Medicare Reform Advisor, March 9, 2004

March 9, 2004 Vol. 1, No. 5 Weekly news and analysis

SUBSCRIBE
to Medicare Reform Advisor

© 2004 HCPro, Inc.

Burn center hit with largest EMTALA patient-dumping fine
Medicare-reform advisory group likely to review case

A new group of emergency-treatment regulatory advisors has a ready-made agenda item for its first meeting this spring: Jackson Memorial Hospital. In February, the center paid the largest fine to date for violating the patient-dumping law.

Jackson Memorial, which has a burn center and other facilities in southern Florida, paid $50,000 to settle its third violation of the Emergency Medical Treatment and Labor Act (EMTALA). The fine stemmed from an incident in February 2001. Jackson's emergency department decided not to treat a 30-year-old woman who had 15.5% body burns. "Her burn percentage didn't meet our criteria," according to a statement from a physician.

The woman was airlifted to Tampa (FL) General Hospital's burn center. Doctors diagnosed her with 23% body burns. The rise in burn percentage played a part in the case. "They didn't deal with the heat, and experts determined they should have," says Judy Holtz, a staff member in the OIG public affairs office.

The woman's burns to her body and feet met American Burn Association criteria. Jackson told the OIG that it did not want to accept financial responsibility for treating the patient when she did not meet the burn center's criteria.

The OIG cited the two reasons for the $50,000 fine:

1. The hospital's failure to accept an appropriate transfer
2. Its two previous violations

The hospital settled the case in February. The violation falls under the patient-dumping section of the Social Security Act (Section 1867). At the time of the settlement, the hospital was under an OIG corporate integrity agreement.

"Many cases never get referred to the OIG because they don't end up as violations," says Holtz. "When EMTALA came out, I remember seeing 500-600 complaints a year sent to Medicare, but only a few went to the OIG."

The Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) calls for the Department of Health and Human Services (HHS) to establish an advisory group to address EMTALA regulatory issues. "The group will have some significant influence over the future of regulations in this area," says one HHS staffer.

Editor's note: The $50,000 will go directly to the Medicare Trust Fund.

Back to top

Sales prices to resemble Medicaid market price formula

The Centers for Medicare & Medicaid Services (CMS) plans to propose rules this spring on how pharmaceutical manufacturers must calculate the average sales price (ASP) of drugs, an agency spokesperson says. CMS will fold the proposed ASP rates into the proposed Physician Fee Schedule in August, then issue the rates in final form this November. There has been a lot of speculation by providers and the pharmaceutical industry about how the ASP should be calculated. During the March 2 CMS Open Door Forum audioconference on ASP, drug, and biological payments, Secretary of the Department of Health and Human Services Tommy Thompson said the formula will resemble the one currently used by pharmaceutical makers to calculate the average market price for the Medicaid program. "For those of you who are familiar with calculating that, it will not be a great leap to calculate the Medicare ASP," Thompson said.

However, questions remain. Bayer's Patty Heard has asked CMS whether the 12-month rolling period in the proposed regulation is for rebates paid during the period, or those for performance. Another drug maker wants to know how to calculate negative sales prices, returned goods, and medicines without any U.S. sales. Stay tuned for answers.

Back to top

AMA wants Medicare to evaluate practice, hospital effects

The American Medical Association, which represents physician practices, told CMS' Practicing Physicians Advisory Council in late February that the agency must provide the physician community with "early notification of the average sales price [ASP] for all impacted drugs, as well as the opportunity to comment on the appropriateness of the ASPs." The physician's group also wants CMS to continually evaluate the following:

1. Whether physicians are able to afford the purchase and administration of drugs needed for appropriate treatment
2. Whether physicians have to lay off medical/administrative staff in response to lower Medicare drug and administration payments
3. Whether doctors have to close satellite offices or discontinue or limit the types of treatment they are able to offer
4. Whether alternative medical facilities, such as hospital outpatient departments, have the proper medical infrastructure in place and enough capacity to provide quality medical treatment for patients who are currently treated in physicians' offices, but may lose that option in the future if those practices are not adequately compensated for administration of drugs or for the cost of those drugs, under the new ASP scheme

Back to top

Senate democrats hope to block state Medicare projects

Senate Democrats in 14 states have jumped on the anti-Medicare Modernization Act bandwagon and introduced identical bills to block Medicare comparative cost adjustment (CCA) programs from running in their states.

The cost adjustment programs mandated by the bill would replace traditional Medicare coverage with private vouchers for seniors to buy health care coverage. Under the new law, the Secretary of Health and Human Services is authorized to designate six states for the privatization experiment, under which Medicare beneficiaries could choose between the federally-backed voucher to cover health care costs, or traditional Medicare. Secretary Tommy Thompson has not yet chosen the six sites for the CCA programs, but senators in the 14 states opposed to the voucher system say they don't want it to operate in their states.

Accountants at CMS have already estimated that premiums for traditional Medicare could go up as much as 25% for seniors in any one of the designated state sites who wanted to stick with traditional Medicare.

"I have strongly opposed the portion of the Medicare bill that authorizes this project, and I particularly oppose Michigan seniors being forced to participate in this ill-advised experiment," said Sen. Debbie Stabenow (D-MI), who introduced S. 2113 on February 25 to block the comparative cost adjustment program from taking place in Michigan.

Identical measures to block the health care voucher programs have been introduced in the House for the states of Michigan, Connecticut, and New Mexico.

Back to top

Temptation to follow Medicare could hurt docs

Private payers are likely to follow Medicare's suit and implement similar payment formulas to the average sales price (ASP), and that worries physicians, according to surveys conducted by two presenters who spoke during the February 26 Medicare Congress in Washington, DC. ASP, effective in 2005, will likely bring in far less reimbursement for most physicians than the current average wholesale price.

Back to top

Durable medical equipment competitive bidding

Medicare reform substantially revises how Medicare will pay for durable medical equipment (DME). Under current law, Medicare pays for DME, prosthetics, orthotics, and a few other categories of covered items provided to patients in their home under a fee-schedule based payment.

The MMA creates a nationwide competitive acquisition system, starting in 10 of the largest metropolitan statistical areas in 2007, then 80 of the largest metropolitan statistical areas in 2009 and additional areas thereafter. This replaces Medicare fee schedules payments for most DME and supplies, including drugs used with DME and off-the-shelf orthotics. Inhalation drugs, Class III medical devices, and parent nutrients, equipment and supplies are excluded from competitive acquisition.

A wheelchair supplier outside of Boston (expected to be one of the originial 10 regions) says he's concerned about the changes. "I'll have to learn about the bidding process and winning bids--it's a whole new area for a lot of us and could make or break some businesses."

A single payment amount will be established for each item, and Medicare will pay 80% of the established rate (just as it currently pays 80% of the fee schedule rates). Suppliers will be required to accept Medicare assignment, and the bidding process will be repeated at least every three years. During the transition to competitive acquisition, existing payment rates for most DME will be frozen through 2008. Five high-volume items, oxygen and oxygen equipment, standard wheelchairs, nebulizers, diabetic supplies, hospital beds and air mattresses, are singled-out for special treatment. For more, go to www.mwe.com, page 25, for a description of special payment treatment, supplier quality standards, and documentation of medical necessity for certain DME, such as power wheelchairs.

Back to top

Law adds conflict-of-interest rules for contractors

The Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) presents a host of new regulations for the companies that pay healthcare organizations and physicians for their work. Providers must learn these to understand their rights in appeal cases. Here, according to section 933 of the MMA, are three action points to consider in the months before Medicare officially releases new Medicare appeals-related rules:

1. Independent Medicare contractors must set, monitor, and enforce more stringent conflict-of-interest policies. To that end, contractors must make sure the physicians who review an appeal case are not

• involved in the case under review
• hired as an employee of the intermediary, carrier, or contractor
• paid based on the appeal rulings they make
• related in any way to the person receiving the inpatient (Part A) or outpatient (Part B) benefits, such as by family or through a financial arrangement

TIP: These physicians cannot review cases exclusively for any one contractor.

2. Contractors cannot review a case if the entity they plan to review is related, including

• any fiduciary, officer, or director of a contractor, the Department of Health and Human Services (HHS) secretary or its employees, or the Medicare contractor involved
• the institution where the health services took place or equipment was used
• any physician or healthcare professional who had a role in providing the service
• any manufacturer of any drug or other items used in the case
• any other party with interest in the case as determined by HHS

3. Physician reviewers may hold staff privileges at the hospital where the services for the case in question took place. To comply, the contractor must disclose this information to the HHS, and gain approval from all parties involved.

Back to top

Bryan Cote
Executive Editor
E-mail address: bcote@hcpro.com