Compliance, the Courts and a Risk Reminder
In previous posts I’ve written about the need for providers in all industry sectors to fully understand the compliance and legal risks that are inherent to the appropriate industry sector, as well as to health care today in general. As someone who has been immersed in health care operations and health policy for the past quarter century, I can honestly say that I have not seen a period more perilous for providers and quite frankly, I perceive that it will remain risky and perhaps escalate in the near future. Consider the following;
- There is renewed vigor and funding in Washington to root out perceived waste and fraud, principally focused on Medicare. Every sector that I follow is a target for the OIG and/or Recovery Audit activity. In spite of GAO findings that Recovery Audits have fallen short of achieving their targeted goal of reducing $231 million in over-payments or improper payments, the action from CMS is to “improve” the system or in other words, increase the amount of personnel and resources devoted to this task. In July, the Department of Justice announced the results of a multistate Medicare fraud investigation implicating 90 individuals, tied to a total of $251 million in Medicare payments. The investigation involved doctors, nurses, therapy companies and others. The investigation was part of the new Health Care Fraud Prevention and Enforcement Action Team.
- According to a recent report from the Congressional Research Service the number of new agencies, commissions and boards created under the recently passed Health Care Reform law is “unknowable”. The Center for Health Transformation headed by former speaker Newt Gingrich estimates that 159 new agencies, offices and programs were created under the PPACA and the Joint Economic Committee claims 47 new bureaucratic entities were created. What this all means in brief is “more regulation”, not less and in most cases, regulations that haven’t even been written yet. Most troubling is that the PPACA seemingly creates bundles upon bundles of additional regulation but is virtually moot on any current regulatory relief or reform. Two interesting charts regarding the bureaucracies created under the PPACA are available at http://www.healthtransformation.net/
- Existing regulatory burdens are already steep and increasing, regardless of the PPACA. Take for example, the annual CMS rule making process regarding rates and payments. Wholesale changes in Medicare assessment requirements and payments are forthcoming this fall for the SNF industry. The home health industry has also seen its share of Medicare reimbursement changes and required assessment and documentation changes under Medicare imposed by CMS without any legislative activity. New HIPAA requirements regarding electronic communications came into play this year, new self-disclosure rules under Stark and the False Claims Act, as well as dozens of other agency regulations.
- Non-health care specific laws also change constantly and impact providers. Whether these laws are labor related, tax related, state laws, local laws, commerce laws, building codes, etc., all are in some way related to the general business conducted by providers.
- The court system (or more appropriately, the plaintiff’s bar) has become more actively focused on the provider side of the health care industry. In just the first seven months of this year, two significant class-action suits have laid new fertile ground that providers should both fear and understand. The first occurred in California where a jury awarded plaintiffs $613 million in statutory damages and $58 million in restitutionary damages (punitive damages not yet determined) against Skilled Healthcare Group, a proprietary nursing home chain. The award was predicated on a 4 year old complaint that the organization failed to staff its facilities to meet the State of California’s minimum staffing requirement of 3.2 nursing hours per patient day at 22 of its California facilities. The ”rub” in this case for providers is that no harm or actual damage theory was applied to the “class of patients” affected or in other words, the residents of the 22 facilities were never effectively damaged in total yet, the jury awarded the maximum damages allowed under California law. The result is that, even before punitive damages are assessed, the damage amount is larger than the value of the organization or more simply, if the damage amounts remain unaltered, Skilled Healthcare is bankrupt. A final piece of irony? The regulatory system that oversees nursing homes in the state took no specific action against Skilled Healthcare to prevent the “understaffing”. The second case comes from the home health industry where as of today, three class action suits have been filed against Amedysis, the industry’s largest proprietary home health company. The suits were born as a result of a Wall Street Journal article and a subsequent Senate Finance Committee inquiry into the Medicare billing practices of large, for-profit home health companies. The fundamental allegation is that Amedysis, along with other major for-profit companies, used the Medicare rules in-place to essentially increase their revenues. The fundamental issue pertains to therapy visits and a provision under Medicare two plus years ago that provided for incentive payments to be made to agencies based on the number of therapy visits (more visits, higher payments). The basis of the suit against Amedysis (clearly a target because of its size, its focus on Medicare patients and the Wall Street Journal article) is that the company overstated its revenues and once investigated or discovered, the same activity now disclosed caused shareholders to lose value as a result of falling stock prices. In a unique twist, the suits use Sarbanes-Oxley, a securities related law that requires senior corporate officers to avoid activity that would result in unethical conduct or malfeasance, harming shareholders. As in the Skilled Healthcare case, the irony here is thick. First, there is no allegation that patients were harmed or that care was rendered inappropriately. Second, the activity of Amedysis was not under investigation by CMS or the OIG concurrent to or before the filing of the suits. In other words, the government’s own enforcement activity was moot on this issue and there is considerable question as to whether what Amedysis did was even improper given the rules that were in effect at the time. Third, virtually all providers practice Medicare maximization or that time-honored practice of using Medicare’s own rules concerning reimbursements to maximize the amount of reimbursement available to them. If the Amedysis case is the standard, virtually every Medicare provider would in fact, be guilty of similar conduct dependent on the industry and the applicable reimbursement rules.
Taking the above into account, and it is truly an overview only, providers need to recognize the gravitas of the environment and the totality of legal and compliance risks that are present and mounting. Recognition and identification of the compliance requirements per applicable industry sector and the legal risks associated with the business and operations encompassed is where providers can begin to respond, not react, and develop the tools, processes, plans and ultimately culture, that mitigates risk and creates effectively compliant operations (“effectively” because totally compliant is improbable if not impossible). Below are some time-honored tips and approaches for creating an organizational environment that achieves high-levels of compliance and mitigates legal risks (I ran a very large, multi-site, complex organization for twenty plus years and never had a lawsuit).
- Within each industry sector there are tons of regulations that in theory, require daily compliance. Likewise, within each industry sector, there are compliance themes and “key” compliance requirements. Focus on the key compliance requirements as activities, tools, and systems that drive compliance in these areas mitigates 90 plus percent of the compliance risk and in all cases, the risk that is expensive and serious. I like to think about the core intent of compliance and create understanding and organizational capacity and systems around these intents. For example, in the areas of patient care, outcomes are the baseline of regulations. Regulations focus on documentation of outcomes, prevention of negative outcomes, and actual standards for outcomes. Systems which assure a close match with the regulatory expectations and are part of an organizational QI process (constantly) achieve the regulatory intent and create a “halo” of compliance. The same can be said for billing practices under Medicare and Medicaid, privacy requirements under HIPAA, etc. Polices are insufficient to achieve the requisite level of compliance required and quite often, do nothing more if not integrated within organizational practices and systems, than create more compliance risk.
- Legal risks are harder to quantify but in some cases, easier to generally address. Take the two legal cases I illustrated above. In the first case, if the staffing requirement in a state is 3.2 hours per patient day, any provider flirting with these levels consistently is asking for trouble – avoid the risk entirely. In the second case, as I pointed out, Medicare maximization is a time-honored tradition for providers. What is not time-honored or allowable, is any activity that suggests that the provider is routinely and consistently, seeking to “game” the system. I see too many therapy companies and SNF providers that merely “up-code” all residents into Ultra High therapy categories as a means of achieving the highest Medicare reimbursement per day. I see too many providers stress the justifications for additional days, manipulate the rules to extract additional benefit periods, and create care requirements and documentation that is not supported by the actual needs or conditions of the patient. These activities, when pervasive and constant, create a legal risk that is tough to impossible to defend. A better approach is to develop strategic and operational plans that maximize revenue the right way. The right way is by achieving high-levels of organizational capability in delivering the right care to the right patient at the most efficient cost levels possible. It also means developing marketing plans and programs that attract the ideal patient mix that produces the highest possible revenue profile for the organization. With respect to employment, avoiding significant legal risks means dealing with employees within the constructs of employment law. This doesn’t mean don’t fire or don’t discipline. It means fire and discipline effectively and only for consistent, documented and legally permissible activity. A core or key requirement is to effectively train and only employ, capable and competent management that know and understand the applicable labor laws and are capable of using effective hiring and supervision methods that produce organizational results without violating company policy or the law.
- Organizationally, the primary methodology to achieving a high level of compliance and to mitigate legal risks involves creating an organizational culture that focuses on compliant activity and solid risk management principles. While not exhaustive, here are some key elements that are part of the culture.
- Internal and external education and audits that identify risks and provide solutions. Developing organizational thought-leaders and subject matter experts provides key resources that can be deployed to solve problems, identify risks, and provide education.
- Encourage reporting and self-disclosure and reward the activity. Management must be open to hearing “what is not right” and providing reinforcement for this activity.
- Integrate compliance and risk management as part of strategic planning and allocate budgetary resources adequate to address the risks. While risk prevention always appears to be money with another use, it is far cheaper to prevent compliance and legal risks than it is to bear the costs after an event has occurred.
- Reward the concept and ideology of “doing the right things” first as opposed to those things which may be short-term, expedient or more profitable.
- Benchmark and test key indicators constantly. For example, if your Medicare census and revenue per day is higher than industry norms and/or market norms, make sure that such results are tied directly to organizational performance and activity, not to billing creativity.
- Provide ownership to compliance activities and outcomes to all staff, not just management. Engage the entirety of the workforce.
- Keep up with pending or new regulatory activity and legal activity and get “ahead” of the curve. Organizations that only respond to laws already passed and cases already decided tend to get caught trying to “react” rather than remain vigilant and prepared. Rarely do new compliance requirements and legal requirements come instantaneously on the radar screen – they have been there for a while. Providers that see and understand the trends can use the virtue of time to integrate new systems into existing systems, teach new knowledge requirements, and build new organizational capacity to manage effectively, the new requirements.
As the Home Health and Hospice World Turns: Part II
In Part I, I wrote about my last week’s conversations, etc. regarding the home health industry, specifically Amedysis, the Senate Finance Committee inquiry, the industry impact via the PPACA and the likely consolidation and merger trends that are approaching. Suffice to say, not all of last week’s news and conversations focused on the home health industry as over the last thirty days, much has happened in the hospice industry as well. The difference between the two industries is that in hospice, the major news involved a significant merger and in home health, the major news involved the legal and compliance issues of the largest provider entity – Amedysis.
The hospice industry saw, via the merger between Gentiva and Odyssey, the creation of the largest home hospice company in the industry. Gentiva, while also a provider of home health, clearly chose to direct more of its attention to the hospice industry, moving from a moderate player in the industry to the predominant player via the acquisition of Odyssey. Odyssey, while not as large as Vitas (the former largest hospice provider), held substantial market share and presence and in many regions and distinct market areas, competed head to head with Vitas for patients. For more information on the Gentiva/Odyssey transaction, see a related article in my company’s E-Newsletter at http://wp.me/pD9Ac-4Q .
Analyzing this merger leads me to a series of assumptions about where the hospice industry is at present and where it is likely headed.
- Hospice is now clearly a mature market or in other words, a market that is unlikely to grow significantly over the near to intermediate term horizon. Despite a fairly profound demographic shift occurring over the next twenty to thirty years (the maturation of the baby-boomers), there is no real indication even with this influx of older adults, that hospice as model of care, will gain in referral popularity. While seniors utilize hospice more in total numbers than any other age cohort, as a percentage of the total cohort, utilization trends show little forward growth. There are a number of reasons why;
- Culturally, U.S. medicine and the U.S. population still values the process of cure or health restoration far greater than the concept of natural death. As hospice is a downstream referral (the referral comes typically from non-palliative medicine trained physicians or via hospitals and/or long-term care providers), the hospice industry relies on the referral source to be; a) knowledgeable about the value of hospice and how it works for patients and their families, b) willing to forego potential incremental revenue for continued care by making the referral to a hospice, c) willing to engage the patient and the family in a difficult conversation regarding end-of-life and treatment futility. As long as these dynamics remain in place to the extent they presently are, the growth of utilization will remain fairly stagnant.
- Financially, the incentives for referrals to hospice don’t truly exist within the current U.S. system. There are no barriers in-place to reduce the reward (payment) for continued acute, diagnostic or curative care (choose your own verbiage) and as a matter of fact, the reimbursement systems (private and public) pay incrementally more for more intense care than palliative care, even if arguably, the care is futile. As only patients and their respective treating health professionals can conclude that continued curative care is futile or unreasonable, the process of garnering more money for more treatment remains intact as a perverse incentive.
- While not for hospice people or physicians trained in palliative medicine, terminality remains an uncomfortable and even disputed condition for many physicians. Patients and there families still wish to avoid discussions far too long and in some cases, avoid the discussion altogether. While in-roads are perhaps being made in some medical centers and in certain communities, these in-roads are miniscule and not evident of a ground-swell movement toward open discussions regarding end-of-life decisions.
- As with the home health industry, the movement in Washington is toward curtailing the growth of hospice spending. The prevailing feeling in Washington policy arenas, supported by Medpac, is that the hospice reimbursement under Medicare is too generous and the benefit itself, easily manipulated and poorly defined. While the PPACA did little to negatively impact the hospice benefit or payment, the recommendations directed to the Secretary of HHS in the language intones significant changes forthcoming.
- Reimbursement under Medicare will change such that early days in the initial benefit period will be paid more as will days at the end of the patient’s stay (proximal to death). Days during the interim, longer stays will be reimbursed with lower payments. The point here is supposedly a recognition that patients with long stays have periods of stability necessitating far less care from the hospice.
- More emphasis will be placed on denying stays for non-specific terminal conditions or denying portions of stays. CMS has determined that too many longer stays are related to diagnoses such as terminal dementia, failure to thrive, etc. In order for these stays to be covered, the onus will fall on the hospice to provide very detailed documentation supporting patient decline.
- More emphasis will be placed on physicians to document terminal conditions and to prognosticate length of likely survival, especially at recertification periods. More direct “hands-on” involvement of physicians will also be required (physically seeing the patient).
- Certain types of stays and relationships between hospices and nursing homes will be closely monitored and reviewed. CMS and Medpac have determined that hospice stays in nursing home environments on behalf of nursing home patients are considerably longer and possibly in many cases, in violation (the hospice) of the conditions of participation as hospices utilize nursing home residents as sources of revenue but often, fail to meet the care requirements (using the nursing home as the source of care and service) under the hospice federal code. Additionally, CMS and Medpac have placed the target for reform squarely on the large for-profit hospices such as Vitas, Gentiva and Odyssey which have typically used nursing homes as major sources of referrals for hospice patients.
- The PPACA, while not bending the cost curve or reducing the overall level of national expenditures on health care, does change in the interim, the overall health care economy. Providers are re-positioning and re-grouping to combat what they perceive, and in some cases know, will be negative changes to how they presently do business. Providers which rely heaviest on Medicare as the bulk of their overall revenues will move the fastest and the most aggressively to alter their current business practices, knowing that regardless of the overall status of the PPACA (repeal, restore Medicare cuts, etc.), the health care economy is entering a long period of fiscal constraint – payments will never be as high or as fluid as they once were.
- Because of points 1, 2 and 3 above, the industry will head into a period of consolidation and even, contraction. The Gentiva/Odyssey merger is a signal of the maturity of the industry and the trend toward tighter regulation of hospice stays under Medicare (the bulk of the hospice revenue) and less economic value per each stay. Lower future revenues per stay, either via reimbursement cuts or regulatory constraints placed on the length of stay, means more overall stays are required to equal the same or greater revenues going forward. As the growth curve of new “potential” referrals is flat, the only real source of new business or referrals for a provider is acquisition of existing market share (buying someone else’s referrals). In order to maximize profitability in an environment where the market is mature and the total revenue per each case is flat to shrinking, providers will have to adopt one of the three strategies below.
- Acquire other providers to build more referrals or volume. While each patient stay will be economically less valuable, increasing the total number for a provider while maintaining expenses on a ratio basis, lower than revenue, will provide a method to achieving overall net income targets - critical for publicly traded provider organizations.
- Shrink the organization to fit the new revenue and length of stay realities that are in place and forthcoming. An organization that can right-size its operations to fit the new business paradigm will be smaller but potentially equally or perhaps, more profitable. The risk here is that provider organizations that are acquiring market share may marginalize some markets such that a shrinking provider (by choice) loses desirable market share.
- Expand non-Medicare business and add complementary businesses that may provide incrementally equal or more revenue than that which is lost under Medicare. Arguably, this strategy may only work for regional or single market providers and those that have strong system ties (hospital owned, etc.).
One final point to note concerns the economy. Absent from the above factors I laid out influencing the hospice industry is the stagnant economy. With recovery a daily discussion regarding likelihood and timing, current uncertainties persist that impact hospice providers rather dramatically.
- The overall number of paying patients available to all providers within the health care economy has shrunk in recent years. This shrinkage is primarily due to job losses and benefit losses. Until employment rebounds and jobs with benefits become more plentiful, consumers for health care in the form of paying patients will remain down.
- When fewer paying patients are in the queue, those patients that do have a payer source, even a less than optimal government payer source, are prized commodities. Each provider wants a piece of the same paying patient.
- Hospice is as I pointed out, a downstream referral. When the upstream referral source, principally hospitals, lacks sufficient paying patients in the queue to replace current patients it “may” customarily refer downstream, it holds the paying patient longer, either delaying the referral and the portion of revenue that comes with a longer stay or avoiding the referral all-together. Similarly, all downstream referral sources such as nursing homes compete aggressively for the referrals even though a referral of a terminal patient (or potentially terminal patient) is ordinarily, not a prize catch for most nursing homes. This competition erodes the number of total possible referrals available to a hospice.
- Each patient has an economic value to a provider. When a patient with a higher economic value (a better payer source) are lacking, providers sort down to the next patient level. This sorting process occurs as a result of too few patients with payment sources available to match the supply or capacity within the existing provider universe. Some markets hit hardest by the downturn will evidence this reality in greater depth and unfortunately, with greater persistency. For hospices (and all downstream providers) in these heaviest hit markets, referrals have trended down and will stay down until the supply of patients with payment sources increases and specifically, the supply of patients with better payment sources and today, deferred health care needs (e.g., elective surgeries such as joint replacements, etc.).
As the Home Health and Hospice World Turns: Part I
Sorry for borrowing (piece of) a soap opera title for this post but it is rather appropriate given the news that occurred over the past 30 days. Just this past week, I’ve been interviewed by two business newspapers and on the phone with an investment banking firm I consult with from time to time regarding Amedysis, Gentiva and Odyssey’s merger, the pending impacts of the PPACA on the home health and hospice industry, mergers in the industry in general and using a “catch-all”, what the “heck” is going on in the home health and hospice sectors. With a chance to recoup over the long 4th of July weekend (and organize my notes from last week’s conversations), a post on what all the conversations were about seemed appropriate.
Amedysis: A month ago, on my company’s E-News site (http://apexhealthcareconsultants.info), I edited an article regarding the Senate Finance Committee’s inquiry into the Medicare billing practices of a handful of very large home health agencies (Amedysis, Gentiva, LHC Group etc.). The inquiry is a result of an article that appeared earlier in the year in the Wall Street Journal, focused quite intently on Amedysis’ billing practices; principally as applicable to therapy visits. The fall-out since the Wall Street Journal article and the Senate Finance Committee article is two-fold. First, the class action suit (I’ll touch on it in a bit) and the hefty drop in Amedysis stock price.
In brief, the class-action suits (there are three) focus primarily on the perspective of shareholders (the “class”) and alleges that the questionable Medicare billing practices (none of which at this point, CMS or the OIG has taken specific issue with) served to artificially increase the share price of Amedysis stock. The allegation of abuse of the Medicare system, prior to any action taken by the federal regulatory system in the form of a fraudulent billing investigation or claims investigation, is a bit different in-so-much that it essentially accuses the company of manipulating its earnings as opposed to causing harm to any patients or group (class) of patients. The “harm” for shareholders is the drop in price that would/did occur as a result of the alleged fraudulent billing practices. To add a twist, the suits also allege Sarbanes-Oxley violations which require the corporate officers of publicly traded companies to abide by a code of ethics. Amedysis settled an allegation of fraudulent Medicare billing practices in 2003 (for Medicare activity between 1994 and 1999) and as part of the settlement, expanded its corporate compliance activity/program. Additionally, since 2003, Amedysis has had notable turnover of the key financial executives (CFOs primarily) with active rumor-mill chatter focusing on the cause related to overly-aggressive Medicare billing practices. Medicare represents 87% of Amedysis annual revenues, by far the largest percentage for any home health provider in the industry.
As Paul Harvey (famous radio newsman now deceased) was famous for; “Now, for the rest of the story”. There are a number of different and integral factors in play that are unique to Amedysis but also, symptoms of an industry, a payment system and a flawed health care reform law.
- The issues regarding possible Medicare over-billing or at least, aggressive billing are not new for Amedysis. Their growth has been remarkable and unique for an agency so fully immersed in a government revenue stream. What is unique at this point in time is that the Senate Finance Committee inquiry, Wall Street Journal article and now the class-action suits come in advance of any customary federal regulatory actions. I do suspect that CMS and the OIG will enter the fray in the near future.
- Medpac has reported to Congress repeatedly that the Medicare payments to home health agencies were “lavish”, producing double digit profit margins on average, for most Medicare home health encounters. The PPACA (reform law) effectively cut Medicare payments to home health agencies and increased the documentation requirements for agencies to justify the necessity of continued visits.
- The feds have aggressively stepped-up their search via Recovery Audits and targeted billing inquiries for Medicare over-payments or more appropriate, Medicare fraud activity. This activity is two years old and growing each year with additional force. The writing is/was “on the wall”.
- To fully understand “what” is at the core of the Amedysis issue is to understand the age-old economic axiom that states, “what gets paid for (rewarded) gets done”. Medicare provided a utilization incentive tied to a certain number of therapy visits ($2,200 for 10 visits). Agencies thus targeted patients and developed care practices that maximized the opportunity to garner the incentive payments. In a typical government move, CMS rescinded the incentive payment as it became obvious that agencies were “gobbling-up” the requisite visits and conforming patients to achieve the incentive. A more meager incentive of a few hundred dollars is now provided at six visits, fourteen visits and twenty visits. Oddly enough, companies today seem to provide far more “six visit” encounters than twenty visit encounters (profitability vs. cost for twenty visits as well as a likely evident decline in medical necessity by the twentieth visit). Amedysis of course, is not alone in seeking to tie care provided to reimbursement nor is the home health industry alone in gaming the Medicare reimbursement system for additional dollars. For-profit hospitals, nursing homes and hospice agencies (and non-profits) alike are skilled at “Medicare maximization”, effectively matching what Medicare will pay with certain types of referrals, matched against the costs incurred to care for certain types of patients. This game goes on year-in and year-out with CMS constantly tweaking PPS categories to incent providers to take certain patient types (payment was too low) and to reduce the profitability of other patient types. In short, what gets paid for gets done.
- The PPACA did nothing to reform the system and arguably, it made it worse by attempting to extract funds via reimbursement cuts from Medicare. Of course, it is unlikely these cuts will be fully made or sustained as Congress has never shown the political will required to cut provider payments. By not truly reforming how Medicare reimburses providers for care, the PPACA only served to layer on huge amounts of bureaucracy to an already antiquated reimbursement system. In the end, nothing changed in terms of how Part A and Part B of Medicare pays providers; only the amounts “theoretically” changed. As a system, Medicare pays more for more care and higher acuity care. Providers will naturally gravitate their referral gathering efforts and marshall their care delivery systems toward the patient encounters that create the most “spread” (cost vs. payment). As the overall universe of these “profitable” patients is somewhat fixed, the provider universe is forced to unnaturally stretch the definitional boundaries of patient types (upcoding in plain health care vernacular). In other words, there are not enough truly “organically” existing patients that fit the best (most profitable) reimbursement categories but there enough that are perhaps, at the fringes. Add the fringe patients with a bit of creative tweaking via assessment and documentation to those that organically exist (fit the exact patient type) and presto, sufficient current volume for all providers. The difficulty for regulators and others who would charge that the fringe patients are not truly members of the organic group (those whose care requirements exactly match a certain reimbursement category or categories) is “proof”. The provider and medical communities are far better versed in assessment techniques and documentation requirements and as such, little can be done to reign in this reimbursement “three-card Monty” game. Until the reimbursement is reformed to reward better, more appropriate and efficient care versus “more” care, the over-reimbursement problem will remain, as it has for decades dating back to when providers ballooned certain costs to receive higher per diem rates from Medicare (under the cost-based reimbursement system).
What comes next in this paradigmatic shift in the home health world is merger/consolidation. As the profitability of one element of Medicare business shifts, larger agencies will acquire smaller to medium-sized agencies in order to increase market-share, lever infrastructure, and to supplement lost incremental margins with volume. Simply put, if the relative margin for one type of encounter shrinks, recouping that lost margin (or at the least the majority of it) becomes a function of incurring more encounters with smaller margins. As long as the incremental costs of additional capacity to handle greater volume remains in a ratio, lower than the net revenue received from the greater number of “less profitable” encounters, it is possible to generate a similar level of organization-wide, net operating income. The fastest and arguably most efficient way to create incrementally more encounters is to acquire someone else’s encounters at a price-point that is sufficiently low enough to create virtually (virtually to mean within a short time-frame) instant margin via the increased volume/market-share.
In effect, smaller agencies with less volume to spread the reimbursement loss/risk become attractive targets in this environment. A smaller agency’s value drops as its revenue/margins shrink and with limited geographic presence and referral markets to spread the lost revenue risk across, the entity price declines. The decline in entity price is attractive for a large acquirer seeking solely market share and/or incremental volume. In short, the acquirer is capable of paying less for the economic value of the entity (it has declined or will declined) which it really doesn’t want, save the referral market or incremental patient volume which it desires. The value is purely found in the market share or referral base, not in the economic metrics or financial value of the entity. For a larger provider, acquiring smaller agencies within areas that the larger provider presently doesn’t serve or undeserves is the goal. The “merger” is almost protectionist; protecting profit margins or revenue streams that are shrinking by increasing volume and thus (hopefully), more overall revenue, equalizing the lost revenue once gained per encounter during periods of higher reimbursement.
In the next post, Part II, I’ll review what is going on in the hospice industry and why the Gentiva/Odyssey transaction is significant in terms of a harbinger of activity yet to come.
Five Things Every Administrator Should Focus On
I had a phone conversation earlier today with a friend and colleague (he’s part owner of a rehab consulting and management company) and as we talked, the conversation reminded me about the host of issues facing health care administrators. Our conversation flowed to long-term care and specifically, SNFs (he spends a lot of his time with SNFs) and the work his firm is involved with. We kicked around some ideas and as our conversation concluded (hopefully with a golf date soon to be set), I did some thinking.
My friend always tries to get me to do “more” speaking engagements, particularly at conferences and trade association meetings and in this case, he was trying to convince me that the discussion we had was great information that “everyone should know”. Oddly enough, I agree but as time doesn’t always permit me to head out on the speaker’s circuit, it made sense to “boil down” our conversation into a quick written summary.
Health care administration, like any leadership discipline, should be (about) one-third current operations focused and two-thirds future operations focused. I realize, having done the job myself for over twenty years, that some days or even weeks bend this ratio but over the long-haul, in order for an Administrator to lead (regardless of title), he/she must be willing to step a good distance forward to lay the ground work and strategies for “what will be”. In other words, effective administration is about understanding what is going on in the industry, how events or policies, etc. not yet in effect will alter the business, and developing plans and strategies to move the “current” toward the “future’. In simpler language: Effective health care administration is principally about planning. Effective leaders have a running gap analysis in their heads; inherently understanding the current status of operations and matching that with what is yet to transpire. Leaders with tenure have a bit of advantage as they should innately understand historically, how change roles out with new government policies, changes to reimbursement, etc. The experience of having been through numerous changes in the business can’t help, if matched with effective planning abilities, but provide a clearer understanding of how to migrate current operations to the next required level of operations.
Synthesizing from my view, what has and is happening in health care today and what I see and hear about long-term care administration and the organizations in the industry, I hashed out five things (issues, concepts, etc.) that every Administrator (senior leader, etc.) should focus on. Obviously, the list could be expanded but in reality, focus on the key or critical five below will produce the kind of results administrators desire and organizations require.
- Medicare and Reimbursement: Regardless of any white-noise concerning possible delays or advances in the implementation of RUGs IV, MDS 3.0, etc., the path is laid and the dates will occur sooner rather than later. Getting clinical and billing functions up-to-speed, educated, and ready to roll is an absolute necessity. During this process, I’d analyze a whole series of issues and begin to lay the ground-work for any related changes to the present course of business, such as;
- What is the potential impact on my Medicare revenues?
- How is the revenue impact related to my current case-mix?
- Should I begin to adjust my case-mix via different marketing strategies or the implementation of some new clinical programs?
- Does my software/IT systems support new forms, new charting/documentation requirements, assessments, and billing documentation? If not, what is my vendor doing to get us there and when will they be ready?
- Big changes are about to occur in therapies particularly and what, if I am using an outside vendor for therapy, are they doing to be ready? Does this impact our contract and our overall care delivery in any way? Is now a time to consider transitioning to an in-house therapy service?
- Are we, as an organization, actively engaged in communicating what is happening to outside vendors, referral sources, etc.?
- Do we have a fully integrate project plan, budget for change implementation (training, software, etc., costs), and a methodology in-place to review, change and update policies, procedures, forms, etc.? (Names need to be involved, dates set, milestones identified, time set aside for review, time set aside for meetings, etc.)
- Compliance: This is a huge issue today and it continues to grow as health care reform upped the ante once again. There are at least a dozen or more key concerns every organization should have in this area and very recent policy and legislative activities have added to the list. Below is a sample of what should be at the forefront of every administrator’s compliance focus.
- Billing compliance, particularly Medicare. Health care reform and the focus on the part of Medicare to save money via reduction of fraud, waste, and overpayment is a hot topic now. I routinely encounter way too many administrators and organizations that have pushed the revenue per diem issue far too much under Medicare, leaving enormous areas of exposure for recovery actions to occur. In other words, I’ve seen way too much routine high level rehab coding, length of stay elongation, etc. than what the clinical documentation supports. Too often, I encounter MDS coding to substantiate rates of payment and then when the resident’s chart/record is reviewed, the documentation is far different than what appears on the MDS. Administrators need to be wary, even though the revenue numbers look good (perhaps too good), of questionable billing activity under Medicare.
- To the point above and addressed in a recent post here, all organizations should have a compliance plan and now, under health care reform, SNFs are required to have one in place this fall. Compliance is about not just being “compliant” with survey and certification rules but also with other federal laws such as Stark and the False Claims Act. There is no reason that any organization participating in Medicare and Medicaid today does not have a fully developed compliance program and a process for routine audits to preemptively identify,correct, and disclose potentially illegal activity – the ramifications under the law for providers are far too severe. For more information, see my post titled “Stark, Health Care Reform, and Updated Compliance Requirements”.
- There are new privacy and security requirements under HIPAA that organizations need to have in-place. For more information, see my post titled “New HIPAA Provision Now in Effect”.
- Survey and certification requirements such as the QIS are here and the government is in the process of revamping the Five Star rating system. As much as I think the survey and certification process is onerous and unrelated to true care quality, administrators need to understand the peril of poor performance and sub-standard quality. Keeping an up-to-date and clean survey history is vitally important in order to avoid fines, public relations problems, rising liability insurance costs and potential litigation problems.
- Patient/Resident satisfaction is an area that too many administrators believe is unrelated to compliance activity; think again. I see way too many facilities that end-up in compliance problems as a result of resident and family complaints. Dealing with satisfaction across the board is an “ounce of prevention” compared to the “ten pounds of cure” that are required when unsatisfied customers complain to the regulatory authorities.
- Transparency and disclosure are two new buzz words that every administrator should incorporate into operations. In today’s arena, disclosure of ownership, governance, staffing, etc. are the new rules of the road and there is no reason any longer not to publicly embrace a plan of transparency and disclosure of all this information and more.
- Labor Relations: The largest allocation of resources in health care is for staff via wages and benefits, etc. yet I still see too many antiquated labor relations approaches that produce high levels of turnover and poor productivity. To me, it is time for health care to adopt labor relations strategies found in other industries and in companies that have world-class employee productivity, retention, and commitment. Administrators can immediately and positively impact the bottom-line by simply focusing on improving retention, hiring practices (avoiding panic hiring and using better matching strategies), improving supervisor training, removing antiquated pay structures and reward systems, and adopting programs and policies that incorporate employees into the overall strategy and direction of the organization. Stable staff equals better compliance, higher customer satisfaction, higher productivity and lower labor costs (less turnover, less recruiting costs, etc.).
- Risk Management: Leading an organization forward is about identifying “risks” that are inherent in the business and developing plans, strategies and processes to mitigate the impact of risk on the organization’s performance. Though of another way and using a phrase I like and used to use frequently, it is about avoiding the expenditure of “stupid money”. Stupid money is money spent unnecessarily on litigation defense, turnover, higher levels of insurance costs such as liability and worker’s compensation, on agency staff or outside pool staff, on fines and forfeitures, etc. These are all expenses associated with identifiable and known risks and risks that can and should be mitigated by appropriate planning and system implementation. Extremely effective risk management tools and practices don’t require large amounts of investment or even, elaborate policies and procedures.
- The best defense is knowledge – knowledgeable and well-trained staff, active and capable management. Risk management is practice best by management being where the “risk” is, not tucked in an office or tied up in too many meetings with limited purpose, no real agenda, and no specific outcome.
- Using patient/resident satisfaction systems is simple and highly effective at identifying areas of potential problems or risks.
- Using benchmarks available from various industry sources to review facility or organization specific indicators against industry norms.
- Using programs of “gain-sharing” and other incentive compensation practices, tied to compliance, tied to satisfaction, tied to workplace accidents, absenteeism, etc.
- Keeping employees informed regarding organizational policies, standards, plans, etc. Employees involvement and input is a very simple and effective way to mitigate a whole series of risks.
- Using periodic audits to check documentation against billing, patient results and outcomes against set standards (infections, wounds, falls, etc.) and compliance with company policies and procedures.
- Education which can occur via very cost-effective means such as webinars, books, staff to staff training, trade association meetings, etc.
- Purposeful Activity: The famed educational philosopher John Dewey wrote a great deal about “purposeful activity” or the time spent engaged in seeking a desired outcome. For Dewey, this involved the application of the scientific method; the search for answers and insights via a systematic and “purposeful” approach. Health care is a bureaucracy and I watch administrators create additional bureaucracy within their own organizations either in defense of the existing bureaucracy or as a symptom of the bigger bureaucratic problem. I’ve never frankly, understood why health care is so fond of so many committees and meetings that accomplish virtually nothing and consume layers of management staff ad nauseum. Purposeful activity for an administrator is about simplifying as much of the operations and business processes as possible and sticking to some real tried and true managerial and leadership approaches.
- Every meeting must have a purpose, an outcome including a “next step”. No meetings or committees should ever be held or created without a purpose and an outcome and the outcome is never to “meet again”.
- Every manager must have enough authority and be charged with making and held accountable for decisions. Managers that are not accountable for “things” and don’t make decisions are enormous wastes of money and enormous sources of risk. Organizations that allow managers the cover of committees and meetings are wasting enormous amounts of productive energy and time.
- Formal meetings and committees should be entirely focused on two things and only two things; compliance (required reporting and information sharing) and addressing what is “new” or going to be “new”. The latter is about change and developing new strategies or learning, etc.
- Meetings must be brief and have requirements for preparation prior to the meeting and work or tasks to accomplish post the meeting. Discussions don’t require a “meeting”.
- Limit communication via voice mail and e-mail and require people to present their issues in person. Voice mail and e-mail have become the bane of office productivity as they produce “cover”, allowing people not to address what needed or needs to be done. (The famous, “I sent you an e-mail on that”).
- For an administrator, the most purposeful activity is planning and strategizing; taking in information, developing plans and strategies, and assessing the same in light of current operations. All activity, or at least as much as possible, should be focused on improving what exists today, matching future industry trends and requirements with current operations and a strategy to address the future requirements, and communicating what is happening via plans, performance indicators, etc. The test is whether the staff under the administrator can answer, “what happens next and why”.
Part B Therapy Cuts Delayed to June 1
As a follow-up to a post from last week regarding pending cuts in Part B therapy rates, last evening the House passed a bill that the Senate had passed earlier in the day, included within is a provision to delay the pending cuts to the physician fee schedule until June 1. The provision is tucked within a broader bill that extends COBRA subsidies and unemployment benefits to long-term unemployed individuals. The provision covers the period from April 1 to June 1. A prior measure, tucked into a jobs bill, delayed the cuts until April 1. Congress was on recess for the Easter Holiday, returning this week. It was expected that upon return, Congress would institute another temporary fix, pushing the reduction out for at least another month; in this case, two months.
The rates for Part B therapy are tied to the physician fee schedule which is targeted by law, for a 21% reduction. The fee schedule formula is a sore issue for Congress and physicians both, at times for opposite reasons. In periods of economic expansion, the annual inflation mechanism built into the formula can adjust the fee schedule dramatically upward, in excess of consumer inflation. In periods of economic contraction, the formula produces dramatic cuts, such as the case set for 2010. (1) Congress has sought for years to amend the economically contrived formula that produces such wild swings but has failed to find a middle ground approach that physicians can agree upon. During the debate over health care reform legislation, fixes to the fee schedule problem were imbedded within inital legislation passed by the House as a permanent solution and manipulated by the Senate in a more limited method in its version. The real crux of the issue boiled down to the costs associated with a permanent solution, estimated at $250 billion or more. With little price-tag wiggle room as reform became final in the Patient Protection and Affordable Care Act, the fixes to the physician fee schedule dilemma moved to a side issue. Given that the Part B therapy rates are mired within the fee schedule issue, the same fate of potential cuts also remained unaddressed at the time the President signed the final reform legislation into law.
The temporary delay in cuts, now set to sunset on May 31 only moves forward the same damning set of political issues. Congress and the President are trying to commit to a reform mantra that is “savings” driven. As the political landscape is clearly divided and mid-term elections loom closer, additional unfunded spending is the last element any “up for re-election” politician wants to come close to. Congressional Democrats have crafted a middle-ground approach that would delay the cuts to October 1 (the start of the new federal fiscal year) or perhaps out into 2015, freezing Medicare rates for the duration. Physicians, preferring a complete revision to the formula and deficit hawks, preferring to let the reductions occur in large part, oppose the Democrats approach.
Tackling the funding and the fee schedule/Part B issue separately as a single new piece of legislation, in my estimation, won’t occur this year. What I believe is likely to happen is that a longer term fix, perhaps until the end of the year, will get tucked into another broader spending bill, delaying once again, the core problems associated with the fee schedule and Part B.
(1) The physician fee schedule increases are tied to an economic sustainability formula that applies the Medicare Economic Index to a target called the Sustainable Growth Rate. Essentially, the Index is a measure of inflation designed to reflect the costs physicians face with respect to their practice and to wage levels. The Growth Rate is calculated based on medical inflation, the projected growth in the economy and the projected growth in the number of Medicare fee-for-service beneficiaries plus any changes in rules, laws or regulations as applicable. Congress has tinkered with the application of this formula, freezing the implementation of cuts at 0% , most recently through March 31, 2010.
Health Care Reform Implications: Home Health Care
I’m a tad behind where I hoped to be in terms of getting these posts out. Its been a bit busy over the last ten days or so but headed into the Holiday weekend, a break in the schedule affords me the opportunity to “maybe” get caught up.
Of all of the industry sectors touched by health care reform, the two most dramatically impacted from an operating perspective are DME and home care (see my earlier post on Medical Devices and DME). Over the last two years, home care or home health has become the target for payment reform, principally due to MedPac’s reports to Congress and CMS on the rising profitability of the industry, the year-over-year growth in agencies and utilization, and the percentage growth in Medicare spending. Justifiable or not, the Feds never like to see any sector perform well or grow rapidly whenever Medicare and Medicaid are the dominant payer sources. To this end, health care reform, those elements focused on home health, focused-in on realigning the trends of growing utilization, Medicare spending, and rising profitability.
- Beginning in 2011, cap outliers at 2.5% and impose a 10% outlier cap on individual agencies. The cap per agency is 10% of anticipated current year revenues.
- Reduce the market basket by 1% for fiscal years 2011, 2012, and 2013.
- Incorporate a productivity adjustment factor (offset) to the market basket beginning in 2015 (anticipated 1% average reduction).
- Rebase the PPS starting in 2014, fully phased in by 2017. Rebasing is meant to take into account the costs of treating more severely ill patients as found typically in efficient, high performing agencies. In so doing, the Secretary of HHS is charged to look at case mix, the number of visits per episode, the resources used in each visit, the cost of providing care, etc. The Secretary is also supposed to analyze the differences between agencies such as those that are free-standing, non-profit, and institution based (hospital typically). The Bill does provide that the Secretary cannot reduce or adjust (reduction is what is intended) reimbursement by more than 3.5% per year. MedPac is supposed to monitor this process and issue reports reflecting changes in utilization, changes in the number of agencies, changes in access, etc. NOTE: MedPac is the principal advocate for these changes so anticipate rebasing to mean “cuts” and MedPac to issue only favorable reports on the implications/outcomes of rebasing.
- Develop a voluntary system that seeks to create a bundled payment for certain post-acute episodes of care (yet unspecified). Under this system starting in 2013 and continuing for five years, CMS will pay one fee to hospitals, SNFs, physicians and home health agencies (as applicable) per a post-acute discharge, covering the care provided for a period of up to five days prior to hospital admission through the period ending thirty days post hospital discharge. Participation in the program is “voluntary” and the Secretary is charged with providing an analysis of the program’s impact and effectiveness in creating efficiency and improving care coordination to Congress by January 1, 2016. At such time, the Secretary shall also determine whether an expansion of the pilot is warranted. NOTE: In this pilot, the goal is to reduce costs nothing more. Hospitals and physicians are the only potential winners here and for home health agencies, the implications (negative) primarily impact fee-standing, non-hospital affiliated agencies.
- The Secretary is required to conduct a study and submit a report for possible legislative and administrative action on home health agency costs for providing care to low-income individuals, particularly those in under-served areas with high levels of disease complexity and/or disability. Medicare may conduct a pilot program worth $500 million to provide incentives to agencies in certain under-served areas, to expand services to care for these “targeted” individuals.
- 3% add-on for rural visits/episodes occurring during the period beginning April 1, 2010 and ending prior to January 1, 2016.
- Establish a center for Medicare/Medicaid Innovation in CMS that would provide some funding opportunities to agencies that implement chronic care management programs for targeted individuals.
- Require face-to-face encounter by the physician (or applicable extender such as NP, advance-practice nurse clinician, physician assistant) within a reasonable time-frame as determined by the Secretary.
- Physician must keep open records and documentation of Medicare home health referrals.
- Require that physicians participate in care plan certification.
- Require background screening and credentialing of provider, suppliers, owners and managers and require compliance plans. Also gives CMS the authority to place a moratorium on the creation of new agencies.
- Establishes spousal impoverishment protection for home care eligibility under Medicaid.
- Removes barriers for access for additional home health care under Home and Community Based waiver programs.
- Implements the Community First Choice program under Medicaid, expanding access to home care services.
One final note. The Bill provides for the creation of an Independent Payment Advisory Board tasked with submitting legislative proposals further limiting program growth and spending under Medicare if the per capita growth in Medicare exceeds targeted spending levels. Beginning in January of 2014, the Board’s proposals become law unless Congress has taken alternative action to curb program growth and spending. The Board cannot raise taxes, raise Part B premiums, change eligibility standards or increase beneficiary cost-share levels – essentially limiting the Board to relying on spending reductions. Hospitals and hospices are not subject to any Board proposals through 2019.
Health Care Reform Implications: Medical Device and DME
Over the next few days I’ll be pushing out a series of posts as my schedule permits, on the implications of health care reform for various industry segments. These are not meant as in-depth analyses, more of a “summary” of the key points.
Reconciliation Act: This Bill has yet to pass the Senate and as a result, it is possible amendments could change these provisions.
The biggest implication is a 2.3% excise tax that goes into effect in 2013. The tax is on manufacturers of devices but exempts Class I devices such as canes, eyeglasses, and hearing aids. Oddly enough, the tax is tax-deductible and applies to all Class II and Class III devices sold beginning Jan 1, 2013. Clearly, the tax impact will be passed along in pricing, assuming price increases will be wholly or partially absorbed via reimbursement. If not, the clear implication is a reduction in margin for device manufacturers.
Other provisions less onerous but still potentially burdensome include a 90 day waiting period for approval of new DME claims to allow the Secretary to conduct analysis of potentially fraudulent claims. This provision assumes the Secretary will identify potential areas of risk and potential categories of supplies that are prone to fraud. I can’t tell from the language whether this will be a “universally applied” wait for all new claims or just certain claims for certain suppliers.
Also within the Reconciliation language is additional funding to fight fraud, waste and abuse. I suspect some allocation of these dollars will be for additional enforcement activity in the Medical Device/DME industry.
Senate Reform Bill: In the Senate Bill the reform bill that will become law today), there are a number of provisions that will impact the industry.
First, there is an imposition of an annual fee on manufacturers and importers of medical devices. The fee is based on 2010 annual sales and will be allocated across the industry based on market share. Best guesses suggest the fee will be in the range of $2 billion. The fee (tax) is non-deductible and doesn’t apply to Class I or Class II device sales or basically any devices sold via retail direct to consumers. Small manufacturers ($5 million or less) will be exempt and manufacturers with sales between $5 million and $25 million will pay 50% of the fee. The Secretary is charged with analyzing the sales of manufacturers and determining the relevant market share of sales for allocation. Again, this applies to non-domestic manufacturers and domestic importers of foreign devices.
The Senate bill expands competitive bidding for DME to 21 additional metro areas and requires the Secretary to nationalize the process and standardize bids by 2018.
Under Medicare, the Senate bill eliminates the 2% add-on payment for DME (above CPI) that Congress provided last year, effective 2014. Instead, the Senate bill incorporates a productivity improvement feature that effectively reduces the DME fee schedule by 1%, applied to the annual update factor for DME.
Finally, the Senate bill eliminates the option for patients to elect Medicare to purchase a power wheelchair within the first month of medical need approval. Instead, Medicare will pay rental on the chair for 13 months, incorporating a portion of the purchase price in its payments to the DME supplier. Effectively, Medicare pays for the chair to the DME supplier over the 13 months at the end of the period, transferring the ownership of the chair to the beneficiary.
In my opinion, the immediate and near-term questions center on whether the Senate will make adjustments to the Reconciliation Bill and will Congress maintain the taxes and fees outlined. Historically, the Congress post-passage of major entitlements and legislation that raises taxes and/or cuts payments has balked to lobbying pressure and ultimately, restored cuts and enhanced payments. In this scenario, anyone’s guess is as good as mine in terms of what could happen.
Medpac Report to Congress: 2011
Earlier this week, Medpac (Medicare Payment and Advisory Commission) released its report to Congress. Primary among Medpac’s duties is its provision of recommendations regarding payment updates under Medicare. Below, I have broken out and summarized the recommendations.
Hospice (the points below the first bullet are continued recommendations from 2009)
- 2011 rate is the market-basket less a productivity growth adjustment (per the Commission) netting a 1.1% increase.
- The Commission recommends that Congress direct the Secretary to change the Medicare payment system to incorporate higher payments at the beginning of the stay and lower payments as the stay goes longer, with the exception of an increasing payment at or proximal to, the time of death. The recommended transition period is 2013.
- The Commission also recommends that the Secretary require a physician or advanced practice nurse visit prior to the 180 day recertification period with corresponding documentation from the physician (or alternate) that the patient’s prognosis remains terminal with a corresponding note providing clinical substantiation of such prognosis.
- The Commission recommends that the Secretary direct the Office of Inspector General to investigate the relationships (primarily financial) between hospices and skilled nursing facilities and assisted living facilities that lead to longer stays and increased benefit utilization. The focus is to determine the appropriateness of hospice care provided within these settings by certain hospices that continue to demonstrate unusual referral and utilization patterns.
Skilled Nursing Facilities (SNFs)
- Eliminate the payment update for 2011
- Congress should establish a budget neutral quality incentive correlated to avoidable hospital re-admission rates and require SNFs to conduct patient assessments at admission and discharge.
- Require the Secretary to direct SNFs to more accurately report diagnostic and service-use information in claims (claim to include dates of service, detailed diagnosis information, and services provided since admission recorded separately in the patient assessment). The Secretary should also require SNFs to report their nursing hours in the Medicare cost report.
- Medpac also recommended (continued from 2008) that the Secretary revise the PPS payment system by adding a non-therapy ancillary component and eliminate the current therapy component, transitioning thus to a therapy payment based on predicted patient care needs. The Secretary should also adopt an outlier policy with corresponding payment.
Home Health
- Eliminate the market basket for 2011 and direct the Secretary to rebase rates to reflect the average cost of providing home care services.
- Direct the Secretary to modify the home health payment system to protect patients from reduced quality of care during re-basing. The new payment system should include risk corridors and blended payments (prospective elements with cost-based elements).
- Direct the Secretary to identify categories of patients with the greatest probability of benefitting from home health and then develop quality measures for each category.
Inpatient Rehab Facilities
- Eliminate the payment rate update for 2011
Long-term Acute Hospitals
- Eliminate the update for 2011 for inpatient rehabilitation services.
Physicians
- Update payments for physician services by 1% for 2011
- Congress should establish a budget neutral payment adjustment (up and within the current fee schedule) for primary care services provided by primary care physicians.
Hospitals
- Increase inpatient and outpatient rates by the current market hospital market basket, concurrent with the start of quality incentive payment system.
- In order to re-capture overpayments to hospitals, the Secretary should reduce payment rates (inpatient) by the same percentage (not to exceed 2%) for each year beginning in 2011, continuing to 2013, or until the over-payments are recouped.
My only comment regarding the Medpac report is that it is a continuation of the theme from prior years where the Commission is recommending payment reform, stabilized increases and revised payment methodologies. These recommendations go hand-in-hand with the Commission’s consistent determination that Medicare, primarily in Hospice, Home Health and SNFs, has been overpaying for care. I firmly believe that Congress will follow most of the Medpac recommendations, sans an implementation of health reform which would likely incorporate (the current versions do), much of Medpac’s recommendations.
To read the full report, click on this link. http://www.medpac.gov/
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