Transcript Slide 1
Beyond Your Numbers
Rural and Critical Access
Hospital Medicare
Reimbursement Issues
Presented by
Tim Wolters, CPA
BKD Health Care Group
10th Annual HFMA Region 11
Symposium, 1/29/08
CPA & Advisory Services
Beyond Your Numbers
Agenda
S. 2499 – Signed 12/29/07
Home Health Changes
National Provider Identifier
Potential Wage Index Changes
Occupational Mix Survey
Value-Based Purchasing
Hospital-Acquired Conditions
Beyond Your Numbers
Agenda (continued)
DSH Change
Physician Ownership and Coverage
MS-DRGs
Cost-Based DRG Weights
CAH Relocation Issues
CAH 2008 Changes
Beyond Your Numbers
S. 2499 – Signed 12/29/07
Outpatient lab cost reimbursement extended
one year – years beginning 7/1/07
MMA 508 wage reclasses extended to 9/30/08
Rehab rates frozen 4/1/08-9/30/09
Rehab “75% rule” frozen permanently at 60%
10.1% physician fee schedule cut changed to
0.5% increase through 6/30/08
Beyond Your Numbers
Home Health Changes
Effective 1/1/08
New case mix model expands payment groupings
OASIS scores early vs. late episodes differently
Three separate therapy thresholds (6, 14 & 20)
with smoothing payments between thresholds
Case-mix creep adjustment of 2.75% per year
Unbundling of non-routine supplies with six
payment levels
Beyond Your Numbers
National Provider Identifier
National NPI Roundtable on February 6th, 1:303:00 Central
CMS urging providers to test submitting
claims with only NPI
3/3/08 – NPI must be included in primary field
5/23/08 – Only NPI reported on claim
Beyond Your Numbers
Potential Wage Index Changes
2006 Medicare/Tax Bill required…
MedPAC to recommend alternatives to current
wage index system by June 2007
MedPAC recommended replacing current system
with one based on BLS, census & other data
CMS must propose in Spring 2008 revision or
replacement of current wage index system
CMS is not required to adopt any changes
Beyond Your Numbers
Occupational Mix Survey
Revised Occupational Mix Survey will cover
pay periods ending between July 1, 2007 and
June 30, 2008
Refinements to categories will be made
Survey due September 1, 2008
Will be applied beginning with the FY 2010 wage
index
Beyond Your Numbers
Value-Based Purchasing
Deficit Reduction Act requires CMS to
implement VBP effective 10/1/08
11/21/07 report to Congress
Discusses potential pool of 2-5% of payments
Distributed based on attaining certain standards
and improving over baseline
Beyond Your Numbers
Hospital-Acquired Conditions
Payment will not be increased if the MCC or
CC is one of the specified hospital acquired
conditions, effective 10/1/08
Claims will be returned to hospitals if proper
Present on Admission (POA) indicators aren’t
present , effective 4/1/08
Beyond Your Numbers
Hospital-Acquired Conditions
8 conditions identified
Object left in surgery
Air embolism
Blood incompatibility
Catheter-associated UTI
Decubitus ulcers
Vascular catheter-associated infection
Beyond Your Numbers
Hospital-Acquired Conditions
Surgical site infection – mediastinitis after
CABG surgery
Hospital acquired injuries – fractures,
dislocations, intracranial injury, crushing,
burn & other unspecified effects of external
causes
More under consideration, stay tuned
Beyond Your Numbers
DSH Change
Effective 1/7/08, hospitals must submit no-pay
bills to Medicare contractor for Medicare
Advantage patients
Already applies to teaching hospitals and
hospitals with nursing/allied health programs
Will affect SSI percentage used for DSH
payments
Beyond Your Numbers
Physician Ownership and
Coverage
CMS adopted new provision at 42 CFR
§489.20(u) to require that all patients be given
written notice that a hospital is physicianowned and that a list of physician owners is
available upon request
Beyond Your Numbers
Physician Ownership and
Coverage
CMS requires hospitals and CAHs that do not
have a physician on site at all times to state
this in a written notice to all patients, as well
as how the hospital will meet the needs of any
patient who develops an emergency medical
condition at a time when there is no physician
present
Beyond Your Numbers
MS-DRGs
MS-DRGs started two-year transition 10/1/07
MS-DRGs have 335 base DRGs split based on
the presence of a major complication or
comorbidity (CC), a CC, or no CC
Beyond Your Numbers
MS-DRGs
Number of Base
MS-DRGs
Number of
MS-DRGs
No subgroups
77
77
Three subgroups
152
456
Two subgroups: CC and major CC; non-CC
43
86
Two subgroups: non-CC and CC; major CC
63
126
TOTAL
335
745
Subgroups
Beyond Your Numbers
MS-DRGs
Increases in the CMI after adopting the system
could be the result of improved coding rather
than increases in actual patient severity
CMS will reduce the standardized amount to
account for improved coding potential:
• 0.6% reduction for FY 2008
• 0.9% reduction proposed for FY 2009
• 1.8% reduction proposed for FY 2010
Beyond Your Numbers
MS-DRGs – Limitations
CMS admits it does not have the data or
expertise to maintain DRGs in clinical areas
that are not relevant to the Medicare population
CMS encourages those who want to use MSDRGs for patient populations other than
Medicare to make relevant refinements to their
system so it better serves the needs of those
patients
Beyond Your Numbers
MS-DRGs – Potential Impacts
On average, the CMI for urban hospitals
increases under MS-DRGs, and that for rural
hospitals decreases
Impact including 3.3% inflation adjustment,
excluding potential coding improvements:
Overall – 3.1% increase
Urban – 3.3% increase
Rural – 1.7% increase
Beyond Your Numbers
MS-DRGs: Example
Old DRG 127, heart failure & shock is split into
3 MS-DRGs
291 – With MCC
292 – With CC
293 – Without CC/MCC
Beyond Your Numbers
MS-DRGs: Example
DRG Number
Weight
Payment
Amount
CMS DRG 127
1.0490
$5,113.34
MS-DRG 291
1.2585
$6.280.67
MS-DRG 292
1.0134
$5,057.47
MS-DRG 293
0.8765
$4,374.26
Beyond Your Numbers
Cost-Based DRG Weights
Calculating weights
CMS combined cost reports into 15 cost centers
to calculate global cost-to-charge ratios
CMS used MedPAR charge data to calculate the
cost of actual claims based on the 15 cost
centers’ cost-to-charge ratios
Beyond Your Numbers
Cost-Based DRG Weights
RTI analyzed the information and found:
Inconsistent reporting between cost reports and
MedPAR claims data for charges in several ancillary
departments (medical supplies, operating room,
cardiology, and radiology)
Routine cost differences can not be calculated
using cost report – standard room charges do not
fully reflect utilization of nursing resources
Beyond Your Numbers
Cost-Based DRG Weights
RTI suggests new standard cost centers
Intermediate care units
Devices, implants and prosthetics
MRI
CT scans
Cardiac catheterization
Beyond Your Numbers
Charge Compression Example
Devices/
Implants
Total Costs
Total Charges
Ratio
Medicare Charges
Medicare Cost
$ 250,000
500,000
50%
300,000
$ 150,000
Other
Supplies
$ 500,000
2,000,000
25%
600,000
$150,000
Total
$ 750,000
2,500,000
30%
900,000
$270,000
Beyond Your Numbers
Cost-Based DRG Weights
AHA, HFMA and others encourage cost
reports be prepared consistent with MedPAR
data
Example: Report all supplies on Line 55
However, note that this may affect
reimbursement elsewhere, e.g. CAH, state
Medicaid plans
Beyond Your Numbers
Cost-Based DRG Weights
CMS Response
CMS recently began doing a comprehensive
review of the Medicare cost report and plans to
make updates that will consider its many uses
CMS stated it will give strong consideration to
these recommendations
Beyond Your Numbers
Cost-Based DRG Weights
CMS Responses (cont)
Hospitals are not required to change how they
report costs and charges if their current cost
reporting practices are consistent with rules and
regulations and applicable instructions, including
• Uniform charge structure
• Matching of costs and charges by cost center
Beyond Your Numbers
CAH Relocation Issues
9/7/07 CMS released revised, revised
interpretive guidelines
In many ways a step in the right direction
Mountainous terrain & secondary roads
definitions are better
• But, still go beyond what the law specifies
Relocation rules only apply to NPs
75% test applicable to total staffing with more
flexibility
Many other improvements
Beyond Your Numbers
CAH Relocation Issues
Problems remain
No firm CMS approval until after the move
• Introduces uncertainty into financing
Requires the CAH to meet same NP criteria at new
site as when first certified as a CAH
• What does “grandfathered” mean?
Beyond Your Numbers
CAH Relocation Issues
Problems remain
Specifically includes non-CAH services in the 75%
of same services test
Does not address merger of 2 CAHs & building on
neutral site
May require extensive documentation with
attestation letter
Beyond Your Numbers
CAH Relocation Issues
If relocated CAH fails to meet all criteria
CMS considers the relocation a cessation of
business (voluntary termination of provider
agreement) & start of new business
Forfeit CAH status
May apply for new provider agreement
Beyond Your Numbers
CAH 2008 Changes
No new co-location arrangements after 1/1/08
Co-location provision applies only to
necessary provider CAHs
Can’t change type & scope of services offered
for existing arrangements
Change of ownership is not considered a new colocation arrangement
Beyond Your Numbers
CAH 2008 Changes
New provider-based locations off campus
must meet federal requirements effective
1/1/08
Over 35 miles from hospital or CAH
Over 15 miles if mountainous terrain or secondary
roads
Does not apply to RHCs
Beyond Your Numbers
Closing
Questions & Discussion
Contact information for additional questions:
Tim Wolters
[email protected]
417-865-8701, ext. 551