Medicare Update

Physician Organizations Advocate for Repeal of Medicare Sustainable Growth Rate Formula

2009-12-15T21:02:56-06:00

On December 15, 2009, a number of national physician organizations (including the American Medical Association) and state medical societies sent a letter to Senator Harry Reid stressing the "urgency of establishing a pathway for a permanent repeal of Medicare's sustainable growth rate (SGR) formula."

In the letter, the physician organizations and state medical societies advocate for a permanent repeal of the SGR formula and oppose "any proposal that would implement another short-term, one- or two-year patch to postpone the 2010 Medicare payment cuts."

However, in the interest of patients, they state that they would "support a very short postponement of the imminent cuts for a period of 30-45 days, so that Congress has enough time to pass Medicare physician payment reform legislation that will be signed into law."

In the Final Rule updating the Medicare Physician Fee Schedule (MPFS) for calendar year (CY) 2010, the Centers for Medicare & Medicaid Services (CMS) adopted an update of -21.2 percent.

MPFS rates are updated annually based on a formula that includes the SGR formula. The SGR formula has resulted in negative updates since CY 2002. However, CMS has taken action or Congress has enacted legislation each year to avoid the negative updates.

On October 21, 2009, the U.S. Senate voted 47-53 to defeat a cloture motion for the Medicare Physician Fairness Act of 2009 (S.1776), which would eliminate the 21.2 percent Medicare payment rate reduction for physician services in 2010 and sunset the SGR formula.

However, on November 19, 2009, the U.S. House of Representatives voted 243-183 to pass the Medicare Physician Payment Reform Act of 2009 (H.R.3961), which would repeal the now 21.2 percent Medicare payment rate reduction for physician services in 2010 and restructure the SGR formula.

So, the SGR formula and its impact in 2010 remains unresolved at this time.

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Medicare Fraud Strike Force Efforts Trigger Arrests in 3 States

2009-12-15T13:58:02-06:00

Today, the Department of Health and Human Services (HHS) and Department of Justice (DOJ) announced that 30 individuals in 3 states have been charged for their alleged roles in Medicare fraud schemes to submit more than $61 million in false Medicare claims.

The charges announced today arise from Medicare Fraud Strike Force (Strike Force) operations in Miami, Detroit and Brooklyn. According to a DOJ Press Release, the defendants allegedly participated in various criminal schemes, including conspiracy to defraud the Medicare program, conspiracy to launder money, money laundering, criminal false claims, making false statements and receiving kickbacks.

As part of today's announcement, the HHS and DOJ also announced that the Strike Force is expanding its operations to include Brooklyn, Tampa and Baton Rouge. The Strike Force is already operating in Miami, Los Angeles, Houston and Detroit.

The Strike Force is a multi-agency team of federal, state and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques.

The Strike Force efforts are part of the Health Care Fraud Prevention & Enforcement Action Team (HEAT), which is a joint HHS and DOJ effort to reduce and prevent Medicare fraud.

Since the inception of Strike Force operations (in March 2007), the Strike Force has obtained indictments of more than 400 individuals and organizations (involving more than $1 billion in Medicare claims).

For more information, see the DOJ Press Release.

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Senator Grassley Seeks Action Against Health Care Providers With Tax Delinquencies

2009-12-15T11:24:08-06:00

On December 14, 2009, Senator Charles Grassley wrote the Internal Revenue Service (IRS) requesting information on the collection activities against (and possible criminal investigation of) 90 health care providers with unpaid Federal taxes.

Senator Grassley's request follows a series of reports and testimony from the U.S. Government Accountability Office (GAO) about Medicare and Medicaid providers with unpaid Federal taxes.

The GAO reports and testimony even highlight the results of the audits and investigations of the 90 (above referenced) providers with high tax debts. According to the GAO, much of the unpaid Federal taxes consist of payroll taxes (including taxes used to fund the Medicare program).

Medicare providers and suppliers should also be aware of a little known tax provision, which is intended to address the tax delinquencies of government contractors and could impact their practices.

Specifically, Section 511 of the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) requires that federal, state and local governments temporarily withhold 3 percent of their payments to certain persons providing goods or services. Payments made by the Medicare program to providers and suppliers fall within the withholding requirement.

However, on December 5, 2008, the IRS published a Proposed Rule for the purposes of implementing Section 511 of the TIPRA. The Proposed Rule contains "transition relief," which would exempt certain written contracts in effect on the later of the effective date of Section 511 or the date that is 6 months after the publication of a final rule on the matter (unless a contract is materially modified).

At the time that the Proposed Rule was published, the withholding requirement was to apply to payments made after December 31, 2010. However, the American Recovery and Reinvestment Act of 2009 subsequently extended the effective date to payments made after December 31, 2011.

A number of trade and professional associations that oppose the tax provision have formed the Government Withholding Relief Coalition to work to repeal the 3 percent withholding requirement. Information on the Coalition's efforts and pending legislation that may repeal the withholding requirement can be found here.

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GAO Reports:

CMS Warns Medicare DMEPOS Bidders About Federal Antitrust Violations

2009-12-14T20:53:20-06:00

The Centers for Medicare & Medicaid Services (CMS) has issued a bidder alert (Alert) in conjunction with the Medicare durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive bidding program.

In the Alert, CMS warns bidders and contract suppliers that they must comply with applicable Federal and State laws, including Federal antitrust laws. The Alert even warns that any supplier suspected of violating Federal antitrust laws (by engaging in price fixing, bid rigging or other collusion) will be referred to the Department of Justice for investigation and is subject to having its bid rejected.

Based on the Alert (and its Q&As), it appears that CMS may be concerned that some bidders may be using consulting services that are comparing a supplier's bid with the bid of other suppliers and advising the supplier to submit identical or substantially identical bid prices.

In addition, the Alert reminds suppliers that bidders must certify that their bids are true, accurate and complete and that the bidder understands that any omission, misrepresentation or falsification of information may be punishable by criminal, civil or other administrative actions.

For more detailed information, see the Alert, which can be found here.

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Region A Medicare Recovery Audit Contractor Adds New CMS Approved Audit Issue

2009-12-14T14:10:24-06:00

DCS Healthcare (DCS), the Medicare recovery audit contractor (RAC) for Region A, recently posted a new CMS approved audit issue for automated RAC review on its website.

The new CMS approved audit issue is titled "Clinical Social Worker (CSW) Services" and applies to CSW providers in the states of Massachusetts, Maine, New Hampshire, Rhode Island and Vermont. On the DCS website, the new audit issue is described as:

"CSW services rendered during an inpatient acute care or skilled nursing facility stay are not separately payable under Medicare Part B, instead they are included in the facility's Prospective Payment System (PPS) payment. CSW providers are expected to render services under arrangement with the facility. Therefore, an issue may exist when a beneficiary received CSW services during an inpatient stay, which have been billed and reimbursed under Medicare Part B."

Region A includes Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.

For more information, see the CMS approved audit issues for Region A, which can be found here.

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CMS Actuaries Weigh In on Patient Protection and Affordable Care Act

2009-12-11T13:43:42-06:00

In a December 10, 2009 memorandum, the Centers for Medicare & Medicaid Services' (CMS) Office of the Actuary estimates the financial and coverage effects of the Patient Protection and Affordable Care Act of 2009 (PPACA), as released on November 18 as an amendment in support of a substitute for H.R. 3590.

According to the memorandum, the PPACA would result in an additional 33 million U.S. citizens and other legal residents having health insurance coverage meeting essential benefit requirements by 2019.

The total Federal cost of the national coverage provisions would be about $930 billion during fiscal years 2013-2019 (with total national health expenditures increasing by about $234 billion (or 0.7 percent) during calendar years 2010-2019).

In the memorandum, CMS also estimates that the total net savings in 2010-2019 from the PPACA's Medicare provisions would offset about $493 billion of the Federal costs for the national coverage provisions. However, CMS states that the "longer-term viability of the Medicare update reductions is doubtful." CMS also suggests that the estimated Medicare savings from permanent annual productivity adjustments to price updates for most providers (e.g., hospitals, skilled nursing facilities, and home health agencies) may be unrealistic. In particular, the memorandum states in part:

"While such payment update reductions would provide a strong incentive for providers to maximize efficiency, it is doubtful that many could improve their own productivity to the degree achieved by the economy at large. Over time, a sustained reduction in payment updates, based on productivity expectations that are difficult to attain, would cause Medicare payment rates to grow more slowly than, and in a way that was unrelated to, the providers' costs of furnishing services to beneficiaries. Thus, providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries). Simulations by the Office of the Actuary suggest that roughly 20 percent of Part A providers would become unprofitable within the 10-year projection period as a result of the productivity adjustments. Although this policy could be monitored over time to avoid such an outcome, changes would likely result in smaller actual savings than shown here for these provisions."

For more information, see the December 10, 2009 memorandum.

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GAO Reports on Medicare DMEPOS Competitive Bidding Program

2009-12-11T12:01:44-06:00

The U.S. Government Accountability Office (GAO) recently released a report titled CMS Working to Address Problems from Round 1 of the Durable Medical Equipment Competitive Bidding Program (Report).

In the Report, the GAO reports on various problems with the Round 1 bidding process including poor communication by the Centers for Medicare & Medicaid Services (CMS) and an inadequate bid submission system. The GAO also reveals that, of the 6,374 Round 1 bids by 1,010 suppliers, half were disqualified before competing on price. According to the GAO, the bids were most often disqualified for missing financial documentation or noncompliance with accreditation requirements.

The Report also points out some changes that CMS has made for the Round 1 Rebid including:

Implementing the Medicare Improvements for Patients and Providers Act of 2008 provisions to notify suppliers of missing financial documentation and create a competitive bidding program ombudsman;
Reducing the financial documentation requirements and revising the request for bid instructions to make it more clear and understandable; and
Developing a new electronic bidding submission system.

As part of the Report, the GAO recommends that, if CMS decides to conduct a review of disqualification decisions, CMS should notify all suppliers of any such process, give suppliers equal opportunity for such reviews, and clearly indicate how they can request a review. CMS agreed with the GAO's recommendation.

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Senate Bill Seeks to Establish Bipartisan Task Force to Confront Budget Crisis

2009-12-10T22:13:07-06:00

On December 9, 2009, Senators Kent Conrad and Judd Gregg introduced the Bipartisan Task Force for Responsible Fiscal Action Act of 2009 (S.2853), which is intended to assure the long-term fiscal stability and economic security of the Federal government.

According the a related Press Release and Fact Sheet, S.2653 would establish an 18-member task force. The Task Force would be charged with reviewing projected revenues, expenditures and the long-term actuarial financial condition of the Federal government.

S.2653 would apparently also establish a process for the Task Force's recommendations to move through Congress and become law. In brief, S.2653:

Provides for the Task Force to make recommendations (with legislative text) about spending and revenues to improve the long-term Federal fiscal imbalance.
Requires that 14 of the 18 Task Force members agree to the recommendations for them to get fast-track consideration in Congress.
Requires that the Task Force vote on recommendations immediately after the 2010 elections.
Requires that the Task Force recommendations be introduced as legislation by November 23, 2010.
Requires that committees with jurisdiction report the legislation (without amendment) within 7 calendar days after introduction (or it will be automatically discharged from the committees).
Provides for reported legislation to be considered under an expedited procedure, which requires that the House and Senate consider the legislation within 2 congressional session days.
Limits floor debate in each chamber to 100 hours and does not permit amendments.
Requires 3/5 of the Senate (60 votes) and 3/5 of the House (261 votes) for final passage.

Based on the Press Release, the Medicare program may be one of the Task Force's initial targets. In fact, the Press Release states in part the following:

"Those who insist there is no crisis are undermining the very programs they seek to protect, said Conrad and Gregg. Both Social Security and Medicare are currently cash negative and headed for insolvency. We need to reform these programs so they are preserved for current and future generations. And everything needs to be on the table, including spending and revenues."

In a Floor Statement, Senator Baucus urged colleagues to reject the Task Force and "get back to enacting real health care reform."

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CMS to Host Hospital & Hospital Quality Open Door Forum

2009-12-09T15:18:17-06:00

The Centers for Medicare & Medicaid Services (CMS) will hold the next Hospital & Hospital Quality Open Door Forum at 2:00 p.m. (ET) on January 14, 2010.

To participate by telephone, one must dial 1-800-837-1935 and reference conference ID 45211596. Beginning January 19, 2010, CMS will also make an audio recording of the Open Door Forum available. To access the audio recording, one must dial 1-800-642-1687 and enter the conference ID. The audio recording will be available for 3 business days.

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Senate Democrats Agree on Medicare Buy-In Proposal?

2009-12-09T11:16:31-06:00

A number of news organizations (including the Wall Street Journal) are reporting that Senate Democrats have reached a tentative agreement to drop a government run insurance plan (or so-called public option) from the Senate health reform legislation (H.R.3590).

In lieu of a public option, Senate Democrats may have agreed to a proposal involving:

A private insurance option supervised by the Office of Personnel Management; and/or
A Medicare buy-in program to expand Medicare to certain individuals who are 55-64 years of age.

There are currently few details about the tentative agreement.

According to various news organizations, the details may not be revealed until the Congressional Budget Office has had an opportunity to score the proposal.

Developing...

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