Policy News: A Black Friday Edition

Full of turkey and the trimmings and avoiding any retail outlets, Black Friday seems perfect for a quick synopsis of what is happening with health policy.  Fortunately, I’ve maintained a good inventory of “stuff” (not stuffing, though I have an inventory of that too) to cull for content.

• OIG on SNF Payments: This falls into my “news but not really news” category; another report from the DHHS OIG on Medicare overpayments to providers.  I have the full report for anyone who would like a copy – just e-mail me (e-mail can be found on the Author page) or comment to this post with a contact.  Essentially, what this report indicates is that in spite of repeat changes to the RUGs PPS system and changes primarily to the therapy sections thereto, providers continue to overbill Medicare unnecessarily.  The begging question is whether the overpayments depicted are a function of fraudulent activity (intent) or negligence and misunderstanding of proper billing requirements.  As I work with SNF providers regularly, I’ll state that elements of both are at play.  As I have written before, the system is inherently flawed and thus the incentives align to contribute (greatly) to fraudulent claims.  As intensive therapy services calculated by minutes provided are rewarded at significantly higher rate levels, providers seeking to gain (this is what providers do) additional revenues and cash flow, migrate toward care services and patient mix as determined by assessment and coding, that pays the most.  The intentionality of certain, possibly fraudulent behavior, arises when “upcoding” and a gap between coding for care level and actual service level, is evident.  Per OIG, upcoding accounts for the bulk of the erroneous claims.  Thus, in the majority of specious claims, SNFs identified the resident as requiring more therapy than actually provided and documented.  As a result of OIG’s analysis of the SNF billing practices, they make the following recommendations.
  • Increase and expand the amount of SNF claims reviewed.
  • Use CMS’ fraud prevention tools to identify SNFs that consistently bill higher RUG categories and/or have a disproportionately higher level of certain therapy RUGs than regional or national averages.
  • Monitor compliance with new therapy assessment criteria.
  • Change methodology for determining how much therapy is required by a resident.
  • Change to improve accuracy, certain MDS sections/items.
  • Follow-up with SNFs that have improperly billed claims.

My comments on this report and “what happens next” are simple.  First, SNFs need to heighten their own internal controls and increase their billing knowledge.  All too often I talk with administrators ecstatic about their case-mix and their per diem.  When I ask these same folks when was the last time they looked at their experience compared to regional levels or national levels, I get too often, the “deer in the headlights” stare.  Bottom-line: Audit and benchmark.  No single facility should have such disproportionate claim experience and if so, should have a very solid business case as to why, backed by third-party audits that substantiate the difference.

The CMS OIG workplan on SNF overpayments is titled, “Operation Vacuum Cleaner”. Interesting?  Not so much.  They know this is a huge issue and with the various fiscal issues on the table concerning health policy, a strong vigilance on Medicare overpayments is operative.  I have the 2012 OIG Workplan and again, for anyone interested, contact me for a copy.

Where this report leads is to a complete revamp/overhaul of the Medicare payment system for SNFs.  In the interim, additional rate rebasing is certain to occur as are heighten assessment requirements and again, more changes to the RUG levels and MDS. 

• Fiscal Cliff: A ton of issues are wrapped in the Fiscal Cliff negotiations and among some the most “sticky” are health policy related.  Republicans are thought willing to concede on certain tax increase components but in return, are requiring a new look at Obama Care provisions and entitlement spending.  Wrapped front-and-center in the Fiscal Cliff debate is the targeted expiration of the current “doc-fix” patch.  Without a settlement, the present patch which temporarily derailed required cuts set by the Sustainable Growth Formula (roughly 26%) kick-in January 1.  On Wednesday, the CBO issued their opinion on the cost of a one-year fix; $25 million.  This number is $7 million higher than an earlier CBO forecast.  The fix would forestall the cuts and restore current-level funding for one year.  Important to note here is that Part B therapy rates are also tied fo the Sustainable Growth Formula and subject to the same levels of cuts.

This is the classic example of how interwoven health policy and entitlement spending is when viewed against issues focused on overall government spending, deficits and taxation.  The real issue here is that the SGR formula is flawed and requires a longterm solution although the same will cost substantially more dollars than any Congress is willing to deal with. What we know is that physicians are already nervous about Obama Care and particularly, the Medicaid expansion components.  Cuts to Medicare payments, already viewed by physicians as less than adequate, will only narrow the supply of principally primary care MDs willing to care for any government payer source.

• Shortage of Primary Care Doctors: In light of the last point, on Wednesday the Annals fo Family Medicine published a report that by 2025, the U.S. will require and additional 52,000 primary care physicians to meet population demands.  The cause for the increase need per the report is an expanding and aging population coupled with changes in health policy.

This number is interesting but I think a bit misleading.  The two major sub-components that need analysis are the need for “geriatric” trained physicians and the number of physicians needed to care for a patient population with a government payer source.  I hear too often from the physician community, a strong desire to de-aggregate their practices from Medicaid and Medicare patients, principally due to meager reimbursement and increased regulation.  With a major entitlement expansion coming under Medicaid and more states opting to shift administration of their Medicaid plans to manged care insurers, physician participation bears watching.

• 2013: The Year of the Health Plan: I’m already catching a great deal of scuttlebutt about employers seeking to fundamentally alter their present health insurance plans or, drop plans entirely.  This comes in tandem with the Obama administration’s release of new rules for health plans and insurers effective in 2013.  These rules prohibit insurers from adjusting premiums based on pre-existing conditions or chronic conditions, expand the drugs that must be covered by insurers, specify essential coverage levels on state health exchange plans, and provide flexibility to employers choosing to reward healthy behaviors.  As of today, I’ve only glanced at the rules.  Suffice to say, and based on what I am already hearing, 2013 will be the year of the health plan and it is already interesting to hear the discussions from trade associations, business groups and employers.