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February 17, 2004
Vol. 1, No. 2
Weekly news and analysis
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| MEDICARE MURMURS |
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"Health savings accounts (section 1201, p. 404 in the MMA) were a big issue to Republican leadership that made the final reform cut. In the coming years, expect an explosion of high-deductible plans due to these accounts. This provision may reduce demand for all health services, including drugs, in the commercial market."
-Tom Scully, former Centers for Medicare & Medicaid Services (CMS) administrator. Scully is now a partner with the law firm Alston & Bird.
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| LETTERS TO THE EDITOR |
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"We're finding from our research that the use of generic drugs is highest among retirees and those who receive their medicines through the mail."
-Bruce Taylor, director of Verizon's employee benefit policies
Send letters to bcote@hcpro.com. Include tips, ideas, questions, and problems related to Medicare reform. The editors reserve the right to edit letters for clarity. |
| DATEBOOK |
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February 25-Leaders will offer analysis and strategies related to Medicare reform at a conference in Washington, DC. Medicare Reform Advisor will have a report in the March 2 issue.
October 1-The Department of Health and Human Services must submit a report to Congress on how it plans to implement the new competitive bidding process for Medicare contracts.
July 1-Hospitals failing to comply with bloodborne pathogen standards will be subject to civil money penalties from OSHA. The rule goes into effect this July. CMS will issue more.
Coming next week! Details on information security audits required annually for carriers and fiscal intermediaries, according to MMA section 912. |
© 2004 HCPro, Inc. |
Critical access hospitals can open psych, rehab units
The nation's 540 critical access hospitals have an opportunity under Medicare reform to open psychiatric and rehabilitation units. CMS will issue the requirements by the fall; until then, here's what one CMS staffer shared:
- The units must be distinct parts of the hospital
- Each unit cannot have more than 10 beds
- Services performed in these units will be paid on an inpatient prospective payment basis
- Effective: October 1, 2004
Critical access hospitals may use up to 25 beds for inpatient acute care services, up from 15, under the MMA. This went into effect for designations hospitals made before, on, or after January 1. The good news for these hospitals: The government cannot count new psych and rehab beds toward this 25-bed limit.
Of note, rehab was among the top five diagnosis related group codes for patients leaving critical access hospital service areas, according to several studies, including one for Arkansas hospitals by Ruth Raines-Eudy, PhD at the University of Arkansas at Little Rock.
| Exec Corner: Certain donations fine under reform |
- Accept certain donations, loans, grants, and goods and services without worrying about antikicback violations. This is the message of section 431 of the MMA.
- The kicker: Health centers may do all of this as long as these benefits increase the number of quality services available to medically underserved populations.
- CMS must create standards for this by December 8.
- The standards will come as a kind of exception to the antikickback statute. CMS must define the terms above in the standards.
- Arrangements among health centers and other parties (including pharmaceutical companies) cannot increase a center's revenues or restrict a patient's freedom of choices.
Editor's note: Details will follow as CMS uncovers its plans. |
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Softer rules for chemo by push technique
Despite the oncology lobby's complaints about Medicare reform implications, there is one positive change: Oncologists may bill intravenous chemotherapy administration via the push technique (Common Procedural Technology [CPT] code 96408) once per day for each drug administered. Before the MMA physicians could use this code only once each day, regardless of the number of drugs administered.
Oncologists will experience about a 12% drop in revenue due to drug administration, according to a CMS estimate. Some government officials say the 47% increase in administration fees mandated by the MMA will offset the loss.
The following lists other oncology- and drug-related changes under the MMA:
- Physicians may no longer bill the most basic level-1 office visits (CPT code 99211) on the same day as a chemotherapy administration service. Doctors typically do this 34% of the time, according to one CMS estimate.
- Offices may bill mid- to high-level visits (CPT codes 99212-99215) on the same day as a drug administration service with modifier -25. This indicates that the service is separately identifiable.
- CMS will create new health care common procedural system (HCPCS) codes for innovator multiple-source drugs by April 1. A CMS official says it's looking for help to distinguish innovator from noninnovator multiple-source drugs.
- The standards will come as a kind of exception to the antikickback statute. CMS must define the terms above in the standards.
- After CMS creates and implements these HCPCS codes, hospitals will be able to submit adjustment bills to receive appropriate payment for multiple-source innovator drugs it delivered to patients between January 1 and March 31. These new HCPCS codes may be eligible for payment for up to 68% of the average wholesale price.
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Buy low to avoid sales price hit
A box of Albuterol for patients with chronic lung disease brings in a $44 profit today for providers prescribing the inhalation medicine in the outpatient setting. That profit will plummet to forty cents a box starting in 2005 under the MMA-mandated average sales price drug reimbursement system. That change may force respiratory care providers to drop Medicare patients.
Drug makers are now required to submit to CMS the average sales prices and the number of units they sell for each drug Medicare will cover under this new system. CMS will take these numbers to calculate an average and then update it quarterly in 2005. Health attorney Nick Thomas urges practice directors and hospital finance chiefs to purchase drugs at the cheapest amount possible. "That's the trend you'll see. If not, your returns will be less than your costs," he said.
If adequate sales data does not exist, CMS can disregard the average sales price entirely if the average manufacturer's price (AMP) exceeds the average sales price by 5% in 2005. The Office of Inspector General (OIG) will give CMS this information from its studies. Manufacturers that report false sales price data to CMS would violate the False Claims Act.
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MMA eliminates hospital outpatient lab testing fee schedule
Beginning in July, hospitals with outpatient labs will be paid differently for diagnostic and routine clinical lab tests, according to section 416 of the Medicare Modernization Act of 2003. This policy change applies to critical-access hospitals with fewer than 50 beds in a qualified rural area. These are the guidelines:
- Qualified rural areas are those with population densities in the lowest quarter of all rural country populations. The Centers for Medicare & Medicaid Services will report the eligible ZIP codes May 15.
- The rule will be in effect for cost-reporting periods from July 1, 2004, through June 30, 2006.
Payment is no longer based on the fee schedule for outpatient lab testing but rather based on a reasonable cost structure. To determine this, multiply the costs to charges for the lab cost center times the provider statistical and reimbursement report's billed charges for outpatient lab services. Do this for the two-year period above and use 12X, 13X, and 85X bill types and revenue code 030X.
Contact CMS' Linda Easter at 410/786-6978 with questions.
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Former Medicare chief says CMS will "be tough negotiators"
A new division will be created at Medicare headquarters to handle the prescription-drug benefit, says Susan Webster of the Centers for Medicare & Medicaid Services (CMS). Also look for CMS to hire hundreds of doctors and coders to handle the mandates under the law, says former Medicare chief Tom Scully.
"We don't really have a recruitment plan yet, though," according to a CMS spokesperson.
Perhaps not; but there is a new coverage philosophy in the works. Drug makers, says Scully, must retool their pricing strategies to work with CMS. "This is uncharted waters for CMS," he says. "Drug makers will have to come in and show CMS staff their expected population competition, similar drug costs, and investment. Show that it's in their interest to do this-but margins don't need to be 80%, they need to be reasonable."
Data will be the secret, but find anecdotal data, says medical economist J.D. Kleinke. CMS will give codes based on a new drug's competition, value, return on shareholder equity, and other data, Scully adds.
Drug companies, can, however, make the case for a reimbursement percentage above the average wholesale price (AWP) figure set this year-for example, 87% of the AWP for Procrit, instead of the 85% ceiling that goes in effect April 1.
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Hospice physicians to be paid for counseling
Physicians who are medical directors or employees of a hospice program may receive reimbursement starting January 2005 for counseling terminally ill Medicare patients. To comply with the rules, make sure the patient has not received hospice care before. Physicians must
- evaluate the patient's need for pain and symptom management
- counsel the patient on hospice services and advanced care planning options
Pay will be based on the evaluation and management system. It will be equal to the amount for low-complexity medical decisions made in the office or outpatient setting for the evaluation and management of a moderately severe problem.
Medicare beneficiaries who are unable to receive hospice because there aren't any providers in their facility can now receive these services in another facility with 20 or fewer beds, though that site must offer the full range of hospice services, according to section 409 of the MMA.
The Regional Home Health Agency in Indiana starts hospice services this year. After looking at statistics about the ages of its patients, it discovered that the average age was older than the national average-and many had six months or fewer to live. "When our nurses offered hospice to the patients, they refused; accepting it would mean they would have to leave the nurse," says director Pam Fahlback.
By adding hospice, Regional Home Health patients will keep the same nurse, have more medications covered by Medicare, and have respite-care benefits. Fahlback has hired an administrator to manage the hospice service.
Other changes
Under Medicare reform, when a patient wants to see her family, for example, and must leave the city or state, her hospice provider no longer needs to close the case and reopen it when he or she returns. Subcontracting with other hospices is now allowed, and both hospices may bill Medicare under these arrangements.
Editors' note: There are 2,300 Medicare-certified hospices in the United States.
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STUDY
$100 million will support 'chronic care' organizations
Program could go national if it reduces costs
A three-year pilot program beginning in 2005 will give funding to select chronic care improvement organizations to help them help patients manage chronic conditions such as congestive heart failure, diabetes, depression, and chronic obstructive pulmonary disease. Programs must help patients set goals, institute care plans, manage comorbidities, find the best services, make evidence-based health-care decisions with their doctors, and manage pharmaceutical needs.
How to apply
The Department of Health and Human Services (HHS) will put out a notice in November 2004 to invite the following organizations to apply for the study:
- Health insurers
- Medicare Advantage health plans
- Prescription drug plans
- Integrated health care delivery systems (which include hospitals)
- Physician group practices
- A combination of any of the above
- Disease management groups
The law doesn't specifically name hospitals as qualifying organizations, but CMS Press Officer Don McLeod says the pilot program will likely be open to them. HHS will select 10 geographic areas for the pilot and pick as many applicants as necessary to help it test whether chronic-care programs can work, according to the CMS press office.
Medicare Advantage plans, the new Medicare managed care option under the reform law, and prescription drug plans must offer medication management services to all chronic-care program enrollees. Starting in 2006, plans must work with pharmacists and physicians to offer these services.
Technology companies that manufacture in-home monitoring technologies have a stake in this. Companies such as the Health Hero Network give health professionals timely information on patients' clinical status. Health Hero's Chief Executive Officer Steve Brown says his company develops technology solutions for chronic-care improvement that combine home-health monitoring and self-care education for patients.
Rollout
Most of the study takes place during 2005 and 2006. But the government could roll out the program nationally as early as 2006 if the results show better outcomes for patients at lower costs to the health care system, fewer rehospitalizations, better quality services from evidence-based decisions, and happier patients.
Tips and payment
HHS won't pick the first applicants; it will reject certain applicants who don't qualify based on the regulation notice the agency puts out. Medicare Reform Advisor will publish the notice rules as HHS releases them, but expect to see some of the following requirements:
- Screen patients and keep a database of them
- Track patient progress
- Give patients information about hospice care, palliative care, and end-of-life care
- Educate primary-care physicians and give patients education materials.
Each organization selected as part of the initial program will be paid per member under traditional fee-for-service Medicare.
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Hospitals, clinics could struggle to hire foreign docs
An incentive program to lure primary-care physicians to medically underserved rural areas begins January 2005, as doctors, including some specialists, can receive a 5% bonus in addition to payment for each service provided.
But hospitals, physician clinics, and rural health centers in these areas may have trouble hiring doctors until then due to a visa law snag.
The issue: Foreign doctors who complete training in the United States may apply for a waiver to stay in the country for three more years provided they work in an underserved area. The waiver, called a J-1, allows hospitals, clinics, and rural health centers to hire these doctors.
However, these waivers are expected to run out in March. Without them, many positions are expected to go unfilled, and access to care in these communities will suffer.
A lobbyist is contacting Congress on behalf of several law firms engaged in efforts to give these foreign doctors an exemption, says attorney Michelle Funk, with immigration law firm Pederson & Freedman in Washington, DC. Funk's firm handles the waiver process for doctors from India, Pakistan, the Philippines, Egypt, Syria, Lebanon, Slovakia, and Romania. "My guess is nothing will happen legislatively until these J-1 visas officially run out," Funk says.
Other lobbyists are pushing to raise the time limit on these visas.
One of four government agencies grants the waivers, the Department of Health and Human Services, Veterans Affairs, a state health department, or the Appalachian Regional Commission. Each agency has different rules, but all require the employer (i.e., the hospital) to be located in a medically underserved area. The hospital must also show that it has tried, unsuccessfully, to locate a qualified American doctor.
Go to http://belize.hrsa.gov/ to see which locations have a shortage of health care professionals.
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NEED TO CONTACT US?
Bryan Cote
Executive Editor
E-mail address: bcote@hcpro.com |
