Medicare Compliance & Reimbursement

Plus:  New law could leave millions of eligible Medicaid enrollees without health care, consumer groups claim.

A series of drastic reforms to payment for imaging services under the Medicare physician fee schedule are all underway--and recent testimony before House lawmakers has sealed the deal for providers.

The changes have come about after lawmakers noticed that spending on imaging services had skyrocketed in recent years. "Between 2000 and 2005, spending for imaging services paid under the physician fee schedule more than doubled from $6.6 billion to $13.7 billion, an average annual growth rate of 15.7 percent," Center for Medicare Management director Herb Kuhn testified before the House Committee on Energy and Commerce's Subcommittee on Health. That growth rate compares to an annual rate of 9.6 percent for all physician fee schedule services, Kuhn told the subcommittee in the July 18 testimony.

In his testimony, Kuhn outlined the steps the Centers for Medicare & Medicaid Services (CMS) is taking to curb its spending on imaging services, including recommendations from the Medicare Payment Advisory Commission (MedPAC) and provisions in the Deficit Reduction Act of 2005 (DRA).

"MedPAC suggested that imaging equipment could be assumed to be used more than 50 percent of the time, given the rapid growth in imaging services," Kuhn says. In June, MedPAC reported to Congress that if a provider actually uses a machine most of the time, "its cost is spread across more units of service, resulting in a lower cost per service than if it were operated half the time." The Commission concluded that CMS overvalues imaging equipment.

Kuhn also cites DRA mandates that prevent CMS from offsetting the savings from the multiple imaging payment reduction policy for 2006 and 2007 by increasing payments for other services payable under the physician fee schedule in 2007. The DRA also "establishes caps on physician fee schedule payments for certain imaging services at the payment levels established in Medicare's hospital outpatient prospective payment system (OPPS)," he testified. The policy, which will take effect in 2007, applies only to imaging services' technical components, and Medicare will pay the professional component--a physician's interpretation of the test--with a separate fee.

"We are still working on the proposed rules for 2007 for both OPPS and the physician fee schedule," Kuhn says. "We will implement the DRA provisions through notice and comment rulemaking," and the notices of proposed rulemaking for the physician fee schedule and OPPS will come out this summer, he adds. He also told the subcommittee that CMS would publish final rules this fall, which would be effective for physicians' services on or after Jan. 1, 2007.

To read a transcript of Kuhn's testimony before the subcommittee, go to www.cms.hhs.gov/apps/media/press/testimony.asp?Counter=1903.

Lawsuit Follows New Medicaid Citizenship Documentation Rule

A federal district court judge has expedited a class action lawsuit against the new Medicaid citizenship documentation rule, which became effective on July 1. And despite CMS' recent revisions to the new law, consumer groups are pushing forward with their battle against the law, claiming that it will jeopardize health care access for millions of people.

The interim final regulations regarding the new citizenship documentation requirements for Medicaid coverage went on display on the July 12 Federal Register. Pursuant to the DRA, the rule requires all persons applying for Medicaid and the 50 million current Medicaid beneficiaries to provide documentation of their citizenship, such as birth certificates or U.S. passports. "Current beneficiaries should not lose benefits during the period in which they are undertaking a good-faith effort to provide documentation to the state," CMS noted in a recent fact sheet.

But CMS revised the regs to exclude seniors and people with disabilities who already receive Medicare or Supplemental Security Income coverage and have met certain documentation requirements. "For all other individuals, in addition to the range of documents outlined in the regulation, states can also document citizenship and identify through data matches with government agencies," CMS says.

Pitfall: Although using computerized matches of state vital records databases will help ease documentation burdens for many people who don't have paper documents to prove their citizenship, this will help only individuals who reside in the state where they were born, according to a July 13 report from the Center on Budget and Policy Priorities (CBPP). "There are no interstate vital records databases yet, so automated checks of births in other states are not yet feasible," CBPP explains.

Between 1.2 and 2.3 million native-born adults and children "may have serious problems getting or retaining their Medicaid coverage because they lack a birth certificate or passport and their citizenship cannot be ascertained through a cross-match with vital records data," CBPP claims. And 750,000 disabled people will still need to provide documentation under the regs. These individuals could have "serious delays in receiving Medicaid coverage because of the additional time, effort and expense imposed," and because the regs don't allow states to provide coverage to applicants while they're trying to obtain the documents, the Center says. CBPP says its estimates are "conservative."

Other organizations, like Families USA, also have their concerns about the new requirements. So concerned, in fact, that a class action lawsuit, which names Health and Human Services secretary Mike Leavitt as the defendant, is pending in a Chicago federal district court. The judge put forth an expedited schedule for the suit, and "factual discovery proceedings may begin this Monday, July 10," Families USA said in a recent statement. The consumer organization is helping plaintiffs' attorneys with the suit, which seeks to declare the law unconstitutional, and is working hard to persuade CMS to repeal the law, according to the statement.

To view the final interim rule, go to http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/06-6033.pdf. CMS is accepting comments on the rule until Aug. 11.

For more data from CBPP, go to www.cbpp.org/7-13-06health2.htm.

For more information on the lawsuit, go to www.familiesusa.org/resources/newsroom/press-releases/suit-challenges-new-law.html.

National Hospice Provider Pays Out $12.9 Million For Medicare Fraud

One major hospice provider allegedly tried to pull the proverbial wool over Medicare's eyes--and now it's paying a hefty price.

Dallas-based national hospice provider, Odyssey HealthCare, has paid the federal government $12.9 million to settle false claims allegations, according to the Department of Justice's (DOJ) July 13 announcement. From 2001 to 2005, Odyssey purportedly billed Medicare for services the provider rendered to hospice patients who were not actually terminally ill and not eligible for the Medicare hospice benefit, the DOJ says. Odyssey also entered into a Corporate Integrity Agreement with the HHS Office of Inspector General.

The settlement included charges from a whistleblower lawsuit that Odyssey's former regional vice president, JoAnne Russell, filed under the False Claims Act. Russell will receive more than $2.3 million from the settlement, the DOJ reports.

In Other News...

--New guidance instructs surveyors doing annual surveys to "verify correction of current noncompliance" as they would on a revisit. The surveyors will use a variety of methods to determine whether a nursing facility corrected the past problem and has prevented it from recurring.

--If your home health agency is accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), you should test your emergency generator at least once every 36 months for at least four continuous hours.

That new requirement, contained in Revised Standard EC.7.40, is in addition to the current requirement to test emergency generators 12 times each year for 30 continuous minutes, JCAHO says in its Online Bulletin.

The new requirement is effective Jan. 1, 2007, and you must perform the test by July 1, 2007, to be in initial compliance, the Oakbrook Terrace, IL-based accrediting body instructs.

--Medicare Part B premiums will hit almost $100 next year, CMS head Mark McClellan said July 11, according to the Cleveland Plain Dealer. And the 11-percent increase to $98.40 doesn't include any costs of rescuing physicians from next year's slated 5.1-percent payment cut, McClellan added.

--Contractor medical review staff should send you a letter notifying you of the results of postpayment medical review, CMS instructs in Transmittal 149, dated June 30. This letter should include beneficiary information, unless the contractor is aware that you're no longer occupying a physical address.

--The interest rate for Medicare overpayments and underpayments has gone up to 12.625 percent, CMS says in July 12 Transmittal 101.