, the performing physician furnished substantially all of his or her professional services through the billing physician or other supplier; or

• the performing physician will furnish substantially all of his or her professional services through the billing physician or other supplier for the next 12 months (including the month in which the service is performed).

CMS believes that its Final Rule modifications to Alternative 1 should satisfy earlier concerns about locum tenens arrangements (and part-time and other on-call or similar arrangements).

Alternative 2 (Site of Service Test)

Under Alternative 2, a physician will be deemed to "share a practice" with the billing physician or other supplier with respect to the performance of the TC or PC of a diagnostic test if the physician is:

• an owner, employee or independent contractor of the billing physician or other supplier; and 

• the TC or PC is performed in the "office of the billing physician or other supplier."

In the Final Rule, the "office of the billing physician or other supplier" is described as any medical office space, regardless of the number of locations, in which the ordering physician or other ordering supplier regularly furnishes patient care, and includes space where the billing physician or other supplier furnishes diagnostic testing, if the space is located in the same building (as defined in 42 C.F.R. 411.351) in which the ordering physician or other ordering supplier regularly furnishes patient care.  For a billing physician or other supplier that is a physician organization, the "office of the billing physician or other supplier" is described as the space in which the ordering physician provides substantially the full range of patient care services that the ordering physician provides generally.

In the Final Rule, CMS:

• does not finalize a definition of "outside supplier;"
• does not create an exception for tests ordered by a physician in a physician organization with no physician owners who have a right to receive profit distributions;
• does not revise the definition of "net charge;" and
• does not make changes to the Stark in-office ancillary services exception, but indicates that it may propose rulemaking on the issue in the future.   

The Final Rule makes the finalized revisions of the anti-mark up provisions effective January 1, 2009.  According to the Final Rule, CMS anticipates that the finalized anti-markup provisions will result in savings to the Medicare program by reducing overutilization and anti-competitive business arrangements.  However, the Final Rule indicates that CMS is unable to gauge (with any certainty) the extent of such savings.

CMS Reports Projected 2008 Medicare Improper Payment Rate

On November 17, 2008, the Centers for Medicare & Medicaid Services (CMS) issued a Press Release reporting that the projected Medicare fee-for-service (FFS) improper payment rate for fiscal year (FY) 2008 is 3.6 percent (or $10.4 billion). 

The Medicare FFS improper payment rate declined from 14.2 percent in FY 1996 (when the Medicare improper payment rate was first reported) to 3.9 percent in FY 2007. In the Press Release, CMS stresses that the Medicare FFS improper payment rate includes payments that may have been incorrectly paid and does not necessarily reflect fraud.  Further, CMS reports that most of the improper payments are due to claims for services that were medically unnecessary or incorrectly coded. 

According to the Press Release, CMS intends to conduct an in-depth evaluation of the FY 2008 Medicare FFS error rate to strengthen the confidence in the accuracy of reported error rates. Presumably, this evaluation is in response to an August 22, 2008 Office of Inspector General report, which questioned the accuracy of CMS's FY 2006 claim error rate for suppliers of durable medical equipment, prosthetics, orthotics and supplies.

In the Press Release, CMS reports a Medicare Advantage improper payment rate of 10.6 percent (or $6.8 billion) for calendar year 2006.  For FY 2007, CMS also reports a Medicaid composite error rate of 10.5 percent (or $32.7 billion) and a SCHIP error rate of 14.7 percent (or $1.2 billion).  CMS expects for the Medicare Advantage, Medicaid and SCHIP error rates to decline like the Medicare FFS improper payment rate through program maturation and CMS's use of tools, such as statistical sampling, medical reviews, and error rate reduction plans.