Health Care Payment

In an effort to transform Medicare from a passive payer to an active purchaser of high-quality, efficient care, the government has instituted three mandates: a readmission reduction program which penalizes hospitals for higher-than-expected readmission rates with a cut in the hospital’s base DRG payment (1% cut in 2013, 2% in 2014, and 3% in 2015); a hospital acquired condition (“HAC”) program beginning in 2015 which will impose a 1% penalty on all discharges at hospitals that are in the top 25%, with regard to HACs; and a value-based purchasing (“VBP”) program which will take away 1% of the MS-DRG rate for all hospitals starting Oct. 1, 2013 (and 2% by FYE 2017), however hospitals can get that money back by performing well on clinical process measures, patients’ experience-of-care measures, and outcome measures.   When all three programs are fully implemented, up to 6% of a hospitals bottom line will be affected by quality of care.

These new quality of care programs are also creating compliance challenges.  Sloppy documentation could subject hospitals to false claims under value based purchasing, which may be intensified by shortcuts in electronic health record (“EHR”) systems, such as copy/paste.  If hospital EHRs prepopulate the administration of drugs, they should document that the drug was in fact administered in the time frame that was in the EHR documentation.  Hospitals must also be aware of physician compensation risks.  If hospitals pay physicians for quality-related activities, they could run afoul of the fraud and abuse laws, as these activities should be performed as an integral part of their professional duties.  However, hospitals may incentivize physicians to adhere to quality improvement programs, as long as the incentive falls within a Stark exception.

Rather than simply responding to these government mandates, hospitals should look overall at how they can reform their health care delivery systems to benefit patients, and how they can deliver optimal care to patients using consistent, reliable methods.  The following identifies examples of how hospitals can begin to implement consistent quality of care:

• Ensure all caregivers are comfortable identifying their concerns regarding inappropriate patient care with their colleagues;
• Use meetings to educate physicians regarding meaningful clinical process issues and to share data with them to garner their support and promote behavior change;
• Rather than comparing hospital statistics to publicly available information, which may be too old to be meaningful, use current results at every level and tie to Joint Commission core measures; and
• To reduce readmissions, ensure clinicians follow-up with patients after discharge from the hospital, whether by phone or an in-person visit. 

If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

On April 9, 2012, CMS announced the one-year delay of ICD-10 implementation.  It is recommended that hospitals use this extra one year to further prepare for the drastic change in coding.  While ICD-9 has 13,000 diagnosis codes and 3,000 procedure codes, ICD-10-CM has 68,000 diagnosis codes and ICD-10-PCS has 87,000 inpatient procedure codes.  The ICD-10 codes are more descriptive and require more detailed documentation.  Hospitals are warned against having a false sense of security that electronic health records (“EHR”) will take care of ICD-10, because EHR information is only as good as the provider using it.  If the provider does not provide sufficient documentation and data, which lacks the required specificity, payors will reduce reimbursement.  ICD-10 procedure codes will likely be more difficult to comply with than diagnostic codes, as procedure codes will require coders to think more three-dimensionally, beef up their anatomy knowledge, and understand what is considered a full body part.  It is also recommended that the one-year delay be used to bring compliance officers in on the ICD-10 transition.  Compliance should work with the health information management department to ensure adequate training and certification. Hospitals may consider hiring temporary codes while the hospital is training their own staff, and training community physicians and their office staff as their coding will affect hospital billing compliance. 

The following are steps compliance officers should take during the ICD-10 preparation process: (1) monitor milestones related to software application testing and validation; (2) educating all levels and types of staff, including physicians, coders, and clerks who deal with managed care authorizations; (3) monitor claims edit software to determine which types of claims fail edits before they leave the hospital and monitor payer data to track payment, denial, and suspension; and (4) follow software application upgrades and programs after ICD-10 has been implemented.   If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Medicare administrative contractors (“MACs”) are cracking down on physician signatures and certifications.  But, if the MAC is relying on a Medicare manual provision that goes beyond the statute or regulation for denying payment due to lack of signature, physicians may have grounds to fight back.  According to the Medicare Program Integrity Manual, if physician signatures are missing from any other piece of documentation, the MAC or comprehensive error rate testing (“CERT”) contractor must accept an attestation from the author of the medical-record entry.  Generally, the attestation statement is required to be signed and dated by the author of the medical record entry and contain enough information to identify the beneficiary.  Even though the Medicare Program Integrity Manual states that physician orders must be signed, providers may not necessarily be out of luck if the claim is denied because of a lack of signature.  The Program Integrity Manual, is a manual, not a regulation, and lacks the force of law.  Furthermore, Medicare regulations set forth requirements for each services, but not all requirements include signatures, some just state the order must be written.

There are conflicting rules on durable medical equipment and prosthetics and orthotics supplies (“DMEPOS”).  The Program Integrity Manual states that unless suppliers obtain a signed, detailed, written order prior to billing DMEPOS, Medicare contractors will deny their claims as medically unnecessary, whereas, the law says that CMS may require a written order before delivery.  Another twist in the rules, is that according to the Medicare Benefit Policy Manual, Medicare Part B covers artificial eyes, arms and legs, and braces and trusses when furnished incident to a physician’s services; so arguably an order may not be required as long as the incident-to requirement is satisfied.  For home health, the physician must certify the patient is confined to their home and needs intermittent skilled nursing care or physical, occupational, or speech therapy.  A face-to-face encounter to assess the need for home health care must occur, within 90 days before home health care starts of 30 days after, by a physician, or by a physician extender if the extender must communicate their findings to the physician.   Home Health must also be recertified every 60 days, but there is no subsequent face-to-face encounter requirement.  Hospice benefits require physician certification, that the patient’s prognosis for life expectancy is six months or less, before billing. Such certification and brief narrative of clinical findings supporting the prognosis must be signed and dated by the physician.  Hospice certification lasts for two 90-day periods, and if the stay is expected to extend into a third period, there must be a face-to-face encounter with a physician or nurse practitioner.  With the crack down on home health and hospice documentation, it is imperative that physicians get the certifications and signature requirements correct.

Although the Medicare manual does not have the force of the law, it is recommended that the hospital and physicians still make an effort to make sure orders are written and signed, as this will help protect reimbursement and promote compliance.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

A recent IHCP Newsletter published an article regarding the various requirements for disenrolling certain Medicaid enrollees.  When Indiana Health Coverage Program (“IHCP”) members transition to a long-term care facility, a psychiatric residential treatment facility (“PRTF”), hospice care, a waiver program, or to the 590 program; the member must be disenrolled from the Hoosier Healthwise risk-based managed care (“RBMC”) program.  Until Hoosier Healthwise disenrollment occurs, fee-for-services (“FFS”) claims, except for carved-out services, for these members will be denied.  

Long-Term Institutional Care

                The nursing facility or ICF/MR must request a Pre-Admission Screening Resident Review (“PASRR”) for facility placement before admission and notify the member’s managed care entity (“MCE”) of the PASRR request within 72 hours of admission. The State will then approve the PASRR request and designate the appropriate level of care in IndianaAIM, which will automatically trigger RBMC disenrollment and result in same-day processing for disenrollment and level of care. If the provider fails to verify an IHCP member’s coverage or fails to contact the MCE within 72 hours, the provider is responsible for charges incurred until the member is disenrolled from the MCE.  If the provider does not complete the paperwork for the appropriate level of care determination, and the member is still enrolled in Hoosier Healthwise after two months, the MCE is no longer liable for payment, and as long as the patient remains a member of the MCE, and FFS claims will be denied.  If the member’s PASRR is in processing while the member is linked to an MCE, the financial responsibility lies with the MCE for up to 60 days.  However, an MCE may obtain services for its members in a nursing facility for a short-term stay, less than 30 days, and the MCE may negotiate rates for reimbursing the nursing facilities for these short-term stays.

Psychiatric Residential Treatment Facility Services

                Before a PRTF can be reimbursed for FFS claims for a Hoosier Healthwise member, the member must be disenrolled from the MCE.  The PRTF must fax a PRTF prior authorization (“PA”) request to the PA vendor, ADVANTAGE Health Solutions, at 1-800-689-2759.    The PRTF must also contact the MCE before the member is admitted to the PRTF, or immediately upon admission, if advance notice is not feasible.   ADVANTAGE will approve the PA request, then enter the PRTF level of care in IndianaAIM which will automatically trigger RBMC disenrollment and provide for same day processing.  Upon discharge, the PRTF must notify ADVANTAGE, and ADVANTAGE will end-date the level of care for the member.  If the member is still eligible for RBMC, the auto-assignment process will immediately reassign the member to the member’s previous MCE, effective the first or 15^th of the month, depending on the disenrollment date.

Hospice Care

                Although hospice care is not covered under Hoosier Healthwise, terminally ill members may qualify for hospice care under the FFS Medicaid program upon disenrollment from RBMC.  Hospice providers must fax a hospice election form to ADVANTAGE at 1-800-689-2759 and contact the MCE the member is enrolled in.  ADVANTAGE will approve the request and designate the appropriate hospice level of care in IndianaAIM, which will automatically trigger RBMC disenrollment providing same day processing.  RBMC disenrollment documentation should be faxed to (317) 810-4488.  MCEs are required to coordinate care for its members who are transitioning into hospice and give the hospice provider any information necessary to complete the hospice election form.

Home and Community-Based Waiver Services

                Home and Community-Based Waiver Services (“HCBS”) are excluded from Hoosier Healthwise, and therefore members approved for waivers must be disenrolled from RBMC.  The MCE must coordinate care for a member during the member’s transition to HCBS, until disenrollment is effective.  The case manager must submit a Notice of Action to the Division of Disability and Rehabilitative Services (“DDRS”) for autism, developmental disabilities, and support services waivers; or the Division of Aging (“DA”) for aged and disabled, and traumatic brain injury waivers.  The appropriate division will review the waiver designation request and enter a waiver level of care into IndianaAIM, which will automatically disenroll the member from RBMC, effective the date the level of care was processed.  If a retroactive level of care date is entered, the disenrollment date will be the “processing date.”

Medicaid-to-590 Program Disenrollment

                Hoosier Healthwise members being transitioned to the 590 program must be disenrolled from RBMC.  As most members seeking enrollment in the 590 program are on disability Medicaid and not in Hoosier Healthwise, the facility must send a request to suspend Medicaid, to the county casework of the Division of Family Resources Service Center.   The facility must then fax State form 32696 E/D/T (Enrollment/Discharge/Transfer) to the HP Eligibility Unit at (317) 488-5217, to enroll the member in the 590 Program.   The HP Eligibility Unit will enter the enrollment and fax the completed for back to the facility, which will trigger RBMC disenrollment, effective the same day.   If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

TrailBlazer Health Enterprises, a Medicare administrative contractor (MAC), has provided guidance on spinal fusion (MS-DRG 460) which has become an area of increased scrutiny by CMS because of the growth in billing volume. The most common reason for denial of payment for spinal fusion-related hospital care is the lack of specific information about conservative care administered before the surgical intervention, but often times this missing information may exist in the outpatient records of the surgeon, primary care physician or other practitioner. To reduce audit errors caused by information missing from the hospital record, the hospital should proactively obtain previous diagnostic and therapeutic records from the surgeon and other practitioners including physical assessments, physician history and physical, progress notes, consultations, physical and occupational therapist evaluations and notes, radiology reports and therapeutic procedure notes. The practitioners should also either create clinically meaningful inpatient records or supply the hospital with relevant documents from their outpatient records. By including adequate history of the presenting illness it will improve the likelihood of payment of the hospital claim and payment of physician services performed in conjunction with the hospital stay.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

Indiana health care providers and other entities who have been holding unclaimed funds of patients or other persons are required to submit their annual report to the Indiana Attorney General on or before November 1st.  Generally, the property that will be subject to the 2011 report will be that property that has been abandoned between July 1, 2007 and June 30, 2008.  

Penalties for non-compliance with Indiana's unclaimed property rules include (i) a late fee of $100 for each day the annual report is late (up to $5,000), (ii) payment of interest for the time of delinquency at a rate equal to the one-year T-Bill rate plus 1% (currently 1.19%), (iii) the cost of any audit performed and associated administrative expenses in investigating the failure to pay, and (iv) if found to have intentionally failed to pay or deliver property, an additional civil penalty of 10% of the value of the property.

The instructions for filing a Report with the Indiana Attorney General are available on its website at: http://ucp.indianaunclaimed.com/attorneygeneral/ucp/holder_reporting.html.  For any other questions regarding Indiana's unclaimed property rules, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com.

The Centers for Medicare & Medicaid Services (CMS) released the Final Rule for SNF PPS and consolidated billing for fiscal year (FY) 2012 on Friday, July 29. An important provision included in this rule will reduce Medicare SNF PPS payments in FY 2012 by $3.87 billion, or 11.1% lower than payments for FY 2011. CMS states that the reason for this rate reduction is to correct for an unintended spike in payment levels and better align Medicare payments with costs.

CMS found that the parity adjustment made in FY 2011, which was intended to ensure that the new RUG-IV system would not change overall spending levels from the prior year, instead resulted in a significant increase in Medicare expenditures during FY 2011. This increase in spending was primarily due to shifts in the utilization of therapy modes under the new classification system differing significantly from the projections on which the original parity adjustment was based.  According to CMS, “additional data analyzed by CMS since publication of the proposed rule confirmed the extent of the overpayments that have occurred since implementation of the RUG-IV system.”  The FY 2012 recalibration of the CMIs will result in a reduction to skilled nursing facility payments of $4.47 billion or 12.6 percent.  However, this reduction would be partially offset by the FY 2012 update to Medicare payments to skilled nursing facilities.  The update — an increase of 1.7 percent or $600 million for FY 2012 — reflects a 2.7 percent increase in the prices of a “market basket” of goods and services reduced by a 1.0 percent multi-factor productivity (MFP) adjustment mandated by the Affordable Care Act.   The combined MFP-adjusted market basket increase and the FY 2012 recalibration will yield a net reduction of $3.87 billion, or 11.1 percent.

Along with recalibrating and updating the SNF PPS payment rates for FY 2012, this final rule makes a number of additional revisions aimed at enhancing SNF PPS accuracy and integrity.  The final rule also:

• Affordable Care Act initiatives:
  • CMS is in the process of developing the SNF value based purchasing plan and will submit a report to Congress by October 1, 2011.
  • The Secretary of the Department of Health and Human Services (HHS) will evaluate the possibility of expanding the hospital-acquired condition policy from acute care hospitals to a variety of other settings, including SNFs, and will submit a report to Congress by January 1, 2012.
  • Nursing home transparency and improvement. Due to the many comments CMS received regarding disclosure of certain parties on Medicare and Medicaid facility applications and revalidations, CMS has deferred any changes in this area for now and will release a final rule sometime in fiscal year 2012. 
• Therapy student supervision: The Final Rule will discontinue the policy requiring lineof-sight supervision of therapy students in SNFs. Instead, effective October 1, 2011, each SNF will determine for itself the appropriate manner of supervision of therapy students consistent with state and local laws and practice standards.
• Group therapy clarifications: Effective October 1, 2011, group therapy will be defined as therapy provided simultaneously to four patients who are performing the same or similar activities, and group therapy time will be divided by four in determining the reimbursable therapy minutes for each group therapy participant and, therefore, the appropriate RUG-IV group.
• Five- or seven-day a week therapy clarification: Elimination of the distinction between facilities regularly furnishing therapy services on a 5- or 7-day basis for purposes of setting the date for the End of Therapy (EOT) Other Medicare Required Assessment (OMRA).
• Introduction of the End of Therapy – Resumption (EOT-R) OMRA: Effective for services provided on or after October 1, 2011, when an EOT OMRA has been completed and therapy subsequently resumes, SNFs may complete an EOT-R OMRA rather than a Start of Therapy (SOT) OMRA, in cases where the resumption of therapy date is no more than five consecutive days after the last day of therapy provided and the therapy services have resumed at the same RUG-IV level that had been in effect prior to the EOT OMRA.
• Introduction of the Change of Therapy (COT) OMRA: Effective for services provided on or after October 1, 2011, SNFs would be required to complete a COT OMRA for patients classified into a RUG-IV therapy group whenever the intensity of therapy (that is, the total reimbursable therapy minutes provided) changes to such a degree that it would no longer reflect the RUG-IV classification and payment assigned for a given SNF resident based on that resident’s most recent assessment used for Medicare payment. The ARD of the COT OMRA would be set for day seven of a COT observation period, which is a successive seven-day window beginning on the day following the ARD set for the most recent scheduled or unscheduled PPS assessment and ending every seven calendar days thereafter.

Questions remain frequent among long term care providers in Indiana regarding facility-level impacts of the decision by the Indiana Office of Medicaid Policy and Planning (“OMPP”) to eliminate reimbursement for bed-hold days.  The elimination of reimbursement for bed-holds was effective February 1, 2011 (For a copy of this bulletin, click here), and the Indiana Medicaid State Plan will be amended in the coming months to finalize elimination of reimbursement.  OMPP has also posted, and periodically updated, a news summary on www.IndianaMedicaid.com that discusses the impact of the reimbursement changes on Indiana’s long term care facilities and their residents (Click here for the news summary).

More recently, requirements for long term care facilities to maintain updated bed-hold policies were discussed during a panel presentation at the 2011 Indiana Health Care Association's ("IHCA") Convention & Expo in May.  In addition to the above OMPP-issued materials, the IHCA offers the following points for long term care facilities when developing bed-hold policies. 

·         Facilities must have a bed-hold policy that states whether or not the facility allows a resident to pay to hold a bed during a leave of absence

o    Though facilities are not required to allow a resident to pay to hold a bed, facilities must still have a policy that states whether or not payment for holding a bed is permitted by the facility

·         The duration of the bed-hold period must be clearly stated in the facility policy

·         Bed-hold policies should state that Indiana Medicaid does not reimburse for bed-holds

·         Payment by residents for bed-holds must follow applicable Medicare and Medicaid guidelines regarding billing for non-covered services

·         Charges for bed-holds should be set at fair market value and must be equally applied to all residents regardless of payor source

o    Facilities may be at risk for Anti-Kickback violations related to improper inducements to government program beneficiaries if charges for bed-holds are not fair market value and equal application of those charges are not maintained.  However, an exception to the Anti-Kickback statute may apply in certain circumstances for bed-hold charges that are unable to be collected.  This exception depends on certain elements regarding facility advertisements, other relevant services and financial need of the resident. 

·         If a resident on leave is expected to return to the facility, regardless of whether they have paid to hold a bed, the facility is not required to discharge the resident

·         If a resident is discharged from a facility, however, the facility must permit the resident to return to the first available semi-private bed when (i) the resident continues to qualify for Medicaid, (ii) the resident requires nursing-level care and (iii) the facility is able to provide appropriate care for the resident.

o    A resident may be discharged from the facility for many reasons including, but not limited to, the resident’s failure to pay for a bed-hold or when the bed-hold period expires.  Facilities must follow applicable regulations and procedures when discharging a resident.

If you have questions about this article or about bed hold policies, please contact Zach Cattell at zcattell@ihca.org or 317-616-9001 or Leigh Ann O'Neill at 317-238-6346.  .

According to a study published in the Journal of the American Medical Association, nearly a “third of emergency departments closed shop over the last two decades.”  The trend has not been caused by a lack of patients.  According to the New York Times, the total number of ER visits increased by roughly 35% during the same time period.  As many hospitals have struggled with the financial drain caused by the mandatory treatment of uninsured and underinsured patients in the ER, many hospitals have simply decided that maintaining an emergency department is not worth the cost.

Closing an emergency department has many legal implications.  Before the decision to close an emergency department is made, a hospital should consider all possible issues including, but not limited to:

1.      Tax-Exempt Status – The IRS has generally considered the operation of an emergency department an important factor in determining whether a hospital should be granted tax-exempt status.  A nonprofit hospital must make sure it will not lose tax-exempt status due to the closure of an emergency department.

2.      Funding/Reimbursement – The closure of an ER may impact the amount of funding a hospital receives through Disproportionate Share Hospital (DSH) payments and Hill-Burton funds.  In addition, certain hospitals such as Critical Access Hospitals (CAHs) must maintain an emergency department in order to receive federal cost-based reimbursement.  Before closing an ER, a hospital should think through all possible changes to funding and reimbursement due to the closure of the emergency department.

3.      EMTALA – Since EMTALA applies to facilities that simply hold themselves out to the public as providing emergency care for emergency medical conditions, hospitals must make sure that they appropriate notify the community in advance of the ER closure and remove all signage from the hospital and local streets upon closure of the ER.  The hospital should also remove all references to the hospital’s ER on the hospital’s website.  Failure to do so could implicate EMTALA even though the hospital no longer operates an emergency department.

4.      Prior Contractual Obligations – A hospital that has existing contracts in place for ER services and supplies through physician groups and other medical suppliers should review all such contracts to ensure it appropriately terminates all applicable contracts upon the closure of the emergency department.  Failure to provide appropriate notice to these contractual parties in advance of the ER closure could result in subsequent lawsuits.  

For an abstract of the study published in the Journal of the American Medical Association, see: http://jama.ama-assn.org/content/305/19/1978.abstract

To read the New York Times article quoted in this article, see: http://www.nytimes.com/2011/05/18/health/18hospital.html?_r=1

If you would like additional information, please contact Jason D. Schultz at jschultz@kdlegal.com or (574) 485-2003 or Leeanne R. Coons at lcoons@kdlegal.com or (317) 238-6269.

Health and Human Services' Office of Inspector General (OIG) published a report on May 4, 2011 which concerns the improper use of anti-psychotic drugs in long term care.  The OIG's review of medical records for elderly nursing home residents during a six-month period revealed that 14% of the 2.1 million elderly nursing home residents had at least one claim for anti-psychotic medications.  Of those 14%, the OIG cited that approximately 22% were not administered in compliance with CMS standards.  The OIG also questioned at least 50% of these claims to be erroneous, either because the medications were not medically necessary or because their use was associated with off-label uses. 

The OIG report communicated numerous recommendations to CMS in order to (1) ensure accurate coverage and reimbursement decisions. (2) improve survey and certification procedures to prevent and detect unnecessary anti-psychotic drug use; and (3) correct all erroneous claims and related payments identified in the OIG report. 

According to CMS data, more than 20% of nursing facility residents have a psychiatric diagnosis and as many as one-third of patients admitted to nursing facilities were already taking these medications prior to admission.   All of these factors reflect the importance of facility standards and related safeguards governing the care of residents who require anti-psychotic medications as part of their treatment regimen. 

To access a copy of the OIG report, go to http://oig.hhs.gov/oei/reports/oei-07-08-00150.asp.  For additional information regarding these matters, contact Susan Ziel at sziel@kdlegal.com or (317) 238-6244.