Health Policy News: Too Good to be Quieted by Election Coverage

With all of the election news blaring (thank goodness the end is soon here), some important health policy issues have been somewhat lost in the milieu.  Below is a quick summary of what has caught my attention as of late (a heads-up for readers).

Medicare/SNF Class Action Settlement: This is profound on a number of levels though I have seen very little analysis on the decision.  A nationwide “group” of Medicare beneficiaries and their families, all suffering (some passed) from one or more chronic illnesses, sued the Federal government on a class-action basis alleging denial of Medicare coverage based on the “improvement” criteria imposed by Medicare intermediaries.  The gist of the case is as such.  In each instance, a SNF resident was admitted meeting the qualifying criteria (three day prior hospital stay, requiring skilled services).  In each instance, Medicare benefits were subsequently denied to these residents, even though the skilled service requirement remained, as the resident’s condition stabilized or failed to show improvement.  The suit further alleged that in certain cases, care levels diminished or skilled services reduced or ended as the individuals involved, were not able to pay for additional care privately.  Briefly, without the presumption of Medicare coverage, the presumption of continuation of skilled services like therapies evaporates, requiring the resident to then pay privately for continuation of service.

The settlement arose when Medicare officials agreed to re-write the claim adjudication manuals to make “clear” that Medicare coverage is only conditioned upon Medicare eligibility, a three day prior inpatient qualifying stay (hospital) and the requirement and delivery of, daily skilled services (as presently defined).  Denial of continued coverage should only occur when the skilled service is no longer required based on the resident’s care needs, not based on improvement or lack thereof.  Nowhere in existing Medicare regulations is there a requirement for “improvement” yet the standard has been universally applied by Fiscal Intermediaries (Medicare claims adjudication contractors).

The case, coming out of Vermont, is expected to be published soon and the class encompassing more than 10,000 beneficiaries nationwide.  The implication is that this group, as well as other beneficiaries, can appeal coverage decisions (where coverage was discontinued) for claims prior to January of 2011 (when the suit was filed).  Note: This will limit claim review exposure unless the decision provides greater detail due to Medicare’s 18 month limit for re-filing claims (18 months from denial or service discontinuation if denial is implied).  Additionally, many residents in the class will no doubt be dead with closed estates, thereby limiting a reconsideration of coverage claim.

What I don’t know yet is how this decision will impact claims going forward.  I am awaiting details on the following questions/concerns.

• Appeal information as applicable from intermediaries.
• Coverage guidance to providers to continue to bill Medicare as long as a skilled service is still required.
• Any RUG guidance and assessment guidance for interpretation of therapy services in particular.  Ordinarily, some assumption of continued therapy hinges on documentation of improvement of some type and guidance is necessary to document minutes for other reasons (prevention of decline, safety, etc.).
• When intermediaries will be instructed by Medicare on the “revised” interpretation of coverage.

Medpac Recommends Cut to Part B Therapy Caps: In their November 1 report to Congress, Medpac recommends a 33% reduction to the current Part B Outpatient therapy cap; presently $1,880 reduced to $1,270.  Additionally, Medpac is recommending that the Manual Medical Review process expand to all “therapy” services including those provided in hospital outpatient departments, whenever a cap is exceeded.  Currently, the process kicks-in at $3,700.  Set to expire at year-end is the exception process with hard-caps going into place in January of 2013, unless Congress acts to extend the cap limits and the exception process.  Medpac’s report is the first shot at creating a recommended action for Congress prior to the January date.  Medpac further recommended, in conjunction with their continuation of the manual review process, a streamlined review approach.  Core to this recommendation is a ten-day turnaround and the use of two MAC contractors nationwide for consistency and focus.  Anyone who wishes to view the report, e-mail me at hislop3@msn.com or leave a comment on this post with your contact e-mail and I will forward it to you.

Medicare Sued for Inappropriate Setting Determination Denials: This one fascinates me particularly as it is the first suit I am aware of implicating Medicare’s RAC contractors and post-care denials.  In this case, the American Hospital Association, joined by four other healthcare providers sued HHS and CMS for allowing RAC contractors to retrospectively, deny outpatient claims filed under Part B determining that the care should have been rendered inpatient and the claim submitted via Part A.  The suit alleges illegality in denial of payments when cases are retrospectively reviewed.  What is interesting is that “inappropriate location” of care is an odd justification for denial, especially when the setting is less costly to Medicare.  While it has always been illegal to improperly bill Medicare, including under-billing, rarely have I seen (in fact never) claims denied retrospectively as inappropriate, simply based on the use of a lower cost or alternative setting.  Typically, a claim properly billed has never been reversed or denied based on location and certainly not a judgment call such as this appears – seemed more appropriate inpatient.  No allegation or substantiation is provided as to whether the care rendered was inadequate, merely wrongly located.  Why this case bears watching is that the RAC issues are brewing in terms of the programs costs, its inter-relationships and lack of impartiality, and the incentivized methodology that exists to “recover” overpayments.  Denials of this nature and the appeals are incredibly expensive for providers and clearly, the suit incorporates by description, the cost vs. benefit insanity of having to appeal denials of this nature.