Headlines

• Inpatient rehabilitation facility PPS Proposed rule increases FY 2014 payments by approximately $150 million
• SNF proposed prospective payment system update for 2014 to increase payments by $500 million
• Medicare billing for emergency room services shows more patients visit receiving more frequent and more intensive services
• Physician Medicaid participation unlikely to meet the need of expansion beneficiaries
• Selection of Medicare Administrative Contractor for Jurisdiction E upheld despite protest
• Allegations of fraudulent kickbacks for induced physician referrals were sufficiently pled
• Home health company unjustly enriched when it refused to return assets
• Independent pharmacy coalition required to exhaust administrative remedies to challenge preferred pharmacy rule
• House, Senate Republicans propose per capita spending limits for Medicaid

Dennis Barry's Reimbursement Advisor

• Pushing the 340B Envelope: The threat of compliance audits.

Receivables Report

• Uncollectibles Reach New High

Headlines (from the Medicare Medicaid Guide):

Inpatient rehabilitation facility PPS Proposed rule increases FY 2014 payments by approximately $150 million

CMS has issued the proposed inpatient rehabilitation facility (IRF) prospective payment system (PPS) rule for fiscal year (FY) 2014 that includes a 2 percent increase for discharges occurring on or after October 1, 2013 and on or before September 30, 2014. The increase is based on a market basket update to payments of 1.8 percent and a 0.2 percent increase to the outlier threshold. Overall, CMS estimates that payments to IRFs will increase approximately $150 million.

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SNF proposed prospective payment system update for 2014 to increase payments by $500 million

CMS has released a Proposed rule outlining fiscal year (FY) 2014 payment rate updates for the Skilled Nursing Facility (SNF) prospective payment system (PPS). Included in the Proposed rule is a 1.4 percent estimated SNF market basket update to FY 2014 payments, which CMS estimates would amount to a $500 million increase in FY 2014 aggregate payments. CMS also noted that providers were not negatively impacted by the FY 2012 allocation of group therapy minutes and implementation of the change of therapy.

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Medicare billing for emergency room services shows more patients visit receiving more frequent and more intensive services

The American Hospital Association (AHA) has released a reportfinding that the number, frequency, and intensity of emergency department (ED) visits increased between 2006 and 2010. The AHA commissioned the Moran Company (Moran) to analyze Medicare fee-for-service (FFS) billing. Moran concluded that: (1) the number of Medicare patients who visited EDs increased; (2) the percentage of patients with three or more ED visits grew from 13.5 percent to 15 percent; and (3) in 2010, Medicare billing for 1.1 million ED visits included observation services, a 72 percent increase from 2006. Several factors have contributed to the increase.

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Physician Medicaid participation unlikely to meet the need of expansion beneficiaries

An analysis of government statistics by Health Pocketfound that the number of practitioners who accept Medicaid will probably not be sufficient to serve the patients who will be newly eligible under the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) Medicaid expansion. Health Pocket reviewed the National Provider Identifier (NPI) database to find the percentage of physicians, therapists, physician assistants (PAs) and nurse practitioners (NPs) who accept Medicaid patients nationally and in high-income and low-income areas. Based on the NPI, which notes Medicaid participation, the author estimated that about 43 percent of physicians nationwide participate in Medicaid; however, an undetermined percentage of these providers are not accepting new Medicaid patients.

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Selection of Medicare Administrative Contractor for Jurisdiction E upheld despite protest

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Allegations of fraudulent kickbacks for induced physician referrals were sufficiently pled

Thomas Simmons, the Relator, sufficiently alleged that Meridian Surgical Partners, LLC, was involved in a kickback scheme wherein Meridian offered “investment” opportunities in ambulatory surgical centers to local physicians. Simmons provided sufficient information regarding the time, place and content of the false claims and kickbacks. However, Simmons did not provide sufficient information to substantiate his allegation that Meridian replicates its kickback-based business models at unspecified ambulatory surgical centers in other areas.

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Home health company unjustly enriched when it refused to return assets

A former home health company’s motion for summary judgment was granted in part, and the issue of damages remained pending for a jury trial. Options Home Health of North Florida Inc. (Options) sold its assets to Nurses Registry and Home Health Corporation (Nurses Registry), the sale of which was contingent upon the prerequisite that the Medicare license of Options be transferred to Nurses Registry so it could bill Medicare for services provided. When new CMS policy prevented a transfer of the license, Nurses Registry applied for a new Medicare license, which was eventually granted, but in the interim overbilled Medicare using Options’ license. When the transfer of the license was barred, Nurses Registry refused to pay the remainder of the purchase price, or the payout to Option’s CEO, but maintained all the benefits of Options’ assets. The court found that because the Medicare license was not transferred, the contract for sale was void and triable questions remained as to whether Nurses Registry was unjustly enriched and the amount of damages owed to Options.

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Independent pharmacy coalition required to exhaust administrative remedies to challenge preferred pharmacy rule

A challenge to the preferred pharmacy rule (PPR), 42 C.F.R. sec. 423.120(a)(9), filed by a coalition of independent pharmacies, Southwest Pharmacy Solutions, Inc. (Southwest) was dismissed because administrative review had not been exhausted. The PPR allows prescription drug plans (PDPs) to charge enrollees different copayment amounts based on the pharmacy where they choose to have their prescriptions filled. The sole issue on appeal, the court said, was whether the district court properly dismissed Southwest’s claim for lack of subject matter jurisdiction.

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House, Senate Republicans propose per capita spending limits for Medicaid

On May 1, 2013, Representative Fred Upton (R-Mich.), Chair of the House Committee on Energy and Commerce, and Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, released a report, Making Medicaid Work: Protect the Vulnerable, Provide Individualized Care, and Reduce Costs, in which they propose major changes to the regulatory and financial framework for the Medicaid program. Different per capita limits would be established for each group of beneficiaries, specifically, children, the elderly, persons with disabilities, and other poor adults. In addition, Hatch and Upton propose: (1) new limits on CMS’ discretion in granting waivers of Medicaid rules; (2) repeal of the “maintenance of effort” requirements that prohibit states from setting more restrictive standards for Medicaid eligibility; (3) granting states complete discretion to set provider rates without federal regulation; (4) different levels of federal financial participation for the services for different types of Medicaid beneficiaries; and (5) allowing states to require foster children and disabled and elderly beneficiaries to obtain their services through managed care entities.

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Dennis Barry's Reimbursement Advisor

In the April 2013 issue of Dennis Barry’s Reimbursement Advisor, authors examine the Centers for Medicare and Medicaid Services (CMS) report on recovery audit contractor (RAC) activity in fiscal year 2011. The report would lead the casual reader to the conclusion that the RAC program was a huge success for the Medicare program. CMS reports that RACs identified $939.3 million in incorrect payments, $797.4 million in overpayments and $141.9 million in underpayments. Of the overpayments of $797.4 million, only $37.9 million were reversed on appeal. After expenses, including payments to the RACs, CMS reports that $488.2 million was returned to the Medicare trust funds. Examining the data CMS reports, however, will lead the informed reader to question CMS’s reports of success and ask, instead, why there should not be material changes to the RAC process.

Pushing the 340B Envelope: The threat of compliance audits.

As uncertainty regarding future reimbursement levels forces many providers to tighten their belts, providers have strong incentives to make the most of every possible cost-saving opportunity. The 340B Drug Pricing Program enables eligible providers to realize considerable savings on covered drugs—estimated at 20 to 50 percent—and many providers are searching for ways to enhance their 340B savings through increased participation in the program. One way to achieve this is by setting up additional provider-based facilities. Significant expansion in this direction, however, may garner unwanted attention. This article discusses the rise in 340B integrity audits and explores the potential threat of manufacturer audits under the 340B program.

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Receivables Report

Uncollectibles Reach New High

Hospitals have continued to struggle with ever-increasing uncollectible write-offs, and fourth quarter 2011 was no exception. In the final quarterly financial reporting period of the year, the percent of total gross revenue written off as bad debt or charity swelled to a new high of 7.28 percent of total gross revenue. Get the details in the August issue of Receivables Report.

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