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CCOs to Use Tools of Trade in New Payment Models, Delivery Systems

This article was first published on February 18, 2013 at AISHealth.

Compliance officers are starting to apply the tricks of their trade to new payment models and health care delivery systems.To keep up with the major transformations rippling through the industry, some compliance officers will need to monitor datathat are used to evaluate their health systems’ performance, tap into new resources and work more closely with finance,revenue cycle and other departments, experts say.

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More hospital revenue will depend on its performance on quality, value and patient satisfaction measures, which impactsthe way compliance officers identify risks. “Establishing a link between finances and compliance makes sense becauseperformance is now integral to compliance,” said attorney Craig Garner, who spoke at a recent Health Care ComplianceAssociation webinar. Continue reading →

60 Days to Pay – Has Medicare Reached the Point of No Return?

This article first appeared in the September 2012 issue of Compliance Today, a publication of the Health Care  Compliance  Association.

In February the Centers for Medicare & Medicaid Services (“CMS”) clarified an oft quoted existing rule: Providers must return overpayments to Medicare within 60 days “after the date on which the overpayment was identified,” or in the alternative, “the date any corresponding cost report is due, if applicable.”[1]

For providers of any size, failure to report and return Medicare overpayments pursuant to these temporal requirements may result in potential liability under the Federal False Claims Act[2], resulting in substantial monetary penalties and the risk of being denied future claims for reimbursement.

Dating back to the American Civil War, the False Claims Act (FCA) has over time become the “primary litigative tool for combating fraud” for both federal and state governments.[3] At its core, the FCA imposes liability on anyone who “knowingly presents, or causes to be presented, a false or fraudulent claim for payment or approval.”[4]  While most providers have worked within a similar time frame after identifying an overpayment, it appears that the statutory requirements under the 2010 Patient Protection and Affordable Care Act [5], as amended by the Health Care and Education Reconciliation Act[6] (collectively referred to as the Affordable Care Act or health care reform) were not enough.[7] In reaction, the February 2012 regulations now leave nothing to chance, imposing upon the health care industry detailed definitions with numerous examples to assist providers in determining exactly when the 60-day clock begins.[8] Continue reading →

Making Sense of Medicare’s Observation Regulations, One Hospital Bed at a Time

On August 1, 2012, the Centers for Medicare & Medicaid Services (CMS) published the Final Rule for Medicare’s Hospital Inpatient Prospective Payment Systems (IPPS) (the Final Rule).

Effective Fiscal Year (FY) 2013 (October 1, 2012), the Final Rule covers the entire scope of the IPPS for acute care hospitals, long-term care hospitals, resident caps for graduate medical education (GME) payment, hospital readmission reduction program, the value based purchasing program, as well as other parts of Medicare.

The Final Rule specifically modified the way CMS approaches labor and delivery beds in the calculation of Medicare disproportionate share (DSH) payment adjustments and indirect medical education (IME). Continue reading →

Medicare’s Hospital Readmissions Reduction Program

Starting October 1, 2012, the Hospital Readmissions Reduction Program (HRRP) reduces a hospital’s base operating Medicare diagnosis-related group (DRG) payments with respect to readmissions for three conditions, including: (1) acute myocardial infarction (ACI); (2) heart failure (HF); and (3) pneumonia (PN).

Section 1886(q) of the Social Security Act (the Act) and section 3025 of the Affordable Care Act (ACA) provide the statutory authority for this non-budget neutral program. The Centers for Medicare & Medicaid Services (CMS) predict that the HRRP will decrease payments to hospitals by as much as 0.3 percent (approximately $280 million) in FY 2013. Continue reading →

Final Rules for Hospital Inpatient Prospective Payment Systems

The Centers for Medicare & Medicaid Services released the final rule for the Medicare inpatient prospective payment systems (IPPS) for the 2013 fiscal year (effective for discharges occurring on or after October 1, 2012).  The final rule revises the IPPS for operating and capital-related costs of acute care hospitals and incorporates certain statutory provisions contained in the 2010 Patient Protection and Affordable Care Act, as amended in part by the  Health Care and Education Reconciliation Act of 2010.

Additionally, the final rule updates the rate-of-increase limits for certain hospitals excluded from the IPPS, as well as the payment policies and annual payment rates for the Medicare prospective payment system (PPS) relating to long-term care hospitals. The final rule changes the ways in which a hospital determines its full-time equivalent (FTE) resident cap for graduate medical education (GME) and indirect medical education (IME) payments.

The final rule also establishes requirements for the Hospital Value-Based Purchasing (VBP) Program and the Hospital Readmissions Reduction Program.

The entire final rule, which will be codified in 42 CFR Parts 412, 413, 424 and 476 can be seen here.

Understanding the Minimum Medical Loss Ratio

Under the Affordable Care Act (ACA), in 2012 consumers anticipate the return of an estimated $1 billion in rebates from health insurance issuers (issuers).

Commonly referred to as the “80/20 provision” of the ACA, the regulations governing Medical Loss Ratio (MLR) rebates appear in Title 45 of the Code of Federal Regulations, Part 158. The minimum MLR (45 C.F.R. § 158.210) applies as follows:

  • Large group market:  For all policies issued in this market during the MLR reporting year, an issuer must provide a rebate to enrollees if the issuer has an MLR of less than 85% (subject to adjustments as discussed below).
  • Small group market and individual market:  For all policies issued in these markets during the MLR reporting year, an issuer must provide a rebate to enrollees if the issuer has an MLR of less than 80% (also subject to certain adjustments).

States, however, retain the option to set a higher MLR, provided the State ensures adequate participation by health insurance issuers, competition in that State’s health insurance market, and value for consumers to ensure that premiums are used for clinical services and quality improvements.  (45 C.F.R. § 158.211.)

While there are specific requirements relating to the aggregation of data in calculating an issuer’s MLR (45 C.F.R. § 158.220), generally an issuer’s MLR is: The ratio of the issuer’s incurred claims plus the issuer’s expenditures for activities that improve health care quality (the numerator) to the issuer’s premium revenue, less any Federal and State taxes as well as licensing and regulatory fees (the denominator). Continue reading →

Time to Focus on Compliance

When it comes to the Affordable Care Act, there is no shortage of topics upon which the nation can disagree.  As patients lobby to make the provision of medical services a constitutional right, providers share a much different perspective on modern American health care.  To practitioners and non-clinical professionals alike, participation in government sponsored health care programs is in many ways akin to joining the freemasons or pledging a fraternity, the exclusion from which is nothing less than a modern day blackballing by the not-so-secret society known as the Office of the Inspector General (“OIG”).

While Medicare regulations are no picnic,[1] there is no shortage of hospitals participating therein.[2] The exclusion of a hospital from federally funded programs such as Medicare and Medicaid can mean the end for that facility, while for hospital executives, directors, officers, managers, and in-house counsel the repercussions from such an act can amount to the end of a career in health care altogether. The nexus between hospital punishment and individual culpability can be tenuous at times, and a negative ruling against a hospital may not insulate individuals from prosecution and even exclusion under the Responsible Corporate Officer Doctrine (“RCO”), sometimes referred to as the “Park” doctrine after the United States Supreme Court decision United States v. Park, where the Court held:

“The concept of ‘responsible relationship’ to, or a ‘responsible share’ in, a violation . . . indeed imports some measure of blameworthiness; but it is equally clear that the Government establishes a prima facie case when it introduces evidence sufficient to warrant a finding by the trier of fact that the defendant had, by reason of his position in the corporation, responsibility and authority either to prevent in the first instance, or promptly to correct, the violation complained of, and that he failed to do so.” [3] Continue reading →

An Overview of the Hospital Value-Based Purchasing Program

Section 3001(a) of the Affordable Care Act (ACA) includes a new section 1886(o) to the Social Security Act and amended 42 U.S.C. § 1395ww to establish the hospital value-based purchasing (VBP) Program.

Under the VBP Program, beginning October 2012 hospitals will face a 1% reduction overall on Medicare payments under the Inpatient Prospective Payment System (IPPS), as these funds will be used to pay for the performance bonuses under VBP Program. By 2015, hospitals that continue to show poor performance ratings will not only be excluded from the bonus pool, they will also face additional cuts in reimbursement. Continue reading →

Discount Cash Flow (DCF) Explained

Determining the fair market value for health care transactions is often the most critical component, especially when navigating through the labyrinth of fraud and abuse regulations. Defined in 42 C.F.R. Section 411.351:

“Fair market value means the value in arm’s-length transactions, consistent with the general market value. ‘General market value’ means the price that an asset would bring as the result of bona fide bargaining between well-informed buyers and sellers who are not otherwise in a position to generate business for the other party, or the compensation that would be included in a service agreement as the result of bona fide bargaining between well-informed parties to the agreement who are not otherwise in a position to generate business for the other party, on the date of acquisition of the asset or at the time of the service agreement. Usually, the fair market price is the price at which bona fide sales have been consummated for assets of like type, quality, and quantity in a particular market at the time of acquisition, or the compensation that has been included in bona fide service agreements with comparable terms at the time of the agreement, where the price or compensation has not been determined in any manner that takes into account the volume or value of anticipated or actual referrals.”

One method commonly employed for fair market value studies is the discounted cash flow analysis (DCF), a commonly accepted method for valuing companies. Using the principles of “time value of money,” the DCF applies a discounted rate to adjust the value of money to be earned in future years with a present day value. Continue reading →

The Right to Strike vs. the Right to Care

Modern day health care is a troubled industry. Enshrouded in a net of oft-conflicting regulations and entrusted with the safety of America’s sick and wounded, many of whom lack the necessary insurance to guarantee reimbursement to their providers, the financial stability of our nation’s medical facilities is called into question on a daily basis. Today’s hospital has the unenviable task of walking a fine line between caring for its patients and remaining solvent as a business, a laudable goal attainable at least in part by recognizing the inextricable connection between the institution itself and the nurses who form an infantry amongst its ranks. Even as these nurses form an ever-present “front line” on the hospital battlefield, the recent threat of strikes around the nation shines a harsh if necessary light on certain issues plaguing our current health care system as it stands so precariously with one foot on either side of a dangerous fence.

The nature of the nurse’s role begs the question: does participation in a labor union extend to the right to strike? Continue reading →


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