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Press Release: Ambulance Delivery To ERs Set To Skyrocket

Written by Don Johnson on . Posted in Press, Reimbursement.

CDO2tm-2 (1)Press Contact
Don Johnson
Vice President Marketing
CDO Squared, Inc.
309.530.8269

Ambulance Delivery To Emergency Rooms Set To Skyrocket Putting Ambulance Company Financials On Life Support

Medicaid and Medicare Drive Reimbursements Below Cost of Service

More Boomers will visit the ER
More Boomers will visit the ER

Schaumburg, IL—September 22, 2016—The convergence of the aging baby boomer population, the projected increase of emergency room services for baby boomers, added to lower reimbursement rates for Medicaid and the increasing influence of private insurance companies with Medicare, signals a rough road ahead for ambulance companies.

In a new survey by revenue realization leader, CDO Squared, and the American Ambulance Association, 126 ambulance company executives were asked, “As a rule, the number of emergency department visits is much higher for Medicaid and Medicare recipients than for the uninsured and those with private insurance. How will this effect your profitability over the next five years?”

The survey revealed that well over 70 percent of ambulance companies saw decreased profitability over the next five years. “In an industry already hard hit by the effects of Obama Care, this is just one more pressure point put onto ambulance companies to maintain profitability.” according the William Stuckert, CEO of CDO Squared. The American Ambulance Association also weighed in on the survey results. “Ambulance services continue to struggle to do more in the way of providing high-quality medical care and improving patient outcomes with less financial resources, and from the survey it doesn’t appear it will get better.”  Stated Mike Hall, AAA President.  “On the Medicare payor front, H.R. 745 and S. 377 would make permanent the current temporary add-ons that have allowed ambulance services to maintain critical financial relief.”

Stuckert offered this advice for those struggling with increased pressure on their financials. “Ambulance companies must learn how to balance their payer mix. With the push by many states to move Medicaid patients into Managed Medicaid Programs, ambulance companies must choose a payer mix that provides a reasonable amount of profitability.” Stuckert stressed the importance of using cash flow analytics to take a deeper look at the profitability of an ambulance company’s location. “Once you understand the true value of your facility, you’ll be able to balance your runs for reasonable profitability” said Stuckert.

About CDO Squared

CDO Squared maximizes revenue realization for profit-minded EMS providers by connecting data, developing processes, and optimizing their ROI. CDO Squared has been helping healthcare businesses run more profitably for over two decades. Through proven financial technology and innovative workflow tracking, CDO Squared provides the medical industry advanced software and tools for analytics, visualization, and financial management along with the industry experience of seasoned revenue realization management professionals.

About AAA

The American Ambulance Association represents ambulance services across the United States that participate in serving more than 75% of the U.S. population with emergency and non-emergency care and medical transportation. The AAA was formed in response to the need for improvements in medical transportation and emergency medical services. AAA views pre-hospital care not only as a public service, but also as an essential part of the total public health care system.

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Visit CDO Squared at the AAA Annual Conference & Tradeshow in island booth #518!

Acadian’s Asbel Montes on Ambulance Payment Reform

Written by Asbel Montes on . Posted in Medicaid, Medicare, Reimbursement.

“EMS is instrumental to the healthcare fabric of our country. As the healthcare industry continues to innovate, it is imperative to recognize the value that EMS brings to the pre- and post-hospital environment. EMS providers are the only gatekeepers to the healthcare system in many communities.

73% of all ambulance suppliers credentialed with Medicare bill the program less than 1,000 transports per year. It is imperative that any cost data collection system reporting requirements consider this to ensure the reliability of the data and the administrative burden to ambulance providers and suppliers.”

Asbel Montes
Vice President of Governmental Relations & Reimbursement, Acadian Ambulance
Co-Chair, American Ambulance Association Payment Reform Committee

Prior Authorization Expansion Delay

Written by David Werfel on . Posted in Medicare, Member Advisories, News, Reimbursement.

Prior Authorization – Repetitive Non-Emergencies – Expansion Delay

CMS has notified the American Ambulance Association that the expansion of Prior Authorization for repetitive non-emergencies, to the states not already on Prior Authorization, will not be implemented January 1, 2017.

The reason for the delay is that, pursuant to Section 515(b) of the Medicare Access and CHIP Reauthorization Act (MACRA), CMS must make determinations as to whether: (1) Prior Authorization for repetitive non-emergencies saves money, (2) it adversely affects quality of care and (3) it adversely impacts access to care.

These studies are being conducted and are expected to show the program saves money without adversely affecting quality or access to care.

For those of you in states currently not under Prior Authorization, it is highly recommended that you still prepare for it to be implemented, even though it will not be implemented January 1, 2017.  You should still ensure that these patients meet the requirements for medical necessity by reviewing your documents, obtaining documents from facilities, conducting assessments of repetitive patients, implementing internal procedures and processes, etc.

For those of you in states already under Prior Authorization for repetitive non-emergencies, there is no impact.  Your program continues.

When a Capitated Payment Arrangement Makes Sense

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

Question

We operate a mid-sized ambulance services in the Midwest. Recently, one of our local hospitals entered into an agreement to become part of a large health system. We are increasingly being asked to transport patients from this local hospital to an affiliated facility in the neighboring city. These patients are being transported for consultations, medical tests, etc., and then being transported back to the local hospital. These transports become the financial responsibility of the health system, which has resulted in our monthly invoices to the hospital increasing nearly ten-fold over the past year. Recently, the hospital approached us with a proposal to move to a capitated payment arrangement. Are these arrangements permissible? And, if so, are there any “dos” and “don’ts” we should know about?

Answer

As the AAA’s Medicare Consultant, I am probably asked this question, or some variation of this question, several times a month. To me, these questions are a natural reaction by our industry to one of the larger tectonic shifts in health care over the past decade, namely the increasing footprint of national and regional hospital health care systems. According to the American Hospital Association, approximately 65% of hospitals nationwide were part of a larger health system in 2016. This is up from 51% in 1995. As these health systems have grown larger, ambulance providers are increasingly looking for alternatives to the traditional fee-for-service payment models.

Broadly defined, a “capitated payment” arrangement is any arrangement where the facility pays the ambulance provider a set amount to cover all or a portion of the transportation costs it incurs during a period of time, without regard to the specific volume of transports. A simple example would be a flat monthly fee for all transportation costs.

There is nothing in federal law that prohibits the use of capitated payment arrangements. The HHS Office of the Inspector General has signed off on capitated payment arrangements in numerous contexts, including the compensation paid to insurers under the Medicare Advantage Program (Medicare Part C). In fact, it could be argued that the Medicare Ambulance Fee Schedule includes some principles of capitation, e.g., it does not reimburse ambulance providers separately for certain ancillary services.

Therefore, capitated payment arrangements are something ambulance services can consider offering to their facility counterparties. However, you should aware that the normal prohibitions under the federal anti-kickback statute continue to apply. To the extent the OIG has a concern related to capitated payment arrangements, that concern would be that the capitated payment amount is used as a means of disguising an otherwise impermissible discount being offered to a potential referral source. In other words, the capitated payment must be structured in a way that avoids any improper remuneration to a potential referral source.

The arrangements do offer several advantages to both the ambulance provider and the facility. For the ambulance provider, the primary advantage is a stable, steady source of cash. However, there are other advantages, including the administrative benefits associated with submitting a simple monthly invoice, rather than a detailed invoice listing numerous transports. Many providers also find that a flat rate reduces tensions with the facilities, as they don’t have to engage in negotiations over why a particular transport is being billed to the facility. For the facility, the primary benefit is that it fixes their costs for transport during each measuring period. An ancillary benefit is that it offers a measure of insurance against unforeseen events (e.g., an MRI machine at hospital breaks down for an extended period of time, and as a result, the hospital is forced to incur the costs of sending patients to an affiliated facility for testing). Generally speaking, as the total volume of services rises, the benefits to moving away from a fee-for-service model also increases.

As noted above, capitated payment arrangements come in many forms, ranging from relatively simple to mind-numbingly complex. However, all arrangements share certain common features. The first is an estimate of the volume of services the facility would be purchasing from the ambulance service during any particular measuring period (hereinafter referred to as the “volume benchmark”). To the extent you are currently the facility’s vendor, this could be calculated based on past volume. This is then multiplied by the “price” of each service to arrive at the amount of the capitated payment. For example, if past history indicates that a facility pays for an average of 100 ambulance transports per month, and the parties agree to a rate of $200 per trip, then the monthly payment would be $20,000 per month. This monthly rate would stay the same regardless of whether the facility ends up responsible for 20 trips in the next month, or 200.

This brings us to one of the key features to a properly structured capitation agreement, i.e., both parties should have some degree of “risk” under the arrangement. In the example listed above, the facility runs the risk that the actual volume of services it would have otherwise been responsible for is less than the estimated 100. If so, it would have essentially paid more than $200 per transport. The ambulance provider bears the opposite risk, i.e., if the number of transports the facility would have paid for ends up being more than 100, it ends up receiving less than $200 per transport. As long as both parties bear risk, the arrangement is permissible.

If, however, one party bears no actual risk under the arrangement (e.g., because the monthly payment is based on an unreasonably low volume benchmark), the OIG could see the arrangement as a disguised way of rewarding the facility for other referrals. Thus, the key to any capitated arrangement is a good-faith estimate of the number of services involved. Please note that there is nothing wrong within incorporating language to adjust the monthly payment if the actual volume over any period of time is radically different than the volume benchmark. For example, I frequently include language that calls for the monthly payment to be recalculated if the actual volume is 20% more or less than the volume benchmark over any calendar quarter. These adjustments can be made prospectively (i.e., they only apply to future monthly payments) or they can be paid retroactively. To the extent you want to include an adjustment mechanism, the guiding principle is that any adjustment should be for the purpose of better estimating the volume benchmark.

Capitated payment arrangements may not be appropriate for all ambulance providers. However, as fee-for-service becomes an increasingly smaller portion of your facility partners’ operations, it may make sense to consider these arrangements.

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

Press Release: ACA Costs Ambulance Companies More Than $2B

Written by Don Johnson on . Posted in Press, Reimbursement.

CDO2tm-2 (1)Press Contact
Don Johnson
Vice President Marketing
CDO Squared, Inc.
309.530.8269

Obama Care Costs Ambulance Companies More Than $2 Billion In Lost Revenue

Schaumburg, IL—August 30, 2016—To understand the serious affect that the Affordable Care Act (Obama Care) has had on ambulance companies, CDO Squared™, the leader in revenue realization for profit-minded EMS providers, initiated a survey with the American Ambulance Association. The results were staggering when dollarized. One hundred twenty-six ambulance company executives were asked the following question: “Over the past few years, many ambulance companies have been negatively impacted by the increase in Medicare and Medicaid patients now enrolled in managed care plans run by for-profit insurance companies. What effect has this had on your operation in lost revenue since the Affordable Care Act (Obama Care) was enacted?”

The result: Overall the impact totaled $2.1 billion in lost revenue because of reduced margins due to lower fees dictated by the plan. The survey also revealed that those with revenues of $1 to $50 million (82.5% of the participants) had lost revenues between $315,000 to $730,000 with larger operations driving the averages up. According to William Stuckert, President and CEO of CDO Squared, “The results are not surprising when you consider that over 75 percent of Medicare and Medicaid patients now opt for a managed care plan. What it boils down to is that these for-profit insurance companies are driving costs down, in many cases below the actual operating costs of many ambulance companies. It’s a numbers game, as you see the larger companies with more exposure being hit the hardest.” When asked what ambulance companies can do to offset these losses, Mr. Stuckert said “Ambulance companies need to manage their commercial payers and overall costs better, and that means collecting more of the revenue they are entitled to. Since ambulance companies excel at saving lives, many lack the tools to collect revenue they are owed. In fact, on average, ambulance companies collect only 70 percent of the revenue they are due as reimbursements are lost in a sea of EMS data.”

Maria Bianchi, Executive Vice President of American Ambulance Association, echoed much the same sentiment regarding insufficient reimbursements in the industry. “The CDO Squared survey results reinforce what the American Ambulance Association has long known—ambulance services across the country are operating in a climate where reimbursement is often well below the cost of service. AAA volunteers, consultants, partners, and staff are working tirelessly across many channels to bring to ambulance services the reimbursement revenue they need to continue serving the public each and every day.”

About CDO Squared

CDO Squared maximizes revenue realization for profit-minded EMS providers by connecting data, developing processes, and optimizing their ROI. CDO Squared has been helping healthcare businesses run more profitably for over two decades. Through proven financial technology and innovative workflow tracking, CDO Squared provides the medical industry advanced software and tools for analytics, visualization, and financial management along with the industry experience of seasoned revenue realization management professionals.

About AAA

The American Ambulance Association represents ambulance services across the United States that participate in serving more than 75% of the U.S. population with emergency and non-emergency care and medical transportation. The AAA was formed in response to the need for improvements in medical transportation and emergency medical services. AAA views pre-hospital care not only as a public service, but also as an essential part of the total public health care system.

#  #  #

Visit CDO Squared at the AAA Annual Conference & Tradeshow in island booth #518!

Novitas – Denials

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

This advisory is for members who have Novitas as their Medicare Administrative Contractor.

On August 17, 2016, Novitas called me to let me know that they are seeing many ambulance claims denied due solely to the diagnosis codes that are listed on claims. Novitas requires a minimum of two ICD-10 codes, as follows:

  • A primary diagnosis code that describes the patient’s medical condition at the time of transport, AND
  • A secondary diagnosis code that reflects the patient’s need for the ambulance at the time of transport.

The list of primary ICD-10 codes was published by Novitas in their Ambulance Local Coverage Article A54574. While the ICD-10 codes in A54574 are not the only codes that will be accepted, it is highly recommended that you use one of those as your primary code, whenever possible.

Novitas also requires a secondary “diagnosis code”. This list is in their Ambulance Local Coverage Determination (LCD) Policy L35162. That has the four “Z” codes, at least one of which must be used as the secondary diagnosis code:

  • Z74.01 – Bed Confined
  • Z74.3 – needs continuous supervision (includes EKG)
  • Z78.1 – physical restraints (patient safety, danger to self/others)
  • Z99.89 – dependence on enabling machines (includes IV fluids, active airway management)

If the claim does not list a primary AND a secondary code, the claim is automatically denied. While the claim can be corrected and resubmitted for processing, that delays cash flow and adds time and expense for the ambulance supplier. Therefore, please make sure you list an appropriate primary code AND an appropriate secondary code.

 

AAA 2016 State Balanced Billing & Direct Pay Survey Results Released

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

Just Released!

View the AAA 2016 State Balanced Billing Survey Results

View the AAA 2016 State Direct Pay Survey Results

The AAA is providing its members with the results of two important surveys conducted of state laws impacting ambulance services.  The first chart entitled “2016 State Balance Billing Survey” shows whether a state restricts balancing billing of patients.  The second entitled “2016 State Direct Pay Survey” lists whether a state has a law requiring an insurer to send payment directly to a non-contracted ambulance service or a law allowing the insurer do send payment to the patient.  We thank AAA Medicare Consultant Brian Werfel for compiling the data and members of the AAA Medicare Regulatory Committee and the AAA membership to which Brian reached out for their assistance.

CMS Moratoria Update

Written by Kathy Lester on . Posted in Government Affairs, Medicaid, Medicare, Member Advisories, Member-Only, Regulatory.

The Centers for Medicare & Medicaid Services Lifts Moratoria on Enrollment of Part B Emergency Ground Ambulance Suppliers in All Geographic Locations; Moratoria for Part B Non-Emergency Ground Ambulance Suppliers Extended

Effective July 29, the Centers for Medicare & Medicaid Services (CMS) has lifted the temporary moratoria in all geographic locations for Part B emergency ground ambulance suppliers.  Beginning in 2013, CMS placed moratoria on Medicare Part B ground ambulance suppliers in Harris County, Texas, and surrounding counties (Brazoria, Chambers, Fort Bend, Galveston, Liberty, Montgomery, and Waller).  In February 2014, CMS announced it would add six more months to these moratoria and add Philadelphia, Pennsylvania, and surrounding counties (Bucks, Delaware, and Montgomery), as well as the New Jersey counties of Burlington, Camden, and Gloucester.  Since that date, CMS extended the moratoria four additional times, most recently in February of this year.

CMS considers qualitative and quantitative factors when determining if there is a high risk of fraud, waste, and abuse in a particular area and whether or not it should establish a moratorium.  If CMS identifies an area as posing an increased risk to the Medicaid program, the State Medicaid agency must impose a similar temporary moratorium as well.  CMS also consults with the Office of the Inspector General (OIG) within the Department of Health and Human Services (HHS) and the Department of Justice (DOJ) when identifying potential areas and providers/suppliers that should be subject to a temporary moratorium.  Finally, CMS also considers whether imposing a moratorium would have a negative impact on beneficiary access to care.  In areas where there is a temporary moratorium, the policy does not apply to changes in practice location, changes to provider/supplier information (e.g., phone number, address), or change in ownership.  Temporary moratoria remain in place for six months, unless CMS extends the policy through notice in the Federal Register.

CMS may lift a moratorium at any time if the President declares an area a disaster under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, if circumstances warranting the imposition of a moratorium have abated, if the Secretary of HHS has declared a public health emergency, or if, in the judgment of the Secretary of HHS, the moratorium is no longer needed.  After a moratorium is lifted, providers/suppliers previously subject to it will be designated to CMS’s “high screening level” for six months from the date on which the moratorium was lifted.

CMS has announced it will lift the moratoria on new Part B emergency ambulance suppliers in all geographic locations because the Agency’s evaluation has shown the primary risk of fraud, waste, and abuse comes from the non-emergency ambulance supplier category and that there are potential access to care issues for emergency ambulance services in the areas with moratoria.  New emergency ambulance suppliers seeking to enroll as Medicare suppliers will be subject to “high risk” screening.  If enrolled, these suppliers will be permitted to bill only for emergency transportation services.  They will not be permitted to bill for non-emergency services.

The moratoria remain in place for Medicare Part B non-emergency ground ambulance suppliers for all counties in which moratoria already are in place in New Jersey, Pennsylvania, and Texas.

 

A Preliminary Estimate of 2017 Medicare Rates

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

 On July 15, 2016, the Bureau of Labor Statistics released its monthly report on inflation.  This release includes the change in the Consumer Price Index for all urban consumers (CPI-U) for June 2016.  As a result, it is now possible to make a preliminary estimate of the Ambulance Inflation Factor (AIF) for calendar year 2017.  The AIF is main factor that determines the increase (or decrease) in Medicare’s payment for ambulance services.

Calculating the 2017 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.  For 2017, this means the 12-month period ending on June 30, 2016.  Starting in calendar year 2011, the change in the CPI-U is 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 resulting AIF is then applied to the conversion factor used to calculate Medicare payments under the Ambulance Fee Schedule.

The formula used to calculate the change in the CPI-U is limited to positive increases.  Therefore, even if the change in the CPI-U was negative over a 12-month period (a rarity in the post-war era), the change in the CPI-U cannot be negative.  However, when the MFP reduction is applied, the statute does permit a negative AIF for any calendar year.  That is precisely what occurred in 2016, where the change in the CPI-U was 0.1% and the MFP was 0.5%.  As a result, the industry saw an overall reduction in its Medicare rates of 0.4%.

Fortunately, it seems unlikely that we will see a negative AIF in 2017.  For the 12-month period ending in June 2016, the Bureau of Labor Statistics (BLS) currently calculates the change in the CPI-U to be exactly 1.00%.

CMS has yet to release its estimate for the MFP in calendar year 2017.  However, assuming CMS’ projections for the MFP are similar to last year’s projections, the 2017 MFP is likely to be in the 0.5% range.

Therefore, at this time, my best guess is that the 2017 Ambulance Inflation Factor will be a positive 0.5%.

Please note that this estimate assumes the Bureau of Labor Statistics does not subsequently revise its inflation estimates.  Please note further that this projection is based on the MFP being similar to last year.  To the extent either of these numbers changes in the coming months (up or down), my estimate of the 2017 AIF would need to be adjusted accordingly.  Ultimately, the 2017 AIF will be finalized by CMS by Transmittal, which typically occurs in the early part of the 4th quarter.

Impact on the Medicare Ambulance Fee Schedule

 Assuming all other factors remained the same, calculating your 2017 Medicare rates would be a relatively simple exercise, i.e., you would simply add 0.5% to your 2016 rates.  However, as part of its 2017 Physician Fee Schedule Proposed Rule (issued on July 15, 2016), CMS proposed extensive changes to the GPCIs.   These changes can be viewed by going to the Physician Fee Schedule page on the CMS website and clicking the link for the “CY 2017 PFS Proposed Rule GPCI Public Use Files” (located in the Downloads section).  You would then need to open the file for “CY 2017 Proposed Addendum E.”

If the PE GPCI in your area is proposed to increase, you can expect your 2017 Medicare rates to increase by slightly more than 0.5%.  If the PE GPCI in your area is proposed to decrease, you can expect your 2017 Medicare rates to increase by slightly less than 0.5%.

If you are looking for a more precise calculation of your rates, you will need to use the following formulas:

Ground Ambulance Services

Medicare Allowable = (UBR x .7 x GPCI) + (UBR x .3)

Air Ambulance Services

Medicare Allowable = (UBR x .5 x GPCI) + (UBR x .5)

 In this formula, the “UBR” stands for the unadjusted base rate for each HCPCS code.   These are calculated by multiplying the national conversation factor by the relative value unit assigned to each base rate.  To save some time, estimates for the 2017 unadjusted base rates are reproduced below:

Base Rate (HCPCS Code)

 2017 Unadjusted Base Rate
BLS non-Emergency (A0428)                     $221.84
BLS emergency (A0429)                     $354.95
ALS non-emergency (A0426)                     $266.21
ALS emergency (A0427)                     $421.51
ALS-2 (A0433)                     $610.08
Specialty Care Transport (A0434)                     $721.00
Paramedic Intercept (A0432)                     $388.23
Fixed Wing (A0430)                     $3,010.52
Rotary Wing (A0431)                     $3,500.17

 

Plugging these UBRs into the above formulas will result in adjusted base rates for each level of ground and air ambulance service.  The final step would be to apply the current adjustments for urban (2%), rural (3%) and super-rural (22.6% over the corresponding rural rate).

2017 Projected Rates for Mileage:

At this time, I am estimating the following rates for Medicare mileage:

Base Rate (HCPCS Code) 2017 Unadjusted Base Rate
Ground Mileage – Urban                     $7.28
Ground Mileage – Rural Miles 1 – 17                     $11.02
Ground Mileage – Rural Miles 18+                     $7.35
Fixed Wing Mileage – Urban                     $8.54
Fixed Wing Mileage – Rural                     $12.81
Rotary Wing Mileage – Urban                     $22.79
Rotary Wing Mileage – Rural

 

                     $34.19

Please keep in mind that a number of assumptions went into these projections.  The Bureau of Labor Statistics can revise its inflation figures in the coming months.  CMS may announce an MFP projection that differs from what we expect.  CMS may also announce that it is electing not to finalize its proposed changes to the GPCI (highly unlikely).   If any of these assumptions was to change, these projections would need to be revised.  Therefore, I would suggest that you view these as rough estimates at best.  The AAA will update members as more information becomes available in the coming months. 

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

2016 Medicaid Crossover Study

Written by Brian Werfel on . Posted in Medicaid, Reimbursement.

The AAA is pleased to announce the release of its Medicaid Crossover Survey 2016. A companion to its recently released 2016 Medicaid Rate Survey, the 2016 Medicaid Crossover Survey focuses on each state’s treatment of Medicare crossover amounts (i.e., copayment’s and deductibles).

The survey notes whether a state will pay the full crossover amount, will make a payment only to the extent Medicare’s payment was less than the amount Medicaid would have paid as a primary, or will not make a payment under any circumstances.

We hope members will find this tool useful in comparing their state’s Medicaid reimbursement to neighboring states, and hope it will assist in their efforts to ensure fair and equitable compensation for their services.

The AAA also wants to thank all members that participated in the survey. Without your help, these sort of projects would be impossible.

AAA 2016 State Medicaid Ambulance Rate Survey Results Released

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

Just Released!

View the AAA 2016 State Medicaid Rate Survey Results

Normally this blog focuses on an area of Medicare reimbursement or compliance.  However, this month I want to talk about Medicare’s companion program, Medicaid.

When you talk to ambulance providers around the country about their State’s Medicaid Program, a universal truth emerges: no one believes their Medicaid Program fairly reimburses them for their services.  This statement is not particularly controversial.  The Government Accountability Office has on several occasions looked at the relationship between our industry’s costs and Medicare’s payment, and has consistently determined that Medicare fails to adequately reimburse us for our costs.  Given that Medicaid payments are usually some fraction of what Medicare pays, there is really no debate that our industry loses money transporting Medicaid patients.

What I find more interesting is the sheer number of people that are convinced – – and I mean absolutely convinced – – that their state has the lowest Medicaid rates in the country.  Call it a reverse Lake Wobegon effect.  Of course, not everyone can be right.  Only one state can have the lowest ambulance rates (answer below).  Conversely, only one state can hold the honor of having the highest rates.  But how to settle these questions?

Well, the AAA has the answer.  On behalf of the AAA, I am pleased to announce the release of the American Ambulance Association’s 2016 State Medicaid Rate Survey.  This survey sets forth the fee-for-service Medicaid rates for all 50 states.  For each state, the Survey lists the rate paid for each of the following procedure codes:

  • A0428 – BLS Non-Emergency
  • A0429 – BLS Emergency
  • A0426 – ALS Non-Emergency
  • A0427 – ALS Emergency
  • A0433 – ALS-2
  • A0434 – SCT
  • A0225 – Neonate Transport
  • A0998 – Treatment, No Transport
  • A0425 – Mileage
  • A0422 – Oxygen
  • A0382/A0398 – BLS/ALS Routine Disposable Supplies
  • A0420 – Wait Time
  • A0424 – Extra Attendant

While I can promise that we have taken steps to verify the information on this Survey, neither the AAA nor myself can guarantee its accuracy.  The rates set out in this survey are based on publicly available information provided by the various State Medicaid agencies, and may not reflect changes to a state’s reimbursement policy that have not been made publicly available.  They will also reflect any emergency budgetary measures or other temporary reductions imposed by a state.  That said, our goal is to make this as accurate as possible.  Therefore, if you believe the rates for your state are inaccurate, I would ask you to please email me at bwerfel@aol.com, and to provide me with updated information.

I can feel some of you thinking at this point: “This is all fine and good, but how does this actually help me?”  Fair question.  At a minimum, it will probably make some of you feel better that your state is not actually the lowest.  Others may be fairly surprised to find that their state, which they believed to be at or near the bottom, is actually closer to the middle of the road.  Many of your states are expanding their managed Medicaid programs, and you find yourself trying to determine whether it makes sense to contract with the MCO (or its transportation broker).  Many of these transportation brokers service multiple states, and may be offering rates based on their rates offered by the State Medicaid agency in the state in which they are headquartered (I know it will come as a shock that many of the new MCOs seem unaware that coverage rules differ in each state).  We are also aware of instances in which a state association has used past rate surveys as part of a comprehensive strategy to lobby their state legislature for a rate increase, e.g., by demonstrating that the current rates paid by the state are far lower than the rates paid in neighboring states.

Regardless of whether (or how) you intend to use this Survey, I encourage all AAA members to check it out.

Answer: New Jersey has the lowest payment for both emergency and non-emergency transport, at a listed rate of $58.00, plus $1.50 per mile (for the first 15 miles, $2.00 for each mile thereafter).  For sake of comparison, a taxi from Newark Airport to midtown Manhattan (a distance of 17 miles) will typically run around $70.00 (plus tip).

 

Have an issue you would like to see discussed in a future Talking Medicare blog? Submit a question today!

 

 

AAA Launches Medicare Audit Activity Survey

Written by Tristan North on . Posted in Finance, Medicare, Member Advisories, Reimbursement.

In an effort to better determine a pattern of Medicare audit issues facing our members, the AAA has launched a survey to identify the different types of audit activity. The AAA will use the survey to inform federal policymakers about problems identified with the audits and how best to address the issues to reduce the burden of the audits on AAA members. It is therefore critical that you complete the survey to help us determine what audit issues your operation is facing.

Start Survey

The survey is comprised of only 14 questions including contact, demographic and characteristic information about your organization and requests data about your claim denial and audit activity. The information will be kept confidential and privileged and will only be reported in the aggregate with no organization identifying information. Contact information will be used only to follow up should we have any questions.

Should you have any questions regarding the survey, please contact AAA Senior Vice President of Government Affairs Tristan North at tnorth@ambulance.org.

Thank you in advance for completing this important survey.

MedPAC Issues June 2016 Report to the Congress

Written by Kathy Lester on . Posted in Finance, Government Affairs, Medicare, Member Advisories, Member-Only, Regulatory.

MedPAC Issues June 2016 Report to the Congress with Chapter on Improving Efficiency and Preserving Access to Emergency Care in Rural Areas

Medicare Payment Advisory Commission (MedPAC or the Commission) has issued its June 2016 Report to the Congress.   The June report includes recommended refinements to Medicare payment systems and identifies issues affecting the Medicare program, broader changes in health care delivery, and the market for health care services.

Chapter 7 focuses on preserving access to emergency care in rural areas.  The Commission recognizes that access to inpatient and emergency services in rural areas is threatened because of the dwindling populations.  Declining populations can lead to fewer hospital admissions and reduced efficiencies that can create financial and staff problems for hospitals.  The Report notes that “[d]eclining volume is a concern because low-volume rural hospitals tend to have worse mortality metrics and worse performance on some process measures.” In addition, “low-volume CAHs have the difficult job of competing with each other for a shrinking pool of clinicians who want the lifestyle of operating an outpatient practice during the day, covering inpatient issues that arise at night, and covering the emergency department.”

Under current policies, most rural hospitals are critical access hospitals (CAHs).  They receive a cost-based payment for providing inpatient and outpatient services to Medicare beneficiaries.  To receive these payments, a hospital must maintain acute inpatient services.  In rural areas, many small towns do not have a sufficient population to support such a model.  Yet eliminating these services would mean giving up the supplemental payments that their hospitals receive through the CAH cost-based payment model.

The hospital prospective payment system serves as the payment model for other hospitals.  Rural providers receive supplemental payments, which are also linked to providing inpatient services.

MedPAC highlights the concerns with cost-based payment models:

  • Cost-based payments do not direct payments toward isolated hospitals having the greatest financial difficulty, but rather reward hospitals in high-income areas with higher non-Medicare margins by providing them with higher Medicare payments.
  • Cost-based payments encourage providers to expand service lines with high Medicare and private-payer shares rather than primarily focus on services that are needed on an emergency basis.
  • Cost-based models reduce the incentive for hospitals to control their costs, which can lead to unnecessary growth in capital costs, despite declining volumes.

In light of these challenges, MedPAC sets forth a two of options that would give isolated rural hospitals the option of converting to an outpatient-only model while maintaining their special payment arrangements.  These models seek to ensure access to essential services:

  • Establishing a 24/7 emergency department model; and
  • Adopting a clinic with ambulance services model.

Under the 24/7 emergency department model, the hospital would be paid under the outpatient prospective payment rates and would receive an annual grant/fixed payment from Medicare to cover the standby costs associated with 24/7 emergency services.  The current supplemental payments would be redirected to support this annual grant/fixed payment amount.  If a hospital chose to use inpatient beds as skilled nursing facility (SNF) beds, it would be reimbursed under the Medicare SNF prospective payment system.  The hospital could be required to use the fixed payment for emergency standby capacity, ambulance service losses, telehealth capacity, and uncompensated care in the emergency department.

Under the clinic and ambulance model, hospitals could convert their existing inpatient facilities into primary care clinics.  These clinics would be “affiliated” with an ambulance service.   Medicare would pay the prospective rates for primary care visits and ambulance transports.  Medicare would provide an annual grant/fixed payment to support the capital costs of having a primary care practice, the standby costs of the ambulance service, and uncompensated care costs.

The Commission recognizes that the “low population density would also make it difficult to retain primary care providers and support an ambulance service.”  It could also be difficult to describe the exact level of primary care and ambulance access that is required to receive the fixed Medicare payment.

MedPAC reiterates its position that “supplemental payments beyond the standard PPS rates should be targeted to isolated rural providers that are essential for access to care.”  Thus, it states that a program to support stand-alone emergency departments should be limited to facilities that are a minimum distance in road miles from the nearest hospital.

 

AAA Issues Response to GAO Claims Report

Written by Tristan North on . Posted in Medicare, Member Advisories, Regulatory.

On May 13, the Government Accountability Office (GAO) issued a report entitled “Claim Review Programs Could Be Improved with Additional Prepayment Reviews and Better Data“. In the report, the GAO recommended that CMS be provided legislative authority to allow Recovery Auditors to use prepayment claims reviews to address improper Medicare payments. CMS fortunately disagreed with the GAO on the recommendation and cited better options such as prior authorization to address potentially improper payments.

The AAA has now issued a Formal Statement in response to the GAO report noting the problems with prepayment claims review for ambulance services and promoting the better alternative of prior authorization for nonemergency BLS transports of dialysis patients. The statement is in follow up to our Member Advisory providing an in-depth review of the report. Please feel free to share the statement if you receive questions about the report.

On June 26, 2015, the AAA had participated in a conference call with the GAO officials conducting the report in which AAA representatives had pushed for recommendations in line with our statement. The AAA will continue to advocate for policies to address improper payments that address the issue but are also the least burdensome to AAA members and help ensure our ability to continue to provide high-quality emergency and nonemergency ambulance services to patients.

Understanding the GAO’s Recent Report on Medicare Prepayment and Postpayment Reviews

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

On May 13, 2016, the Government Accountability Office (GAO) publicly released a report on the comparative effectiveness of the various audit programs used by the Centers for Medicare and Medicaid Services (CMS) and its various contractors. This report was requested by Senator Orrin Hatch, the Chairman of the Senate Finance Committee, who had asked the GAO to examine: (1) the differences between prepayment and postpayment reviews and the extent to which CMS contractors utilize each, (2) the extent to which contractors focus their reviews on particular types of claims, and (3) CMS’ cost per review, and the amount of improper payments identified by contractors for each dollar they are paid.

To briefly summarize the GAO’s findings:

  • The Recovery Audit Contractors (RACs) generally limited themselves to conducting postpayment reviews. The GAO attributed this to the fact that the RACs were paid contingency fees based on recovered overpayments, i.e., because prepayment reviews result in a claim never being paid in the first place, there is no “overpayment” to be recovered, and, therefore, no contingency fees to be paid. The GAO did note that from 2012 to 2014, CMS conducted a demonstration project in which the RACs conducted prepayment reviews (and were paid contingency fees based on the dollar amount of denied claims), which CMS considered to be a success.
  • The Medicare Administrative Contractors (MACs) generally limited themselves to conducting prepayment reviews.
  • Each contractor also tended to specialize in certain types of claims. For example, the GAO noted that during 2013 and 2014, the RACs tended to focus primarily on inpatient hospital claims. The GAO found that the MACs tended to focus on physician and durable medical equipment claims. Note: the GAO included claims for ambulance services within the larger category of “physician” claims.
  • The RACs identified a total of $4.5 billion in improper payments during 2013 and 2014. For their work, the RACs were paid contingency fees totaling $312 million, a return of approximately $14 in improper payments for every dollar paid to the RACs.
  • CMS lacked reliable data on the costs and effectiveness of its MACs program integrity reviews.

The GAO made two specific recommendations. First, it recommended that CMS seek legislation that would permit its RACs to conduct prepayment claims reviews. Second, it recommended that CMS develop written guidance on how its MACs should calculate the savings attributable to prepayment claims reviews. CMS disagreed with the first recommendation, believing it unnecessary in light of other programs intended to move CMS away from “pay and chase”, including prior authorization and enhanced provider enrollment screening. CMS agreed with the second recommendation.

Focus on the RACs

For the years 2013 – 2014, the GAO found that the RACs focused primarily on hospital inpatient claims. For example, the GAO found that 78% of the FY 2013 claims reviewed by the RACs were hospital inpatient claims. While this number declined to 47% in FY 2014, that decline was largely attributable to CMS, under its own authority and subsequent legislation, prohibiting the RACs from reviewing certain inpatient stays during the first part of FY 2014. If you look only at postpayment reviews, the numbers were even higher, 87% in FY 2013 and 64% in FY 2014.

So why were the RACs focused on hospital inpatient claims, largely to the exclusion of other types of claims? The GAO believes the answer lies in how the RACs are compensated for their work. Recall that the RACs are paid contingency fees (of between 9% – 17.5%) based on the amount of the recovered overpayments. Given this fee structure, the GAO believed it was logical for the RACs to focus on claims with higher average dollar amounts per claim. The following chart shows the average amount of the improper payment identified by the RACs on a per-claim basis:

As you can see, the average overpayment for an inpatient hospital claim was more than $3,000 in FY 2013, compared with slightly more than $300 for a physician (or ambulance) claim. Assuming a 10% contingency fee, this means the RAC could expect to receive $300 for each inpatient hospital claim it reviewed, compared with $30 for a physician claim. Given these financial incentives, the RACs decision to focus on inpatient hospital claims makes sense.

Focus on the MACs

In contrast to the RACs, the Medicare Administrative Contractors focused their program integrity activities almost exclusively on prepayment reviews. The following chart shows the breakdown of MAC reviews by provider type:

As you can see, the MAC largely focused on physician and DME claims, with physician claims (including ambulance claims) accounting for 49% of MAC reviews in FY 2013 and 55% of MAC reviews in FY 2014.

The efficacy of these reviews is unclear. This is largely due to the failure by CMS to collect consistent data on the savings from prepayment claims denials. At least 3 MACs failed to provide data on the specific funds they spent on prepayment and postpayment reviews. Instead, these MACs reported their costs as part of their broader claims processing activities. MAC also used different methods for calculating the savings from prepayment reviews. For example, 2 MACs used the billed amounts by providers to calculate total savings from denied claims, despite the Medicare allowables being significantly lower than the amounts normally billed by providers. 9 MACs used the total Medicare allowable, without differentiating between Medicare’s payment and the payments made by secondary insurers and/or patients. The remaining 5 MACs compared denied claims to similar claims that were paid to estimate what Medicare saved on claims denied as part of prepayment reviews.

Impact on Ambulance Providers and Suppliers

The key finding in this report is the GAO’s belief that prepayment reviews are generally more cost-effective in preventing improper Medicare payments. The GAO believes this is because prepayment reviews “limit the need to recover overpayments through the “pay and chase” process, which requires administrative resources and is not always successful.”

While the GAO and CMS are in agreement that Medicare should move away from postpayment reviews, they appear to disagree on how, exactly, to implement that transition. The GAO’s report makes clear its belief that CMS should devote greater resources to prepayment reviews, with the GAO specifically recommending that CMS seek legislative authority to empower its RACs to take a greater role in conducting prepayment reviews. By contrast, CMS appears to favor prior authorization programs.

Only time will tell which of these views gains prominence. In the meantime, ambulance providers and suppliers should expect to see the RACs take an increasing interest in our industry.

Have an issue you would like to see discussed in a future Talking Medicare blog? Submit your question!

Indian Health Service Issues Final Rule on Payments to Non-Contracted Providers

Written by Brian Werfel on . Posted in Government Affairs, Medicare, Member Advisories, Talking Medicare.

On March 21, 2016, the Indian Health Service (IHS), an agency with the Department of Health and Human Services, issued a final rule with comment period titled “Payment for Physician and Other Health Care Professional Services Purchased by Indian Health Programs and Medicare Charges Associated with Non-Hospital-Based Care.” This final rule will change the way the Indian Health Service pays for Purchased/Referred Care (PRC), formerly known as Contract Health Services (CHS). The provisions of this final rule will become effective on May 20, 2016.

Under current regulations, payment for PRC services is based on rates established by arms-length negotiations between the physician or other health care provider (including ambulance providers and suppliers) and the IHS, Tribe, Tribal Organization or urban Indian organizations (collectively referred to hereinafter as I/T/U programs). In the absence of an agreement, the health care provider is generally paid its full billed charges.

Provisions of Final Rule

The final rule amends the regulations at 42 C.F.R. 136.1 e. seq. to provide that payment for PRC services will now be based on Medicare payment methodologies. Specifically, payments would generally be set at the lowest of: (1) the amount provided for such service under the applicable Medicare fee schedule or Medicare waiver, (2) the amount negotiated with a specific provider or its agent, or the amount negotiated by a repricing agent, if applicable, or (3) the rate for such service paid by the health care provider’s or supplier’s “Most Favored Customer” (MFC). For these purposes, IHS has indicated that the MFC rate will be evidenced by commercial price lists or paid invoices and other related pricing and discount data.

While the previous paragraph sets forth the general rate-setting regime, a number of important exceptions will apply. First, any negotiated rate between the parties must be equal to or better than the provider’s or supplier’s MFC rate. The AAA is interpreting this requirement to require the provider or supplier to offer better (i.e. lower pricing) to the I/T/U program than it offers to any nongovernmental entities, including insurance plans. However, IHS indicated that this restriction would not apply to the extent the I/T/U program determines that the negotiated rate is otherwise fair and reasonable, and is otherwise in the best interests of the I/T/U (as determined by the I/T/U). Second, in the event that no agreement exists, and the Medicare Fee Schedule amount is greater than the provider’s or supplier’s MFC rate (i.e. the provider or supplier has voluntarily elected to accept a rate lower than the corresponding Medicare allowable from at least one nongovernmental entity), then the rate may not exceed the MFC rate, but may be lower than the MFC rate.

The final rule can be viewed in its entirety here.

The GAO Releases New Report on Claims Review Programs, Recommending Additional Prepayment Review Authority and Written Guidance on Calculating Savings from Prepayment Review

Written by Kathy Lester on . Posted in Government Affairs, Medicare, Member Advisories, Reimbursement, Talking Medicare.

On Friday, May 13, the Government Accountability Office (GAO) publicly released a new Medicare report entitled, “Claim Review Programs Could Be Improved with Additional Prepayment Reviews and Better Data,” which it shared with the Congress and the Centers for Medicare & Medicaid Services (CMS) in April. The report is addressed to the Senate Finance Committee Chairman Orrin Hatch (R-UT) in response to his request.

The Report examines:

1. The differences, if any, between prepayment and post-payment reviews, and the extent to which the contractors utilize these types of reviews;

2. The extent to which the Medicare claim review contractors focus their reviews on different types of claims; and

3. CMS’s cost per review and the amount of improper payments identified by the claim review contractors per dollar paid by CMS.

In compiling the Report, the GAO reviewed Administration documents, interviewed CMS officials, Recovery Auditors (RAs), and Medicare Administrative Contractors (MACs). The GAO also interviewed representatives from 10 Medicare provider/supplier organizations that have experienced claim reviews on both a pre- and post-payment review basis. The AAA worked the GAO by participating in a telephone interview and providing written comments.

The GAO examined three types of contractors – the RAs, the MACs, and the Supplemental Medicare Review Contractor (SMRC). These contractors are responsible for reviewing claims that are at high risk of improper payment and claims that pose the greatest financial risk to Medicare. Only MACs conduct both pre- and post-payment reviews. RAs and the SMRC conduct only post-payment reviews, but RAs did participate in a pre-payment review demonstration project. RAs are paid on a contingent basis from recovered overpayments. During the demonstration, RAs were paid contingency fees based on claim denial amounts.

In its review, the GAO found that few differences exist between pre- and post-payment reviews, but noted that pre-payment reviews “better protect Medicare funds.” The GAO found that CMS is not always able to collect overpayments from post-payment reviews and that post-payment reviews require more administrative resources than pre-payment reviews.

The provider/supplier organizations highlighted two issues that need to be resolved with regard to pre-payment review audits. First, they identified that the option to hold discussions with RAs before payment determinations are made in the context of post-payment reviews can be helpful. These discussions are not part of the pre-payment review process; nor are they part of the MAC process. CMS indicated that it is not practical to have such an option in these contexts because of the timing requirements.

Second, the providers/suppliers noted that pre-payment reviews create cash flow burdens, in light of the appeals process. When appealing a post-payment review, providers/suppliers retain their Medicare payments through the first two rounds of review. If the denial is overturned at a higher level, CMS must pay back the recovered amount with interest accrued. However, for pre-payment reviews, providers/suppliers do not receive payment and CMS does not provide interest on the dollars withheld if the provider/supplier wins on appeal.

MACs have traditionally relied upon post-payment review. MACs will also use post-payment reviews to analyze billing patterns to inform other review activities, such as future pre-payment reviews and educational outreach. CMS has encouraged MACs to perform extrapolation, especially for providers/suppliers that submit large volumes of low-dollar claims with high improper payment rates.

The SMRC reviews often include studies to develop sampling methodologies or other policies that could be rolled out more broadly in the future.

The GAO also found that different contractors focused on different claims during 2013 and 2014. RAs focused on inpatient claim reviews primarily. RAs have the discretion to select the claims they review and the GAO stated that “their focus on reviewing inpatient claims is consistent with the financial incentives associated with the contingency fees they receive, as inpatient claims generally have higher payment amounts compared to other claim types.” The GAO also found that RA claim reviews had higher average identified improper payment amounts per post-payment claim review relative to other claim types in 2013 and 2014. For the upcoming contracts, CMS has indicated that it will more closely monitor RAs to ensure that they are reviewing all types of claims. For DME claims in particular, CMS has increased the contingency fee percentage paid to the RAs for DME, home health agencies, and hospice claims.

In contracts, MAC claim reviews focused primarily on physician and DME claims. DME claims accounted for 29 percent of their reviews in 2013 and 26 percent in 2014, while representing 22 percent of total improper payments in fiscal year 2013 and 16 percent of improper payments in fiscal year 2014. DME claims also had the highest rates of improper payments in both years.

Physician claims is a broadly used term that includes labs, ambulances, and individual physician.

The SMRC focused its claim reviews on studies that CMS directs the contractor to conduct. In 2013, the SMRC reviews focused on outpatient and physician claims, but in 2014 the focus shifted to home health agency claims and certain DME suppliers.

The GAO concluded that both RAs and SMRC generated savings for CMS, but unreliable data prevented comparing these results to those of MACs. CMS paid the RAs an average of $158 per review; the RAs averaged $14 in identified improper payments per dollar paid by CMS in both 2013 and 2014. CMS paid the SMRC an average of $256 per review, and the SMRC averaged $7 in identified improper payments per dollar paid in 2013 and 2014. The higher SMRC costs related to the study costs and extrapolation.

CMS lacks reliable MAC cost and savings data. CMS does not collect reliable data on claim review funding and does not have consistent data on identified improper payments. While CMS has established ways to collect this information, some MACs are not reporting it. MACs also use different methods to calculate and report savings.

The GAO recommended that CMS take two actions:

• In order to better ensure proper Medicare payments and protect Medicare funds, CMS should seek legislative authority to allow the RAs to conduct prepayment claim reviews.

• In order to ensure that CMS has the information it needs to evaluate MAC effectiveness in preventing improper payments and to evaluate and compare contractor performance across its Medicare claim review program, CMS should provide the MACs with written guidance on how to accurately calculate and report savings from prepayment claim reviews.

CMS did not agree with the first recommendation, stating that it has a strategy to move away from “pay and chase” using different policies, such as prior authorization initiatives and enhanced provider enrollment screening. CMS concurred with the second recommendation.

CMS Releases Medicare Provider Utilization and Payment Data for CY 2014 for Ambulance Suppliers, Physicians and Other Part B Organizations

Written by Brian Werfel on . Posted in Government Affairs, Medicare, Member Advisories, Reimbursement, Talking Medicare.

On May 5, 2016, CMS publicly released the “Medicare Provider Utilization and Payment Data: Physician and Other Supplier Public Use File,” which provides information on the services and procedures provided to Medicare beneficiaries by ambulance suppliers, physicians and other healthcare provider groups.  The data file is based on calendar year 2014 data. This release follows on last year’s release of payment data for calendar year 2012.

The database lists all individual and organizations providers by National Provider Identifier (NPI), and provides information on utilization, total payments and submitted charges.  It can also be searched by Healthcare Common Procedure Coding System (HCPCS) code and place of service.

The Public Use File can be obtained here. Please note that you will need to download the desired file and then import it into an appropriate database or statistical software program.  CMS is indicating that Microsoft Excel is not sufficient for these purposes, and that importing it into Excel may result in an incomplete loading of data.

A number of news organizations have already created searchable databases that will allow you to search the CY 2012-2013 data by physician/organizational name, provider specialty, city, state, etc.  It is expected that these news organizations will be updating their websites to incorporate the CY 2014 data in the coming weeks. The searchable database created by the Wall Street Journal can be accessed here.

Prior Authorization Pilot Program – Status Update

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

CMS released preliminary data on the impact of the prior authorization demonstration program on Medicare payments for ambulance services.  This data is limited to the three states (NJ, PA, and SC) that were included in the demonstration program’s first year.

CMS noted that it has observed a dramatic decrease in expenditures for repetitive non-emergency ambulance transports since the program’s implementation.  CMS released the following data for the first 10 months of the program (i.e. December 2014 – September 2015), comparing that data to the first 11 months of 2014:

  • Payments for repetitive non-emergency ambulance transportation in these states averaged $5.4 million per month, down from nearly $18.9 million per month prior to the program’s implementation. This is a reduction of more than 70%.
  • In the states that were not part of the demonstration program, payments have decreased very slightly for the 10 months in 2014 and are very similar to the payments in the 11 months prior to the program beginning in SC, NJ and PA.
  • 18,367 prior authorization requests were received and finalized by Medicare’s contractors. Of these, 6,430 (35.0%) were approved.

CMS is closely monitoring these results to evaluate its effectiveness. Here is the full status update.

HHS Office of Civil Rights Announces Phase 2 HIPAA Audit Review Program

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

On March 21, 2016, the Office for Civil Rights of the Department of Health and Human Services announced Phase 2 of its HIPAA Audit Program.  The Health Information Technology for Economic and Clinical Health Act (HITECH) required HHS to perform periodic audits of covered entities and business associates to assess their compliance with the HIPAA Privacy, Security and Breach Notification Rules.  These rules are enforced by the HHS Office for Civil Rights (OCR).

Background on Phase 1

In 2011, OCR implemented a pilot audit program to assess the controls and processes covered entities have adopted to meet their HIPAA obligations.  The pilot audit program was conducted in three phases.  OCR first developed a set of audit protocols that it would use to evaluate covered entities’ compliance.  This protocol was then tested using a limited number of audits.   The final step involved using the revised audit protocols on a larger number of covered entities.  Ultimately, 115 covered entities were selected for review, and all audits were concluded by December 31, 2012.

Phase 2

Phase 2 of the HIPAA Audit Program will focus on the policies and procedures adopted and employed by entities to meet the requirements of the Privacy, Security, and Breach Notification Rules.  OCR has indicated that these audits will be conducted primary through desk audits (i.e., document submissions), although by a limited number of on-site audits will also be conducted.

Unlike Phase 1, which focused exclusively on covered entities, OCR is indicating that Phase 2 will involve audits of both covered entities and their business associates.

As with the initial pilot audit program, Phase 2 will consist of several stages.  The first stage involves verification of a covered entity’s or business associate’s address and contact information.  A sample address verification letter can be viewed by clicking here.  OCR has indicated that emails will be sent to entities requesting accurate contact information for the entity.  OCR will then transmit a “pre-audit questionnaire” to the entity.  These questionnaires will be used to gather data about the size, type, and operations of potential auditees.  Based on this data, OCR will create potential audit subject pools.

Note: OCR has indicated that if an entity fails to respond to OCR’s request to validate its contact information and/or fails to return the pre-audit questionnaire, OCR will use publicly available information about the entity to create its audit subject pool.  As a result, an entity that fails to respond may still be selected for audit and/or compliance review.  OCR is specifically reminding entities to check their email “junk” or “spam” folders for any communications from OCR.

Once OCR has developed its audit subject pools, it will randomly select auditees from these pools.  Auditees will then be notified by OCR of their participation.  OCR has indicated that the first set of audits will focus on covered entities, with a subsequent round of audits focused on business associates.  These audits will focus on compliance with specific requirements of the Privacy, Security, or Breach Notification Rules.  Auditees will be notified of the scope of their audit in a document request letter.  Both of these rounds will be desk audits.  OCR indicated that all desk audits will be completed by the end of December 2016.

A third round of on-site audits will take place after the completion of the desk audits, and will examine a broader scope of requirements under HIPAA.  OCR further indicated that desk auditees may also be subject to on-site audits.

If an entity is selected for audit, OCR will notify them by email.  The email will introduce the OCR audit team, explain the audit process, and discuss OCR’s expectations in greater detail.  The email notification letter will also include initial requests for documentation.  OCR has indicated that it will expect entities to respond to these documentation requests within ten (10) business days.  Documents will be submitted through a new secure online portal.  Once received, OCR’s auditors will review the submitted information and inform the entity of its draft findings.  The entity will then have ten (10) business days to respond with written comments, if any.  OCR will then review the entity’s comments and issue a final audit report within thirty (30) business days.

OCR has indicated that the audits are primarily intended as a compliance improvement activity.  OCR will use aggregated data to better understand compliance with respect to particular aspects of the HIPAA rules.  The goal being to understand what types of technical assistance and/or corrective actions would be most helpful.  In other words, OCR is indicating that the goal of these audits is to improve its understanding of the state of compliance, and not to penalize specific companies for violations.  However, OCR indicated that should an audit reveal a serious compliance issue, OCR may initiate a further compliance review of the company.

OCR indicated that it will not post a list of the audited entities, nor will its findings be available in a format that would clearly identify the audited entity.  However, OCR noted that audit notification letters and other information regarding these audits may be discoverable under the Freedom of Information Act (FOIA).

Additional information from OCR regarding the Phase 2 HIPAA Audit Program can be obtained by clicking here.

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