Go to HBMA Website Washington Report –March/April, 2008 Bill Finerfrock, David Connolly, and Rina Shah Capitol Associates We’ll Fix it, Trust Us Is the SGR Problem A Real SNAFU? Medicare Going Bankrupt? Care Coordination – Boom or Bust? CMS Program Identifies $371.5 Million In Improper Medicare Payments In Three States HBMA Goes to Baltimore (and Washington) EHR - Guest Article New ABN Released by CMS CMS Announces Steps to Encourage Participation in the PQRI NPI Update Return to Top We’ll Fix it, Trust Us In late December, Congress passed and President Bush signed legislation preventing a scheduled 10.1 percent cut in physician fee schedule payments from taking effect. This is what has become known as the Sustainable Growth Rate (SGR) problem. In lieu of the cut, a .5% increase was approved. Included in this same legislation were other provisions extending various Medicare incentive payments that were schedule to expire on December 31, 2007. That’s the good news. The bad news was that the legislation was only for 6 months; meaning that unless Congress and the President can come to a new agreement, the cuts will take effect on July 1. For the past several months, Congressional leadership has been adamant about passing the necessary legislation to prevent the dramatic cuts from taking place on July 1. Unfortunately, as the month of April comes to a close, that legislation has not been enacted. There appear to be two issues which must be resolved in order to get the necessary legislation adopted: 1. How long of an extension should be enacted – 6 months? 12 months? 18 months? 2. How does Congress “pay for” this temporary “fix”? How Congress “pays for” the fix is a significant issue. Much of the public discussion has focused on reducing Medicare payments to the private Medicare Advantage plans. This has been a popular target in the past and will continue to be for the foreseeable future. But making cuts in payments to plans or other providers only covers part of the cost of the so-called “fix”. In reality, the bulk of the way this and past SGR “fixes” have been paid for has been the legislative equivalent of a balloon mortgage payment. In effect, Congress has pushed the effective date, and much of the cost of fixing the SGR problem into subsequent fiscal years which will then appear on the books as a future debt owed to the Medicare program. The legislation calls for the debt to be paid in subsequent years with lower physician fee schedule payments in those future years. It is expected that this type of forward funding fix will be used once again to address this problem. What this would mean is that if Congress enacted a 6 month “fix” the balloon payment would be due on January 1, 2009 in the form of reduced physician payments. The magnitude of the 1/1/09 cut is estimated to be in the neighborhood of 15%. If Congress puts off the “fix” until 1/1/10, the balloon payment due on 1/1/10 would result in a projected cut in physician fee schedule payments somewhere in the neighborhood of 20%. In terms of the length of the “fix” it appears that it will most likely be 18 months; six months is too short. Given that this is an election year and Congress is expected to adjourn in late September or early October, passing a 6 month extension that would only run through the end of 2008 would mean that Congress would have to enact another bill this year in order to prevent the 15% SGR cut on January 1, 2009. Realistically, the two choices are a 12 month fix or an 18 month fix. A 12 month fix would put off any decisions until July 1, 2009 and give the new Congress and new President 6 months to come up with a solution. An 18 month fix would carry through the entire 2009 year and give the new Congress and new President more time to come up with a long-term solution. From our vantage point, we believe that Congress will pass an 18 month extension of the SGR “fix” and give the next Congress a full year to grapple with a longterm solution. Return to Top Is the SGR Problem A Real SNAFU? For the past several years, Congress has been wrestling with solutions - both short and long-term - to the SGR problem. During all this time, HBMA, the American Medical Association and other physician organizations have been cajoling, challenging and generally pushing Congress to come up with a fix – preferably a long-term fix to the SGR problem. At times, it appeared that progress was being made but inevitably, only a short-term fix was approved by Congress. As might be expected tempers flare and tension mounts as time moves on with no long-term solution in sight. One of the stumbling blocks for achieving a long-term solution to the SGR problem has been the inability to come up with a funding source to “pay for” any fix. As has been reported in the past, while the Medicare program does not operate on a hard budget, technically there is no upper limit on how much will be spent each year, it does operate based upon certain budget assumptions. Moneys paid out for the Medicare benefits come from a trust fund established for that purpose. In 2007, there was more than enough money in the trust fund to pay for all of the benefits delivered in 2007 and still have money left over. That trust fund has money deposited from current taxes being collected along with accumulated revenue from previous years. According to the Medicare actuaries, in the very near future, we will not only use all of the tax money deposited in the trust fund in for that year, but we will start to draw from the accumulated reserves (see related story). Each year the actuaries look at what expenses Medicare covers, make certain assumptions about demand for services based upon what the program covers and from that, they develop a budget target. Because the budget target is based upon assumptions, it is conceivable that the assumptions are wrong and as a consequence, expenditures are higher than projected. When this happens, the law requires Congress to make changes in the program (covered services, amounts paid for services, inflationary adjustments), to bring the spending in line with the assumptions. This process is referred to as resetting the baseline. Each summer, the Congressional Budget Office resets the baseline for the Medicare program. At the same time, it lets Congress know how close we came to meeting the budget target set for the previous year. This is when we typically get the first glimpse at how far off the budget target was from actual spending and thus how big the spending adjustment will have to be to account for that difference. For the past several years, as you’ve no doubt noticed, the size of the SGR fix gets bigger and bigger. A few years ago, Congress was faced with a mandatory reduction in physician payments of about 1.5%; the next year it was 4%; this year, it was 10%. One might conclude from this escalation that we’re getting worse at projecting Medicare spending. That’s not the case. The law provides only a handful of options to Congress as far as making adjustments to the Medicare program to meet the budget target. Congress can raise the Medicare portion of the Social Security tax, cut benefits, cut provider payments or, it can raise the eligibility age. None of these options is politically attractive. Or, the Congress can put off the cuts into a future year. Think of this as a balloon payment due to the Medicare program. That’s about it. Recognizing that raising taxes, cutting benefits or raising the eligibility age wasn’t going to fly, the only realistic solutions lie in either reducing Medicare expenditures by cutting provider/plan payments or using a budgetary gimmick. Over the years, there have been politically easy ways to “pay for” the SGR fixes (or at least much of the cost of the fix). Congress has taken the money from certain Medicare funds set-aside for possible future adjustments that were not really needed. The money in these funds had to be accounted for and the actuaries had to assume the money would be spent some day but the reality was that the purpose for which the money was set aside, never materialized. So Congress raided these “funds” and used the money to pay for part of the fix. Similarly, there have been some situations where the evidence was clear that certain providers may have been receiving higher payments from Medicare than might have been necessary so Congress cut these payments. Again, some of these payment cuts were used to pay for part of the SGR fix in past years. In legislative parlance, we call this the low-hanging fruit. Unfortunately, Congress has not always been able to come up with enough of these offsets to fully “pay for” the SGR fix. When this has happened, Congress has taken out another balloon payment. The problem with the balloon payment solution is that in each successive year, the balloon payment is due and the money is not there to make the payment. Because Congress writes the laws, they simply push off the balloon with a “promise” that the payment will be made the next year, and then the next year and then the next year. The effect of continually pushing forward the due date, means the size of the cut in physician payments necessary to make the balloon payment escalates as well. Should Congress adopt an 18 month “fix” to the SGR problem using the balloon payment approach, preliminary estimates are that the amount of the cut necessary in 2010 will be approximately 20%. One possible solution is that because the Medicare trust fund (the fund the money is owed to) is in a temporary surplus, the Congress could simply write-off the debt and pay for the cuts out of the surplus. Think of this like a loan a parent might give to a child for the purpose of making a down payment on a home. The parents can carry the debt, collect interest on the money owed, but at some point simply tell the child, the debt is forgiven. Because the taxpayers technically owe the money to themselves, the Congress, acting as the agent for the taxpayers, can simply forgive the loan. Years ago, there was a character on Saturday Night Live by the name of Emily Litella. Litella would engage in some rather absurd rant about a subject she clearly misunderstood (i.e. wondering why so many people were worried about Russian Jewelry only to find out that the issue was Russian Jewry). When Ms. Litella was told that she misunderstood the topic of discussion, she would end the sketch by saying, “Sorry, never mind.” Don’t be surprised if after years of making these promises, Congress says at some point, “Sorry, never mind” with regard to the SGR balloon payments. Return to Top Medicare Going Bankrupt? The Medicare Program is one of the largest social insurance programs in the U.S. In 2007, there were more than 44 million individuals receiving benefits from the Medicare program at a cost of $432 billion. Each year, the Board of Trustees for Medicare reports to Congress on the actuarial status of the program. The Trustees of the Medicare program are the Secretary of Health and Human Services, the Secretary of the Treasury, the Secretary of Labor and the Commissioner of Social Security. There are two public trustees appointed by the President and confirmed by the Senate. The two Public Trustee positions are currently vacant. The 2008 Trustees Report was released on March 25th. Since 2002, there has been one combined report discussing both the Hospital Insurance program (Medicare Part A) and the Supplementary Medical Insurance program (Medicare Part B and Prescription Drug Coverage). The Office of the Actuary in the Centers for Medicare & Medicaid Services (CMS) prepares the report under the direction of the Board. About 75 percent of Part B expenditures are paid from Federal general fund revenues, with most of the remaining costs covered by monthly premiums charged to enrollees. Part B premium amounts are based on methods defined in law and increase as the estimated costs of those programs rise. In 2008, the standard Part B monthly premium paid by most enrollees is $96.40. Beginning in 2007, the program began phasing in an income-related premium surcharge for Part B beneficiaries whose modified adjusted gross income exceeds $82,000 for individual tax returns and $164,000 for joint returns for 2008. Below is a chart showing income and outlays for both Medicare Part A and Medicare Part B: Medicare Part A Medicare Part B Assets (end of 2006) $305.4 $33.1 Income during 2007 223.7 238.2 Outgo during 2007 Net increase in assets 203.1 20.7 228.5 9.7 Assets (end of 2007) 326.0 42.9 For 2008, Medicare's Hospital Insurance (HI) Trust Fund is expected to pay out more in hospital benefits and other expenditures than it receives in taxes and other dedicated revenues. The difference will be made up from general revenues which pay for interest credits to the Trust Fund. Growing annual deficits are projected to exhaust HI reserves in 2019. In addition, according to the Trustees, the Medicare Supplementary Medical Insurance (SMI) Trust Fund (Part B) that pays for physician services will continue to require general revenue financing and charges on beneficiaries that grow substantially faster than the economy and beneficiary incomes over time. The 2008 Medicare Trustees Report notes that Medicare expenditures for 2007 represented 3.2 percent of total gross domestic product (GDP). If the program goes unchanged, that percentage will rise to 11 percent of GDP over the next 75 years. Although the budget projections paint a rather dire future, the reality is that neither Part A nor Part B will technically go bankrupt as the law provides for an infusion of general tax revenues to cover whatever shortfalls may occur. Of course the extent to which general revenues must be used to cover the short-fall means less money is available to pay for other federal programs which rely upon general revenues, or future Congress’ will have to raise taxes to allow non-Medicare spending to continue at inflationary adjusted levels. Some key Members of Congress have said they believe the magnitude of the problem facing Medicare has been overblown by the Trustees. Rep. Pete Stark (D-CA), Chairman of the Ways & Means Health Subcommittee, in response to the Trustees report stated, “"Reports of Medicare’s death have been greatly exaggerated." Chairman Stark went on to state, "… this year’s Trustees report shows that Medicare remains solvent and sustainable." The Heritage Foundation, a conservative think tank that advocates major reforms in Medicare has estimated that the future unfunded liability of the Medicare program amounts to a $320,000 IOU for every American household. There doesn’t appear to be any chance that the current Congress and the current President will agree on a long-term solution. As with so many other issues, this one will be left to the next Congress and the next President to deal with. Return to Top Care Coordination – Boom or Bust? Depending upon who you listen to, increased use of “Care Coordination” in Medicare is either going to be a tremendous boom for the program saving money and improving care, or it will be a bust, saving little or no money with no improvement in care. A recent report by the General Accounting Office (GAO) presents a mixed bag of results for a Medicare demonstration program aimed at assessing the value of Care Coordination. As payments for physician services have continued to escalate, there has been increasing concern about how Medicare pays for physician services and whether the current payment methodology incorporates the proper incentives. According to the GAO, “Medicare spending for physician services paid through Medicare’s Part B fee-for-service (FFS) program grew rapidly from 2000 to 2006, at an average annual growth rate of almost 8 percent. This rate of growth outpaced the national economy’s annual average growth rate for that period of 5.2 percent. Some in Congress and the Administration have argued that this is an unsustainable growth rate compared to general economic growth. The Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 directed the Centers for Medicare & Medicaid Services (CMS), to conduct demonstrations to test incentive-based alternative payment methods for physicians reimbursed under Medicare Part B. The first demonstration undertaken by CMS was the Physician Group Practice (PGP) Demonstration. The PGP Demonstration tests a hybrid payment methodology which combines physician payments with a bonus payment that participating physician groups can earn by demonstrating savings through better management of patient care and services and meeting quality-of-care performance targets. Ten large physician group practices from throughout the United States were selected to participate in this demonstration. Those practices were: Billings Clinic Park Nicollet Health Services Novant Medical Group Integrated Resources for the Middlesex Area Geisinger Health System The Everett Clinic Dartmouth-Hitchcock Clinic Marshfield Clinic St. John’s Health System University of Michigan Faculty Group Practice Montana/Wyoming Minnesota North Carolina Connecticut Pennsylvania Washington New Hampshire/Vermont Wisconsin Missouri/Arkansas Michigan In reviewing the first year’s results, GAO found that only 2 of the 10 participants (the Marshfield Clinic and the University of Michigan Faculty Group Practice) earned a bonus payment for achieving cost savings and meeting quality-of-care targets. While almost all of the groups met 7 or more of CMS’s 10 quality-of-care targets in year one, only two were eligible for bonus payments. The other projects did not achieve the required level of cost savings. To obtain a bonus payment, the group had to generate cost savings to Medicare of more than 2 percent compared to a comparison group of Medicare beneficiaries. Groups that achieved this level of cost-savings were eligible for a bonus payment and were also able to increase their bonus payments if they met certain diseasespecific, quality-of-care performance targets. The program will likely be modified as it moves forward although some in Congress have questioned the value of these types of care coordination demonstrations. GAO took no position on the continuation of this particular demonstration but there appears to be enough “good news” to warrant continued examination of this type of program as a means of improving quality and saving money. If you would like to review the entire report (approximately 60 pages), go to the GAO web site at http://www.gao.gov and search for the report by title “Care Coordination Programs Used in Demonstration Show Promise, but Wider Use of Payment Approach May Be Limited” or by document number: GAO-08-65. Return to Top CMS Program Identifies $371.5 Million In Improper Medicare Payments In Three States According to a press release issued by the Centers for Medicare & Medicaid Services (CMS) “$371.5 million in improper Medicare payments has been collected from or repaid to health care providers and suppliers as part of a demonstration program using Recovery Audit Contractors (RACs) in California, Florida and New York in 2007. Nearly $440 million has been collected since the program began in 2005.” In announcing these findings, Acting CMS Administrator Kerry Weems said, “We need to ensure accurate payments for services to Medicare beneficiaries and by taking this important step, people with Medicare can be assured they are being charged correctly for their share of their health care services,” Weems went on to state, “The RAC demonstration program has proven to be successful in returning overpayments to the Trust Fund and identifying ways to prevent future improper payments. We will use the lessons we learned from the demonstration program to help us implement the national RAC program next year.” The RAC demonstration program was designed to find and correct improper Medicare payments (both underpayments as well as overpayments) paid to health care providers participating in fee-for-service Medicare. Some have speculated that payment errors can account for billions of dollars in improper payments each year. When Congress authorized this initiative, providers were assured that the companies hired to serve as Recovery Audit Contractors would be equally incentivised to find underpayments as well as overpayments. Although the program theoretically achieves this balance, it shouldn’t go without notice that approximately 96 percent of the improper payments were overpayments collected from health care providers; the remaining 4 percent were underpayments repaid to health care providers. Examples of the types of errors identified by the RACs include: A health care provider bills Medicare for conducting three colonoscopies on the same patient on the same day Payments are made for services that are coded incorrectly – for example, Medicare is billed for a certain procedure but the medical record shows that a different procedure was actually provided A claim is paid using an outdated fee schedule. A health care provider is paid twice because the provider submitted duplicate claims Due to the dramatic savings reported from this three state demonstration, CMS sought and Congress approved expansion of the RAC program to all 50 states. CMS will enter into new contracts as the program goes national. It is expected that a RAC will be in place in all 50 states before January 1, 2010. For more information on the RAC program and to view the FY 2007 Status Document, visit: http://www.cms.hhs.gov/RAC Return to Top HBMA Goes to Baltimore (and Washington) On May 14th and 15th members of the HBMA Government Relations (GR) Committee will travel to the “belly of the beast” when they visit CMS headquarters to meet with senior management and Capitol Hill to visit with their Representatives and Senators. On the 14th, a series of meetings have been scheduled with CMS staff handling such diverse issues as provider enrollment, MAC oversight, the Office of E-Health Standards, Provider Outreach, RAC oversight and the Director of the Physician’s Regulatory Issues Team (PRIT). Given the proximity of the meeting with the May 23rd effective date for filing NPI Only claims, this will surely be a topic of discussion. Committee members will also be presenting the results of the 2nd annual HBMA Medicare Carrier Provider Satisfaction Survey. This is a shadow survey HBMA conducts with the membership to assess the work of the Medicare Carriers (or MACs) during the previous year. This survey directly mirrors a survey CMS conducts with physicians and allows CMS to compare the results of billing companies with the results CMS gets from it’s physician survey. HBMA conducted a similar survey last year and presented the results to CMS. CMS staff were so pleased with the work HBMA did last year, we agreed to replicate the CMS survey process again. On May 15th, GR Committee members will be traveling to Capitol Hill to meet with Representatives and Senators to educate our elected officials about the role of medical billing companies and share our views on critical issues facing the billing industry. HBMA continues to expand its Government Relations program for the benefit of its members and your physician clients. If you have federal issues or topics you would like to bring to the attention of the Committee, please contact GR Committee Chair Barry Reiter through the national office. Return to Top EHR - Guest Article CMS has asked HBMA to publish the following article from Acting CMS Administrator Kerry Weems: A new national Medicare demonstration program is aiming to show health care professionals the on-the-ground advantages of connecting to the information age. Medicare is looking for 12 communities across the country that can bring together a broad cross-section of community leadership, leverage resources, and recruit small and medium-sized primary care physician practices willing to provide the evidence that electronic health records (EHR) can improve the quality of patient care. As many as 1,200 physician practices nationwide could be eligible for incentive payments of up to $58,000 per physician—up to $290,000 per practice—over the five-year life of the demonstration. Incentives would be based on a practice’s level of EHR use, and for reporting and performance on 26 clinical quality measures. But the rewards of joining are much more than financial. An entire community can benefit from the use of EHRs, which can help avoid drug interactions, redundant lab and diagnostic tests – meaning fewer medical errors and potentially lower costs. Medicare plans to announce the winning communities in June, 2008. There is no question that interoperable EHRs will be a key part of the healthcare landscape in the future. Medicare’s objective, with this demonstration, is to launch the construction of an interconnected electronic information system quickly and seamlessly. The challenge before us is not whether to move forward to improve health care quality through the secure exchange of medical information, but how to accomplish this most effectively. To learn more about this demonstration, go to: www.cms.hhs.gov/DemoProjectsEvalRpts/downloads/ 2008_Electronic_Health_Records_Demonstration.pdf Return to Top New ABN Released by CMS A revised Advance Beneficiary Notice (ABN) of Non-coverage (CMS-R-131) was released by CMS on March 3. Providers are authorized to begin using the notice immediately. Beginning September 3, all providers, practitioners, and suppliers paid under Part B must use the revised ABN in place of the ABN-G (CMS-R-131G) and ABN-L (CMS-R-131-L). Revised manual instructions in Chapter 30 of the Claims Processing Manual (Pub. 100-04) will be published in the near future. The revised ABN and form instructions can be accessed at http://www.cms.hhs.gov/bni. Return to Top CMS Announces Steps to Encourage Participation in PQRI The following is a release issued by CMS: The Centers for Medicare & Medicaid Services (CMS) today announced steps it is taking to encourage physicians and other eligible professionals to participate in the Physician Quality Reporting Initiative (PQRI), a program designed to improve the quality of care provided to Medicare beneficiaries. These steps, including a variety of new reporting options, will make it easier for eligible professionals to participate and receive feedback on their performance. Implemented in 2007, the PQRI creates a quality reporting system that includes an incentive payment for satisfactorily reporting data on quality measures for covered professional services delivered to Medicare beneficiaries. “By providing more opportunities to submit information about the quality of care provided to Medicare beneficiaries, we will ultimately improve the services provided to our beneficiaries,” said CMS Acting Administrator Kerry Weems. “The Physician Quality Reporting Initiative puts an emphasis on measuring and improving the performance of the health care system to reduce inappropriate care and encourage best practices in care.” The PQRI was originally authorized by the Tax Relief and Health Care Act of 2006. In late 2007, Congress made changes to the program with the passage of the Medicare, Medicaid, and SCHIP Extension Act of 2007. The statute authorizes PQRI transitional bonus incentive payments in 2008, and requires the Secretary to establish alternative criteria for satisfactorily reporting and alternative reporting periods for both the reporting of groups of measures and the use of registry-based reporting. For 2008, in addition to submitting PQRI measure data as part of their Medicare claims submissions, eligible professionals may report data on quality measures to a medical registry, and these registries will then report that data to CMS. In addition to providing new flexibility for submitting data, registry-based reporting will provide more ways for eligible professionals to qualify for an incentive payment. Participating eligible professionals can choose to report data on either individual measures or on groups of measures that capture a number of data elements about common care processes for diabetes, kidney disease, and preventive medicine. Another change under the enhanced PQRI program for 2008 will be new PQRI reporting periods for eligible professionals who report using measures groups. Participants may now start reporting in July 2008 and still be eligible to earn an incentive payment for the 2008 PQRI program. For more information about the program, including how eligible professionals can participate and the criteria to qualify for an incentive payment, please go to www.cms.hhs.gov/PQRI. Return to Top NPI Update Beginning May 23rd, Medicare will only accept/send NPI-Only transactions. If you are not already doing so, you are encouraged to use the remaining few weeks before the NPI-Only requirement goes into effect to make sure that your claims will process smoothly. There have been numerous reports of problems with Third Party Payers processing NPI-Only claims, particularly when a provider works at multiple locations. According to CMS, more than 98% of claims are being submitted with an NPI. However, only 18% are being submitted using NPI-Only. CMS is concerned that the percentage of Medicare claims with NPI-Only is not growing fast enough. If you have not already begun doing so, billing companies are encouraged to begin billing with NPI-only now to test how May 23rd will impact you and your clients. CMS is recommending that billing companies follow these steps in order to facilitate a smooth transition to NPI-Only 1) Bill with NPI –Only Start with a small batch of claims. If, or when, the results are positive, begin sending a greater volume and move to Step 2. Billing with NPI-Only also tests the ability to receive the NPI on 835 transactions. 2) Test NPI-Only on Other HIPAA Transactions CMS will require use of the NPI on the 270/271, 276/277 and NCPDP transactions. Providers should begin testing the use of the NPI on these transactions, in small quantities, prior to May 23rd to ensure a smooth transition. Also, be prepared to accept the NPIOnly on the 835 remittance advice transaction. A recent news release by CMS states, “It has come to CMS’ attention that some clearinghouses may not allow important NPI-Only testing prior to May 23rd. CMS encourages Medicare providers to work with their clearinghouses to allow use of the NPI-Only to facilitate this testing. If you do not test, you will not be aware, in advance, of any problems that could prohibit Medicare from processing and paying claims. If you are submitting NPI-Only claims and your third party payer is unable to process the transaction this is technically a violation of the HIPAA electronic transaction standards. You may want to consider filing a formal complaint with the Office of E-Health Standards (OEHS) if informal attempts to work with the payer have been unsuccessful. Complaints can be filed anonymously and the OEHS staff will look into all complaints and, where appropriate, take action against the payer. If you cannot resolve issues with the payer and want to file a complaint, you can do so by mail, fax, or online. For additional information on how to file a complaint, visit the CMS website: www.cms.hhs.gov/Enforcement/02 _HIPAAComplaintInformation.asp#TopOfPage Healthcare Billing and Management Association 1540 South Coast Highway, Suite 203 Laguna Beach, CA 92651 ph: (877) 640-HBMA (4262) Ex: 203 fax: (949) 376-3456 email: info@hbma.org Website design by Webteam, Inc.