The Centers for Medicare & Medicaid Services (“CMS”) has announced that most hospitals will receive an inflation update of 2.1 percent in their payment rates for services provided to Medicare beneficiaries in outpatient departments.  Due to a Medicare requirement, CMS will reduce the update by 2.0 percentage points for hospitals that did not participate in quality data reporting for outpatient services or that did not report the quality data successfully, resulting in only a 0.1 percent update for those hospitals. 

CMS also announced that ambulatory surgical centers (“ASCs”) will receive a 1.2 percent inflation update starting January 1, 2010.  CMS projects that the aggregate Medicare payments to more than 4,000 hospitals and community mental health centers in calendar year (“CY”) 2010 will be approximately $32.2 billion, while aggregate Medicare payments to approximately 5,000 ASCs will total $3.4 billion.

The payment updates are included in a final rule with comment period that revises payment policies and updates the payment rates for services provided to beneficiaries during CY 2010 in hospital outpatient departments under the Outpatient Prospective Payment System (“OPPS”) and in ASCs under a revised rate-setting methodology that was established January 1, 2008.

The updated payment rates are meant to ensure that Medicare beneficiaries continue to receive high quality and efficient care in the most appropriate setting.

The CY 2010 OPPS/ASC final rule with comment period will be included in the November 20, 2009 Federal Register.  Comments on designated provisions are due by 5:00 p.m. EST on December 29, 2009.  CMS will respond to comments in the CY 2011 OPPS/ASC final rule.

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MGMA Releases Proposed 2010 Medicare Physician Fee Schedule Analysis –

The Centers for Medicare & Medicaid Services (“CMS”) recently released the 2010 Medicare proposed physician fee schedule along with a related press release and fact sheet. The regulation includes provisions that confirm a 21.5 percent reduction in 2010 Medicare physician payments unless Congress enacts legislation to reverse this cut.  The regulation also proposes to “remove physician-administered drugs from the definition of “physician services” for purposes of computing the physician update formula in anticipation of enactment of legislation to provide fundamental reforms to Medicare physician payments,” a move that has been advocated by the Medical Group Management Association (“MGMA”) for a long time.

MGMA analyzed the regulation’s impact on medical group practices and is making its analysis available only to members at The proposed fee schedule includes provisions that would affect physician practices as follows:

  • Start implementation of the congressionally-mandated requirement that suppliers of advanced diagnostic imaging services become accredited
  • Notably change the practice expense relative value units for many covered services
  • Increase the equipment usage assumption for equipment costing greater than $1 million
  • Transfer responsibility from the patient to the Medicare program for co-payments for covered outpatient mental health services
  • Add a group practice reporting option to both the Physician Quality Reporting Initiative and the E-Prescribing Incentive Program

 The member-only analysis can be accessed here:

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The Centers for Medicare & Medicaid Services (“CMS”) recently confirmed that the Recovery Audit Contractors (“RACs”) will operate in all 50 states by the end of 2009.  RACs identify overpayments and underpayments by CMS to Medicare providers.

The permanent RAC program began with a three-year RAC demonstration project established under the Medicare Modernization Act of 2003. The Tax Relief and Health Care Act of 2006 made the RAC program permanent and authorized CMS to expand it to all 50 states by 2010.

Unlike the demonstration project, the permanent RAC program limits the medical-record review period to three years and prohibits audits on claims paid before October 1, 2007. The program also requires RACs to have a physician medical director and certified coders available to discuss denials with providers.  

 Here are some practical steps that providers should take to ensure that submitted claims meet the Medicare rules:

  • Identify where improper payments have been persistent by reviewing the RACs’ Web-sites and identifying any patterns of denied claims within their own practice or facility.
  • Implement procedures to promptly respond to RAC requests for medical records.
  • If the provider disagrees with the RAC determination, file an appeal before the 120-day deadline.
  • Keep track of denied claims and correct these previous errors.
  • Determine what corrective actions need to be taken to ensure compliance with Medicare’s requirements and to avoid submitting incorrect claims in the future.

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HHS Announces Infection Control Surveys for Ambulatory Surgery Centers

To help prevent serious infections resulting from services performed in ambulatory surgical centers, the Centers for Medicare and Medicaid Services (“CMS”) will use the funds provided in the American Recovery and Reinvestment Act of 2009 (“ARRA”) to implement the nationwide application of a new infection control survey tool developed in consultation with the Centers for Disease Control and Prevention (“CDC”) and a case tracer methodology that tracks a patient’s care from admission to discharge. Additionally, CMS will use the ARRA funds to survey ambulatory surgical centers using this survey application at the rate of approximately once every three years during the national pilot program.

The particular focus on ambulatory surgical centers for this funding was chosen because the available infection control tool was developed for ambulatory surgical centers and because of the likely continuing infection control deficiencies in ambulatory surgical center settings.

The primary use of this money will be to pay for the expansion of ambulatory surgical center surveys (both in quality, time and number) using the new infection control tool and case tracer methodology. The funds will allow states to hire additional surveyors (one to four per state dependent upon ambulatory surgical center growth), which will increase a state’s capacity to maintain expected levels of ambulatory surgical center inspections while building greater capacity to use the improved survey tool nationwide.

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