Medicare Update

Top Ten Medicare Update Blog Posts in October 2009

Below are the top ten Medicare Update posts during October 2009 (based on the number of views):

1)   CMS Announces 2010 Medicare Premiums and Deductibles

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

3)   Senator Stabenow Introduces Medicare Physician Fairness Act of 2009

4)   OIG Work Plan Identifies Possible Areas of Concern for Home Health Agencies and DMEPOS Suppliers

5)   CMS Directs Medicare Contractors to Take Action on OIG Reports

6)   CMS Posts FAQ on Code 432 and Medicare Recovery Audit Contractors

7)   The Changing Dynamics of Medicare Fraud Schemes?

8)   Medicare Fraud and Recovery Audit Contractor Program

9)   CMS to Shelve Medicare Medical Home Demonstration

10) Region D Recovery Audit Contractor Updates CMS Approved Audit Issues

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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.

OIG Releases Compendium of Unimplemented Recommendations

On May 29, 2009, the Department of Health and Human Services' (HHS) Office of Inspector General (OIG) released its Compendium of Unimplemented Office of Inspector General Recommendations (May 2009).

The Compendium includes information about OIG recommendations that had not been fully implemented as of December 31, 2008.  The Compendium also includes a list of "priority recommendations," which the OIG believes represent the most significant opportunities to positively impact HHS programs.

The list of "priority recommendations" includes a number of recommendations for the Medicare program. In brief, those recommendations (and any estimated savings) include:

• Ensure accurate Medicare Part D sponsors bids and prospective payments
• Implement safeguards to prevent and detect fraud and abuse in Medicare prescription drug plans
• 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 (estimated savings $3.2 billion)
• Modify payments to managed care organizations (estimated savings $1.97 billion)
• Place a ceiling on administration costs included in managed care organizations' rate proposals
• Improve Centers for Medicare & Medicaid Services performance evaluation process for program safeguard contractors
• Ensure the appropriate processing of denial of Medicare payment remedies for noncompliant nursing homes
• Improve oversight of Medicare hospices

The Compendium also includes other unimplemented OIG recommendations pertaining to the Medicare program, including (but not limited to):

• Identify duplicate Medicaid and Medicare home health payments
• Require physician examination before ordering home health services
• Revise graduate medical education payment methodology
• Reduce Medicare end stage renal disease payment rates
• Improve quality oversight of ambulatory surgical centers in the Medicare program

See the Compendium for more detailed information (including background information, OIG findings, recommendations, status and any estimated savings). 

MedPAC Releases Updated Medicare Payment Basics Documents

On October 7, 2008, the Medicare Payment Advisory Commission (MedPAC) released updated 2008 documents for its Medicare Payment Basics series, which provide an overview of 18 Medicare payment systems.  To view the updated 2008 documents, visit the Medicare Payment Basics page of the MedPAC website or click on any of the following links:

• Oxygen and Oxygen Equipment Payment System

• Skilled Nursing Facility Services Payment System
• Physician Services Payment System
• Psychiatric Hospital Services Payment System
• Rehabilitation Facilities (Inpatient) Payment System
• Part D Payment System
• Outpatient Therapy Services Payment System
• Medicare Advantage Program Payment System
• Outpatient Dialysis Services Payment System
• Outpatient Hospital Services Payment System
• Home Health Care Services Payment System
• Hospice Services Payment System
• Hospital Acute Inpatient Services Payment System 
• Long-Term Care Hospitals Payment System
• Clinical Laboratory Services Payment System
• Critical Access Hospitals Payment System
• Durable Medical Equipment Payment System
• Ambulatory Surgical Centers Payment System

MedPAC is an independent Federal body established by the Balanced Budget Act of 1997 to advise Congress on issues affecting the Medicare program.

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

On October 1, 2008, the Department of Health and Human Services’ Office of Inspector General (OIG) released its Work Plan for federal fiscal year 2009 (Work Plan).  The Work Plan addresses the areas and issues the OIG intends to audit, evaluate and inspect during federal fiscal year 2009. 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 the Medicare program and hospitals, physicians and other health professionals.

CMS Announces Provider Feedback Town Hall Meeting

The Centers for Medicare & Medicaid Services (CMS) recently announced in a notice that it will host a town hall meeting from 2:00 p.m.- 4:00 p.m. (ET) on September 22, 2008.  The meeting will be held via conference call and in the CMS auditorium at 7500 Security Boulevard, Baltimore, Maryland.

The purpose of the town hall meeting is to entertain provider feedback on Medicare fee-for-service (FFS) policy and operational issues.  The meeting is open to all Medicare FFS providers and suppliers that participate in the Medicare program.  CMS reports that agenda topics will include, but not be limited to:

• 5010- Possible next version of HIPAA standards for claims and other transactions; and
• Recovery auditing and Medicare Administrative Contractor transitions.

During the town hall meeting, CMS will offer meeting participants an opportunity to provide feedback on agenda topics. However, CMS reports that not all participants will have an opportunity to speak due to time constraints.  Nevertheless, CMS reports that it will accept written submissions at MFG@cms.hhs.gov through September 30, 2008. By September 19, 2008, CMS is also expected to post meeting agenda and discussion materials for download here.

To participate in the town hall meeting, registration is required.  Registration will open on August 29, 2008 and close on September 17, 2008. CMS reports that registered participants may be contacted for follow up meetings to solicit additional opinions and clarify any issues that arise during the town hall meeting.

CMS reports that persons attending the town hall meeting in person will be required to show photographic identification (a valid driver's license or passport).  For further details, CMS refers possible meeting participants to the August 22, 2008 Federal Register notice.  For questions or additional information, CMS reports that email may be sent to MFG@cms.hhs.gov.

U.S. District Court Stops Clinical Laboratory Competitive Bidding Demonstration

On April 8, 2008, the U.S. District Court for the Southern District of California enjoined the Secretary of the Department of Health and Human Services (Secretary) from implementing the Medicare clinical laboratory services competitive bidding demonstration project (Demonstration Project) at this time in the San Diego-Carlsbad-San Marcos, California metropolitan area. 

Specifically, in Sharp Healthcare v. Leavitt, Case No. 08-CV-0170 W (S.D. Cal. April 8, 2008), the U.S. District Court for the Southern District of California granted the plaintiffs' (Sharp Healthcare, Scripps Health and Internist Laboratory) motion for a preliminary injunction enjoining the Secretary from:

• announcing the winners in the Demonstration Project's bidding for the San Diego-Carlsbad-San Marcos metropolitan area;
• otherwise implementing and carrying out the Demonstration Project for the San Diego-Carlsbad-San Marcos metropolitan area; and
• disclosing any information included in the bid applications submitted in connection with the Demonstration Project for the San Diego-Carlsbad-San Marcos metropolitan area.

Furthermore, in granting the plaintiffs' motion, the U.S. District Court found that the plaintiffs established the possibility of irreparable injury and that the balance of the hardships was sharply in the plaintiffs' favor.  The U.S. District Court also found that the plaintiffs established a likelihood of success on their claims that:

• the Secretary violated the Administrative Procedure Act's (APA) notice and comment rule making requirements in developing the Demonstration Project rules;
• the Secretary's interpretation of the "face-to-face exception" violates the APA because it is arbitrary, capricious, an abuse of discretion, and/or not otherwise in accordance with the law; and
• the Demonstration Project rules violate the controlling statute by increasing the scope of the Demonstration Project to include collecting and handling laboratory specimens.

In 2003, Congress passed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) requiring that the Secretary, through the Centers for Medicare & Medicaid Services (CMS), conduct a demonstration project on the application of competitive acquisition for payment of clinical diagnostic laboratory tests that would otherwise be covered by the Medicare Part B fee schedule.  The MMA also required that the Secretary exclude entities that have a "face-to-face encounter" with patients, and pap smears and colorectal cancer screening tests, from the Demonstration Project.

On October 17, 2007, CMS announced that the first site for the Demonstration Project would be the San Diego-Carlsbad-San Marcos, California metropolitan area.  Under the Demonstration Project, the deadline for submitting bids was February 15, 2008. Prior to the U.S. District Court enjoining the Secretary, CMS was expected to announce the winning bidders on or around April 11, 2008.

Hospitals and Laboratory Seek to Enjoin Clinical Laboratory Competitive Bidding

On January 29, 2007, Sharp Healthcare, Scripps Health and Internist Laboratory filed a Complaint for Injunctive Relief (Complaint) in the U.S. District Court for the Southern District of California. 

The Complaint seeks to enjoin the Secretary of the Department of Health and Human Services (Secretary) from implementing the Medicare clinical laboratory services competitive bidding demonstration project (and its February 15, 2008 bid date) in the San Diego-Carlsbad-San Marcos, California area or any other area.

In the Complaint, the plaintiffs allege that, among other things, the Secretary is implementing the demonstration project without abiding by the notice and comment rule making requirements of the Administrative Procedure Act, and that the project would dramatically change and irreparably harm and damage the system for delivering clinical laboratory services to Medicare beneficiaries in the San Diego-Carlsbad-San Marcos area.

The demonstration project is authorized by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA).  On October 17, 2007, the Centers for Medicare & Medicaid Services (CMS) announced that the first site for the Medicare clinical laboratory services competitive bidding demonstration project would be the San Diego-Carlsbad-San Marcos, California metropolitan statistical area. 

For more information, see Sharp Healthcare et al. v. Leavitt, Case No. 3:08-cv-00170-W-POR. 

UPDATE: CMS Delays Revised Anti-Markup Provisions for Certain Services

On January 3, 2008, the Centers for Medicare & Medicaid Services (CMS) published the Final Rule in the Federal Register, delaying until January 1, 2009, the applicability of the anti-markup provisions in 42 C.F.R. 414.50, as revised by the Medicare Physician Fee Schedule final rule for 2008, except with respect to:

• the technical component of a purchased diagnostic test; and
• any anatomic pathology diagnostic testing services furnished in space that: (i) is utilized by a physician group practice as a "centralized building" (as defined at 42 C.F.R. 411.351) for purposes of complying with the physician self-referral rules; and (ii) does not qualify as a "same building" under 42 C.F.R. 411.355(b)(2)(i).

CMS also recently announced that the word "except" was inadvertantly omitted from Section III of the Final Rule.  CMS reports that a correction notice will be published shortly.

President Bush Signs Medicare, Medicaid and SCHIP Extension Act of 2007

On December 29, 2007, President Bush signed the Medicare, Medicaid and SCHIP Extension Act of 2007 (Act) into law, extending the State Children's Health Insurance Program (SCHIP) and temporarily addressing a number of Medicare program issues.

As widely reported, the Act prevents the 10.1 percent reduction in Medicare physician payments that was scheduled for 2008 and gives physicians a 0.5 percent increase through June 30, 2008.  The 10.1 percent reduction in Medicare physician payments is driven by the statutory sustainable growth rate (SGR) formula, which is intended to control the growth in aggregate Medicare expenditures for physician services. Therefore, Congress will have to revisit the issue before July 1, 2008 or the 10.1 percent reduction will take effect at that time.  The 109th session of Congress passed similar legislation averting a 5 percent reduction in Medicare physician payments for 2007. The 5 percent reduction for 2007 was also driven by the SGR formula.

The Act also extends the Medicare therapy cap exception process through June 30, 2008.  The Balanced Budget Act of 1997 required that the Centers for Medicare & Medicaid Services (CMS) impose the therapy caps on Medicare payments for outpatient physical therapy (OPT), speech-language pathology (OSP) and occupational therapy (OOT) services in all settings, except hospital outpatient departments.  However, the Deficit Reduction Act of 2005 directed CMS to create a clinically-based exception process to the therapy caps for 2006. The Tax Relief and Health Care Act of 2006 extended that exception process through 2007. If Congress had not acted to extend the exception process through June 30, 2008, the Medicare Physician Fee Schedule Final Rule for 2008 would have imposed a combined therapy cap of $1,810 per beneficiary for OPT and OSP, and a separate cap of $1,810 for OOT, beginning January 1, 2008.  Unless Congress repeals the therapy caps or further extends the therapy cap exception process prior to July 1, 2008, the therapy caps will take effect when the Act's extension expires on June 30, 2008.

The Act also contains a number of other provisions impacting Medicare providers and suppliers, such as provisions freezing the inpatient rehabilitation facility compliance threshold at 60 percent and allowing certain comorbidities to count toward that threshold.