WASHINGTON WIRE
July 18, 2008
Issue 177
Medicare Bill Halts Physician Cuts and DME Competitive Bidding, Restarts Therapy Exceptions Process
Inpatient Hospitals Responsible for Most ‘Improper’ Medicare Payments, CMS Reports
CMS’s Quality Reporting Initiative Pays Physicians Bonuses Topping $36 Million
Sens. Harkin, Specter Propose $5 Billion Boost of NIH Budget
Hearings
Top Story
Medicare Bill Halts Physician Cuts and DME Competitive Bidding, Restarts Therapy Exceptions Process
On Tuesday evening, the Medicare Improvements for Patients and Providers Act of 2008, H.R. 6331, became law when the House and Senate voted (383-41 and 70-26, respectively) to override President Bush's earlier veto of the bill. The bill replaces the impending 10.6% fee cut for physicians with a 0.5% update, retroactive to July 1, 2008 and for the remainder of 2008, and replaces an over 5% cut with a 1.1% update for all of 2009.
Physicians, non-physician practitioners and other providers of services paid under the MPFS should begin to receive payment at the 0.5 % update rates in approximately 10 business days, or less. Medicare contractors are currently working to update their payment system with the new rates. In the meantime, to avoid a disruption to the payment of claims, Medicare contractors will continue to process the claims that have been on hold on a rolling basis (first in/first out) for payment at the -10.6% update level. After local contractors begins to pay claims at the new 0.5% rate, to the extent possible, the contractor will begin to automatically reprocess any claims paid at the lower rates.
In addition, the law reinstated the exceptions process for limits on therapy services as of July 1. To the extent possible, claims paid at the lower rate will be reprocessed automatically as well.
A controversial durable medical equipment (DME) competitive bidding program that was set to take effect July 1 was also delayed by the new Medicare bill until 2009. The new law terminated contracts that the government awarded to 325 suppliers earlier this year under the first bidding round in 10 metropolitan statistical areas (MSAs), which included Dallas, Miami, Cleveland, and Orlando, Fla. The program began in those areas on July 1.
The law delayed the program for 18 months, and made various revisions to the bidding procedures. Under the new law, the bidding process will begin again for the first round MSAs in 2009 and the second round in 2011. The original DME payment rates in effect prior to July 1 are to be reinstated retroactively. A 9.5 percent reduction in rates nationwide will begin in 2009 for those items subject to bidding in round one.
The Centers for Medicare and Medicaid services (CMS) said that information on payment rates and claims processing "will be communicated to DME suppliers in the coming days" and that beneficiaries in the 10 competitive bidding areas will be notified of this change directly in a letter within two weeks.
Health Care News
Inpatient Hospitals Responsible for Most 'Improper' Medicare Payments, CMS Reports
CMS announced this week that the three-year recovery audit contractor (RAC) demonstration project, designed to identify overpayments to Medicare providers, returned nearly $700 million in improper Medicare payments between 2005 and March 2008. The returns took into account the dollars repaid to health care providers, the money overturned on appeal, and the costs of operating the demonstration program. It did not, however, take into account the extensive resources necessary for providers to challenge these claims denials.
The Medicare Recovery Audit Contractor Program: An Evaluation of the 3-Year Demonstration found that the RACs pinpointed over $1.03 billion in improper payments. About 96 percent ($992.7 million) were overpayments made to providers and 4 percent ($37.8 million) were underpayments.
Inpatient hospitals were responsible for 85 percent of the overpayments collected by special contractors assigned to find overpayments and underpayments during a CMS pilot program. In addition to these facilities, 6 percent was collected from inpatient rehabilitation facilities, and 4 percent from outpatient hospital providers.
Separately, citing constituent complaints, five Democratic House Chairmen and Members July 11 asked the Government Accountability Office to study the RAC program. Their letter to GAO requesting the study raised concerns about inconsistent communications, unqualified contractor personnel and inconsistent review practices.
The report is available at http://www.cms.hhs.gov/RAC/Downloads/RAC_Demonstration_Evaluation_Report.pdf.
CMS's Quality Reporting Initiative Pays Physicians Bonuses Topping $36 Million
More than $36 million in bonus payments was awarded to more than 56,700 health professionals who satisfactorily reported quality information to Medicare under the 2007 Physician Quality Reporting Initiative (PQRI), the Centers for Medicare & Medicaid Services announced July 15.
Payments should be received no later than August 2008 by physicians, physician group practices, and other PQRI eligible professionals. The average incentive amount for individual professionals was more than $600 and the average incentive payment for a physician group practice was more than $4,700.
Under a law passed by Congress in late 2006, physicians and other eligible professionals could receive bonus payments of up to 1.5 percent of their total Medicare charges, subject to a cap, by satisfactorily and voluntarily submitting quality information for services rendered between July and December 2007.
Sens. Harkin, Specter Propose $5 Billion Boost of NIH Budget
Senate health appropriators are seeking an additional $5.2 billion for the National Institutes of Health for fiscal year 2008, which ends Oct. 1. Sens. Tom Harkin (D-Iowa) and Arlen Specter (R-Pa.), chairman and ranking member, respectively, of the labor-health subcommittee on the Senate Appropriations Committee, introduced a supplemental bill (S. 3272) July 16 to provide the additional funds: $1.2 billion to the National Cancer Institute and another $4 billion to other NIH institutes. It is the boldest funding proposal for NIH since Congress and the White House completed a five-year doubling of the NIH budget in 2003, but with legislators unable to agree on most federal budget issues this year, it is unclear how likely this proposal is to pass.
Upcoming Events
Hearings
Tuesday, July 22, 2008
Fiscal 2008 Appropriations: Second Supplemental
Senate Appropriations Committee
Time TBA, Location TBA
Implementation of the Army Medical Action Plan
House Armed Services - Subcommittee on Military Personnel
2 p.m., 2212 Rayburn Bldg.
Wednesday, July 23, 2008
Childhood Obesity
Senate Health, Education, Labor and Pensions - Subcommittee on Children and Families
2:30 a.m., 430 Dirksen Bldg.
Childhood Obesity
Senate Health, Education, Labor and Pensions - Subcommittee on Children and Families
2:30 p.m., 430 Dirksen Bldg.
Thursday, July 24, 2008
Health Information Technology
House Ways and Means - Subcommittee on Health
10 a.m., 1100 Longworth Bldg.
Medicare Drug Benefit
House Oversight and Government Reform Committee
10 a.m., 2154 Rayburn Bldg.
Childhood Obesity
House Education and Labor Committee
10 a.m., 2175 Rayburn Bldg.
Long-Term Care Insurance
House Energy and Commerce - Subcommittee on Oversight and Investigations
10 a.m., 2123 Rayburn Bldg.
For More Information
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