Washington Report - December, 2001
Bill Finerfrock
Capitol Associates
Economic Stimulus or Political Stalemate?
As Congress wound down the first session of the 107th Congress, vigorous debate on the parameters of an economic stimulus package continued. While a political compromise still seems possible, it is not clear whether the final package will truly serve to stimulate the economy as proponents suggest. Congress adjourned on December 20th without adopting a stimulus packer nor did they complete action on bioterrorism legislation. Both issues are sure to be on the Congressional agenda when Congress reconvenes in late January.
Just prior to adjournment, Congress completed action on several remaining FY 2002 appropriations bills. In the space of a few days, Congress completed action on the FY 2002 appropriations bills for the Departments of Defense, Transportation, Labor, Health and Human Services, Education, the District of Columbia and the Foreign Operations appropriations bill. These bills collectively represented over half of the discretionary spending that occurs annually in this country. As you may know, the federal fiscal year officially ended on September 30, 2001.
Unlike some previous years, the government did shut down October 1st because Congress passed and the President signed into law a series of “Continuing Resolutions”. These are bills that effectively extend or “continue” the end of the fiscal year and allow agencies whose appropriations have not been approved to continue to function based upon the prior years appropriation. Continuing resolutions typically last from a few days to a few weeks. Congress adopted 7 Continuing Resolutions (CRs) between September mid-December. The last CR expired on December 21st. The fact that the remaining bills were passed and sent to the President on December 20th meant that another CR was not necessary.
All legislation not acted upon at the end of the First Session of the 107th Congress will be carried over to the Second Session.
In a strange way, the fact that Congress and the President were not able to reach consensus on an economic stimulus bill was a good sign.
Since September 11th, there has been an unwillingness or an uneasiness in many quarters of Congress to engage in spirited debate. It appears that this hesitancy was borne out of a fear that vigorous disagreement between Congress and the White House would create the impression in the international community that the U.S. government was not united. It was as though dissent might be viewed as a sign of Presidential weakness by our enemies. The fact that Republicans and Democrats feel comfortable engaging in politics means that they are not afraid to disagree.
America, in my opinion, is its strongest when we have great debates. I am sometimes more worried about issues that pass 99 - 1 than I am about issues that pass 51 - 49. We know that when a vote is close, there has been open, vigorous and serious debate. When issues pass by overwhelming majorities, the debate tends to be canned.
So rejoice America, Republicans and Democrats are engaging in healthy debate. In the end, the policies and programs that get enacted will be better for it!
HIPAA Transaction Standards Compliance Deadline Extended
Congress has sent legislation to President Bush providing an extension for compliance with the transaction standards mandated by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). However, unlike a bill initially approved by the Senate, the bill sent to President Bush would extend the limit on a case-by-case basis. Individual providers would have to apply to the Secretary of Health and Human Services for a one-year extension. With their request, the provider would have to provide:
(A) An analysis reflecting the extent to which, and the reasons why, the person
is not in compliance.
(B) A budget, schedule, work plan, and implementation strategy for achieving compliance.
(C) Whether the person plans to use or might use a contractor or other vendor to assist the person in achieving compliance.
(D) A time frame for testing that begins not later than April 16, 2003.
The request for an extension must be submitted to the Secretary of Health and Human Services before October 16, 2002.
If the provider is successful in obtaining a one-year extension but fails to meet the new deadline, the Secretary is authorized to exclude the provider from the Medicare program. This exclusion authority is discretionary, not mandatory.
The legislation also mandates that all Medicare claims submitted after October 16, 2003, must be submitted in electronic form unless there is no method available for the submission of claims in an electronic form, or the entity submitting the claim is a small provider of services or suppliers. The legislation defines a “small provider” as:
A. a provider of services with fewer than 25 full-time equivalent employees; or
B. a physician, practitioner, facility, or supplier (other than provider of services) with fewer than 10 full-time equivalent employees.
HBMA members are encouraged to review this legislation and assess their clients’ ability to meet the deadlines. If you have any concerns about this delay, please contact your elected officials and notify HBMA of your concerns.
It is not insignificant that this article follows my previous comments about my concerns about legislation that is passed by overwhelming majorities. This HIPAA extension legislation was passed by “Unanimous Consent” in both the House and the Senate. In adopting this legislation, there were no hearings, no committee reports and no real debate.
Everyone hopes that this is a good bill and that is certainly the intent. But given the quick way this was put together and the lack of debate or discussion, I am fearful that problems will arise and we will be back here in the next 18 months “fixing” the unintended consequences of this bill.
CMS Delays Effective Date of 2001 OPPS Rates
On December 18th, the Centers for Medicare & Medicaid Services (CMS) announced that the 2002 Medicare hospital outpatient prospective payment system(OPPS) rates will be postponed until CMS conducts a review of the rates and codes announced in the final regulation on Nov. 30. Hospitals will be paid at the 2001 OPPS rates until Medicare officials finish a review, which the agency said in a release will not extend beyond March, 31 2002. Formal notification of CMS’s plans regarding the delay will be published in the Federal Register some time before Dec. 31.
In a press release issued in response to the announced delay, American Hospital Association President Dick Davidson had this to say, “A delay in implementing the outpatient prospective payment system avoids the train wreck that CMS was headed for on January 1.
Medicare Contractor Reform Legislation Slows
Despite considerable progress towards achieving consensus on Medicare Contracting and Administrative Reform, Congress did not complete action on this important legislation prior to adjourning the First Session of the 107th Congress. In all likelihood, the Contracting Reform legislation will receive early consideration during the Second Session. A summary of the House and Senate reform legislation is available on the HBMA website.
The delay in progress has more to do with a packed Congressional agenda than any major substantive disagreements between the House and Senate. As the Senate leadership is tied up trying to work out a last minute deal on the economic stimulus package, there just does not appear to be sufficient time to resolve the remaining issues in disagreement with regard to Medicare reform.
In remarks to the HBMA membership at the Fall meeting Congressional staff working on the Medicare reform initiative noted HBMA’s significant involvement in identifying necessary changes and commended the organization for it’s support for Medicare Administrative and Contracting reform.
Decrease in Physician Fee Schedule Payments still likely
Despite growing Congressional support for legislation to restore at least part of the anticipated reduction in the Medicare physician fee schedule, the Congress adjourned without getting legislation to the President’s desk addressing this problem. In short, Congress ran out of time. The Congressional calendar did not contain enough time to get a bill through. There is, however, a possibility that the Center for Medicare and Medicaid Services could Administratively delay the effective date of the reduction in order to give Congress more time to resolve this dilemma.
Representative Billy Tauzin (R-LA) Chairman of the House Energy and Commerce Committee, which has jurisdiction over Medicare Part B issues, acknowledged the importance of this issue as Congress was preparing to adjourn. In remarks to reports about the failure to address the physician fee schedule update problem, Chairman Tauzin said, "there is general agreement in the leadership it's something that has to get done early next year."
Now that Congress has failed to act, the only possibility for immediate relief would be if CMS were to administratively delay the reduction.
Ask The Administrator
If you could spend ten minutes with the CMS Administrator, Tom Scully, what issues would you discuss with him? If you could change two practices of Medicare to more closely mirror what you like in the commercial insurance market, what would they be? What are the best ways for CMS to communicate with third party billing companies and the physician practices you represent? If given the opportunity, could you come up with three ideas on how CMS could improve its educational efforts directed to physicians and third party billing companies? If you could change three Medicare requirements that you believe are unnecessary and simply add paperwork with no appreciable clinical or administrative value, what would they be?
These are some of the questions CMS officials are asking of the physician community and, we expect, may soon be asked of the third party billing community. We are therefore taking this opportunity to bring these questions to your attention so you have a chance to think about how you might answer if given the opportunity.
HBMA has taken a leadership position in promoting greater communication between CMS and the third party billing community. HBMA believes that by fostering improved communication, we can eliminate unnecessary or burdensome regulations. In addition, better education can improve claims submissions and eliminate unnecessary errors due to confusing or inconsistent Medicare policies.
HBMA’s leaders have been working with the CMS leadership to develop some new mechanisms for communication between Medicare and the third party billing community and we hope to be able to announce those forums in the very near future. In the meantime, think about how you would answer the questions posed at the beginning of this article. Who knows, you just might get that 10 minutes with Administrator Scully or some other senior Medicare official!
Solicitation of New Safe Harbors and Special Fraud Alerts–Comment Requested
The Office of Inspector General (OIG) within the Department of Health and Human Services posted in the December 19 Federal Register a notice soliciting proposals and recommendations for developing new and modifying existing safe harbor provisions under the anti-kickback statute as well as developing new OIG Special Fraud Alerts.
It is recommended by the OIG that comments address access to services, quality of services, patient freedom of choice among health care providers, competition among health care providers, the cost to Federal health programs, the potential overutilization of services and the ability of health care facilities to provide services in medically underserved areas.
Please send comments to the Office of Inspector General, Department of Health and Human Services, Attention: OIG-61-N, Room 5246, Cohen Building, 330 Independence Avenue, SW, Washington, DC 20201. All comments will be considered if received by the close of business on February 19, 2002. Remember to include the file code (OIG-61-N) when commenting.
The entire notice is available on the Federal Register’s website at Please let us know if you have any questions or need more information.
Certification Program for Insurer’s Claims processors?
For years, third party billing companies have been frustrated over claims submission problems created by improperly trained insurance company personnel. It seems that every time an insurance company hires a new claims processing employee, claims denials increase because the new employees have not been adequately trained. Some have suggested that this is an intentional effort on the part of the insurance companies to delay payments. Regardless of the reasons behind this ineptitude, help may be on the way!
URAC, also known as the American Accreditation Healthcare Commission, has approved standards for the first-ever national Claims Processing Accreditation Program. According to the Association’s website, the claims processing standards address several key functions, including:
_ the timeliness of the claims process
_claims protocols, appeals processes
_communications to claimants
_staff training and infrastructure.
In a press release announcing this exciting new program, URAC President and CEO Garry Carneal stated ,"Claims processing is one of the most central functions of health plans, and one that has a very direct impact on consumers." "These standards are designed to ensure that consumer rights are respected throughout the claims process."
According to the URAC press release, “an Advisory Committee made up of representatives of health care organizations, health care providers, purchasers, and other experts developed URAC's Claims Processing standards. This program provides claims processing organizations -- such as health insurers, HMOs, and TPAs -- the opportunity to demonstrate their commitment to quality and accountability to patients and other stakeholders.”
Maryland Insurance Commissioner Steven Larsen had this to say about the new standards, "Claims processing is a critical aspect of the health care system." "The national benchmarks URAC has established will augment existing regulatory frameworks to promote claims processing quality and timeliness."
According to URAC, this “claims processing accreditation program emerges at a time when major media outlets, such as NBC Dateline and The Washington Post have focused their attention on perceived deficiencies in the claims process, such as administrative burden and payment delays.” It should be noted that the URAC standards are voluntary, numerous states and the federal government have created regulations for claims processes in response to public criticism of the claims processing system.
Guy D'Andrea, URAC Senior Vice President noted that these new standards were developed to be fully consistent with the Department of Labor’s claims regulations issued in 2000 that take effect in 2002.
For more information about URAC's claims processing standards, contact URAC's Business
Development department at (202) 216-9010 or visit their website at: and click on URAC Claims Processing Accreditation.
CMS Issues new Lab Regulations
On November 23rd, the Center for Medicare and Medicaid Services (CMS) announced a national coverage decision and administrative policy for clinical diagnostic laboratory services payable under Medicare Part B. The purpose of this national policy is to promote Medicare program integrity and national uniformity, and simplify administrative requirements for clinical diagnostic laboratory services. According to the introduction in final rule “This rule addresses public comments received on the proposed rule that was published March 10, 2000.”
The policies set forth in the new rule will be effective November 25, 2002, except for sections 410.28(f), 410.32(d) redesignations, (d)(1) heading, (d)(4) and (e), which are effective February 21, 2002.
To view this rule and review CMS’ response to the public comments, go to:
and go to the Section Titled: Centers for Medicare and Medicaid Services.
See the effective date section of the preamble for a discussion of the effective dates for provisions that were discussed in the preamble but not codified in the rule.
If, after reviewing the new rule, you have questions, contact the following CMS staff: Jackie Sheridan, (410) 786-4635 (for issues related to coverage policies). Brigid Davison, (410) 786-8794 (for issues related to documentation requirements). Dan Layne, (410) 786-3320 (for issues related to claims processing).
Medicare Withdraws Coverage for Certain PET Scans
Effective January 1, 2002, Medicare will no longer cover certain 2-(F-18) Fluoro-D-Glucose (FDG) Positron Emission Tomography (PET) Scanners. According to the notice, “For those clinical indications already covered by Medicare before July 1, 2001, PET imaging must be performed on either FDA-approved full- or partial-ring scanners, or coincidence systems that have the following features:
Crystal at least 5/8 inch thick
Techniques to minimize or correct for scatter and/or randoms
Digital detectors and iterative reconstruction
Scans perfomed with gamma camera PET systems with crystal thinner than 5/8 inch WILL NOT be covered. In addition, scans performed with systems with crystals greater than or equal to 5/8 inch in thickness, which do not meet the other listed design characteristics, are not covered.
Medicare Delays Effective Date for Part of Stark Rules
On December 3, the Centers for Medicare and Medicaid Services announced that it was delaying for one year the effective date of the “last sentence of 42CFR 411.354(d)(1). For those of you who have not memorized this section of the Federal Register, it reads as follows:
“Percentage compensation arrangements do not constitute compensation
that is ‘set in advance’in which the percentage compensation is based on
fluctuating or indeterminate measures or in which the arrangement
results in the seller receiving different payment amounts for the same
service from the same purchaser.”
As you may recall, the Stark law mandates that the amount of compensation paid to the practitioner be “set in advance.” It would appear from the comments CMS received after announcing this policy that this would disrupt thousands of contracts between academic medical centers and physicians in order to comply with this requirement.