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Author: Brian Werfel

Brian S. Werfel, Esq. is a partner in Werfel & Werfel, PLLC, a New York based law firm specializing in Medicare issues related to the ambulance industry. Brian is a Medicare Consultant to the American Ambulance Association, and has authored numerous articles on Medicare reimbursement, most recently on issues such as the beneficiary signature requirement, repeat admissions and interrupted stays. He is a frequent lecturer on issues of ambulance coverage and reimbursement. Brian is co-author of the AAA’s Medicare Reference Manual for Ambulance, as well as the author of the AAA’s HIPAA Reference Manual. Brian is a graduate of the University of Pennsylvania and the Columbia School of Law. Prior to joining the firm in 2005, he specialized in mergers & acquisitions and commercial real estate at a prominent New York law firm. Werfel & Werfel, PLLC was founded by David M. Werfel, who has been the Medicare Consultant to the American Ambulance Association for over 20 years.

Federal District Court Judge Strikes Down the ACA

Written by Brian Werfel on . Posted in Legislative, Member Advisories, News, Reimbursement.

On December 14, 2018, a federal district court judge for the Northern District of Texas issued a ruling striking down the Affordable Care Act (ACA) on the grounds that the Individual Mandate was unconstitutional, and that the rest of the law cannot withstand constitutional scrutiny without the Individual Mandate.

District Court Judge Reed O’Connor’s decision relates to a lawsuit filed earlier this year by 20 states and two individuals. The plaintiffs argued that the Tax Cuts and Jobs Act of 2017 — which amended the Individual Mandate to eliminate the penalty on individuals that failed to purchase qualifying insurance effect January 1, 2019 — rendered the Individual Mandate unconstitutional. The plaintiffs further argued that the Individual Mandate was inseverable from the rest of the ACA, and, therefore, that the entire ACA should be struck down.

The defendants in this case were the United States of America, the U.S. Department of Health and Human Services (HHS), Alex Azar, in his capacity as the Secretary of HHS, and David J. Kautter, in his capacity as the Acting Commissioner of the Internal Revenue Service (IRS). 16 states and the District of Columbia intervened as additional defendants.

In order to properly understand the district court’s ruling, it is necessary to revisit the Supreme Court’s 2012 decision on the constitutionality of the ACA, National Federal of Independent Business v. Sebelius (NFIB). In that case, 26 states, along with several individuals and a business organization challenged the ACA’s Individual Mandate and Medicaid expansion provisions as exceeding Congress’ enumerated powers. In a complicated decision, the majority of Justices ruled that the Individual Mandate was unconstitutional under Congress’ authority to regulate interstate commerce, but that the provision could be salvaged under Congress’ authority to lay and collect taxes. In reaching this conclusion, the majority of Justices focused on the “shared responsibility payment” aspect of the Individual Mandate, which imposed a tax on those individuals that failed to purchase or otherwise obtain qualifying health insurance. The majority of Justices concluded that the shared responsibility payment was a “tax.” It was therefore constitutional under the Congress’ general taxing authority.

In sum, the Supreme Court ruled that Congress lacked the power to compel individuals to buy qualifying health insurance, but that it could constitutionally impose a tax on those that failed to purchase or otherwise obtain qualifying health insurance.

In the current case, the court was asked to reconsider the Individual Mandate in light of the TCJA, which “zeroed” out of the shared responsibility payment, effective January 1, 2019. The plaintiffs argued that the Individual Mandate could no longer be justified as a valid exercise of Congress’ taxing authority. The federal government and its agents did not necessarily contest the plaintiffs’ argument with respect to the Individual Mandate. By contrast, the intervening states and the District of Columbia argued that the Individual Mandate could continue to be construed as a tax because it continues to satisfy the factors set forth by the Supreme Court in NFIB.

Judge O’Connor sided with the plaintiffs, holding that, because the Individual Mandate would no longer trigger a tax beginning in 2019, the Supreme Court’s ruling on this point in NFIB was no longer applicable. He therefore concluded that the Individual Mandate could no longer be upheld under Congress’ taxing authority. Judge O’Connor then fell back on the Supreme Court’s previous holding that the Individual Mandate, as a stand-alone command, remained unconstitutional under the Interstate Commerce Clause. Judge O’Connor then ruled that the Individual Mandate could not be severed from the rest of the ACA. On this point, the judge cited the express provisions of the ACA, as well as the Supreme Court’s decisions in NFIB and King v. Burwell.

What this decision means

On its face, the decision strikes down the Affordable Care Act in its entirety. However, the ruling is likely to be appealed to the Fifth Circuit Court of Appeals. Most legal experts expect that, regardless of the decision at the Circuit Court, the case is likely to make its way up to the Supreme Court.

Pending the resolution of these appeals, the Administration has adopted a “business as usual” approach. The White House has already indicated that it will not attempt to enforce the ruling during the appeals process. CMS Administrator Seema Verma recently tweeted that the decision will have “no impact to current coverage or coverage in a 2019 plan.”

The American Ambulance Association will continue to monitor this case as it makes its way through the appeals process, and we will notify our members of any new developments.

CMS Posts 2019 Public Use File

Written by Brian Werfel on . Posted in Medicare, Member-Only, News, Reimbursement.

On November 28, 2018, CMS posted the 2019 Ambulance Fee Schedule Public Use Files. These files contain the amounts that will be allowed by Medicare in calendar year 2019 for the various levels of ambulance service and mileage. These allowables reflect a 2.3% inflation adjustment over the 2018 rates.

The 2019 Ambulance Fee Schedule Public Use File can be downloaded from the CMS website by clicking here.

Unfortunately, CMS has elected in recent years to release its Public Use Files without state and payment locality headings. As a result, in order to look up the rates in your service area, you would need to know the CMS contract number assigned to your state. This is not something the typical ambulance service would necessarily have on hand. For this reason, the AAA. has created a reformatted version of the CMS Medicare Ambulance Fee Schedule, which includes the state and payment locality headings. Members can access this reformatted fee schedule here.

View Reformatted Fee Schedule

CMS Announces 2019 Ambulance Inflation Factor

Written by Brian Werfel on . Posted in Medicare, Member Advisories, Member-Only, News.

On November 30, 2018, CMS issued Transmittal 4172 (Change Request 11031), which announced the Medicare Ambulance Inflation Factor (AIF) for calendar year 2019.

The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.

For the 12-month period ending in June 2018, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased 2.9%. CMS further indicated that the CY 2019 MFP will be 0.6%. Accordingly, CMS indicated that the Ambulance Inflation Factor for calendar year 2019 will be 2.3%.

CMS Announces Extension of Prior Authorization Program

Written by Brian Werfel on . Posted in Medicare, Member Advisories, Member-Only, News, Reimbursement.

On November 30, 2018, CMS issued a notice on its website that it would be extending the prior authorization demonstration project for another year. The extension is limited to those states where prior authorization was in effect for calendar year 2018. The affected states are Delaware, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia and West Virginia, as well as the District of Columbia. The extension will run through December 1, 2019. 

CMS indicated that the extension will provide it with an additional year to evaluate the prior authorization program, and to determine whether the program meets the statutory requirements for nationwide expansion under the Medicare Access and CHIP Reauthorization Act of 2015.

CMS has also updated its Ambulance Prior Authorization FAQs and its Physician/Practitioner Letter to reflect the expansion of the program. The updated FAQ and Physician Letter can be downloaded from the CMS Ambulance Prior Authorization webpage by clicking here.

2017 National and State-Specific Medicare Data

Written by Brian Werfel on . Posted in Medicare, Member Advisories, Member-Only, News, Reimbursement.

The American Ambulance Association is pleased to announce the publication of its 2017 Medicare Payment Data Report. This report is based on the Physician/Supplier Procedure Summary Master File. This report contains information on all Part B and DME claims processed through the Medicare Common Working File and stored in the National Claims History Repository.

The report contains an overview of total Medicare spending nationwide in CY 2017, and then a separate breakdown of Medicare spending in each of the 50 states, the District of Columbia, and the various other U.S. Territories.

For each jurisdiction, the report contains two charts: the first reflects data for all ambulance services, while the second is limited solely to dialysis transports. Each chart lists total spending by procedure code (i.e., base rates and mileage). For comparison purposes, information is also provided on Medicare spending in CY 2016.

2017 National & State-Specific Medicare Data

Questions? Contact Brian Werfel at bwerfel@aol.com.

 

Talking Medicare: CMS Implements Further Dialysis Cuts

Written by Brian Werfel on . Posted in Advocacy Priorities, Member-Only, News, Reimbursement, Talking Medicare.

Talking Medicare: CMS Implements Further Cuts in Reimbursement for Dialysis Services; Medicare Payment Data Shows Continued Reduction in Overall Spending on Dialysis Transports, but Net Increase in Dialysis Payments in Prior Authorization States

On October 1, 2018, CMS implemented an additional thirteen (13%) cut in reimbursement for non-emergency BLS transports to and from dialysis. This cut in reimbursement was mandated by Section 53108 of the Bipartisan Budget Act of 2018. This on top of a ten (10%) cut in reimbursement for dialysis transports that went into effect on October 1, 2013. As a result, BLS non-emergency ambulance transports to and from dialysis that occur on or after October 1, 2018 will be reimbursed at 77% of the applicable Medicare allowable.

In related news, CMS has released its national payment data for calendar year 2017. This data shows a continued reduction in total Medicare payments for dialysis transports. Medicare paid $477.7 million on dialysis transports in 2017, down from $488.9 million in 2016. This continues a downward trend that has seen total payments decline from a high of more than $750 million in 2013 (see accompanying chart to the right). Not coincidentally, it was in 2013 that our industry saw its first reduction in Medicare’s payments for dialysis transports.

The payment reduction is partially the result of the reduction in the amounts paid for dialysis services. However, it is also reflective of an overall decline in the number of approved dialysis transports. For this, we can look primarily to the impact of a four-year demonstration project that requires prior authorization of dialysis transports in 8 states and the District of Columbia.

As a reminder, the original prior authorization states were selected based on higher-than-average utilization rates and high rates of improper payment for these services. In particular, the Medicare Payment Advisory Commission (MedPAC) had singled out these states as having higher-than-average utilization of dialysis transports in a June 2013 report to Congress. The chart below shows total spending on dialysis in those states in the years immediately preceding the implementation of the prior authorization project up through 2017, the third year of the demonstration project. While the three states had very different trajectories prior to 2015, each showed a significant decrease in total payments for dialysis under the demonstration project.

However, it is the trajectory of these changes that I want to discuss in this month’s blog. In previous blogs, I discussed the impact of the particular Medicare Administrative Contractor on the outcomes under prior authorization. Specifically, I noted that, while dialysis payments dropped in each state, the decline was far more dramatic in the states administered by Novitas Solutions (NJ, PA) than in the South Carolina, which was administered by Palmetto GBA. This trend continued in the second year of the program, which saw prior authorization expanded into five additional states and the District of Columbia. Those states administered by Novitas (DE, MD) saw far greater declines than the states administered by Palmetto (NC, VA, WV).

Given these declines, the data from the third year is somewhat surprising. The states administered by Palmetto continued to see declines in total dialysis payments, with the only exception being West Virginia. However, in the states administered by Novitas, we saw total dialysis payments increase, particularly in New Jersey, which saw nearly a 33% increase in total dialysis payments.

Three years into the prior authorization program, it is starting to become clear that the two MACs have approached the problem of overutilization of dialysis transports using two different approaches. Palmetto appears to have adopted a slow-and-steady approach, with total payments declining in a consistent manner year after year. By contrast, Novitas adopted more of a “shock the system” approach, where it rejected nearly all dialysis transports in the first year, and has adopted a somewhat more lenient approach in subsequent years.

Key Takeaways

 Last year, I wrote that two years of data under the prior authorization program permitted two conclusions: (1) the implementation of a prior authorization process in a state will undoubtedly result in an overall decrease in the total payments for dialysis within that state and (2) the size of that reduction appears to be highly dependent on the Medicare contractor.

With an additional year of data, I think both conclusions remain valid, although I would revise the second to suggest that the initial reduction has more to do with the Medicare contractor. The evidence from the third year of the program suggests that the trends tend to equalize after the first few years. It is also possible that Novitas felt a more aggressive approach was needed in the first few years to address evidence of widespread dialysis overutilization in the Philadelphia metropolitan area.

This has potential implications beyond the demonstration project, as CMS looks towards a possible national expansion of the program. Among other issues, it suggests that the AAA must continue its efforts to work with CMS and its contractors on developing more uniform standards for coverage of this patient population.

What the AAA is Doing

The AAA continues to work on legislation that would restructure this cut to dialysis transport reimbursement. The AAA strongly supports the NEATSA Act (H.R.6269) introduced by Congressman LaHood (R-IL) and Congresswoman Sewell (D-AL) that would restructure the offset so that a majority of the additional reduction would be focused on those ambulance service agencies in which 50% or more of their volume are repetitive BLS nonemergency transports. AAA members and the AAA are working to get a Senate companion bill introduced shortly. The goal of this legislation would be to have the restructured offset go into effect as soon as possible. Thank you to the dozens of AAA members who have already contacted their members of Congress voicing their support for this critical legislation.

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com

Preliminary Calculation of 2019 Ambulance Inflation Update

Written by Brian Werfel on . Posted in Member Advisories, Member-Only, News, Reimbursement.

Section 1834(l)(3)(B) of the Social Security Act mandates that the Medicare Ambulance Fee Schedule be updated each year to reflect inflation.  This update is referred to as the “Ambulance Inflation Factor” or “AIF”.

The AIF is calculated by measuring the increase in the consumer price index for all urban consumers (CPI-U) for the 12-month period ending with June of the previous year. Starting in calendar year 2011, the change in the CPI-U is now reduced by a so-called “productivity adjustment”, which is equal to the 10-year moving average of changes in the economy-wide private nonfarm business multi-factor productivity index (MFP). The MFP reduction may result in a negative AIF for any calendar year. The resulting AIF is then added to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.

For the 12-month period ending in June 2018, the federal Bureau of Labor Statistics (BLS) has calculated that the CPI-U has increased by 2.87%.

CMS has yet to release its estimate for the MFP in calendar year 2019. However, assuming CMS’ projections for the MFP are similar to last year’s projections, the number is likely to be in the 0.5% range.

Accordingly, the AAA is currently projecting that the 2019 Ambulance Inflation Factor will be approximately 2.4%. 

Cautionary Note Regarding these Estimates

Members should be advised that the BLS’ calculations of the CPI-U are preliminary, and may be subject to later adjustment. The AAA further cautions members that CMS has not officially announced the MFP for CY 2019. Therefore, it is possible that these numbers may change. The AAA will notify members once CMS issues a transmittal setting forth the official 2019 Ambulance Inflation Factor.

CMS Announces Revisions to Provider Enrollment Waiver Demonstration (PEWD) Program

Written by Brian Werfel on . Posted in Medicare, Member Advisories, Member-Only, News.

CMS Announces Revisions to Provider Enrollment Moratoria Access Waiver Demonstration (PEWD) Program

On August 20, 2018, the Centers for Medicare & Medicaid Services (CMS) published a notice in the Federal Register that it would be revising the terms of its Provider Enrollment Moratoria Access Waiver Demonstration (PEWD) Program. These revisions became effective on August 20, 2018.

Section 6401(a) of the Affordable Care Act granted CMS the authority to impose temporary moratoria on the enrollment of new Medicare providers and suppliers to the extent doing so was necessary to combat fraud or abuse. Based on this authority, CMS has implemented temporary moratoria on the enrollment of new non-emergency ambulance providers in the states of New Jersey and Pennsylvania.

Under the Provider Enrollment Moratoria Access Waiver Demonstration (PEWD) Program, CMS has the authority to grant waivers to statewide enrollment moratorium on a case-by-case basis in response to access to care issues.  However, since the implementation of the PEWD Program in 2016, CMS has identified a handful of technical issues that have complicated the implementation of the PEWD Program.  The revisions in this notice are intended to resolve these technical issues.

The specific revisions CMS is making include:

  1. In December 2016, Congress enacted the 21st Century Cures Act. Section 17004 of that law prohibits payment for items or services furnished within moratoria areas by any newly enrolled provider or supplier that falls within a category of health care provider that is subject to the enrollment moratoria.  This provision became effective on October 1, 2017.  CMS is revising the PEWD Program to waive the requirements of Section 17004 of the Cures Act with respect to providers and suppliers who were granted waivers under the PEWD.
  2. CMS is further revising the PEWD to create a second category of waivers for those providers or suppliers that had submitted an enrollment application prior to the implementation of the moratoria, but who were denied as a result of the implementation of the moratoria. CMS indicated that this new waiver authority was necessary to protect providers and suppliers that spent substantial amounts of time and money preparing for enrollment at the time the enrollment moratoria were county-based, only to be denied once the moratoria were expanded to the entire state.
  3. CMS is revising the PEWD to provide additional discretion regarding the effective date of billing privileges for providers and suppliers granted waivers under the PEWD.

Talking Medicare: DOJ Settlement Highlights Importance of Exclusion Testing

Written by Brian Werfel on . Posted in Medicare, Member-Only, Talking Medicare.

Talking Medicare: Recent DOJ Settlement Highlights Importance of Exclusion Testing

On July 17, 2018, the U.S. Attorney for the District of Maine issued a press release on a settlement that had been reached with an ambulance service in Maine. As a result of this settlement, the ambulance service agreed to pay $16,776.74 to resolve allegations that it had submitted false claims to the Medicare and Maine Medicare Programs.

While the Department of Justice’s press release referred to the matter as a civil health care fraud, that headline is somewhat misleading. The ambulance service was not alleged to “up-coded” its claims or to have billed for patients that did not require ambulance transportation. Rather, the ambulance service was accused of using monies paid to it by these federal health care programs to pay the salary and benefits of a woman hired to assist the company’s billing manager. The woman, who was not identified in news reports, had previously been excluded from participation in federal health care programs after surrendering her license as a pharmacy technician after being found to have inappropriately diverted certain controlled substances. The ambulance service apparently failed to conduct an exclusion test on this individual prior to placing her on its payroll. The ambulance service’s side of the story is discussed in greater detail in this article from the local newspaper.

This settlement provides a reminder of the potential liabilities associated with the employment excluded individuals. As the HHS Office of the Inspector General (OIG) noted in its May 2013 Special Advisory Bulletin, the effect of exclusion goes beyond direct patient care. The OIG noted that excluded individuals are prohibited from providing transportation services paid by a federal health care program, using the example of ambulance drivers and ambulance dispatchers. The OIG further indicated that excluded individuals cannot provide administrative and/or management services that are payable by federal health care programs, even if these administrative or management services are not separately billable. In the above-referenced case, the prohibition was applied to the wages and benefits payable to the excluded employee.

Do we need to conduct exclusion testing, and, if so, how frequently?

The OIG recommends that all health care providers conduct exclusion testing prior to an individual’s employment, and then periodically thereafter. However, the OIG takes no formal position on how frequently these periodic exclusion checks should be conducted. The OIG does note, however, that it updates its List of Excluded Individuals and Entities (LEIE) on a monthly basis.

Given the potential risks involved, I think monthly testing of all employees should definitely be considered a best practice. The hope is that this case serves as a cautionary tale for other ambulance providers.

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com.

CMS Extends Moratorium on Non-Emergency Ground Services

Written by Brian Werfel on . Posted in Medicaid, Medicare, Member Advisories, Member-Only, News.

CMS Extends Temporary Moratorium on Non-Emergency Ground Ambulance Services in New Jersey and Pennsylvania

The Centers for Medicare & Medicaid Services (CMS) has announced that it intends to extend the temporary moratoria on the enrollment of new Medicare Part B non-emergency ground ambulance providers and suppliers in the states of New Jersey and Pennsylvania.  The extended moratoria will run through January 29, 2019.  Notice of the extension of the temporary moratorium will appear in the Federal Register on August 2, 2018.

Section 6401(a) of the Affordable Care Act granted CMS the authority to impose temporary moratoria on the enrollment of new Medicare providers and suppliers to the extent doing so was necessary to combat fraud or abuse.  On July 31, 2013, CMS used this new authority to impose a moratorium on the enrollment of new ambulance providers in Houston, Texas and the surrounding counties.  On February 4, 2014, CMS imposed a second moratorium on newly enrolling ambulance providers in the Philadelphia metropolitan areas.  These moratoriums were subsequently extended on August 1, 2014, February 2, 2015, July 28, 2015, and February 2, 2016.

On August 3, 2016, CMS announced changes to the moratoria on the enrollment of new ground ambulance suppliers.  Specifically, CMS announced that: (1) the enrollment moratoria would be lifted for the enrollment of new emergency ambulance providers and supplier and (2) the enrollment moratoria on non-emergency ambulance services would be expanded to cover the entire states of New Jersey, Pennsylvania, and Texas.  At the same time, CMS announced the creation of a new “waiver” program that would permit the enrollment of new non-emergency ambulance providers in these states under certain circumstances.  The revised moratorium on newly enrolling non-emergency ground ambulance providers was subsequently extended on January 9, 2017 and July 28, 2017.

On September 1, 2017, CMS issued a notice on its website indicating that it had elected to lift the moratorium on the enrollment of new Part B non-emergency ambulance suppliers in Texas, effective September 1, 2017.  CMS indicated that this decision was made to assist in the disaster response to Hurricane Harvey.  CMS published formal notice of the lifting of this moratorium on November 3, 2017.

On January 30, 2018, CMS announced an extension of the moratorium on the enrollment of new Part B non-emergency ambulance suppliers in New Jersey and Pennsylvania.

CMS will need to make a determination on whether to extend or lift the enrollment moratorium on or before January 29, 2019.

Talking Medicare: GAO urges CMS to continue prior authorization

Written by Brian Werfel on . Posted in Member-Only, Talking Medicare.

Talking Medicare: GAO urges CMS to continue prior authorization efforts

On May 21, 2018, the Government Accountability Office (GAO) issued a report to the U.S. Senate Finance Committee on the use of prior authorization models by the Centers for Medicare and Medicaid Services (CMS). The GAO was asked to examine: (1) the impact of prior authorization on total expenditures, and the potential savings for items or service subject to prior authorization, (2) the reported benefits and challenges of prior authorization, and (3) CMS’ monitoring of these programs, and its plans for future prior authorization. To conduct its study, the GAO looked at payment data and other information provided by CMS. The GAO also interviewed CMS, the Medicare Administrative Contractors (MACs), and selected provider, supplier, and beneficiary groups.

Prior authorization was first implemented by CMS in 2012 for certain power mobility devices (e.g., power wheelchairs) in seven states. Subsequent prior authorization models were implemented for non-emergency hyperbaric oxygen and home health services. Most relevant to our industry, CMS implemented a prior authorization model for repetitive, scheduled, non-emergency ambulance transportation in December of 2014. Originally, this model was implemented in only three states: New Jersey, Pennsylvania, and South Carolina. In January of 2016, the prior authorization model was expanded to include the states of Delaware, Maryland, North Carolina, Virginia, and West Virginia, as well as the District of Columbia.

The GAO’s key finding is that these prior authorization models have been effective in reducing Medicare’s expenditures for various items. The GAO’s analysis of actual expenditures found that the estimated savings from all demonstrations through March of 2017 could be as high as $1.1 to $1.9 billion. Given this fact, it should not be surprising that the GAO is calling on CMS to continue the use of prior authorization.

The majority of the data included in this report relates to non-ambulance services. However, I do want to highlight a few data points noted by the GAO.

From the model’s implementation in December 2014 through March 2017, MACs collectively handled more than 337,000 prior authorization requests, including a total of 3,231 requests for authorization of a repetitive, non-emergency, ambulance patient. This includes 2,620 initial requests, and 611 resubmissions (i.e., subsequent requests for prior authorization following the rejection of the initial request).

The GAO provisional affirmation rate for both initial and resubmitted authorization requests rose in each demonstration between the initial implementation date and March 2017. For example, the GAO noted that the affirmation rate (i.e., the rate at which patients are approved for repetitive ambulance transportation) during the first six months of the non-emergency ambulance model was 28 percent. This rose to 66 percent during the most recent six-month period (October 2016 through March 2017). The GAO noted that MAC officials attributed this increase, in part, to provider and supplier education, which they felt improved the documentation being submitted by providers and suppliers. While this is undoubtedly true, it is also likely the case that the MACs refined their approval process over time.

The GAO estimated the total potential savings from the prior authorization model for ambulance to be nearly $387.5 million from December 2014 through March 2017. Importantly, 90 percent of that savings was attributable to reductions in utilization in the original three states. Moreover, more than half the reduced expenditures took place within the first six months of the demonstration project.

In terms of fitting this report into the larger picture, I think it is best viewed as further confirmation of what we already suspected: namely, that the federal government perceives prior authorization to be an effective tool for combating the perceived overutilization of ambulance to transport patients to and from dialysis. CMS indicated as much when it adopted the program in 2014. Medicare payment data has borne out those expectations. Recently, CMS issued its first interim report on prior authorization’s effectiveness. The GAO’s report adds an independent imprimatur to that belief.

Big picture, all of the stars appear to be lining up for an expansion of prior authorization next year. Stay tuned!!

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com.

Talking Medicare: A Good Thing Poorly Explained

Written by Brian Werfel on . Posted in Medicare, Regulatory, Talking Medicare.

On April 13, 2018, CMS released two Transmittals, Transmittal 243 and Transmittal 4021, and a related MedLearns Matter Article (MM10550). Collectively, these documents clarify Medicare’s coverage of ambulance transportation of SNF residents in a stay not covered by Part B, but who have Part B benefits, to the nearest supplier of medically necessary services that are not available at the SNF. This clarification relates to both the ambulance transport to the site of medical care, and the return trip.

In order to properly understand the clarification, it is helpful to review Medicare’s coverage of ambulance transportation provided to SNF residents. At the onset, it is important to note that Medicare draws a distinction between the first 100 days of a beneficiary’s SNF stay, and any subsequent days of the same stay. The first 100 days are commonly referred to as the “Part A Period.” Under current Medicare rules, all ambulance transportation provided during the Part A Period is the financial responsibility of the SNF, unless a specific exemption applies. Outside the Part A Period, Medicare’s coverage rules generally mirror the rules applicable to ambulance transports that originate at the patient’s residence. However, there is an exception that relates to transportation to and from therapeutic or diagnostic sites (i.e., those facilities identified with the “D” modifier). This clarification relates to transportation to and from diagnostic sites.

Medicare rules are clear that transportation of an SNF resident outside the Part A Period for the purpose of receiving medically necessary care that could not be provided at the SNF will be covered to the extent the ambulance transportation was both medically reasonable and necessary. This is true regardless of the type of facility to which the patient is transported. In this context, the term “reasonable” refers to the costs of transporting the patient to the site of medical care. Where it is cheaper to bring the patient to the service (e.g., an MRI or CT scan), Medicare will cover the service. Where it is cheaper to bring the service to the patient (e.g., certain minor procedures), Medicare rules indicate that the transportation would not be covered.

In other words, once an SNF resident is outside the Part A Period, Medicare will cover a medically necessary ambulance transport to a diagnostic site provided that it is cheaper to transport the patient to that site than to transport the equipment needed to provide care to the SNF.

As you can imagine, determinations as to the reasonableness of a particular service can be quite subjective. Moreover, these determinations can typically only be made on a case-by-case basis, i.e., it is extremely difficult for Medicare Administrative Contractors to make such decisions without seeing the ambulance trip report and other supporting documentation. As a result, CMS has historically given its MACs broad discretion to make these determinations.

The MACs have elected to utilize this discretion in various ways. Some MACs have essentially elected to rely upon the ambulance provider to make such determinations prior to submitting the claims. These MACs have therefore elected not to implement front-end edits for such claims.

Other MACs have elected to issue an initial denial, and handle reasonableness determinations through the appeals process. These MACs do so by implementing edits into their claims processing system that automatically deny claims submitted with the “ND” modifiers. However, because Medicare coverage rules indicate that transportation from anywhere to an SNF may be covered, these MACs do not have a corresponding edit to deny claims submitted with the “DN” modifiers.

The result is various inconsistencies in the ways claims for these situations are handled. Depending on the MAC jurisdiction in which you operate, a claim for an ambulance transport from an SNF to a diagnostic site (“ND”) for a beneficiary outside the Part A Period may be paid or denied. For those of you that operate in jurisdictions where the MAC denies this claim, you may also see the return trip either paid or denied. Note: if the transportation to the diagnostic site is denied as not being “reasonable,” the return trip should be denied as well.

It is these inconsistencies that CMS is addressing. Essentially, CMS is instructing those MACs that use claims processing edits to deny the “ND” transport to remove those edits. The practical effect is to force the MACs to use some other criteria to determine whether the roundtrip is reasonable (and, therefore, covered by Medicare Part B).

Please note that the coverage rules and clarification summarized above applies only to therapeutic and diagnostic facilities. It does not apply to ambulance transportation to and from a physician’s office. With the narrow exception of emergency ambulance transportation to a physician’s office as an interim stop on the way to a hospital, such transportation has always been and remains a non-covered service.

While I believe the change is, on net, a positive one for the industry, I would caution against reading too much into this clarification. CMS is not indicating that these transports will be covered in all instances. CMS is simply saying that, with respect to the initial processing of claims, it is willing to sacrifice some potential accuracy for the sake of greater national consistency. CMS in not restricting its MACs from using other means to make reasonableness determinations, e.g., the use of development requests, prepayment review, etc. While it is reasonable to assume that most MACs will elect not to utilize these tools, only time will tell if that is indeed what comes to pass. In the meantime, I am going to enjoy one of those rare instances where CMS used common sense, and removed an additional burden on our industry.

Have an issue you would like to see discussed in a future Talking Medicare blog?
Please write to me at bwerfel@aol.com.

Update on Medicare Reimbursement Issues

Written by Brian Werfel on . Posted in Medicare, Member-Only, Reimbursement.

The AAA would like to take this opportunity to update members on a number of issues related to Medicare reimbursement:

  1. CMS and its contractors have begun adjusting claims for ground ambulance services to reflect the restoration of the temporary add-ons. Section 50203(a) of the Bipartisan Budget Act of 2018 retroactively reinstated the temporary add-ons for ground ambulance services. These add-ons increase the applicable Medicare allowables by 2% in urban areas, 3% in rural areas, and 22.6% in “super rural” areas (over and above the corresponding rural rate), retroactive to January 1, 2018. On a March 7, 2018 Open Door Forum, CMS indicated that it had updated the Medicare Ambulance fee schedule to reflect these higher rates, and that it has provided a Change Request to each of its Medicare Administrative Contractors (MACs). The AAA has confirmed that all MACs have successfully implemented the new rates, and that all are paying current claims at the correct rate. The AAA has further confirmed that MACs have started to adjust 2018 claims paid at the original (lower) rates. Unfortunately, neither CMS nor its MACs have committed to a firm timetable for the completion of all required adjustments; however, a number of MACs have indicated that they anticipate completing all required adjustments by the end of the second quarter of 2018.
  1. Further reduction in Medicare’s payment for non-emergency BLS transports to and from dialysis. The Bipartisan Budget Act of 2018 further required CMS to implement an additional 13% reduction in Medicare’s payment for scheduled, non-emergency BLS transports to and from dialysis. This reduction is on top of the existing 10% payment reduction. Collectively, this means that dialysis transports will be reimbursed at a rate that is 23% less than the rate that would otherwise be applicable to BLS non-emergency transports in your area. The AAA. is reminding members that this additional reduction in payments will go into effect for transports on or after October 1, 2018.
  1. CMS has updated its SNF Consolidated Billing file to resolve the error that resulted in certain ambulance claims being incorrectly denied as being the responsibility of the SNF. Each year, CMS updates the SNF Consolidated Billing file provided to MACs. This file contains several lists of Healthcare Common Procedure Coding System (HCPCS) codes, and provides instructions to the MACs on whether these codes: (i) should be accepted for separate payment under Medicare Part B or (ii) should always be denied for inclusion in the SNF Consolidated Billing system. Ambulance HCPCS codes (A0425, A0426, A0427, etc.) have always been included in the first list, as the issue of whether an ambulance transportation is bundled to the SNF is conditioned on the nature of the services that the patient will receive at the destination. To the extent the service the patient will receive at the destination is bundled, the ambulance services to and from that service will also be bundled, and vice versa. Note: there are two exceptions to this general rule. The first is that ambulance transportation to and from dialysis is specifically exempted from the SNF Consolidated Billing regime, and therefore will always be separately billable to Medicare Part B. The second exception relates to the provision of chemotherapy services furnished on an outpatient basis in a hospital. Chemotherapy services are generally bundled to the SNF; however, several years ago, Congress elected to exempt a number of particularly expensive forms of chemotherapy from the SNF bundle. In these instances, while the SNF is not responsible for the payment of the expensive chemotherapy, the SNF remains responsible for payment of the ambulance transportation to and from the hospital. Because ambulance codes may or may not be bundled to the SNF based on the nature of the transport, they are not automatically denied. Instead, the MACs are supposed to use further edits to identify those situations in which the ambulance transport would be bundled vs. separately payable. Unfortunately, in its 2018 update, CMS inadvertently left the ambulance HCPCS codes off the list of codes that are not automatically denied as being bundled to the SNF.  As a result, ambulance providers have indicated that claims were being denied using remark code “OA109.”  In some cases, claims for dates of service in 2016 or 2017 that were previously paid were being recouped. CMS recognized its error fairly quickly, and updated the SNF Consolidated Billing file in mid-February. All MACs were provided with updated instructions by February 27, 2018. Therefore, the issue has been resolved for current claims. What remains to be resolved is how CMS and its MACs will adjust or reprocess claims that were incorrectly denied. Several MACs have notified providers of the issue, and asked that they refrain from appealing the claims. These MACs are indicating that they will automatically adjust/reprocess affected claims. In other instances, the MACs have asked the providers to make a refund of affected claims that were previously paid, promising to then reprocess the entire claim. The AAA is advising members to carefully track the claims that were affected by this mistake, and to follow the instructions issued by their MAC for ensuring their reprocessing.
  1. CMS has delayed the mailing new ID cards to all Medicare beneficiaries. As part of the Medicare Access and CHIP Reauthorization Act of 2015, Congress mandated that CMS remove a beneficiary’s social security number (SSN) from their Medicare ID card by April 2019. As part of this initiative, CMS will be replacing the SSN-based Health Insurance Claim Number (HICN) with the new Medicare Beneficiary Identifier (MBI). CMS has already started mailing cards with the MBI to newly enrolling Medicare beneficiaries. CMS originally announced that it would be mailing new cards to existing Medicare beneficiaries starting in April 2018, but recently indicated that it would delay the mailing of new cards to existing Medicare beneficiaries until May 2018. From May to June, CMS will mail new cards to existing Medicare beneficiaries residing in Alaska, California, Delaware, Hawaii, Maryland, Oregon, Pennsylvania, Virginia, West Virginia, the District of Columbia, and the U.S. territories of American Samoa, Guam, and the Northern Mariana Islands. The mailing program will then be extended to additional states in 5 “waves” over the coming year. To the extent you provide services in the above-mentioned states, you may want to educate crewmembers and other employees on the differences between the HICN and the MBI. You may want to also consider updating your existing patient databases to include the new identifier. As a reminder, CMS will permit claims to be submitted with either the HICN or the MBI during a transition period running through December 31, 2019.  Effective January 1, 2020, claims must be submitted with a patient’s MBI. This requirement applies regardless of whether the date of service occurred prior to the expiration of the transition period.
  1. Extension of prior authorization project for scheduled, repetitive transports. In December 2017, CMS indicated that it would be extending the prior authorization program for an additional year. This program is currently in place for the states of Delaware, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Virginia, West Virginia, and the District of Columbia. The extension of the program is limited to those states. CMS has further indicated that it will be making a determination on possible national expansion at some point in the near future. CMS recently released its first interim report on the prior authorization program. As expected, that report indicated that prior authorization has been successful in reducing Medicare expenditures on scheduled, repetitive transports, without any material impact on beneficiary access to and quality of care.

Have any questions about these updates? Contact Brian Werfel at bwerfel@aol.com

First Interim Evaluation Report on Medicare Prior Authorization

Written by Brian Werfel on . Posted in Medicare, Talking Medicare.

Talking Medicare: First Interim Evaluation Report on Medicare Prior Authorization (An 80-page report confirming what you already likely suspected)

On February 28, 2018, the Centers for Medicare and Medicaid Services (CMS) posted an interim report on its prior authorization demonstration project for repetitive, scheduled, non-emergent ambulance transportation. The report, titled First Interim Evaluation Report of the Medicare Prior Authorization Model for Repetitive Scheduled Non-Emergent Ambulance Transport (RSNAT), was conducted by Mathematica Policy Research, a nonpartisan think tank. Mathematica studied the impact of the prior authorization model on Medicare payments, ambulance utilization, and patient quality of care.

Background

CMS implemented the prior authorization demonstration project in December 2014 in three states: New Jersey, Pennsylvania, and South Carolina (referred to in the report as “Year 1 States”). These states were selected based on higher-than-average utilization rates and high rates of improper payment for these services. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) subsequently expanded the demonstration project to five additional states (Delaware, Maryland, North Carolina, Virginia, and West Virginia) and the District of Columbia on January 1, 2016 (referred to in the report as “Year 2 States”).

The goal of the demonstration project was to study the impact of prior authorization on the utilization of ambulance transportation. Under the program, ambulance suppliers in the affected states would be required to submit documentation related to medical necessity to their Medicare Administrative Contractors (MACs) prior to Medicare payments being authorized. The MACs would review this documentation, and approve those they felt were medically necessary, while denying those patients that they believed could be safely transported by other means.

Reports Methodology

Mathematica was retained by CMS to conduct a five-year evaluation of the impact of the RSNAT prior authorization model.  Specifically, Mathematica was asked to evaluate the program on five specific measures:

  1. The effect of prior authorization on Medicare use and cost. Did the model realize savings for the Medicare Program?
  2. How does the prior authorization model affect the quality of and access to care for Medicare beneficiaries?
  3. How does the prior authorization model affect Medicare program operations? What was the impact, if any, of the model on MAC operations?
  4. How does the prior authorization model impact non-emergency ambulance suppliers’ and other health care providers’ behavior? Did ambulance suppliers and other health care providers change their behavior in response to the model?
  5. Does prior authorization impact improper payment rates, the rate at which claims are denied, and related program integrity concerns?

Mathematica indicated that it conducted its review using both quantitative and qualitative data analysis. It analyzed data from January 2012 through June 2016. Mathematica noted that it estimated program effects by measuring the change over time in certain key metrics between the pre-model years (2012 through 2014 for Year 1 States, 2012 through 2015 for Year 2 States) and post-implementation years (2015 through 2016 for Year 1 States, 2016 for Year 2 States) in the nine model states. It also compared these states against non-model states.

Because dialysis patients account for more than 75% of all repetitive transports, the report focused on ESRD patients.

Key Findings

The study concluded that the RSNAT prior authorization model successfully reduced the utilization of ambulance, as well as Medicare’s expenditures on repetitive ambulance transportation.  The report indicated that a reduction of nearly 70% in the nine states combined. This was associated with an approximately $171 million reduction in Medicare payments for dialysis transports. Interestingly, the study concluded that it also led to a reduction in total Medicare FFS expenditures for ESRD beneficiaries.

Not surprisingly, the Year 1 States saw more dramatic reductions than the Year 2 States. Mathematic attributed this to the fact that the Year 1 States were specifically selected based on higher-than-average utilization rates, while the Year 2 States were selected based on their geographic proximity to the Year 1 States. Mathematic concluded that national expansion would likely result in additional reductions in Medicare payments, but that the impact would likely be less than what was seen with the Year 1 States.

With respect to issues related to access and quality of care, Mathematica found little quantitative evidence to suggest that prior authorization had a negative impact on quality or access to care. The authors noted that they defined a negative impact quite narrowly, limiting it to emergency department visits, emergency ambulance utilization, unplanned hospital admissions, and death. The study did note a 15% increase in emergency dialysis use, which the authors noted might suggest that some beneficiaries were delayed in receiving ESRD treatment. The authors further noted that some beneficiaries who were denied approval could experience difficulty in accessing alternative means of transportation. Finally, the study did note that stakeholders, including ambulance suppliers, expressed concerns that some beneficiaries may have turned to other services — including emergency ambulance transportation and ED services — in response to being turned down for ambulance transportation.

The study indicated that the MACs reported that they successfully implemented the prior authorization model, and that they have adequate staffing to ensure that they meet CMS’ timelines for responding to prior authorization requests. The MACs did note, however, that there were some difficulties in implementing the program in the Year 1 States, which they attributed to their underestimating the required amount of training. The MACs self-reported that they did far better implementing the program in the Year 2 States.

The impact on the ambulance supplier community was mixed. Mathematica noted a 15% decrease in the number of ambulance suppliers per 100,000 beneficiaries in the model states after implementation. The majority of the ambulance suppliers that (euphemistically) “left the program” were smaller services that specialized in dialysis transports. Other companies reported that they reduced their volume of dialysis transports, or stopped transporting dialysis patients entirely. Not surprisingly, the ambulance supplier community believed that the coverage standards being used by the MACs were too strict.

Finally, Mathematica indicated that it was difficult to determine the prior authorization model’s impact on improper payments. This was partly due to the fact that improperly paid claims for ambulance services increased in both the model states and non-model states during the review period.

Analysis

Mathematica’s findings do not come as a surprise. Rather, they pretty much confirm what our industry has long recognized. The HHS Office of the Inspector General has long warned that dialysis transports are susceptible to overutilization. The Medicare Payment Advisory Commission (MedPAC) concluded the same thing in a June 2013 report to Congress.

Moreover, the A.A.A. has acknowledged the potential for fraud and abuse in connection with these transports. It was for this precise reason that the A.A.A. pushed for prior authorization as a better alternative to reductions in Medicare’s payment for dialysis transports. Our position was that payment reductions failed to adequately address the underlying incentives for overutilization, and, therefore, primarily punished the legitimate providers of such transports.

To its credit, Mathematica acknowledged that factors other than the ambulance suppliers’ financial motives contribute to overutilization. Specifically, it cited the difficulty many beneficiaries face in accessing alternative means of transportation, even where such alternative means would meet the patient’s medical needs. Mathematica also noted the confusion that exists among other health care providers, particularly physicians, in terms of when Medicare would cover an ambulance. Long term, my hope is that this acknowledgement will pave the way towards more constructive conversations between the industry and Congress, CMS, and other stakeholders.

In the short term, the report clears a statutory hurdle that has prevented CMS from considering the expansion of the prior authorization model to the rest of the nation. It remains to be seen whether CMS believes this report is sufficient to make a determination on national expansion, or whether CMS will want to see additional evidence.

Have an issue you would like to see discussed in a future Talking Medicare blog?  Please write to me at bwerfel@aol.com.

Summary of March 2018 Ambulance Open Door Forum

Written by Brian Werfel on . Posted in Medicare, Member-Only, News, Reimbursement.

CMS held its latest Open Door Forum on Wednesday, March 7, 2018. As with past Open Door Forums, CMS started the call with the following series of announcements:

Medicare Fee Schedule – CMS indicated that the Bipartisan Budget Act of 2018, enacted on February 9, 2018, contained several provisions that impacted the payment of ambulance claims under the Medicare Ambulance Fee Schedule:

  • Temporary Add-Ons for Ground Ambulance – CMS indicated that Section 50203(a) of the bill extended the temporary add-ons for ground ambulance services for an additional five years, retroactive back to January 1, 2018.  As extended, these add-ons will expire on December 31, 2022.  These add-ons increase Medicare’s allowable for ground ambulance base rates and mileage by 2% in urban areas, 3% in rural areas, and by 22.6% (over the applicable rural rate) for services provided in so-called “super rural” areas.
  • Cost Reporting – CMS indicated that Section 50203(b) of the bill would require ground ambulance providers and suppliers to submit cost data to CMS. CMS noted that the new law requires CMS to develop, no later than December 31, 2019, a data collection system to collect cost, revenue, utilization, and certain other information related to ground ambulance services. The law provides that cost data will be collected using a survey methodology, with a representative sample of ambulance providers and suppliers being asked to submit cost data in any given year.  Finally, CMS noted that, starting on January 1, 2022, providers or suppliers that fail to submit the requested cost data would be subject to a 10% reduction in their Medicare payments, unless otherwise exempted on the basis of significant hardship.
  • Additional Reduction in Medicare Payment for Dialysis Transports – Section 53108 of the bill provides that the Medicare allowable for non-emergency, basic life support transports to and from dialysis will be subject to a further 13% reduction.  This reduction would go into effect for dialysis transports with dates of service on or after October 1, 2018. This would be on top of the existing 10% reduction in Medicare’s payment for dialysis transports, for a total reduction of 23%.

Temporary Enrollment Moratorium – CMS indicated that the temporary moratorium on the enrollment of new ground non-emergency ambulance providers in Texas was lifted on September 1, 2017. CMS further indicated that the enrollment moratorium was extended for the states of New Jersey and Pennsylvania for an additional six months on January 29, 2018. CMS will need to make a determination on or before July 29, 2018 on whether to lift the moratorium or extent it for an additional six months in that state.

Following the announcements, CMS moved into a brief Question & Answer period.  Most of the questions were not answered on the call; instead, CMS took the contact information of the person asking the question, and indicated that they would respond directly to them at a later date.  However, the following questions were answered:

  1. CMS indicated that a Change Request had been sent to all Medicare Administrative Contractors (MACs) informing them of the new, adjusted fee schedule amounts. CMS further indicated that this Change Request, which it indicated was confidential, provided further instructions to the MACs on when and how to adjust claims initially paid at the original 2018 rates.
  1. CMS confirmed that the adjusted rates are retroactive to January 1, 2018. Accordingly, CMS indicated that claims paid at the original 2018 rates will be adjusted by the MACs at some future date.
  1. CMS indicated that it recently released its First Interim Evaluation Report on the Medicare Prior Authorization Model for repetitive, non-emergency ground ambulance transports. CMS further indicated that it was still reviewing this report, and that no decision has yet been made on the extension of this model within the existing 9 states and the District of Columbia and/or the expansion of the model to additional states.

Have questions? Please write to the Werfels at bwerfel@aol.com.

AAA Releases Updated 2018 Medicare Rate Calculator

Written by Brian Werfel on . Posted in Medicare, Member Advisories, Member-Only, News, Reimbursement.

CMS Posts Updated 2018 Public Use File; OIG Guidance on Waiver of Small Cost-Sharing Balances Updated AAA 2018 Medicare Rate Calculator Now Available!

The Centers for Medicare and Medicaid Services (CMS) has posted an updated version of the 2018 Medicare Ambulance Fee Schedule Public Use Files (PUF). These files contain the Medicare allowed base rate reimbursement amounts for the various levels of ambulance service and mileage rates. These files reflect the restoration, retroactive to January 1, 2018, of the temporary add-ons for ground ambulance services (2% for urban transports, 3% for rural transports, and the “super-rural” bonus) pursuant to the Bipartisan Budget Act of 2018, which was enacted on February 9, 2018.

2018 Fee Schedule

Accuracy of Rates and AAA Fee Calculator

The American Ambulance Association has reviewed the rates in this file and confirmed that the rates are accurate. The AAA has also revised its Medicare Ambulance Rate Calculator to reflect the five-year extension of the ambulance add-ons as well as other policy changes including the two-year extension (2026 and 2027) of the 2% Medicare provider cut under sequestration and the additional 13% (23% total) cut to BLS nonemergency transports to and from dialysis centers. The additional dialysis transport cut takes effect on October 1, and as a modifier, is not included in the Public Use File.

Download the 2018 Rate Calculator

Reformatted Version of PUF

Unfortunately, CMS has elected in recent years to release its Public Use Files without state and payment locality headings. As a result, in order to look up the rates in your service area, you would need to know the CMS contract number assigned to your state. This is not something ambulance services would necessarily know off-hand. For this reason, the AAA has created a reformatted version of the CMS Medicare Ambulance Fee Schedule, which includes the state and payment locality headings. Members can access this reformatted fee schedule on the AAA website.

CMS has yet to announce a timetable for adjusting claims that were paid at the original fee schedule amounts. It is anticipated that CMS will make an announcement on this timetable in the next few weeks.

Coinsurance

One issue that frequently arises in these situations is how ambulance providers and suppliers should treat the additional coinsurance amounts that are generated when CMS and its contractors adjust claims from the original allowed amounts to the now higher allowed amounts. These additional coinsurance amounts are typically quite small. Ambulance providers and suppliers may determine that the costs associated with trying to collect these small amounts would likely exceed the amounts they could reasonably hope to collect. The question is whether writing off these small balances could be construed as a routine waiver of cost-sharing amounts, a practice prohibited under Medicare’s rules.

In 2010, the HHS Office of the Inspector General (OIG) issued guidance on this issue. Specifically, the OIG indicated that it would not seek to impose administrative sanctions on Medicare providers and suppliers that waive these amounts provided the following conditions are met:

• The waiver is limited to the increased cost-sharing amounts generated upon adjustment of claims previously paid at the lower allowable, i.e., it does not apply to cost-sharing amounts associated with claims paid at the increased allowables;
• The waiver is limited to the small balances created by the adjustment of claims, i.e., it does not apply to the cost-sharing amounts originally imposed on the beneficiary when the claim was paid at the lower amounts;
• The waiver must be offered uniformly to all affected beneficiaries;
• The waiver must not be advertised; and
• The waiver must not be conditioned on the beneficiary’s receipt of any items, suppliers, or services.

Assuming the above-referenced conditions are met, ambulance providers and supplier can safely write-off these small balances. Please note that the OIG is not indicating that ambulance providers and suppliers must write-off these amounts. Rather, the OIG is simply indicating that this is an option available to health care providers and suppliers impacted by retroactive adjustment of claims.

Download the 2018 Rate Calculator

2018 Fee Schedule

Talking Medicare: Low Volume Settlement Option

Written by Brian Werfel on . Posted in Medicare, Reimbursement, Talking Medicare.

Low Volume Settlement Option – A Viable Solution to the ALJ Backlog?

The Centers for Medicare and Medicaid Services (CMS) recently announced a new initiative to help relieve some of the appeals backlog at the ALJ level. Titled the “Low Volume Settlement Option,” this new initiative appears, on its face, to offer ambulance providers and suppliers a viable alternative to the multi-year wait for an ALJ hearing.

First some background. In January 2017, CMS announced that there has been a 1,222% increase in the number of appeals submitted to the Office of Medicare Hearings and Appeals, which operates the ALJ hearing system. The dramatic increase in the number of appeals was the result of several program integrity initiatives implemented by CMS in prior years, most notably, the creation of the Recovery Audit Contractor Program (RACs). As a result, there were more than 650,000 appeals pending at the ALJ-level as of September 30, 2016. CMS simultaneously disclosed that it currently processed approximately 92,000 appeals per year.

Doing the math, this meant that CMS could clear the existing ALJ backlog in a little over 7 years at its current pace. Of course, that made no allowance for new appeals that would be filed during that 7-year period. Moreover, appeals are not treated equally at the ALJ level. Appeals filed by beneficiaries are given priority, with the intent of issuing a decision within 60-90 days of filing. This necessarily means that appeals filed by providers and suppliers are moved to the end of the queue. A good metaphor would be airport security, with beneficiaries being given TSA Preè, and providers and suppliers being stuck in the normal lane of traffic.

Enter the American Hospital Association. On behalf of its members, who were disproportionately targeted by the RACs, the AHA filed suit seeking a writ of mandamus that would require CMS to adjudicate ALJ-level appeals within the 60-day time limit prescribed in the regulations. This case bounced back and forth between the circuit and appeals courts for several years, until December 2016, when a district court judge ordered CMS to eliminate the ALJ backlog by 2020.

CMS appealed that decision, arguing that it would be impossible for the agency to comply with the judge’s order without either (1) a massive increase in its funding level or (2) offering mass settlements to entire classes of appellants. CMS argued that only Congress could appropriate additional funds. CMS simultaneously argued that existing law prohibited it from offering mass settlements. Essentially, CMS was arguing that it lacked the authority to take the only step (i.e., mass settlements) that could reasonably be expected to alleviate the ALJ backlog. In August 2017, the U.S. Court of Appeals for the D.C. Circuit sided with CMS, and remanded the case back to the district court to determine whether CMS could legally comply with the order to reduce the backlog.

That brings us to the Low Volume Settlement Option (LVSO). Despite CMS’ previous argument that it lacked the authority to offer mass settlements, that is precisely what the LVSO does. Providers and suppliers will be given the option to settle eligible claims at 62% of the net allowed amount, regardless of the merits of the appealed claims.

How will it work? Providers and suppliers will submit an Expression of Interest (EoI) through a CMS web portal, indicating that they would like to explore the option of settlement. Depending on the provider’s or supplier’s NPI, they will need to submit their EoI during one of two 30-day periods, with the first (for NPIs ending in an even number) starting on February 5, 2017. CMS will determine the provider’s or supplier’s eligibility, and then provide a list of the claims it believes are eligible to be settled. The provider or supplier will have the ability to suggest additions or removals from that list. Once the list is finalized, the provider or supplier will have to make a decision on whether to settle all of the claims on that list. In other words, CMS’ offer is an all-or-nothing proposition.

There are some additional criteria for eligibility. Perhaps the most important one is the requirement that the provider or supplier have fewer than 500 total Medicare appeals across all of its associated NPIs. Once the provider or supplier is determined to be eligible, there are also restrictions on the types of claims that can be settled. To be eligible for settlement, the claims must have been appealed on or before November 3, 2017, and must still be pending. The total billed charges for all claims in a particular appeal must total less than $9,000. The claims must also be fully denied, i.e., they must not be denied in part or downgraded. Finally, this settlement option only applies to Fee-For-Service Medicare claims, i.e., it does not apply to Medicare Advantage claims.

Providers and suppliers that elect to accept the settlement offer can expect to receive payment within 180 days.

Brian, that is all fine and good, but will this actually help my organization?

Ultimately, that is a determination that every provider or supplier will need to make for itself. If you have already been given an ALJ hearing date and are 100% convinced you will win your appeal, there is little benefit in settling the appeal. If you are convinced you will loss the appeal, the offer to settle at 62% probably looks like a windfall. However, it is unlikely that your appeal falls close to one of those two extremes. The main difficulty in valuing CMS’ offer is not knowing how long you might wait to get an ALJ hearing. A year is one thing, a 10-year wait is something else entirely.

That being said, there is little harm in submitting an Expression of Interest, and seeing which claims CMS would be willing to settle. For that reason, my recommendation is for every A.A.A. member to enroll in the program, and to wait for CMS to provide the spreadsheet of the claims it would be willing to settle before making any decision.

If you are interested in learning more about the Low Volume Settlement Offer, the AAA hosted a recent webinar on the initiative. Order the webinar on demand.

Have an issue you would like to see discussed in a future Talking Medicare blog? Please write to me at bwerfel@aol.com

VA Issues Rule Expanding Coverage of Ambulance Services

Written by Brian Werfel on . Posted in Member Advisories, News, Reimbursement, Veterans Affairs.

Veterans Administration Issues Interim Final Rule Expanding
Coverage of Ambulance Services under Millennium Bill

On January 9, 2018, the Department of Veterans Affairs issued an interim final rule that would amend its policy for payment of Millennium Bill claims. The Millennium Bill authorizes the Veterans Administration (VA) to pay for emergency care provided to veterans in non-VA facilities — including emergency ambulance transportation — provided the veteran has no other health insurance that would cover the costs of such emergency care. These changes were necessitated, in part, by a recent decision of the U.S. Court of Appeals for Veterans’ Appeals (Staab v. McDonald, 28 Vet. App. 50, 2016).

The two major changes being made by the interim final rule are: (1) the expansion of payment eligibility to include veterans who received partial payment or reimbursement from a health plan for their non-VA emergency care and (2) the expansion of payment eligibility for emergency transportation associated with a veteran’s receipt of emergency treatment in a non-VA facility.

These changes went into effect on January 9, 2018.

Relevant Background

38 U.S.C. §1725 authorizes the VA to reimburse veterans for the costs of emergency treatment for non-service connected conditions furnished in a non-VA facility, provided certain criteria were met. One requirement was that the veteran be personally liable for the costs of that emergency treatment. As originally enacted in 1999, the statute indicated that the veteran would be personally liable if the veteran: (1) has no entitlement to care or services under a health-plan contract and/or (2) the veteran had no contractual or legal recourse against a third party that would, in part or in whole, extinguish such liability. The VA historically interpreted its payment obligations under the Millennium Bill to be limited to situations where the veteran had no entitlement to coverage under their health insurance or any other contractual or legal recourse against a third party.

The Expansion of Veteran Eligibility for Reimbursement Act of 2010 amended the requirements related to non-health insurance payments to remove the phrase “in part”. As a result, the VA revised its regulations to permit it to make a payment under the Millennium Bill in situations where automobile or other forms of non-health insurance made a partial payment, and where the veteran remained liable for the balance of the health care provider’s bill. However, there was no corresponding change made to the provisions related to health insurance contracts. As a result, the VA continued to view partial payment by a health plan as a bar to payment by the VA.

In Staab, the Court of Appeals adopted a more lenient interpretation of the statute, i.e., a more restrictive view of the VA’s statutory bar on reimbursement. Specifically, the Court held that the reimbursement bar would only apply when the payment from the health plan fully extinguished the veteran’s liability. The practical effect was to place health insurance plans on equal footing with other forms of insurance. The Court remanded the case back to the lower court for further proceedings.

The VA subsequently appealed the Court of Appeals decision. However, on June 14, 2017, Veterans Affairs Secretary David Shulkin announced that the Department would drop its appeal.  Reversing course, Secretary Shulkin indicated that the VA had drafted regulations to implement the expanded Millennium Bill coverage. Those regulations form the basis of this interim final rule.

Provisions of Interim Final Rule

Partial Payment from Health Insurance Plan

The VA revised its regulations at 38 C.F.R. §17.1002(f) to indicate that the VA will make payment under the Millennium Bill to the extent the veteran otherwise qualifies for coverage to the extent that the veteran “does not have coverage under a health-plan contract that would fully extinguish the medical liability for the emergency treatment.” The VA retained the reimbursement bar for situations where the veteran would have been covered under a health plan had the veteran or the provider failed to comply with the requirements of that health plan, e.g., by failing to submit a timely claim. This change will apply to: (1) all claims pending with the VA as of April 8, 2016 or (2) submitted after that date.

Expansion of Payment Authority for Emergency Transportation

The VA historically viewed emergency ambulance transportation to the non-VA facility as part of the overall emergency treatment of the veteran. As a result, the VA believed that a health plan’s payment for the hospital care, in whole or in part, triggered its reimbursement bar. One common situation that impacts ambulance suppliers involves veterans that have Medicare Part A benefits (which cover the costs of their hospital care), but where the veteran has elected to forego paying for Medicare Part B.  In these situations, Medicare would pay for the hospital care. The VA took the position that this triggered the reimbursement bar, and therefore prevented it from making payment for the emergency ambulance transportation.

Because the interim final rule expands Millennium Bill coverage to include situations where a health plan makes a partial payment, the VA found it necessary to amend its regulations governing the payment of ambulance claims. Specifically, the VA amended its regulations at 38 C.F.R. 17.1003 to provide that ambulance providers will now be eligible for payment provided the following conditions are met:

  1. Payment for emergency care provided at the non-VA facility is authorized or would have been authorized had:
  2. The veteran’s personal liability for the emergency treatment was not fully extinguished by payment by the health plan or other third-party; or
  3. Death not occurred before emergency treatment (at the hospital) could be provided);
  4. The veteran is financially liable to the ambulance provider;
  5. The veteran does not have coverage under a health insurance plan that would fully extinguish the medical liability for the emergency transport (and further provided that the veteran or the provider has timely filed a claim with the health plan);
  6. If the emergency transportation is the result of an accident or work-related injury, the veteran must have reasonably exhausted his remedies against a third-party payor (e.g., auto insurance policy or workers’ compensation policy); and
  7. The veteran remains liable for all copayments and deductibles.
Effect of Coinsurance and Deductibles

The A.A.A. has confirmed that the VA does not consider the coinsurance or deductible obligations imposed by a veteran’s health plan for the purposes of determining whether the veteran’s liability has been fully extinguished by the health plan’s payment.

Therefore, in situations where the veteran has health care coverage, payment by the VA is likely to be limited to situations where the ambulance provider is permitted under state and local laws to bill patients for the difference between their billed charges and the amounts allowed by the health insurer, i.e., those areas that currently permit balance billing. This would also mean that the VA would be unlikely to have any payment responsibility in situations where Medicare has made payment on the ambulance claim (although it leaves open the possibility that the VA may be responsible for non-covered Medicare services such as excess mileage).

Amount of Payment

 When the VA pays under this expanded Millennium Bill authority, its payment will be based on the following methodology:

  1. When the veteran has no coverage under a health plan or other third-party payor, the VA will pay the lesser of: (a) the amount for which the veteran is personally liable or (b) 70% of the applicable Medicare allowable;
  2. When partial payment is made by a health plan or other third party payer, the VA will pay the difference between: (a) the amount the VA would have paid under the preceding bullet point (typically 70% of the Medicare allowable) or (b) the amount paid (or payable) by the health plan or other third-party payor; provided that amount is greater than zero;
  3. If the calculation in the preceding bullet point would not result in the VA making a payment (i.e., because the resulting amount would be less than zero), the VA will pay the lesser of: (a) the veteran’s personal liability after the third-party payment (excluding deductibles and copayments) and (b) 70% of the applicable Medicare allowable;
  4. In the absence of a corresponding allowable, the VA will be the lesser of: (a) the amount for which the veteran is personally liable or (b) the amount calculated by the VA Fee Schedule in 38 C.F.R. 17.56(a)(2)(i)(B).

Payment from the VA is generally considered to be payment-in-full, and extinguishes the veteran’s remaining liability to the provider for unpaid amounts. Note: the veteran would remain liable for unpaid co-payments and deductibles. If the provider does not wish to accept the VA’s payment, it has 30 days from its receipt of such payment to reject and refund the payment.

Have any Medicare questions? Contact Brian at bwerfel@aol.com

CMS Extends Moratorium on Non-Emergency Ground Services

Written by Brian Werfel on . Posted in Medicare, Member Advisories, Member-Only, News.

CMS Extends Temporary Moratorium on Non-Emergency Ground
Ambulance Services in New Jersey and Pennsylvania

On January 30, 2018, the Centers for Medicare & Medicaid Services (CMS) issued a notice in the Federal Register extending the temporary moratoria on the enrollment of new Medicare Part B non-emergency ground ambulance providers and suppliers in the states of New Jersey and Pennsylvania. The extended moratoria will run through July 29, 2018.

Section 6401(a) of the Affordable Care Act granted CMS the authority to impose temporary moratoria on the enrollment of new Medicare providers and suppliers to the extent doing so was necessary to combat fraud or abuse. On July 31, 2013, CMS used this new authority to impose a moratorium on the enrollment of new ambulance providers in Houston, Texas and the surrounding counties. On February 4, 2014, CMS imposed a second moratorium on newly enrolling ambulance providers in the Philadelphia metropolitan areas. These moratoriums were subsequently extended on August 1, 2014, February 2, 2015, July 28, 2015, and February 2, 2016.

On August 3, 2016, CMS announced changes to the moratoria on the enrollment of new ground ambulance suppliers. Specifically, CMS announced that: (1) the enrollment moratoria would be lifted for the enrollment of new emergency ambulance providers and supplier and (2) the enrollment moratoria on non-emergency ambulance services would be expanded to cover the entire states of New Jersey, Pennsylvania, and Texas. At the same time, CMS announced the creation of a new “waiver” program that would permit the enrollment of new non-emergency ambulance providers in these states under certain circumstances. The revised moratorium on newly enrolling non-emergency ground ambulance providers was subsequently extended on January 9, 2017 and July 28, 2017.

On September 1, 2017, CMS issued a notice on its website indicating that it had elected to lift the moratorium on the enrollment of new Part B non-emergency ambulance suppliers in Texas, effective September 1, 2017. CMS indicated that this decision was made to assist in the disaster response to Hurricane Harvey.  CMS published formal notice of the lifting of this moratorium on November 3, 2017.

On or before July 29, 2018, CMS will need to make a determination on whether to extend or lift the enrollment moratorium.

Have any Medicare questions? Contact Brian at bwerfel@aol.com

Should I Hold My Medicare Claims?

Written by Brian Werfel on . Posted in Medicare, Member Advisories, Member-Only, Reimbursement.

The Great Medicare Debate: Should I Hold My Medicare Claims?

By: Brian S. Werfel, Esq. and Rebecca Williamson, Chair, AAA Medicare Regulatory Committee

Ambulance suppliers face an important decision at the start of every calendar year on whether to hold their Medicare claims for the first few weeks of the calendar year.

This decision historically revolved around the patient’s Medicare Part B deductible ($183 in 2018).  The argument in favor of holding claims was that a brief claims hold would allow time for the patient’s deductible to be satisfied by another health care provider, thereby relieving the ambulance supplier of the time and expense involved in billing the patient (or their secondary insurance) for the deductible.  Ambulance suppliers that hold claims believe that this ultimately results in higher collections.  The argument against holding claims is that any increase in overall collections is likely to be minimal, and that the resulting disruption to the company’s cash flow more than offsets any potential benefits from those higher collections.

This year, the debate is complicated by the events surrounding the expiration of the temporary add-ons for urban, rural, and super-rural ground ambulance transports on December 31, 2017.  These temporary add-ons increased the Medicare allowables by 2%, 3%, and 22.6%, respectively.  Congress failed to act upon these temporary add-ons prior to its adjournment.  However, there remains strong bipartisan support for reinstating these add-ons – – and Medicare extenders for other types of Medicare providers – – early in the 2018 Legislative Calendar.  The AAA’s political consultants believe these Medicare extenders will likely be included in the next government funding legislation, which must be passed by January 19, 2018.

Assuming our temporary add-ons are reinstated, they are likely to be made retroactive to January 1, 2018.  This would require CMS to retroactively adjust claims previously paid at the current (lower) rate.  This may also require secondary payers, including State Medicaid Programs, to retroactively adjust their payment amounts to reflect increased cost-sharing amounts.  There is precedent for these sort of retroactive adjustments.  Most recently, the Affordable Care Act, which was enacted on March 23, 2010, provided for a reinstatement of these same temporary add-ons, retroactive to January 1, 2010.

In this inaugural edition of the Great Medicare Debate, AAA Medicare Regulatory Committee Chair Rebecca Williamson and AAA Medicare Consultant Brian S. Werfel, Esq. debate the merits of holding claims pending a resolution of the add-on issue vs. submitting claims.

Ambulance suppliers would likely benefit from holding their claims for some period of time pending clarity on the status of our temporary add-ons.

Rebecca Williamson, Chair of the AAA’s Medicare Regulatory Committee:

According to CMS, 73% of all ambulance service suppliers bill less than 1,000 Medicare covered transports per year. Additionally, 54% of ambulance suppliers bill less than 250 Medicare covered transports per year. Assuming an average claim amount of $400.00 per call (base rate plus mileage), an ambulance supplier with 1,000 Medicare covered transports per year could collect approximately $320,000.00 per year in a best case scenario ($400,000.00 X 80%). This leaves the service with copays of $80,000.00 to be collected from patients. By adding $183.00 as a deductible for each of these 1,000 patients, the collection from Medicare decreases to only $173,600.00. This means the service now must collect an additional $43,400.00 . In other words, if the patient has not met the deductible, the deductible is applied first and a $400.00 allowable becomes a $217.00 allowable. Medicare now pays 80% of $217.00 which is $173.60. Multiplied by 1,000 claims, Medicare pays a total of $173,600.00 and the balance owed to the supplier is the deducible of $183,000.00 and copayments of $43,400.00.

By holding claims for a brief period, usually thirty days, ambulance services increase the likelihood that another provider, often a hospital, will file claims with Medicare first, meaning collecting patients’ deductibles becomes the facilities’ responsibility.

Of course these numbers are only examples and many factors affect the actual billing and collection process. Some Medicare beneficiaries will promptly pay the deductible, many will have secondary payers or insurances, and a certain percentage will be dually eligible for Medicare and Medicaid, all of which results in higher collection ratios for the ambulance service. However, in plain terms, collecting $320,000.00 versus $173,600.00  can make a very real difference in the viability of a small service.  Each service should look carefully at its own payer mix, patient statistics, and demographics to determine individual service projections.

Another good reason to hold claims, this year in particular, is the almost certainty of Congress reinstating the extenders. For those of us who have been in this industry for a long time, the expiration of the add-ons this year is a painful reminder of 2010  when the extenders expired and were not reinstated until March 23, 2010. It wasn’t until July 2010 that CMS even began the process of correcting previously processed claims , and by January 2011 many claims were still outstanding and had not been completely reprocessed. Also by that time, which could have been as long as a year after the date of service, many secondary payers were either unwilling or unable to retroactively correct the reprocessed claims. Some Medicaid states, such as Oklahoma, simply did not have the manpower or ability to even attempt it.

The administrative burden imposed on ambulance suppliers by having claims retroactively reprocessed by CMS, then reprocessed again by secondary payers – potentially incorrectly, if at all – along with the many manual adjustments required in-house, make it even more attractive to advocate and advise holding claims for as long as financially feasible. Of course not every service has the cash reserve to be able to do this, and I would generally not advise holding claims for as long as it may take for Congress to reinstate the extenders and for CMS to implement the correction  for services who cannot afford to, but for those who can, not only will they almost certainly increase the amount of payments collected, they will decrease overhead administrative costs.

I am very optimistic that Congress will include the ambulance extenders in legislation as well as being optimistic that it will be sooner rather than later. I know others disagree, but the higher likelihood of it happening versus not, make this a good bet to take. 

Ambulance suppliers should disregard the status of the temporary add-ons when making their decision on whether to hold claims for some period of time

By: Brian S. Werfel, Esq.:

Rebecca makes a strong argument about the benefits of holding claims.  Moreover, I have long advocated in favor of holding claims for the patient’s deductible.  For these reasons, I would understand if ambulance suppliers elect to hold claims for the patient deductible.  However, I would question the wisdom of holding claims pending further clarity on the status of the temporary add-ons.

My argument against holding claims for that reason boils down to a single word: uncertainty.  In this context, I am referring to four specific types of uncertainty:

  1. Uncertainty over whether the temporary add-ons will be extended.
  2. To the extent legislation is passed extending the temporary add-ons, uncertainty as to whether the higher rates will be made retroactive to January 1, 2018.
  3. To the extent legislation is passed extending the temporary add-ons, uncertainty as to how quickly CMS will implement the revised rates for new claims and adjust claims paid at the original, lower rates.
  4. Uncertainty over how the various secondary payers will handle their adjustments.

With respect to the extension of the add-ons, I agree that they are likely to be included with other Medicare adjusters in the budget resolution that must pass before January 19, 2018.  Likewise, at this point, there is no reason to think that these add-ons will not be made retroactive to January 1, 2018.  However, there are no guarantees.  It is possible that the Republicans and Democrats fail to reach agreement on the larger budgetary issues, including the status of the so-called “Dreamers”, and a government shutdown results.

My larger concern relates to how quickly CMS revises its fee schedule, and implements instructions to its contractors.  As Scott noted above, the last time we faced this issue was in 2010.  The Affordable Care Act was signed into law on March 23, 2010.  However, CMS didn’t issue a transmittal to its contractors until May 21, 2010, and even then, didn’t instruct its contractors to start paying the higher rates until July 6, 2010.

In other words, if you elected to hold claims to avoid having them paid and then reprocessed, you would have needed to hold claims for more than 6 months.

To me, the strongest argument for holding claims is not how Medicare would handle the adjustment.  I recognize the administrative burden created by having to post and then re-post the same claim once it was adjusted.  However, I trust that CMS will eventually get it right (emphasis on eventually).

I have far less confidence in how the secondary payers, including State Medicaid Programs, will handle the adjustments.  When this happened in 2010, we had numerous reports from A.A.A. members of secondary payers incorrectly processing the adjustment.  For example, some State Medicaid Programs didn’t simply issue a supplemental check for the higher copayment.  Instead, the Medicaid Program took back its initial payment, and then reprocessed the claim in its entirety.  Unfortunately, in some instances, the Medicaid rates changed in the interim, and Medicaid then repaid a lower amount.  In other instances, they failed to repay the patient’s deductible.  Similar issues were noted with commercial secondary payers, Medicaid managed care organizations, etc.

In sum, if your company has historically held claims during the first few weeks of the year for the patient’s deductible, I see no reason to discontinue that practice.  If, however, you historically submitted claims without regard to the patient’s deductible, I see little benefit to holding claims pending action by Congress on our add-ons.

Have any Medicare questions? Contact Brian at bwerfel@aol.com

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