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CMS Proposes Mandatory Bundled Medicare Reimbursements: Financial Risk on Hospitals!

A new CMS proposal could transform durable medical equipment (DME) Medicare reimbursements to hospitals. The proposal, if adopted, would implement a mandatory bundled Medicare reimbursement for hip and knee replacements or lower extremity joint replacements (LEJRs).

CMS has proposed this change to be piloted in 75 metropolitan areas prior to being implemented nationwide.

This mandatory bundled Medicare reimbursement will be unprecedented, as, thus far, CMS has only implemented voluntary bundled reimbursement rates. However, CMS has stated that its goal is to have at least 50% of all Medicare fee-for-service reimbursement to be paid under an alternative payment model by 2018, and, in order to meet this objective, CMS will need to implement more  mandatory alternative payment models.

Another first is that CMS proposes that hospitals bear the brunt of the financial risk. To date, CMS has not targeted a type of health care provider as being a Guinea pig for new ideas, unlike the other proposed and implemented Bundled Payments for Care Improvement (BPCI) initiative where there are many types of providers that can participate and bear risks.

Will this affect NC hospitals?

Yes.

Of the 75 metropolitan areas chosen as “test sites” for the new bundled payment plan, 3 are located in NC.

1. Asheville
2. Charlotte
3. Durham-Chapel Hill

Apparently, CMS believes that Durham and Chapel Hill are one city, but you got to give it to them…by hyphenating Durham and Chapel Hill, CMS gets both Duke and UNC health systems to participate in the mandatory trial. Other large metro areas included in the trial are Los Angeles, New York City, and Miami.

LEJRs are the most frequent surgeries in the Medicare population. The average Medicare expenditures for LEJRs, including surgery, hospitalization, and recovery, can range from $16,500 to $33,000.

The mandatory bundled reimbursement will become effective January 2, 2016; however, the hospitals will not carry the financial risk until January 1, 2017.  So, hospitals, you got a year and a half to figure it out!!

What exactly will this bundled reimbursement rate include?

Answer: Everything from an inpatient admission billed under MS DRG 469 or 470 until 90 days following discharge.

And we are talking about everything.

Thus, you will be reimbursed per “Episode of Care,” which includes:

“All related items and services paid under Medicare Part A and Part B for all Medicare fee-for-service beneficiaries, including physicians’ services, inpatient hospital service, readmissions (subject to limited exceptions), skilled nursing facility services, durable medical equipment, and Part B drugs.”

What should you do if you are a hospital so graciously selected to participate?

1.  Assess your protocol as to discharging patients.  Where do your patients go after being discharged?

2. Determine whether you want to partner with any critical care facilities, skilled nursing agencies, or home health agencies.

3.  Assess your current reimbursement rates and analyze what current delivery patterns must be revamped in order to maintain profitability.

4. Determine future care management and clinical reprogram needs.

5. Analyze ways to provide more efficient delivery components.

6. Communicate with your DME vendors.  Discuss ways to decrease spending and increase efficiency.

7.  Plan all ways in which you will follow the patient after discharge through the 90 day period.

8. Consult your attorney.

If you would like to comment on the proposed rule, you have until September 8, 2015 at 5:00pm.

Dealer Has an Ace: Do You Take the “Insurance?” CMS Incentivizes Hospitals to Drop Appeals

Medicare appeals are at an all-time high. Back in January 2014, the Office of Medicare Hearings and Appeals (OMHA) stated that a health care provider with a Medicare appeal, may not have the case assigned to a judge for at least two years, and may wait even longer for the appeal to be heard.

Since the beginning of 2014, the Medicare appeal backlog has only grown. With the passing of the Affordable Care Act (ACA), which increased the amount of regulatory audits on providers in an attempt to partially fund the Act, more and more providers are finding themselves audited and in disagreement with the overzealous results. More and more providers are fighting the audit results and filing Medicare appeals at OMHA.

Now, because in large part of the massive backlog, the Center for Medicare and Medicaid Services (CMS) is offering hospitals an “administrative agreement mechanism.” In other words, if the hospitals agree to dismiss the appeal, CMS will agree to partial repayment for the claims at issue. Specifically, the hospital will be reimbursed for 68% of the disputed claims.
Notice the offer from CMS only pertains to hospitals. CMS has made no such offer to long-term care facilities (LTCF), which have been vocal when it comes to aggravation resulting from the Medicare appeal backlog.

For CMS’s offer, if a hospital is owed $1 million, then CMS will agree to reimburse the hospital $680,000 if the hospital dismisses the appeal.

What if the hospital has multiple appeals? CMS will only offer this meagre, olive branch if no other appeals are pending. As in, you must dismiss all lawsuits in order to receive the partial payout.

Personally, I call this a raw deal.

Think of blackjack. The purpose of blackjack is to have two cards’ sums equal 21. Only with 2 cards equaling 21 does the player receive more than the bet. You bet $100 and hit 21 with an ace and a king? You get paid $150.

“Insurance” is a side bet which you can take when the dealer’s face up card shows an ace and only pays 2:1. You bet half your bet for insurance; so if you placed a $100 blackjack bet, your insurance bet should be $50. If the dealer hits blackjack, you lose your $100 bet but get paid on the insurance. On a $50-insurance bet, you’d win $100, and lose your $100 bet. If the dealer doesn’t have a blackjack, your insurance bet is forfeited. Either way, by making an insurance bet, you lose money.. You do not have the chance to win 100% of a blackjack payout.

This is essentially what CMS is offering. You are holding an ace and CMS is holding an ace. Will you take the partial payout?

Many of these pending appeals by hospitals are a result of auditors’ determinations that a Medicare recipient was received as an inpatient instead of (as the auditor believes proper) an outpatient.

One of the reasons that I believe the 68% payout from CMS is a raw deal is because the auditors are not always right. Why take 68% when you are owed 100%?

My question is: Are these auditors M.D.s?

When I present myself at a hospital emergency room, I hope that the decision for me to be admitted as inpatient or outpatient hospital admission is a complex medical decision contemplated by my doctor based on medical necessity, not an insurance auditor. After the physician determines that a patient needs to be admitted, an auditor is second guessing a physician’s decision that was made in “real time” with multiple variables at issue.

The Social Security Act (SSA) provides numerous defenses for a provider to assert against an auditor challenging the medical necessity of a service, in this case whether the patient is admitted into the hospital as inpatient. The rendering physician’s medical decision should be upheld absent clear and convincing evidence to the contrary.

Some people suggest that the auditors’ emphasis on inpatient stays versus outpatient stays will cause hospitals to err on the side of caution and just keep patients in observation status to avoid inpatient status.

We need to prevent the hospitals from fearing to admit patients as inpatient due to overzealous audits and mistaken determinations from non-M.D.s who believe the patient should have been outpatient. I say, go all in. Do not take the “insurance.” Do not take the 68%, if you deserve 100%.

Could NC Hospitals Be the Surprising and Much Needed Advocate for Mentally Ill Medicaid Recipients?

North Carolina has created the perfect storm when it comes to mentally ill…the perfect scenario for disaster.  10…9….8…..7……6…….5……..4………3………..2…………..

From 2001 to 2012, the total population of North Carolina increased from 8,203,734 people to 9,781,022.  Over 1 and a half million more people live here now than twelve years ago.  Which is understandable when you think about all the people relocating here.

The number of NC residents in need of mental health services has increased from 517,447 in 2001 to 613,379 in 2012 (not sure how many are on Medicaid).  However, since 2001, the number of inpatient psychiatric beds has DECREASED by fifty percent (50%), from approximately 1,750 beds to approximately 850 beds.  850 beds!!  Not even enough beds to serve 1/10 of the population in need!!

In the past, it was understandable to decrease the number of psychiatric beds.  NC was doing a fairly decent, not perfect, by any means, but a decent job of providing community-based mental health services to those in need. 

Those days of decent care for mentally ill Medicaid recipients are over.  Instead, we have the perfect storm for utter disaster.

Enter main ingredient of the perfect storm…the managed care organizations (MCOs).  In NC, we moved only behavioral health care to the MCOs.  Basically, if you are on Medicaid and need any type of health care services, besides behavioral health services, you will never come into contact with an MCO.  However, if you suffer from a mental illness, a developmental disability, or a substance abuse problem and rely on Medicaid for insurance, you have encountered the MCOs.

Prior to 2013 (except for the experimental 1st MCO, which was called Piedmont Behavioral Health, but now called Cardinal Innovations), the MCOs did not exist.  Literally, the MCOs have gone “live” this year.  The MCOs are new to being the gatekeepers of mental health services for Medicaid recipients in NC.

Not only do we have these new, inexperienced companies deciding which Medicaid recipients may receive mental health services, but we, in our great wisdom, gave them the monetary incentive to DENY services to recipients and to DENY providers Medicaid contracts, which is the 2nd ingredient for the perfect storm.  Oh yes, we did all that!  The MCOs are prepaid.  So, in theory, the MCOs are taking the burden of risk (i.e., going over budget) off the State and onto themselves.  If the MCOs go over budget, it is on the MCOs to come up with the money.  However, in reality, the MCOs, to save on money and increase profit, are denying medically necessary services and terminating (or not enrolling) quality health care providers.  See my blog “The NC Medicaid Mental Health 10-Ring Circus: How 10 Mini Jurisdictions Will Be the Downfall of Mental Health.”

Enter the 3rd ingredient to the perfect storm…the Department of Health and Human Services (DHHS), Division of Medical Assistance (DMA)’s complete absence of supervision of the MCOs.

The MCOs have full reign and uninhibited authority to deny mental health care services, to terminate Medicaid provider contracts, or to refuse to contract with Medicaid providers with absolutely ZERO repercussions (unless you hire an attorney (not necessarily me) and obtain an injunction) from DMA, from the federal government, from anyone.  See my blog “The MCOs: Judge, Jury, and Executioner.”

[The equation for the perfect storm = the decreased number of psychiatric beds + increase in population + the increase of mentally ill residents + the MCOs + the monetary incentive for MCOs to deny services and not enroll providers + DMA’s complete lack of supervision]

As I am sure you are aware, a week or so ago, Virginia state Senator Creigh Deeds was stabbed multiple times by his son.  Deeds was hospitalized for three days, but his son took his own life after stabbing his father.  According to the media, Deeds’ son, Gus Deeds, suffered from severe mental problems and the day prior to the stabbing, an emergency custody order was sought.  However, a psychiatric bed, reportedly, could not be found.

Sadly, the tragic story of Gus Deeds is too common.  In Modern Healthcare this week, the feature story is called, “No Room for the Mentally Ill.”

The article discusses how the hospitals “are trying to collaborate with other hospitals  to place psychiatric patients in open beds, using separate psychiatric EDs, setting up crisis triage centers, and referring patients to residential treatment centers.” See Modern Healthcare, dated November 18, 2013.

The hospitals may be acting in a self-serving manner.  Most mentally ill patients, who are admitted to the ERs are not paying clients.  The hospitals cannot turn a profit if too many non-paying clients are admitted to the ER.  However, whatever the motivation, I say, thank goodness, and God bless the hospitals’ efforts!

Mentally ill, Medicaid recipients may be the demographic with the LEAST voice of all demographics in existence. 

Sadly, few care about poor people, and even fewer care about poor people suffering with MH/DD/SA. (When I say “care,” I mean will devote time, resources, and energy to them.  I mean hire lobbyists for them, hire attorneys.)

Here, in NC, we are staring into the face of a perfect storm.  If the hospitals can make headway with a bigger voice than those depending on Medicaid with behavioral health issues, God bless the hospitals, whatever the reason for their advocacy.

Because, perhaps, without the hospitals, we could be seeing:

3….2…..1……BOOM!