Physician Fee Schedule Cut Still on Table

Washington Report –November, 2005

Bill Finerfrock Capitol Associates

Physician Fee Schedule Cut still on Table

Despite broad, bi-partisan support for preventing the projected 4.4% reduction in the physician fee schedule from taking effect, Congress is struggling to pass the legislation necessary to accomplish that objective.

As previously reported, the Senate passed legislation in late November to repeal the cut and give physicians a 1% increase in fee schedule payments for 2006. This was done as part of the Budget Reconciliation legislation and would result in an increase in Medicare costs in excess of $7 Billion. Because similar language was not included in the House passed version of the budget bill, the issue was a “conferenceable” item. In other words, it was open to negotiations between the House and Senate.

During the week of December 13th, House and Senate negotiators came to an agreement that would repeal the cut but instead of giving a 1% increase as proposed by the Senate, the final version of the budget bill froze physician payments for one year. In addition, the Congress directed the Medicare Payment Advisory Commission (MedPAC) to study the issue further and make recommendations to Congress on how to fix the fee schedule problem over the long-term. That report is to be submitted to Congress by March 1, 2007.

The House-Senate Conference report ran into considerable opposition in both the House and Senate when it came up for consideration. On the vote on final passage, the Conference Report on the budget bill passed 212 – 206. Many Members were absent from the vote but the bill only needed a majority of those in attendance and voting. The bill’s support in the Senate was even more tenuous.

As the Senate leadership began conducting it’s survey of Senators and how they would vote, it became clear that there was a very good chance the vote on final passage of the Budget Conference agreement could end in a tie. In the event a vote in the Senate ends in a tie, the Vice President is authorized to cast a tie-breaking vote. Although the Vice President is nominally the “President of the Senate”, the only time the VP actually gets to cast a vote is in the event of a tie. As anticipated, the vote on final passage of the budget bill did end in a 50-50 tie (one Senator was literally taken from his hospital bed to the floor to cast his vote) and the Vice President cast the tie-breaking vote in favor of final passage.

Prior to final passage of the budget bill, Senator Kent Conrad (D-ND) raised a point of order against the bill arguing that the bill, as presented to the Senate, violated the so-called Byrd Rule. Essentially, the Byrd Rule stipulates that all provisions included in a budget bill must either raise spending, reduce spending, raise taxes or reduce taxes. If there is language in the bill that does none of these things, it is subject to removal. A determination of whether a provision violates the Byrd Rule is made by the Parliamentarian. In this case, the Parliamentarian ruled that there were three provisions in the 700+ page bill that had no monetary significance and should not have been included in the bill.

While the Senate can override a ruling of the Parliamentarian, in the case of a Byrd Rule budget related matter, it requires 3/5 of the Senate (60 votes) to override this type of point of order. The Senate leadership was not able to muster the 60 votes and the Parliamentarian’s ruling stood.

Legislatively, this meant that the Senate had to remove the offending provisions from the bill. More importantly, it meant that the Senate bill was now different from the version previously passed by the House. Because you cannot send a bill to the President that has not been passed in IDENTICAL form by both the House and Senate, the bill had to go back to the House for reconsideration.

Unfortunately, by the time the Senate had acted, the House had, for all intents and purposes, adjourned for the year. While a “Pro Forma” session was scheduled for Thursday, December 22, it would take Unanimous Consent to put the revised legislation on the House calendar and move the budget bill. The House Democratic Leadership announced that it would object to a reconsideration of the budget bill under a UC agreement.

At press time it was not clear whether the Speaker of the House would seek to reconvene the House prior to its scheduled reconvening on January 31, 2006, or simply wait until the end of January to take up the revised budget bill.

Congress Rejects Effort to Delay/Repeal Therapy Cap

For several years, the Congress and CMS have been attempting to adopt a financial cap on therapy services provided to Medicare beneficiaries. Despite seemingly strong, bi-partisan support in Congress for repealing the cap, the final budget agreement did not prevent the cap from going into effect. Instead, Congress authorized a beneficiary appeal process in which an individual could seek to have additional payments for medically necessary therapy services. The legislation directs the Secretary of Health and Human Services to develop an appeals process and also stipulates that if the appeal is not rejected within14 days, the Secretary is presumed to have approved the appeal.

Because the budget legislation has not been passed, the Therapy Cap goes into effect on January 1 and there is no process for obtaining a patient specific waiver of the cap.

How the Government “Saves” Money

In the past, I’ve talked about how anytime Congress makes a change in the Medicare law that will result in higher than projected expenditures, it must make a corresponding cut in the Medicare program to offset that increase.

For example, in order for Congress to repeal the projected physician fee schedule cut, which costs approximately $7 Billion in additional Medicare expenditures, Congress must find $7 Billion in corresponding “savings” in order to keep the overall Medicare budget unchanged.

In some cases, these offsets can be significant changes in policy, for example cutting Medicare “bad debt” payments to nursing homes or phasing out risk-adjustment payments to Medicare Advantage plans. But sometimes, the Congress will use a budget gimmick to achieve “savings”. This year’s budget bill proposed an interesting change that should be of particular interest to physician’s a billing companies.

Buried in the budget bill is a section entitled, “Timeframe for Part A and B Payments”. I removed a lot of the legal references and what follows is the relevant language:

…any payment for claims submitted under Part A or B of title XVIII (Medicare) of such Act for items and services furnished under such Part A or Part B, respectively that would otherwise be payable during the period beginning on September 22, 2006, and ending on September 30, 2006, shall be paid on the first business day of October, 2006, and no interest or late penalty shall be paid to an entity or individual for any delay in a payment by reason of the application of this paragraph.

What this means is that if the budget bill passes with the above language, the Carriers and Intermediaries will be directed to hold the payment of all claims payable that last week of September and pay them the 1st of October. The significance of this is that the Federal Budget operates on a October 1 – September 30 Fiscal Year. Consequently by holding the payments and moving them to FY ’07, the Congress can claim to have “saved” several Hundred Million dollars in FY ’06.

So on behalf of the taxpayers of America, I want to thank the health care providers in America for being willing to give the government an interest free loan on money they are rightfully owed by the Federal government.

Physician Fee Schedule Update Not Only thing Held Up in Budget Bill

While the repeal of the projected cut in the physician fee schedule garnered much of the medical community’s attention, it was not the only significant change included in the budget bill.

For the Medicare Part B program, there were some rather significant changes. These are highlighted below:

 Medicare patients would have to purchase, rather than rent, certain DME equipment. Included in the rent/purchase arrangements would be power wheelchairs, oxygen equipment;  Payments for Imaging Services would be adjusted to reflect a recent change in Medicare payment policy for imaging procedures performed on contiguous body parts;  Limits on payments for procedures in Ambulatory Surgical Settings;  Coverage of Ultrasound screening for patients suspected of an abdominal aortic aneurysm;  Waiver of the Medicare deductible for colorectal cancer screening tests;

Again, none of these changes would become law until Congress passes and the President signs the budget bill. CMS Issues Final Rule on Electronic Claims Submissions

On November 25, the Centers for Medicare and Medicaid Services published the final rule governing electronic submission of Medicare claims. These new rules are effective for claims submitted after December 27, 2005. Publication of the final rule effectively ends the so-called “contingency” phase under which the rule has operated since being published as an “interim-final” rule in August, 2003.

According to the final rule, “Approximately 86.1 percent of claims submitted to the Medicare Program are submitted electronically, which means that approximately 139 million claims are submitted on paper per year (fiscal year (FY) 2002).” Therefore, while substantial progress has been made in getting providers to submit electronic claims since the issuance of the original rule in 2003, CMS continues to process a significant number of paper claims.

This final rule is largely a restatement of the interim final rule originally published in 2003, which has been on the books but not heavily enforced.

The rules provide for two exceptions to the electronic claims requirement:

1. Unusual Causes 2. Small providers

Unusual Causes

A service interruption in the mode of submitting the electronic claim that is outside of the control of the entity submitting the claim, for the period of the interruption. This exception would apply only if the physician, practitioner, facility, supplier, or other health care provider temporarily loses electricity, or telephone or other communication service. If electricity, telephone, or other communication services exist, but one or the other is unavailable for a period of time (for example, because of inclement weather or due to telephone company technical breakdowns), paper claims will be accepted during the period of disrupted power or communication service.

The final rule adds two new examples of “unusual causes”. These would be:

“…the requirement to submit electronic claims may be waived when the entity submitting the claim (1) submits, on average, less than 10 claims per month, or (2) furnishes services only outside of the U.S. territory.”

These are not the only “unusual causes”. If you want to view other circumstances that come under the unsual causes section, please review the rule (link below).

Small Providers

The final rule provides a rather extensive description of some of the issues surrounding the small provider exception and if you think this may apply or need additional information, I would encourage you to review the final rule. It should be noted that entities that fail to submit claims electronically or situations where one of the exceptions applies, are, “subject to claim denials, overpayment recoveries, and applicable interest on overpayments.”

To review the rule, you can go to: http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/05-23080.htm

No Action on Association Health Plans Legislation

Congress adjourned for the year without taking any final action on the Association Health Plan legislation that would allow organizations, such as HBMA, to offer a health insurance plan to member companies and their employees. Opposition to the AHP concept continues to come from some health plans, such as Blue-Cross/Blue Shield. In addition, some health professional groups oppose AHPs because it would circumvent state mandatory coverage laws. For example, many state laws mandate that insurers in that state cover Chiropractic services. Under most AHP proposals, those state mandates would be waived. Chiropractors, and some other health professionals, are concerned that legislative victories they have achieved at the state level could be effectively overturned under and AHP arrangement.

AHP legislation remains on the Congressional agenda and could see movement in 2006.

OIG Toots Own Horn

According to a press release issued by the HHS Inspector General’s office, the agencies efforts over the past year have resulted in a savings of more than $35 Billion during Fiscal Year 2005. However, of that amount, only $1.2 Billion is related to the agency’s auditing work. The bulk of the savings, $32.6 Billion, the agency claims as a result of “implemented recommendations to put funds to better use”.

The press release also notes that more than 3,000 individuals and entities have been excluded from participation in federal programs for committing fraud and abuse. Of the 3,000 exclusions, 537 have resulted in criminal actions and 262 civil actions.

To review the OIG’s semiannual report and read in great detail a report on their activities, go to: http://oig.hhs.gov/publications/docs/seminannual/2005/SemiannualFall05.pdf

Medicare Contractor Reform Moves Ahead

The Centers for Medicare and Medicaid Services continues to proceed with plans for major reforms of the Contractor process. During 2006, the agency plans to award the first Medicare Administrative Contractor (MAC) contract. This will cover both Part A and Part B claims submissions in the states of Arizona, Utah, Wyoming, Montana, North Dakota and South Dakota. The contract will also include most specialty claims (i.e. DME, Rural Health Clinic, Federally Qualified Health Center claims for that region). At the present time, SNF and Home Health Claims would continue to be processed through specialty contractors hired to specifically handle those types of claims. To view more about CMS contractor reforms, go to: http://new.cms.hhs.gov/MedicareContractingReform/01_Overview.asp#TopOfPage

Medicare Wants to Know

As part of the contractor reform process, CMS is attempting to learn more about provider satisfaction with the current contractors. Beginning in early January, CMS intends to conduct a survey of approximately 25,000 Medicare providers. The providers invited to participate in the survey will be randomly selected and the survey is being conducted by an independent outside contractor, not CMS, Carrier or Fiscal Intermediary staff. You are encouraged to make your clients aware of this survey and offer to assist them in completing the survey as you may be in a better position to assess Medicare contractor work.

According to CMS, the Medicare Contractor Provider Satisfaction Survey (MCPSS) is designed to garner quantifiable data on provider satisfaction with the performance of Medicare Fee-for-Service (FFS) Contractors.

The MCPSS is one of the tools CMS will use to measure provider satisfaction levels, a requirement of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA).

CMS intends to use the survey to gauge provider satisfaction with key services performed by the 42 Contractors that process and pay the more than $280 billion in Medicare claims each year. CMS will use the results of the survey to improve its oversight and increase the efficiency of administration of the Medicare program.

The CMS website describing this initiative indicated that there are 3 main goals:

1. Satisfy the MMA requirement to measure provider satisfaction levels; 2. Provide feedback from providers to Contractors so they may implement process improvement initiatives; and 3. Establish a uniform measure of provider satisfaction with Contractor performance.

The survey will include all Medicare FFS Contractors, including Fiscal Intermediaries (FIs), Carriers, Durable Medical Equipment Regional Carriers (DMERCs), and Regional Home Health Intermediaries (RHHIs).

HHS Extends Deadline for Electronic Attachment Rule Comments

The Department of Health and Human Services (HHS) announced on November 22 that it was extending the public comment period for the proposed standards for electronic health care claims attachments.

The proposed rule was published in late September and all comments were supposed to be submitted to the agency by late November. However, due to the complexity of the rule, CMS staff decided to give the public more time to analyze the proposal and submit their comments.

The new deadline for public comments is January 23, 2006

To review the proposed standards, go to: http://a257.g.akamaitech.net/7/257/2422/01jan20051800/edocket.access.gpo.gov/2005/05-18927.htm

HBMA members and staff have reviewed the proposed standards and are preparing comments on behalf of the Association. Individual HBMA members are encouraged to review the standards and consider submitting their own comments in response to this proposal.

Imaging Payments Face Cuts

As part of the 2006 changes in the Medicare Fee Schedule, CMS proposed to make reductions in imaging payments for 2nd and 3rd images performed at the same time on “contiguous body parts”. Under the original proposal, the second concurrent image would be paid at 50% of the fee schedule amount and the third at 25% of the fee schedule amount. The plan was proposed for full implementation in 2006.

Under the final rule, CMS has modified implementation but still plans to move ahead with the cuts.

In announcing the final rule, CMS stated the following:

“To allow for a transition of the changes in payments for these services attributable to this reduction policy, and provide a further opportunity for comment, we have decided to phase-in the policy over 2 years. We will implement a 25 percent payment reduction in CY 2006 and a 50 percent reduction for all 11 families in CY 2007 for all code families, unless we find upon further review during the upcoming year that modifications to this policy are appropriate. To enhance our review, we are soliciting, from providers of diagnostic imaging services, comprehensive data regarding the efficiencies associated with different combinations of imaging services in the 11 families. We welcome the opportunity to have other discussions with the physician community on these issues.”

The budget bill still being considered by Congress endorses the reduction in imaging payments proposed by CMS.

Senate Supports Greater use of Health IT

On November 18, the Senate passed legislation encouraging greater use of technology in the health sector. The Wired For Health Care Quality Act was passed by unanimous consent and enjoyed strong bi-partisan support. According to Senator Mike Enzi (R-WY), the bill’s sponsor, the legislation, “…brings us closer to enabling all Americans the freedom and security of going to the doctor’s office or hospital and presenting an electronic card or identification tag that holds all patient data, insurance and medical history records.” The bill encourage private sector involvement by adopting the standard setting processes outlined in the American Health Information Collaborative. It also will establish grants to help leverage the federal government’s investment in healthcare by targeting financial resources to providers who need help to get on line.

Similar legislation has been introduced in the House and it is possible that legislation could make its way to the President’s desk in 2006.

CMS Program Transmittals for November/December

The following program transmittals were issued by the Centers for Medicare and Medicaid Servics between November 1 and December 19.

CMS uses transmittals to communicate new or changed policies or procedures that we will incorporate into the CMS Online Manual System. The cover or transmittal page summarizes and specifies the changes.

Transmittal # Subject Implementation Date Appeals of Claims Decisions: Redeterminations and Reconsiderations (Implementation Dates for FI Initial R677CP N/A Determinations Issued on or After May 1, 2005 and Carrier Initial Determinations Issued on or After January 1, 2006) Appeals of Claims Decisions: Redeterminations and Reconsiderations (Implementation Dates for All Requests for R678CP Redetermination Received by FIs on or After N/A May 1, 2005, And All Requests for Redetermination Received by Carriers on or After January 1, 2006) Key Medicare News for 2006 for Physicians SE0543 N/A and Other Health Care Professionals New Educational Products Available on SE0559 Medicare Prescription Drug Coverage - The N/A Eighth in the Medlearn Matters Series Temporary Hold of Claims with HCPCS Codes G0369 or G0370 Received on or after October SE0564 N/A 1, 2005, from Maryland Hospitals and Non- OPPS Hospitals and Dialysis Facilities SE0565 MMA - The Centers for Medicare & N/A Medicaid Services (CMS) Recovery Audit Contract (RAC) Initiative Important Information about Medicare Coverage of Drugs under Part B and the New Medicare Prescription Drug Coverage(Part D), SE0570 N/A and Vaccines Administered in a Physician's Office - The Ninth in the Medlearn Matters Series on the New Prescription Drug Plans Important Message to Nursing Home Administrators About Medicare Prescription SE0575 N/A Drug Coverage - The Tenth in a Series in the Medlearn Matters Series MMA Sunset of the Provider Nomination SE0582 Provision and the Policy to Assign Providers to N/A the Local Fiscal Intermediary (FI) Influenza/Flu Season and Available Resources SE0580 N/A for Providers Hurricanes Katrina and Rita-Transportation of SE0579 N/A Evacuees with Medical Needs Providing Medicare with Data for Certain SE0578 N/A Implantable Cardioverter Defibrillators (ICDs) Appeals of Claims Decisions: Redeterminations and Reconsiderations (Implementation Dates for All Requests for R688CP Redetermination Received by FIs on or After N/A May 1, 2005, And All Requests for Redetermination Received by Carriers on or After January 1, 2006) Calendar Year 2005 Payment for Medicare R738CP Part B Radiopharmaceuticals Not Paid on a 12/05/2005 Cost or Prospective Payment Basis Revised October 2005 Quarterly Average Sales R729CP Price (ASP) Medicare Part B Drug Pricing 11/28/2005 File, Effective October 1, 2005 Payment Allowances for the Influenza Virus Vaccine (CPT 90655, 90656, 90657, and R185OTN 90658) and the Pneumoccocal Vaccine (CPT 11/21/2005 90732) when Payment is Based on 95 Percent of the Average Wholesale Price (AWP) New G Code for Power Mobility Devices R748CP 10/25/2005 (PMDs) Enrolling Indian Health Service (IHS) Facilities as Durable Medical Equipment, R133PI 04/03/2006 Prosthetics, Orthotics and Supplies (DMEPOS) Suppliers National Monitoring Policy for EPO and R751CP Aranesp for End Stage Renal Disease (ESRD) 04/03/2006 Patients Treated in Renal Dialysis Facilities R741CP New Condition Codes 49 and 50 04/03/2006 Change to the Common Working File (CWF) Skilled Nursing Facility (SNF) Consolidated R740CP Billing (CB) Edits for Evaluation and 04/03/2006 Management (E&M) Services Billed to Fiscal Intermediaries (FIs) by Hospitals Redefined Type of Bill (TOB), 14x, for Non- R734CP 04/03/2006 Patient Laboratory Specimens New ICD-9-CM Codes for Beneficiaries with R737CP Chronic Kidney Disease and new HCPCS for 04/03/2006 reporting Epoetin Alfa and Darbepoetin Alfa Smoking and Tobacco-Use Cessation R726CP Counseling Services: Common Working File 04/03/2006 (CWF) Inquiry for Providers Clarification and Update to Hospital Billing Instructions and Payment for Epoetin Alfa R719CP (EPO) and Darbepoetin Alfa (Aranesp) for 04/03/2006 Beneficiaries with End Stage Renal Disease (ESRD) Modifiers for Transportation of Portable X- R716CP rays (R0075) When Billed by Skilled Nursing 04/03/2006 Facilities (SNFs) Payment Window Edit Corrections within the R714CP 04/03/2006 Common Working File (CWF) R768CP Lung Volume Reduction Surgery 03/02/2006 Medical Review Matching of Electronic R131PI Claims and Additional Documentation in the 02/10/2006 Medical Review Proces Full Replacement of and Rescinding Change R41MSP Request (CR) 3504--Modification to Online 01/21/2006 Medicare Secondary Payer Questionnaire R739CP Erroneous Guidance - Basis to Waive Penalty 01/19/2006 Use of Value Codes 48 and 49 on End Stage R721CP 01/06/2006 Renal Disease (ESRD) Bills R45NCD Stem Cell Transplantation 01/03/2006 Fee Schedule Update for 2006 for Durable R770CP Medical Equipment, Prosthetics, Orthotics, and 01/03/2006 Supplies (DMEPOS) Multiple Procedure Reduction of the Technical SE0587 Component (TC) of Certain Diagnostic 01/03/2006 Imaging Procedures Home Care and Domiciliary Care Visits Codes R775CP 01/03/2006 99324 - 99350) Annual Update of HCPCS Codes Used for R710CP Home Health Consolidated Billing 01/03/2006 Enforcement R766CP Stem Cell Transplantation 01/03/2006 Supplying Fee and Inhalation Drug Dispensing R754CP 01/03/2006 Fee Revisions and Clarifications Changes to the Laboratory National Coverage R758CP Determination (NCD) Edit Software for 01/03/2006 January 2006 R762CP Ambulance Inflation Factor for CY 2006 01/03/2006 Update to the Prospective Payment System R764CP (PPS) for Home Health Agencies for Calendar 01/03/2006 Year (CY) 2006 2006 Annual Update for the Health R708CP Professional Shortage Area (HPSA) Bonus 01/03/2006 Payments Physician's Voluntary Reporting Program R31DEMO 01/03/2006 (PVRP) 2006 Annual Update for Clinical Laboratory R750CP Fee Schedule and Laboratory Services Subject 01/03/2006 to Reasonable Charge Payment Update of HCPCS Codes and File Names, Descriptions and Instructions for Retrieving the R720CP 01/03/2006 2006 ASC HCPCS Deletions, Additions, and Master Listing Quarterly Update to Correct Coding Initiative R742CP 01/03/2006 (CCI) Edits, V12.0, Effective January 1, 2006 Reasonable Charge Update for 2006 for Splints, Casts, Dialysis Supplies, Dialysis R749CP 01/03/2006 Equipment, Certain Intraocular Lenses and Certain HCPCS Coding Issues Remittance Advice Remark Code and Claim R743CP 01/03/2006 Adjustment Reason Code Update Update to Medicare Deductible, Coinsurance R31GI 01/03/2006 and Premium Rates for 2006 Payment for Office or Other Outpatient R731CP Evaluation and Management (E/M ) Visits 01/03/2006 (Codes 99201 - 99215) Coverage by Medicare Advantage (MA) Plans for Implantable Automatic Cardiac R186OTN 01/03/2006 Defibrillator (ICD) Services Not Previously Included in MA Capitation Rate Reasonable Charge Update for 2006 for Splints, Casts, Dialysis Supplies, Dialysis R749CP 01/03/2006 Equipment, Certain Intraocular Lenses and Certain HCPCS Coding Issues Appeals of Claims Decisions: Redeterminations and Reconsiderations (Implementation Dates for FI Initial R724CP 01/01/2006 Determinations Issued on or After May 1, 2005 and Carrier Initial Determinations Issued on or After January 1, 2006).