Corporate Compliance

Note from Hugh

Medicare Insider, July 22, 2008

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In last week’s issue of the Medicare Weekly Update, I wrote about the June 30, 2008 expiration of the statutory moratorium on the enforcement of a 1999 CMS regulation prohibiting non-hospital laboratories from being paid for technical component pathology services furnished to hospital patients. Within hours of publication, we were contacted by multiple readers alerting us to pending Federal legislation which would extend the moratorium beyond its June 30, 2008 expiration date.

That legislation turned out to be the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA). MIPPA is a broad-reaching law affecting many aspects of the Medicare program. MIPPA was passed by both the House and Senate. However, President Bush vetoed MIPPA on July 15, reportedly because he opposed MIPPA’s reduction in payments to the Medicare Advantage plan (i.e., Medicare managed care plans). That same day, Congress overrode the President’s veto (which, by the way, is relatively unusual). So, MIPPA became law last week (although different provisions of MIPPA have different effective dates).

Enactment of MIPPA means, among other things, that the moratorium on the enforcement of the 1999 regulation prohibiting payment to non-hospital laboratories for technical component pathology services furnished to hospital patients will remain in place through 2009 in accordance with Section 136 of MIPPA.

While the provisions of MIPPA relating to payment for physician services seem to be getting the most press, there are several MIPPA provisions that affect hospitals. My colleague Kimberly Hoy prepared the following summary of some of the more significant hospital-related provisions of MIPPA:

Section 122: Rebasing of Sole Community Hospital Alternate Payment Amounts
Effective: Cost reports beginning on or after January 1, 2009
Sole Community Hospitals receive special payment for operating costs related to hospital inpatient discharges. They receive a DRG payment initially and then a subsequent cost report based supplemental payment if their payment would have been greater in certain cost reporting years. Section 122 of MIPPA rebases the year used for calculating one of the alternate target amounts for purposes of determining the amount of the supplemental payment, if any.
Section 124: Extension of Geographic Reclassifications for Wage Index Purposes for Certain Hospitals
Effective: Set to expire September 30, 2008, extended to September 30, 2009
Certain hospitals receive statutory geographic reclassifications as provided for in Section 508 of the MMA (Medicare Modernization Act of 2003), subsequently extended by other acts of Congress, which were set to expire at the end of FY2008. This provision was extended through September of 2009 (FY2009).
Section 125: Revocation of Joint Commission on Accreditation’s Unique Deeming Authority
Effective: Accreditations granted more than 24 months after July 15, 2010. Accreditations in effect will not be subject to the change.
The Joint Commission has previously been named by statute as an accrediting body for hospitals. If a hospital met Joint Commission accreditation standards they were deemed to meet certain certification requirements for Medicare purposes. The amending language removes from the statute specific named reference to the Joint Commission. The MIPPA language specifies that the Secretary of Health and Human Services is authorized to recognize the Joint Commission under terms, conditions and requirements set by the Secretary, similar to other accrediting bodies.
Section 142: Extension of Cost Based Payment for Brachytherapy and Therapeutic Radiopharmaceuticals for Outpatients
Effective: Expired June 30, 2008, extended to December 31, 2009
Prior to CY 2008, payment for brachytherapy seeds and sources and therapeutic radiopharmaceuticals was calculated on a cost basis by taking the hospital’s charge for the item and applying their cost to charge ratio. For CY2008, CMS finalized payment for brachytherapy seeds and sources and therapeutic radiopharmaceuticals on a prospectively determined basis, set using industry reported data. Congress, in prior legislation, extended cost based payment through June 30, 2008 and instructed CMS to evaluate payment rates for these services. On July 1, 2008, CMS implemented the original prospective payment rates finalized for CY2008 for these items. In the CY2009 Outpatient Prospective Payment System (OPPS) Proposed Rule, CMS had also proposed to continue prospective payment for these items in CY2009. This amendment extends cost based payment for these items through December 31, 2009, effectively overriding the CMS decision to apply prospective rates beginning July 1, 2008 and their proposal in the CY2009 OPPS Proposed Rule.
Note that this provision has a retroactive effect on claims beginning July 1, 2008. CMS announced on their most recent Hospital Open Door Forum on July 16, 2008 that they will continue to pay these claims on the established prospective payment rates until software can be configured to pay the claims on a cost basis. At that time, they will automatically reprocess all affected claims.
Section 144: New Benefit Category (Statutory Coverage) for Cardiac Rehabilitation, Intensive Cardiac Rehabilitation and Pulmonary Rehabilitation Programs
Effective: Services Furnished on or after January 1, 2010
CMS has previously recognized coverage of formal Cardiac Rehabilitation Programs as a benefit incident to a physician’s service in a National Coverage Determination. The MIPPA gives Cardiac Rehabilitation, and two new programs, Intensive Cardiac Rehabilitation and Pulmonary Rehabilitation, their own benefit category under the Social Security Act. The provision contains very specific definitions of the programs, drawing on the current definitions existing in the NCD for Cardiac Rehabilitation. The new statutory definition for these programs contains a requirement for a physician to be immediately available and accessible for medical consultation, but also contains a provision that physician availability will be presumed for services provided in a hospital.  
Intensive Cardiac Rehabilitation Programs contains all the features of a Cardiac Rehabilitation Program and additionally must show certain positive impacts on the health of the patient in peer reviewed published research. The number of conditions that can be treated in an intensive program goes beyond those currently covered in the NCD for standard Cardiac Rehabilitation Programs. The definition also provided for increased physician involvement and a greater number of sessions than currently covered (72 compared to 36 in the current NCD).
In January of 2008, CMS published a National Coverage Determination evaluating the coverage of Pulmonary Rehabilitation Programs and determined there was no benefit category for this service, but that individual pulmonary services within the program may be covered and leaving coverage determinations up to the local MAC or FI. This provision would create a benefit category for Pulmonary Rehabilitation Services allowing CMS to adopt a National Coverage Determination covering these programs.
Section 147: Extension and Expansion of Hold Harmless Payments for Rural Hospitals
Effective: Set to expire December 31, 2008, extended to December 31, 2009
Currently, a “hold harmless” payment is made under the OPPS to rural hospitals that are not sole community hospitals to prevent the full impact of the OPPS from negatively affecting those hospitals. These hold harmless payments were set to expire December 31, 2008, and this provision extends them to December 31, 2009. It also expands the payments to include sole community hospitals with 100 or less beds.


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