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Medicare Compliance & Reimbursement

REIMBURSEMENT:

Top 10 Payment Changes In The New Deficit Reduction Act

Published on Thu Feb 02, 2006

Medicare providers get to start the 2006 claims year all over again.

The intense Congressional volley that prolonged the budget reconciliation bill's enactment is over, and the new Deficit Reduction Act's rollout has begun. But providers awaiting their claims adjustment checks could still have a long wait ahead.

The DRA's new provisions have many providers breathing a small sigh of relief. The American Academy of Family Physicians applauds the Centers for Medicare & Medicaid Services for agreeing to restore physicians' Medicare payments retroactively, but notes that the tug-of-war between the agency and physicians cannot continue. "[W]e cannot go on year after year with this battle. We can't be satisfied with breaking even or a small percent increase each year," AAFP president Larry Fields pleads in a statement. "Congress needs to fulfill its obligation to fix this problem so that our patients have access to quality care. Until Congress acts, they are putting their constituents and our patients at risk."

Key Payment Changes Begin Immediately

The DRA makes many changes and adjustments to Medicare reimbursements and rental agreements, all of which stand to relieve some providers and benes--and frustrate others. Watch out for these key payment changes that are now in effect.

1. Physician payments. The DRA reverses the 4.4-percent physician payment reduction that went into effect Jan. 1, 2006. Medicare contractors began paying new claims without the 4.4-percent reduction within two days of the DRA's passing.

Contractors will reprocess January claims that they already filed and issue payment adjustments by July 1, 2006. Contractors will make one or more aggregate payments by that time, rather than reprocessing reimbursements on a claim-by-claim basis. Most Medigap plans and secondary insurers will also be able to reprocess claims automatically, but some secondary insurers may require resubmission.

CMS recognizes that the physician payment changes may affect providers' decisions to participate in Medicare. Providers have a 45-day window from Feb. 15 through March 31 to reconsider their Medicare participation for the 2006 plan year. Participation changes will be retroactive to Jan. 1, 2006.

2. Claims payments. The act extends the minimum number of days Medicare has to pay non-electronic claims from 27 days to 29 days.

3. Outpatient therapy payments. The act requires CMS to establish an exceptions process that permits payments for outpatient therapy services to exceed payment caps when those services are "medically justified." Two separate $1,740 payment caps went into effect Jan. 1, for occupational therapy services and for combined services relating to physical therapy and speech-language pathology. Look for more information about the exceptions process in next week's issue of MLR.

4. SNF bad debt payments. The DRA reduces Medicare bad debt reimbursements to skilled nursing facilities to 70 percent of benes' unpaid coinsurance (with the exception of dual eligible benes). CMS will revise its cost reporting instructions and issue new instructions through a series of program transmittals starting in mid-February.

5. Home health agencies. The act reestablishes the 5-percent add-on payment for home health services that expired April 1, 2005. The add-on payment helps to improve access to benes in rural areas. Contractors began processing payments at the new levels within two days of the Act. Prior claims will undergo reprocessing by July 1, 2006.

In addition, HHA payments will reflect the 2005 rates for services on or after Jan. 1, 2006, based on the Medicare Payment Advisory Commission's recommendation. CMS will recoup claims payments it has already processed at the 2.8-percent increase that went into effect Jan. 1, 2006. Because Medicare makes HHA payments based on 60-day episodes of care, CMS is confident that the change will affect few existing claims. Contractors began making payments within two days of the act and will complete reprocessing by July 1, 2006.

6. ESRD facilities. Increases to the base composite rate for payments to end-stage renal disease facilities will go into effect retroactively to Jan. 1. Contractors began processing claims at the new rate within two days of the act. They will reprocess prior claims by July 1, 2006.

7. Rural hospitals' hold harmless payments. The DRA reinstates hold harmless payments that expired Dec. 31, 2005, for about 230 small rural hospitals' outpatient services. Reinstatement is effective retroactively to Jan. 1, 2006, but CMS is still developing a way to reinstate payments that contractors already reduced.

8. DME capped rentals. The act changes the rental period for new durable medical equipment rentals from 15 months to 13 months beginning Jan. 1. In addition, after the rental period, the title transfers from the supplier to the bene, instead of remaining with the supplier. Medicare will continue paying for "reasonable and necessary service and maintenance" after the rental period ends and the bene assumes ownership.

The act also applies a new 36-month cap to oxygen equipment rentals beginning Jan. 1. The 36-month rental period begins Jan. 1 for benes who began renting equipment prior to Jan. 1.

After the rental period, the title transfers from the supplier to the bene. Medicare will continue paying for "reasonable and necessary service and maintenance" after the rental period ends and the bene assumes ownership. Medicare will also pay for gaseous and liquid oxygen contents for benes using stationary or portable oxygen tanks and cylinders after the bene assumes ownership.

9. FQHC diabetes and renal disease therapy. Medicare will pay for diabetes self-management training and medical nutrition therapy that federally qualified health centers provide to benes with diabetes or renal disease. The act expands the definition of FQHCs to include Health Care for the Homeless grantees.

10. Specialty hospitals. The DRA continues CMS' enrollment suspension for new specialty hospitals. CMS will develop a strategic plan that analyzes specialty hospital investments and provision of care to Medicaid patients, patients receiving medical assistance through a state demonstration project and patients receiving charity care. The enrollment suspension period for specialty hospitals extends for six months following the act or the date CMS releases its final report, whichever is earlier.

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