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August 2008 Client Newsletter


On July 15th, 2008 Congress passed the Medicare Improvements for Patients and Providers Act of 2008. This legislation cancelled the scheduled 10.6% fee reduction mandated by the SGR and replaced the reduction with a .5% increase which is the same amount paid by Medicare from January 1st, 2008 through June 30th, 2008. Medicare expected to begin making the adjusted .5% payment no sooner than July 22nd and no later than July 29th. Claims submitted with a service date of July 1st or after were being paid at the 10.6% reduced fee schedule. As soon as possible, the carriers will begin reprocessing these claims automatically and will remit the additional payments to the provider in the same fashion the reduced payment claims were paid. Please note that payments will likely come in “lump sum payments” of one or several checks. Payment details will accompany these lump sum payments.

To avoid the 10.6% reduction, and since CMS already directed the carriers to delay payment for 10 business days (which ended July 15th), CPB withheld submitting Medicare charges until July 17th. We hope this allowed Medicare to process these claims and pay the full amount to you – without the 10/6% reduction – and thus avoid the reprocessing delay. We will know July 31st or August 1st if that strategy worked.

It appears that CMS has established a process that will allow the carriers to adjudicate the supplemental payments efficiently. Should this not be the case CPB will handle, of course.

Medicare Improvements for Patients and Providers Act of 2008

In addition to the fee schedule, this bill also:

· Reduced Medicare beneficiaries’ coinsurance for mental health services to the same level applied to other outpatient medical care. Transitions from current 50-50 (Medicare-patient split) to 80-20 (Medicare patient split) over a six year period. Transition begins in 2009.
· Extends the exceptions process for therapy (PT, OT, SLP) limits through December 31, 2009.
· Imposed an 18-month delay of Phase 1 of the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Acquisition Program (CAP), with a corresponding 18-24 month delay of Phase 2 and subsequent applications of the program. Furthermore, the new law modifies the CAP to ensure a fair bidding process and to protect beneficiaries. In lieu of the competitive bidding, payment rates for items included in the CAP will be reduced.
· Provided incentives for practitioners who use a qualified e-prescribing system in 2009 through 2013. The new law requires practitioners to use a qualified e-prescribing system beginning in 2011. Once the mandate is in effect, providers who fail to use an e-prescribing system will have payments reduced by up to 2%. The new law prohibits application of financial incentives and penalties to those who write prescriptions infrequently, and the new law permits the Secretary of HHS to establish a hardship exception to providers who are unable to use a qualified e-prescribing system.
· Excluded Podiatrists from DMEPOS accreditation requirements.
· Delayed the Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program. As a result of this delay, the special accreditation deadlines previously established for the second round of the program have been cancelled. Specifically, prior to enactment of this new law, suppliers must have been accredited or have applied for accreditation by July 21, 2008 to be eligible to submit a bid for the second round of competitive bidding and must have obtained accreditation by January 14, 2009 to be eligible for a second round contract. Both of these deadlines have been cancelled and no longer apply.
The deadline of September 30, 2009 that was previously established by which all DMEPOS suppliers must be accredited is still in effect.

Waiving Retroactive Beneficiary Cost Sharing Due to Increases in Payment Under MIPPA

The HHS Office of the Inspector General has issued a policy statement that assures Medicare providers, practitioners, and suppliers affected by retroactive increases in payment rates under the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008 that they will not be subject to OIG administrative sanctions if they waive retroactive beneficiary cost-sharing amounts attributable to those increased payment rates, subject to the conditions noted in the policy statement. To view the document, go to on the web.

Highmark Medicare was awarded the Jurisdiction 12 contract & will replace Empire Medicare for New Jersey on November 14, 2008 for PA, MD, NJ, DE & the District of Columbia. They are requiring a new CMS-588 EFT Agreement (Electronic Funds Transfer) from every provider that is currently receiving their Medicare payments electronically. To avoid the rush in November, we would suggest that you do this early. Highmark sent that information to you in July – please forward to CPB and we will complete it for you to sign.

Recovery Audit Contractors (RAC)- Nearly $700 Million in Improper Medicare Payments

“The Centers for Medicare & Medicaid Services (CMS) released a new report on July 16th offering fresh evidence that the recovery audit contractors (RACs) pilot program is successfully identifying improper payments. The findings will also help the agency improve the program as it is expanded nationwide within two years, officials say.
The evaluation report shows that $693.6 million in improper Medicare payments was returned to the Medicare Trust Funds between 2005 and March 2008. The funds returned to the Medicare Trust Funds occurred after taking into account the dollars repaid to health care providers, the money overturned on appeal and the costs of operating the RAC demonstration program. In most cases, it is all about documentation.
Of the overpayments, 85 percent were collected from inpatient hospital providers, and the other principal collections were 6 percent from inpatient rehabilitation facilities, and 4 percent from outpatient hospital providers.

The RACs corrected over $1 billion of Medicare improper payments from 2005 through March 27, 2008. Roughly 96 percent of the improper payments ($992.7 million) were overpayments collected from providers, while the remaining 4 percent ($37.8 million) were underpayments paid to providers.

Of the $1 billion in improper payment determinations by the RACs, providers chose to appeal only 14 percent of the RAC decisions. Of all the RAC overpayment determinations, only 4.6 percent were overturned on appeal. Throughout the demonstration, the RAC program has cost only 20 cents for each dollar collected.

Most of the improper payments that the RACs identified occurred when health care providers submitted claims that did not comply with Medicare’s coverage or coding rules. The types of inadvertent errors leading to improper payments, found by the RACs include billing for a procedure multiple times (for example, when a health care provider charged Medicare for conducting three colonoscopies on the same patient on the same day), incorrectly coded procedures, and submission of duplicate claims resulting in two payments to a provider.

The program, designed to protect the Medicare Trust Funds and beneficiaries from improper payments, began in California, Florida and New York in 2005 and in July 2007 expanded to Arizona, Massachusetts and South Carolina. The law states the national program must be implemented by Jan. 1, 2010 for all states. To view the entire Press Release:”
2008 Client Newsletter Archive