Medicare Advantage plans in most cases offer more benefits than traditional Medicare because of higher reimbursement rate increases established under the 2003 Medicare law, in addition to separate subsidies from the federal government for plans that provide prescription drug coverage.

Karen Ignagni, president of America’s Health Insurance Plans, said, “No member of Congress will be able to conclude that plans are overpaid next year.”

Details on the CMS website.

AISHealth

CMS said recently that hospitals can’t charge Medicare for more than one IV push injection of the same drug during the same patient encounter (HCPCS code C8952C), according to new guidance on billing for drug administration under the outpatient prospective payment system (OPPS). Only multiple injections of different drugs can be charged separately, according to the guidance, which comes in the form of answers to frequently asked questions (FAQs) and was posted on the CMS Web site in mid-February.

This is the latest in a series of OPPS drug administration changes to cause revenue and/or compliance challenges for hospitals.

“Part D plans should not be requiring a Part B rejection as their first step before they’ll start thinking about covering it under Part D,” Craig Miner, a pharmacist with CMS’s Division of Drug Plan Policy, told call participants. “In other words, they need to take further steps to see if there is reason to believe that it should be Part B [which covers outpatient medical expenses], and in that case, perhaps, they can get to the situation where it makes sense for them to say, ‘we’re not going to cover it under D unless there’s a Part B rejection,’” he said.

CMS will not reimburse for drugs that can be covered under Part B if they are billed as Part D. According to call participants, as a result, many plan sponsors are refusing to cover injectable and infusible drugs unless a Part B rejection is presented first.

Miner acknowledged that in some cases whether to request a Part B rejection is clearly a judgment call, and that CMS does not provide specifics on the issue. Instead, “I would say…what we would expect in general is that plans would have policies and procedures…[at] the level that is appropriate and necessary…to make B vs. D determinations,” he said. “It doesn’t have to be a one size fits all.”

CMS officials emphasized that Part B coverage has not changed, so that drugs previously covered under Part B — including immunosuppressants for patients who received transplants at a Medicare-approved facility, oral oncology agents used for cancer indications, and erythropoietin for treatment of anemia in dialysis patients — remain under Part B. CMS staff also clarified that inhalation drugs dispensed through machines in nursing homes, as well as diluents used for mixing drugs (but not saline and other flushes) are indeed covered under Part D.

One area of controversy surrounding CMS’s Part B vs. Part D policy is reimbursement for home infusion (HI) drugs. Under Part D, although the drugs themselves are covered, the related supplies, equipment and support services are not, creating billing problems, coverage gaps and confusion for plan sponsors, HI providers and patients. The National Home Infusion Association and its members are calling for HI drugs to be shifted to coverage under Part B.

A few Medicare Advantage prescription drug plans (MA-PDs) have crafted their own solution to the Part D HI problem, but it is not yet clear whether their policy will withstand CMS scrutiny. According to NHIA, at least two managed care organizations — Blue Cross Blue Shield of Massachusetts and Horizon Blue Cross Blue Shield of New Jersey — have made the decision to continue covering HI for their MA-PD patients as a medical benefit, instead of split-billing drugs and services.

View CMS’s Part B vs. D coverage guidelines at www.cms.hhs.gov/Pharmacy/ Downloads/partsbdcoverageissues.pdf.

Excerpts from AISHEALTH News of the Week

Implementation of the National Provider Identifier(NPI) is moving forward. We should stay on top of the current implementation calendar and recent CMS guidance.

Here is a link to the CMS site where there is a letter clarifying CMSs expectations on determining subparts to covered entities who should bill CMS using unique NPIs. Here is an excerpt clairfying how organizations should define subparts:

Generally, the type of service being reported on a Medicare claim determines the type of Medicare contractor who processes the claim. Medicare will expect an enrolled organization health care provider or subpart to use a single (the same) NPI when billing more than one type (fiscal intermediary, carrier, RHHI, DMERC) of Medicare contractor. However, in certain situations, Medicare requires that the organization health care provider (or possibly even a subpart) enroll in Medicare as more than one type of provider. For example, an ambulatory surgical center enrolls in Medicare as a Certified Supplier and bills a carrier. If the ambulatory surgical center also sells durable medical equipment, it must also enroll in Medicare as a Supplier of DME and bill a DMERC. This ambulatory surgical center would obtain a single NPI and use it to bill the fiscal intermediary and the DMERC. Medicare expects that this ambulatory surgical center would report two different Taxonomies when it applies for its NPI: (1) that of Ambulatory Health Care Facility—Clinic/Center–Ambulatory Surgical (261QA1903X) and (2) that of Suppliers—Durable Medical Equipment & Medical Supplies (332B00000X) or the appropriate sub-specialization under the 332B00000X specialization.

Medicare advantage plans are private managed care plans that offer typically offer benefits beyond traditional fee for service Medicare. Plan bids outline the benefit packages offered to an area and the beneficiary contributions, if any.

By law, CMS is required to publish the Medicare Advantage payment rates for each county, which are used to compute the benchmarks, in April of the preceding year. The Medicare Advantage payment rates are based on a formula that reflects costs in the fee-for-service program and other adjustments.. Actual payments to each plan are further adjusted based on the reported health status of plan enrollees – “risk adjustment” – so that plans who enroll beneficiaries with chronic illnesses receive increased payments reflecting their higher expected costs.

Figure 1: Risk Adjustment Calculations

The payments to Medicare Advantage plans are also adjusted by a “budget neutrality” factor that was implemented to prevent health plan payments from being reduced overall while, at the same time, directing higher, risk adjusted payments to those plans whose enrollees had more chronic diseases. Congress intended to move to a clinically based risk adjustment model but not reduce the overall payments to Medicare Advantage plans. Knowing that the transition would require stakeholders in the current system to make adjustments in how information is captured and reported they implemented a budget neutrality factor that would give back the “saving” that the government would have realized because of the inefficiencies in the current system of capturing and reporting diagnosis information.

Smaller Expected Costs of Medicare Advantage Payment Adjustments for Budget Neutrality

There has always been a phase-out of the budget neutrality adjustment. The phase-out will begin in 2007 and will be completed by 2011, when plans will receive no budget neutrality payment adjustment. The reason why the Medicare Actuaries now expect the budget neutrality adjustments to be less costly over the 5-year phase-out period is because newer data shows a much smaller difference in the reported health status between enrollees in Medicare Advantage and those in traditional Medicare. The adjusted phase out has accelerated the step down in the budget neutrality adjustment as indicated in the chart below:

In Summary

The basis for accelerating the phase out of the budget neutrality factor is a result of higher reported diagnosis scores for beneficiaries than originally expected. Those organizations who have implemented a risk adjustment program that identifies missing or mis-coded diagnosis scores stand to survive and thrive in the new Medicare market. Those who are not maximizing risk scores and are not reimbursed the dollars thay deserve will struggle and likely not survive.

On Tuesday, January 24, the Centers for Medicare and Medicaid Services hosted a call to discuss coverage of Medicare Part B drugs as it relates to Medicare Part D. Drugs excluded from coverage under Part D were also discussed. CMS provided an overview of the Medicare Parts B/D Issues (http://www.cms.hhs.gov/Pharmacy/) and followed by answering questions for over one hour. Due to the extension of the original conference call, the encore presentation will not be available until after 4:00 EST. To access the encore presentation, please call (888) 286-8010 passcode: 70165156. The encore presentation will be available through Sunday, January 29.

P4P is already on its way and most organizations that manage Medicare lines of businesses are not preparing for the changes in data collection and reporting. Here is a good article outlining the P4P programs already in demonstration with CMS and where they are headed. Now is the time for us to pay attention and begin planning and preparing.

• Outpatient dialysis facilities: Composite rate payments should be increased by the market basket increase for the sector, or 3.1%, minus 0.45% to account for productivity gains. In addition, MedPAC said Congress should direct the secretary of HHS to eliminate disparities in payments to hospital-based and freestanding dialysis facilities under the composite payment rate and combine the composite rate and add-on adjustment for dialysis medications into a single payment.
• Doctors: Payments to doctors should be increased by the expected change in “input prices” for doctor care minus an adjustment for productivity gains, resulting in an overall increase of 2.8%. The cost of the increase would be $1.5 billion in the first year and $5 billion to $10 billion over five years.
• Payment codes: The HHS secretary should establish a new procedure for reviewing payment codes that accompany the tests and services for which doctors bill Medicare to help identify services that are “overvalued.” A new permanent panel of experts should be appointed to review recommendations by the Resource Utilization Committee. The panel also recommended no payment increase for FY 2007 for home health agencies, inpatient rehabilitation facilities, long-term care hospitals and skilled nursing facilities. In addition, MedPAC decided that it will postpone for now a recommendation to address the “relatively poor performance of rural hospitals” under the existing outpatient Medicare payment system, CQ HealthBeat reports.

Reaction

The American Hospital Association said it was “dismayed” with MedPAC’s recommendation to reduce the Medicare payment increases called for under law. AHA Executive Vice President Rick Pollack said, “This poor decision ignores data detailing the pressures facing hospitals and fails to take into consideration the very serious impact any reduction in payment would have on hospitals and the patients we serve.” He added that hospitals’ Medicare margins have fallen continually since 1997, and in 2004, 68% of hospitals lost money treating Medicare beneficiaries. “With this evidence at hand, MedPAC’s recommendation for less than a full market basket update is very troubling and threatens hospitals’ ability to continue to provide vital health care services,” Pollack said. Larry Minnix, president of the American Association of Homes and Services for the Aging, said, “We are disappointed that MedPAC recommended no inflation adjustment for SNFs in 2007, especially since the Commission reported last month that profit margins at non-profit SNFs are nearly zero.” Minnix added, “This recommendation only amplifies the need for our country to take a comprehensive look at how to overhaul long-term care financing to meet the needs of our aging population” (Reichard, CQ HealthBeat, 1/10).

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