Medical Education Reimbursement

The 5% reduction in reimbursement for inpatient and outpatient hospital services was extended through June 30, 2013.  HP, the IHCP claims processing contractor, found that encounter inpatient risk-based managed care claims received from July 1, 2011 to present and processed through IndianaAIM for payment of the medical education payment, were not reduced by the 5%.  As such, HP will mass adjust the encounter inpatient claims and reduce the medical education payment by 5%.  Such adjustment will appear on Remittance Advices, beginning March 20, 2012, as an accounts receivable and will have an internal control number that begins with region code “56.”  The overpayment will be recouped at 100% from future claims paid to the respective provider number.  If you have any further questions please contact Meghan Linvill McNab at 317-808-5863 or Kristen L. Gentry at 317-238-6288.

On November 22, 2010, HHS Secretary Kathleen Sebelius announced the new application cycle of the National Health Service Corps (NHSC) Loan Repayment Program.  In an effort to address shortages in the primary health care workforce, the Affordable Care Act allocated $290 million in new funding for the Program.  The NHSC Program offers funding for primary care, medical, dental and mental health clinicians; up to $60,000 in medical education reimbursement in exchange for two years of service at health care facilities in medically underserved areas.

Not only are the monetary awards higher than in previous years under the Patient Protection and Affordable Care Act (PPACA), the PPACA also gives members the option of working half-time for four years to fulfill their service obligation and provides credit for some teaching hours. Additional information, tutorials, and the Loan Repayment Program application can be found on the NHSC Web Site. 

If you have questions about the Loan Repayment Program or other primary care funding initiatives under the PPACA, visit us at Health Reform Connect or contact one of our health care reform lawyers, Leigh Ann O'Neill.

Today the Centers for Medicare and Medicare Services (CMS) published a proposed rule aiming to implement Medicaid changes which would withdraw two provisions of the "Medicaid Program; Prescription Drugs" rule which was originally published on July 17, 2007.  Specifically, the proposed rule would withdraw the determination of Average Manufacturer Price (AMP), and the Federal upper limits (FULs) for multiple source drugs.  Additionally, the proposed rule would withdraw the definition of "multiple source drug."   "Under this proposed rule, the terms 'average manufacturer price' and 'multiple source drug' would no longer be defined in regulations.  Instead, they would be defined by section 1927 of the [Social Security] Act, including changes made by section 2503 of the Patient Protection and Affordable Care Act [PPACA], as amended by the Health Care and Education Reconciliation Act, together called the Affordable Care Act, and the FAA Air Transportation Modernization and Safety Improvement Act." 

Section 2503 of the PPACA amends the FUL for multiple source drugs by requiring that the FUL be set at a minimum of 175% of the current AMP for pharmaceutically and therapeutically equivalent multiple source drugs that can be purchased at "community retail pharmacies."  Before March 23, 2010, the FUL was set at 150% of the lowest published price for a given dosage and strength of a generic drug. 

The health care reform law also changes the definition of AMP to include wholesalers that distribute drugs to retail pharmacies, and to also include pharmacies that purchase drugs directly from the manufacturers.  Specifically, the AMP will now exclude the following:

(I) customary prompt pay discounts extended to wholesalers;

(II) bona fide service fees paid by manufacturers to wholesalers or retail community pharmacies, including (but not limited to) distribution service fees, inventory management fees, product stocking allowances, and fees associated with administrative services agreements and patient care programs (such as medication compliance programs and patient education programs);

(III) reimbursement by manufacturers for recalled, damaged, expired, or otherwise unsalable returned goods, including (but not limited to) reimbursement for the cost of the goods and any reimbursement of costs associated with return goods handling and processing, reverse logistics, and drug destruction;

(IV) payments received from, and rebates or discounts provided to, pharmacy benefit managers, managed care organizations, health maintenance organizations, insurers, hospitals, clinics, mail order pharmacies, long term care providers, manufacturers, or any other entity that does not conduct business as a wholesaler or a retail community pharmacy

(V) discounts provided by manufacturers for individuals with incomes up to 150% of federal poverty line under SSA section 1860D-14A.

CMS has asked the public to comment on this proposed rule by October 4, 2010.  The proposed rule can be viewed here.

The health care reform law contains various provisions on graduate medical education ("GME"), and one in particular could result in redistribution of residency slots for certain hospitals, which will lead to changes in GME reimbursement. As noted in proposed regulations published on August 3, 2010, hospitals located in Montana, Idaho, Alaska, Wyoming, Nevada, South Dakota, North Dakota, Mississippi, Florida, Puerto Rico, Indiana, Arizona, and Georgia will be eligible to add slots to their approved medical residency training programs under the health care reform law.  The Patient Protection and Affordable Care Act (PPACA) contains a provision that directs the Secretary of HHS to redistribute unused residency slots to certain hospitals.  Specifically, Section 5503 lowers the resident limit for certain hospitals that do not, after July 1, 2011, fill their allowed resident slots.  This opens up unused slots for other hospitals.  

Section 5503 instructs that the Secretary of HHS " shall increase the otherwise applicable resident limit for each qualifying hospital that submits an application under this subparagraph by such number as the Secretary may approve for portions of cost reporting periods occurring on or after July 1, 2011."  Hospitals awarded additional slots must be able to prove that their number of primary care residents will not decrease after the new slots are awarded, and that not less than 75% of the added slots are for primary care and general surgery residents.  In no case shall the aggregate amount of increased resident slots exceed the aggregate amount of decreased resident slots under this provision.  The redistributed residency slots under this Section must be reserved in the following manner:

·         70% of redistributed slots go to hospitals located in states designated by the Secretary as those in the lowest quartile of states with low resident-to-population ratios (those states listed above)

·         30% of redistributed slots go to hospitals located in rural areas and in states that are in the top ten (10) states in terms of the ratio of the total population of the state living in an area designated as a health professional shortage area (as of March 23, 2010) to the total population of the state as determined by the Secretary based on the most recent available population data published by the Bureau of the Census (this includes: Louisiana, Mississippi, Puerto Rico, New Mexico, South Dakota, North Dakota, District of Columbia, Montana, Wyoming, Alabama)

Additionally, in determining which hospitals should receive the increased resident limits, the Secretary must take into account the demonstrated likelihood that the new positions will be filled within the first three (3) cost-reporting periods beginning on or after July 1, 2011, and whether the hospital has an accredited rural training track. 

For hospitals awarded increased resident limits under Section 5503, such hospitals must make certain assurances in order to maintain their added residency slots.  If a hospital receiving increased residency slots under Section 5503 is found to not meet certain specific requirements, the Secretary shall reduce the hospital's resident limit in accordance with Section 5503 and redistribute those available slots.

If you would like additional information, please contact Kristen L. Gentry at kgentry@kdlegal.com or (317) 238-6288, or Leigh Ann Lauth O'Neill at loneill@kdlegal.com or (317) 238-6346.