beyondyour numbers cpa & advisory services presented by tim wolters, cpa bkd health care group...
TRANSCRIPT
Beyond Your Numbers
CPA & Advisory Services
Presented by
Tim Wolters, CPA
BKD Health Care Group
10th Annual HFMA Region 11 Symposium, 1/29/08
Rural and Critical Access Hospital Medicare Reimbursement Issues
Beyond Your Numbers
Agenda
S. 2499 – Signed 12/29/07Home Health ChangesNational Provider IdentifierPotential Wage Index ChangesOccupational Mix SurveyValue-Based PurchasingHospital-Acquired Conditions
Beyond Your Numbers
Agenda (continued)
DSH ChangePhysician Ownership and CoverageMS-DRGsCost-Based DRG WeightsCAH Relocation IssuesCAH 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 9/30/08Rehab rates frozen 4/1/08-9/30/09Rehab “75% rule” frozen permanently at 60%10.1% physician fee schedule cut changed to
0.5% increase through 6/30/08
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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
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National Provider Identifier
National NPI Roundtable on February 6th, 1:30-3:00 Central
CMS urging providers to test submitting claims with only NPI
3/3/08 – NPI must be included in primary field5/23/08 – Only NPI reported on claim
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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
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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
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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
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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
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Hospital-Acquired Conditions
8 conditions identifiedObject left in surgeryAir embolismBlood incompatibilityCatheter-associated UTIDecubitus ulcersVascular catheter-associated infection
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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
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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
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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 physician-owned and that a list of physician owners is available upon request
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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
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MS-DRGs
MS-DRGs started two-year transition 10/1/07MS-DRGs have 335 base DRGs split based on
the presence of a major complication or comorbidity (CC), a CC, or no CC
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MS-DRGs
SubgroupsNumber of Base
MS-DRGsNumber 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
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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
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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 MS-DRGs for patient populations other than Medicare to make relevant refinements to their system so it better serves the needs of those patients
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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
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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
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MS-DRGs: Example
DRG Number WeightPayment
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
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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
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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
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Cost-Based DRG Weights
RTI suggests new standard cost centers Intermediate care units Devices, implants and prosthetics MRI CT scans Cardiac catheterization
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Charge Compression Example
Devices/Implants
OtherSupplies Total
Total Costs $ 250,000 $ 500,000 $ 750,000
Total Charges 500,000 2,000,000 2,500,000
Ratio 50% 25% 30%
Medicare Charges 300,000 600,000 900,000
Medicare Cost $ 150,000 $150,000 $270,000
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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
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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
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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
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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
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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?
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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
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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
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CAH 2008 Changes
No new co-location arrangements after 1/1/08Co-location provision applies only to
necessary provider CAHsCan’t change type & scope of services offered
for existing arrangements Change of ownership is not considered a new co-
location arrangement
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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
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Closing
Questions & DiscussionContact information for additional questions:
Tim Wolters
417-865-8701, ext. 551