CMS Outlines Improvements in RAC Audit Processes

In the face of complaints from hospitals about backlogs, time-consuming procedures, and lengthy appeals processes involving Medicare Recovery Audit Contractor audits, the Centers for Medicare & Medicaid Services recently outlined changes it has implemented in the RAC audit process to address these and other concerns.  They are (in CMS’s own words):

Better Oversight of RACs

  • We are holding RACs accountable for performance by requiring them to maintain a 95% accuracy score. RACs that fail to maintain this rate will receive a progressive reduction in the number of claims they are allowed to review.
  • We also require RACs to maintain an overturn rate of less than 10%. Failure to maintain such a rate, will also result in a progressive reduction in the number of claims the RAC can review.
  • RACs will not receive a contingency fee until after the second level of appeal is exhausted. Previously, RACs were paid immediately upon denial and recoupment of the claim. This delay in payment helps assure providers that the RAC’s decision was correct before they are paid.

 

Reducing Provider Burden and Appeals

  • We are making RAC audits more fair to providers. Previously, RACs could select a certain type of claim to audit. Now, they must audit proportionately to the types of claims a provider submits.
  • We changed how we identify whom to audit. Instead of treating all providers the same, we conduct fewer audits for providers with low claims denial rates.
    We gave providers more time to submit additional documentation before needing to repay a claim. This 30-day discussion period, after an improper payment is identified, means that providers do not have to choose between initiating a discussion and filing an appeal. CMS expects this will continue to reduce the number of appeals.

 

Increasing Program Transparency

  • We are regularly seeking public comment on newly proposed RAC areas for review, before the reviews begin. This allows providers to voice concerns regarding potentially unclear policies that will be part of the review. Posting these topics also allows providers to better prepare for RAC reviews before they begin.
  • We required RACs to enhance their provider portals to make it easier to understand the status of claims.

Learn more in this CMS news release.

Safety-Net Hospitals, Others Benefit From Changes in Medicare Readmissions Program

Safety-net hospitals are among the leading beneficiaries of changes implemented this year in Medicare’s  hospital readmissions reduction program.

According to a new study, safety-net, academic, and rural hospitals have enjoyed improved performance under the program since Medicare began organizing hospitals into peer groups based on the proportion of low-income patients they serve rather than simply comparing individual hospital performance to that of all other hospitals.

While the current fiscal year is still under way, it appears that safety-net hospitals will enjoy a collective decline of $22 million in Medicare readmissions penalties while 44.1 percent of teaching hospitals and 43.7 percent of rural hospitals will face smaller penalties than last year.

NASH was one of the leading and most outspoken proponents of leveling the playing field in the readmissions reduction program, encouraging policy-makers to reform the program so it would compare hospital readmission rates among similar hospitals instead of to those of all hospitals.  NASH’s multi-year effort proved successful and private safety-net hospitals are now benefiting from that success.

Learn more about the readmissions reduction program and how changes in that program have significantly altered its outcomes in the JAMA Internal Medicine study “Association of Stratification by Dual Enrollment Status With Financial Penalties in the Hospital Readmissions Reduction Program.”

CMS Posts Proposed FY 2020 Inpatient Regulation

Medicare would change its wage index system, raise inpatient fees, increase funding for Medicare disproportionate share hospital payments (Medicare DSH), enhance payments for new technologies, and make minor modifications in its hospital readmissions reduction, value-based purchasing, and hospital-acquired condition program if a proposed regulation published this week is ultimately adopted.

The Centers for Medicare & Medicaid Services has published its proposed FY 2020 Medicare inpatient prospective payment system regulation:  its plan for paying acute-care hospitals for Medicare-covered inpatient services in FY 2020.  The 1800-page regulation calls for major changes in Medicare’s wage index system – changes CMS says would “…address the disparities between high and low wage index hospitals…”  It would do so by increasing the wage indexes of many rural hospitals, regardless of their actual wage costs, and pay for those increases by reducing the wage indexes of high-index hospitals, again regardless of their actual wage costs.

The proposed regulation also would raise inpatient payments to hospitals 3.2 percent in the coming year.  In addition, it would add $216 million to its pool of money for Medicare DSH uncompensated care payments – an increase necessitated by this year’s increase in the number of uninsured Americans – while modifying the methodology for calculating those payments.

Learn more about what CMS proposes for Medicare inpatient payments in the coming year by reviewing the proposed regulation itself or reading the fact sheet CMS published to outline the regulation’s highlights.

Stakeholder comments are invited and due to CMS by June 24; NASH expects to take advantage of this opportunity to convey its concerns about selected aspects of the proposed regulation.

MedPAC Offers Recommendations on FY 2020 Rates, More

Last week the Medicare Payment Advisory Commission released its annual report to Congress.  Included in this report are MedPAC’s Medicare rate recommendations for the coming year.  They are:

  • hospital inpatient rates – a two percent increase
  • hospital outpatient rates – a two percent increase
  • physician and other health professional services rates – no update
  • skilled nursing facilities – no 2020 increase
  • home health agencies – a five percent rate reduction
  • inpatient rehabilitation facilities – a five percent rate reduction
  • long-term-care hospital services – a two percent increase
  • hospice services – a two percent rate reduction

MedPAC also recommended that the Centers for Medicare & Medicaid Services replace its current array of hospital quality programs with a new, streamlined “hospital value incentive program,” or HVIP, that would replace the Hospital Inpatient Quality Program, the Hospital Readmissions Reduction Program, the Hospital-Acquired Condition Reduction Program, and the Hospital Value-Based Purchasing Program.

MedPAC’s recommendations are binding on neither the administration nor Congress but its views are highly respected and often find their way into new laws, new policies, and new programs.

Learn more about MedPAC’s annual recommendations to Congress in the full MedPAC report or the MedPAC fact sheet that accompanies the recommendations’ release.

Stark Changes Coming to Facilitate Value Care?

At a Washington, D.C. conference, Centers for Medicare & Medicaid Services Administrator Seema Verma announced that changes coming in Stark law requirements will enable Medicare to make better use of value-based purchasing in its reimbursement system.

In addition to addressing cybersecurity and electronic health record system issues, changes in the anti-self-referral law will seek to facilitate better coordination of care for Medicare patients.  Verma explained the underlying rationale for the anticipated changes, noting that

…in a system where we’re transitioning and trying to pay for value, where the provider is ideally taking on some risk for outcomes and cost overruns, we don’t have nearly as much of a need to interfere with who’s getting paid for what service.

Learn more from the Fierce Healthcare article “Verma promises hospital industry ‘significant’ Stark Law changes later this year.”

800 Hospitals Face Medicare Penalties

800 hospitals will see their Medicare payments reduced one percent this year because they are among the 25 percent of hospitals in the U.S. with the highest rate of hospital-acquired conditions.

Among the 800 hospitals are 110 that are being penalized for the fifth year in a row.

Medicare’s hospital-acquired condition reduction program tracks a variety of medical problems, including infections, blood clots, sepsis, hip fractures, bedsores, and others.  Every year, the 25 percent of eligible providers – the program excludes significant numbers of hospitals – are penalized even if their performance for hospital-acquired conditions is superior to the previous year.

Critics of the program say it creates unachievable goals and  penalizes hospitals that are doing an excellent job of reducing hospital-acquired conditions and that there is virtually no statistical difference in performance between some hospitals that are and some hospitals that are not penalized.  Program proponents maintain that all hospitals can and should do an even better job than they already are of reducing their patients’ hospital-acquired conditions.

NASH has long been concerned about the degree to which private safety-net hospitals are at a disadvantage in such programs because of the disproportionately large numbers of low-income patients they serve who pose special health and socio-economic challenges when hospitalized.

Learn more about Medicare’s hospital-acquired conditions reduction program, the penalties some hospitals face in the coming year, and the arguments for and against the program in the Kaiser Health News article “Medicare Trims Payments To 800 Hospitals, Citing Patient Safety Incidents.”

Readmissions Reduction Program Results Overstated?

A new study suggests that the encouraging results of Medicare’s hospital readmissions reduction program may not actually be as encouraging as people thought.

According to a new study published in the journal Health Affairs, data on reduced readmissions may be more the result of changes in hospital coding practices than improved quality performance by hospitals.

The report suggests that new industry standards for reporting were implemented at roughly the same time Medicare launched the value-based purchasing program and may account for most or even all of the reported improved performance by hospitals.

Learn more from the Health Affairs study “Decreases In Readmissions Credited To Medicare’s Program To Reduce Hospital Readmissions Have Been Overstated.”

CMS to Create New Office for Regulatory Reform

In 2019 the Centers for Medicare & Medicaid Services intends to create a new office to address regulatory reform.

CMS administrator Seema Verma recently announced her intention to create this office, but other than saying its priority would be to reduce regulatory burden, offered no details.

See a brief notice about the new office here.

HHS Gives States New Options for Medicaid-Covered Behavioral Health Treatment

The U.S. Department of Health and Human Services has informed state Medicaid programs that it is giving them new opportunities to pay for hospitalization to care for recipients with behavioral health problems.

For years Medicaid has greatly limited the ability of state Medicaid programs to pay for inpatient care for many behavioral health problems – a limit commonly known as the IMD (institution of mental disease) exclusion.  Earlier this year the Centers for Medicare & Medicaid Services eased this long-time limit, announcing that it would make it easier for states to secure waivers from it.  CMS has announced in a formal guidance letter to state Medicaid directors that it is extending this policy, according to a CMS news release, which explains that the agency offers

…both existing and new opportunities for states to design innovative delivery systems for adults with serious mental illness (SMI) and children with serious emotional disturbance (SED).  The letter includes a new opportunity for states to receive authority to pay for short-term residential treatment services in an institution for mental disease (IMD) for these patients.  CMS believes these opportunities offer states the flexibility to make significant improvements on access to quality behavioral health care.

Under this new approach, states are invited to develop new delivery systems for serving patients with behavioral problems, and especially substance abuse disorders, that make greater use of inpatient behavioral health services and to receive federal Medicaid matching funds for pay for this care – something that has been greatly limited in the past.  In offering this opportunity, CMS notes that a number of states that have already obtained waivers from the IMD exclusion since its easing of the limit on such waivers earlier this year and are already showing encouraging results in their battle against opioid abuse.

Learn more about this new policy, its intentions, and how it will work in this CMS news release or go here to see the CMS guidance letter to state Medicaid directors.

CMS Proposes New Medicaid Managed Care Regulation

Just two years after a major overhaul of Medicaid managed care regulations, the Centers for Medicare & Medicaid Services is again proposing changes in how the federal government regulates the delivery of managed care services to Medicaid beneficiaries.

Under the newly proposed regulation, states would:

  • be free to implement more changes in their managed care programs without seeking federal permission;
  • have slightly more flexibility in how supplemental payments are made to hospitals through managed care plans and implement some such changes without federal approval;
  • be permitted to redefine what constitutes an adequate provider network for managed care plans; and
  • not be required to publicize beneficiary grievance and appeals processes as prominently as they currently do.

Overall, the proposed regulation appears to help managed care insurers a great deal, states a little, and hospitals barely at all.  It also could have serious implications for private safety-net hospitals, most of which are located in states that employ managed care in their Medicaid programs.

Stakeholders have until January 14 to submit formal comments about the proposal to CMS.

To learn more about the proposed Medicaid managed care regulation, go here to see CMS’s news release presenting the regulation, go here to see a more detailed CMS fact sheet, and go here to see the proposed regulation itself.