Medicare Compliance & Reimbursement

Plus:  Bipartisan bill could extend Part D enrollment deadline

Providers who've been crossing their fingers for retroactive adjustments to the 2006 physician payment update finally have some good news.

Upon the Deficit Reduction Act's enactment, the Centers for Medicare & Medicaid Services will instruct contractors to automatically process new claims and reprocess existing claims to reflect the legislation's zero-percent physician payment update. CMS director Herb Kuhn made the announcement in a Jan. 6 letter to Rep. Bill Thomas (R-CA), the House Ways and Means Committee chairman, and Sen. Charles Grassley (R-IA), the Senate Finance Committee chairman.

The American Medical Association applauds CMS' decision to provide automatic, retroactive reimbursements. "Automatic reprocessing of claims retroactive to January 1, 2006 is a help to physician offices swimming in paperwork, and an important assurance from CMS as physicians make decisions affecting patient care," says AMA's Katherine M. Hatwell.

The retroactive payment adjustment would reverse the 4.4 percent payment reduction that went into effect Jan. 1, 2006. CMS expects contractors to begin paying new claims using the DRA's zero percent update within two days of the legislation's enactment.

In addition, providers will not need to resubmit existing claims submitted between Jan. 1, 2006, and the legislation's enactment. Contractors will automatically reprocess any claims that used the 4.4 percent pay reduction to use the zero percent update retroactive to Jan. 1.

Because contractors process approximately 20 million claims per week, the turnaround time for reprocessing existing claims will depend on the volume with each contractor. CMS estimates contractors should be able to reprocess all claims by July 1, 2006. Providers will receive retroactive payment for the 4.4 percent differential in a lump sum.

CMS also recognizes that the physician payment adjustment would increase beneficiaries' copayments and deductibles for previously billed services and could lead to improper bene inducements. CMS has contacted the HHS Office of Inspector General about enforcing these issues and asserts that "where a beneficiary has already been charged for the appropriate cost-sharing amount under an existing physician fee schedule, and an additional cost-sharing amount is subsequently due because of a retroactive application of a statutory fee schedule adjustment, a waiver of the additional cost-sharing amount would be unlikely to serve as an inducement to the beneficiary."

In addition to the retroactive payment adjustment, CMS will offer a second enrollment period for physicians to reconsider their participation retroactive to Jan. 1. The enrollment period will begin on or shortly after Congress enacts the DRA and will run for 45 days.

Part D Drug Plan Participants Could See Extended Enrollment Deadline

A new bipartisan plan could buy Medicare recipients more time to enroll in a Part D drug plan. Senators Olympia J. Snowe (R-ME) and Bill Nelson (D-FL) recently introduced a bill that could extend the Part D enrollment deadline from May 15 to Dec. 31.

The senators cited significant signup problems, inaccurate pricing information and inadequate plan information as reasons for introducing the bill. "We must ensure that seniors who are depending on Medicare prescription drug coverage are not saddled with monthly premiums for plans which do not meet their needs," says Snowe.

If passed, the bill would also permit misinformed enrollees to change plans in 2006 without facing penalties and afford benes a one-time opportunity to switch plans before the new deadline. "Seniors shouldn't have to pay a penalty if they choose the wrong plan or delay enrollment," notes Nelson. States and nonprofit organizations also stand to gain $25 million in grants for 2007-8 outreach programs if the bill becomes law.

Four New Medicare DME MACs Enter the Scene

After a competitive bidding process, four new Medicare administrative contractors will be responsible for handling claims from durable medical equipment, prosthetics and orthotics suppliers, CMS announced Jan. 9. The DME MACs will begin transition immediately and fully assume claims processing from Durable Medical Equipment Regional Carriers by July 2, 2006.

CMS contract reform aims to streamline claims processing and establish a single point-of-contact for Medicare suppliers by consolidating fiscal intermediaries' and carriers' Part A and Part B claims processing under new MACs.

"As a result of the recent Medicare reforms, for the first time in Medicare's 40-year history, we have been able to select our administrative contractors through a full and open competition to provide the best services at the lowest cost," says CMS Administrator Mark McClellan. "These competitive reforms will lead to better quality, more efficiency and greater accountability in the administration of the traditional Medicare program."

The DME MACs and their corresponding jurisdictions are:

• Heritage Insurance Company (Jurisdiction A: CT, DE, DC, ME, MD, MA, NH, NJ, NY, PA, RI, VT)

• AdminaStar Federal (Jurisdiction B: IL, IN, KY, MI, MN, OH, WI)

• Palmetto Government (Jurisdiction C: AL, AR, CO, FL, GA, LA, MS, NM, NC, OK, PR, SC, TN, TX, VI, VA, WV)

• Noridian Administrative Services (Jurisdiction D: AK, AS, AZ, CA, GU, HI, ID, IA, KS, MO, MT, NE, NV, ND, MP, OR, SD, UT, WA, WY)

CMS awarded DMERCs' pre-pay and post-pay medical review and benefit integrity functions to separate contractors in December 2005.

For further information, visit www.cms.hhs.gov/MedicareContractingReform.

MedPAC: Lift Part B CAP For Satellite Chemotherapy

The Department of Health and Human Services should permit drug deliveries to satellite chemotherapy facilities, recommends the Medicare Payment Advisory Commission.

Vendors should deliver drugs directly to the facility that plans to administer them, according to current CAP rules. In rural areas, however, benes often receive chemotherapy drugs in satellite facilities. "Sometimes nurses cannot mix drugs safely in these satellite offices because the office does not have the expensive equipment necessary for the safe handling of these toxic products," notes MedPAC. "Nurses mix the drugs at the main facility and then travel to the satellite office to administer chemotherapy."

The CAP's principle is to encourage competition among vendors for provider-administered Part B drugs. But none of the oncologists MedPAC interviewed was willing to participate in the CAP, the report states. US Oncology openly objects to the CAP in a recent letter to CMS, citing system flaws that could delay therapy and provide inadequate oversight for counterfeit and adulterated drugs. "[The CAP] may challenge the cost effective and controlled clinical treatment environment of today's community-based cancer care system," US Oncology alleges.

After closely evaluating oncology-related Medicare drug payments and the competitive acquisition program, MedPAC also recommends that HHS should use its demonstration authority to test in health care quality and delivery, but not to increase payments. HHS should also require providers to include patients' hemoglobin levels on all claims for erythroid growth factors and use the data for Medicare's pay-for-performance initiative, MedPAC adds.

To view the full report, visit www.medpac.gov/publications/congressional_reports/Jan06_Oncology_mandated_report.pdf.