Medicare Reform Advisor, June 1, 2004

June 1, 2004 Vol. 1, No. 15 Weekly news and analysis

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CMS analyzing new residency, rural payment models
The Centers for Medicare & Medicaid Services (CMS) is seeking help on a host of inpatient payment related changes it may make as a result of Medicare-reform law provisions. A spokesperson said CMS is considering a possible change in how it pays a hospital for medical residents pursuing specialty residencies. The agency is also seeking public comments before it begins a five-year demonstration project required by the Medicare-reform law to test the feasibility and value of establishing a separate payment system for inpatient services provided by rural community hospitals. The public comment period closes on July 12 for these and other changes to the inpatient prospective payment system rules. CMS will publish its final rule later this year. For a look at the proposal, visit the following Web site: www.cms.hhs.gov/providers/hospital.asp.

Chiro denial rates high, so Medicare makes changes
Chiropractors have the highest error rate among providers, incorrectly filing claims almost a third of the time, according to a Medicare fee-for-service report issued May 28. To help chiropractors bill Medicare correctly, CMS wants billing and compliance directors to check for the following to reverse this trend, and for fiscal intermediaries to track these for compliance:

1. Make sure each chiropractic claim (those containing HCPCS code 98940, 98941, 98942) with a date of service on or after October 1, 2004, include the Acute Treatment (AT) modifier if active/corrective treatment is performed. Otherwise, contractors will deny these claims.
2. Do not use a modifier when maintenance therapy is performed.
3. Use the GA or GZ modifiers for chiropractic active/corrective treatment exceeding a contractor's frequency limit, as published in a coverage decision. Medicare contractors may review these claims or "auto" deny them, a CMS spokesperson says.

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Texas AG sues three drug makers
Texas Attorney General Greg Abbott sued three major drug manufacturers on May 26 for falsely reporting the wholesale prices of specific drugs and devices prescribed for Medicaid patients. Expect similar scrutiny of drug companies and others that falsely report prices and improperly defraud Medicare under its new average sales price method, according to a Washington, DC-based pharmaceutical lobbyist. Illinois-based Abbott Laboratories Inc. and Baxter Healthcare Corp. and Pennsylvania-based B. Braun Medical Inc. were named in the suit. Texas is asking the companies for a total of $8 million in damages in addition to civil penalties and other fees for defrauding Medicaid. All three companies erroneously reported prices for various intravenous fluids and other products, according to allegations in the suit. This led state and federal Medicaid programs to reimburse clinics, pharmacies, distributors, and wholesalers at vastly inflated rates. Ven-a-Care, a Florida-based specialty pharmacy participating in that state's Medicaid program told officials about the scheme. Under a Texas state law, Ven-a-Care is eligible for a percentage of damages recovered. In early May, Ven-a-Care also provided key details in a similar suit involving Schering-Plough Corp. in New Jersey. The pharmaceutical manufacturer paid a $27 million settlement.

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EMTALA advisory group forms to develop rules
A group of regulators will meet twice a year to review regulations that affect hospital responsibilities under the Emergency Medical Treatment and Labor Act (EMTALA), the Centers for Medicare & Medicaid Services (CMS) announced May 28. The group, formed as a result of Section 945 of the Medicare-reform law, will help CMS develop rules to protect individual rights while minimizing unnecessary burdens on hospitals and physicians.

"I am confident that we can work together to improve how hospitals and physicians respond to medical emergencies without imposing unnecessary requirements on providers," said CMS Administrator Mark B. McClellan, MD, PhD.

Tommy Thompson, secretary of the Department of Health and Human Services, will appoint most of the advisory group's 19 members based on nominations submitted by interested groups. Nominations must be submitted to CMS no later than July 12. The committee is expected to hold its first meeting in late fall.

CMS has primary responsibility for investigating EMTALA complaints and, when appropriate, making referrals to the Office of Inspector General for imposition of sanctions. In February, Jackson (FL) Memorial Hospital paid the largest fine to date for an EMTALA violation: $50,000.

Four of the advisors must work at hospitals and seven must practice medicine in various specialties, including emergency medicine, cardiology or cardiothoracic surgery, orthopedic surgery, neurosurgery, pediatrics or a pediatric subspecialty, obstetrics-gynecology, and psychiatry.

Nominees: Contact the editor by e-mail if you're interested in nominating someone to serve on the advisory panel.

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HHS may issue advisory opinions on Medicare
According to a mandate in section 904 of the Medicare-reform law, the U.S. General Accounting Office (GAO) has an assignment: It must determine by December 8 whether it's both feasible and appropriate for the Department of Health and Human Services (HHS) to issue legally binding advisory opinions to providers and others about Medicare regulations.

GAO officials contacted Medicare Reform Advisor May 28 for assistance. So we ask you, our readers, what are the most complex and troublesome Medicare regulations for you to interpret and comply with? Send suggestions to bcote@hcpro.com. Also, let us know which agency you think should issue these advisory opinions: HHS, the Centers for Medicare & Medicaid Services (CMS), the Office of Inspector General (OIG), or another federal agency?

The OIG issues these opinions on questions related to the anti-kickback statute, and CMS has, on occasion, issued opinions about physician referrals. In both cases, the agencies receive questions from providers and then respond with a ruling on which only the requesting provider may rely.

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HHS announces $1,200 credit to attract low-income group
The Department of Health and Human Services (HHS) announced last week new initiatives aimed specifically at enrolling low-income Medicare beneficiaries in the prescription discount drug card program. Under this plan, beneficiaries at 135% of the federal poverty level ($12,569 annually for singles and $16,862 for couples) who sign up for the cards would be eligible for transitional assistance during the next 18 months in the form of a $1,200 credit: $600 beginning June 1 and another $600 beginning January 1, 2005.

In addition to the credit, seven pharmaceutical manufacturers (Abbott, Astra Zeneca, Eli Lilly & Company, Johnson & Johnson, Merck, Novartis, and Wyeth) will provide "wraparound" benefit programs to provide many drugs for free or very small fees once the credits are used up for some of the card programs, HHS Secretary Tommy Thompson announced at a May 27 briefing in Washington.

Efforts, though, are being made to expand these wraparound benefits to all of the drug card benefit programs, said James Firman, president and CEO of the National Council on Aging and chair of the Access to Benefits Coalition, a group of 68 national nonprofit groups that is aiming to assist low-income beneficiaries in saving on their prescription medications.

Beginning last week, the coalition began calling on the companies that sponsor the drug benefit cards to make a pledge to include any wraparound benefits offered by the manufacturers, Firman said at the HHS briefing. So far, five companies have said yes. "We do expect to get most of them."

Also, to beef up the efforts to get more low-income beneficiaries enrolled, HHS announced it has made an additional $4.6 million available to organize and fund community-based groups to help them learn about the drug card benefits. Of this amount, $2.4 million will be targeted at 30 of the largest markets where 70% of low-income beneficiaries reside. HHS' Administration on Aging will receive another $2 million to communicate with hard-to-reach minority groups--particularly those in rural and non-English-speaking areas, Thompson said. Indian Health Services also will receive $200,000 for educational efforts.

Enrollment intiative
Meanwhile, the coalition is starting its own initiative called "5.5 by '05"-or 5.5 million low-income beneficiaries enrolled in the Medicare transitional benefit program by 2005. "We in the private sector also recognize that the goal of enrolling 5.5 million is much too important and ambitious to leave to the government agencies," Firman said.

While it's "crystal clear" that beneficiaries with incomes less than 135% of poverty should get Medicare-approved discount cards, other Medicare beneficiaries with incomes up to 200% as well could save "a great deal of money through a combination of a [Medicare]-approved discount card with other public and private savings programs," Firman said.

For instance, 31 states have pharmacy-assistance programs and many manufacturers offer prescription-assistance programs that provide discounts for people whose incomes may be above 135% but below the 200% poverty level. "It may take more work with these people to find just the right combination, but it definitely will be worth it for most of them," Firman said. In several weeks, the coalition will announce how it will be establishing this initiative effort through grants, new Web sites, decision-support tools, and "grassroots mobilization efforts."

More information on the coalition is available at www.accesstobenefits.org.

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