EisnerAmper Blog

May 21,  2013

By Michael McLafferty, CPA 

The Medicare Sustainable Growth Rate (SGR) is a method currently used by the Centers for Medicare and Medicaid Services (CMS) in the United States to control spending by Medicare on physician services. Enacted by the Balanced Budget Act of 1997 to amend Section 1848(f) of the Social Security Act, the SGR replaced the Medicare Volume Performance Standard (MVPS), which was the previous method that CMS used in an attempt to control costs. Generally, this is a method to ensure that the yearly increase in the expense per Medicare beneficiary does not exceed the growth in Gross Domestic Product (GDP).

Health care providers have been genuinely concerned that their Medicare reimbursement rates will be reduced at the beginning of every calendar year. This is due to the current faulty SGR payment system. Providers are discussing a five-year transition period before moving to a new physician payment system, according to Rep. Kevin Brady (R-Texas), chairman of the Ways and Means Health Subcommittee, who is involved in developing the revised payment system.

Rep. Brady went on to say the next question in developing a sustainable growth-rate replacement measure that is expected to pass this year is how much time is needed even before that transition period begins.
 

Brady declined to give a timeframe in which he and his colleagues are expected to introduce their long-awaited SGR replacement measure. The question of appropriate transition periods arose repeatedly in a recent hearing by Brady's panel, which featured testimony from provider and insurance representatives.

Brady said representatives crafting an SGR-replacement bill are focused on finding ways to cover the $138 billion, 10-year cost of repealing Medicare's cost-control formula. Even though the Congressional Budget Office-provided estimates dropped in February from its earlier expectation of a $245 billion cost, the challenge of finding a bipartisan way to pay for eliminating the current SGR payment method still appears the chief hurdle to reforming Medicare physician payments.

The demographics of the United States suggests that as the population continues to age, there will be an increase in Medicare patients and at the same time a potential shortage of physicians to service them. It is absolutely essential that CMS revise its payment system to incent physicians to continue to participate in the Medicare Program—and the sooner the better.
 

May 13, 2013

By Maureen Doherty  

Medical practices should conduct quarterly prospective coding and documentation reviews.  A designated certified coder or internal compliance officer would review the claims before they are submitted to the payer for appropriateness of coding and documentation.   A prospective review will ensure the physician is submitting appropriately coded claims according to Current Procedural Terminology (“CPT”) guidelines and payer payment policies, as the physician is ultimately responsible for claims submission, even if a billing service or clearinghouse is used for claims submission to payers.  

Should the audit reveal a pattern of repeated coding, documentation and/or billing errors, physician education should be provided.   Additionally, the necessary steps should be taken to ensure these errors don’t recur.  

May 3, 2013

By Steven Bisciello 

 
In a recent article published in Modern Healthcare, a large hospital system in Texas announced their plans to enter into the health insurance market place. We see this happening not only occurring in Texas but throughout our nation and expect the trend will continue to grow.

One major reason for our expectation is that, slated to begin on Oct. 1, 2013, online markets or exchanges will be available for the purchase of health insurance by the public.  Aided by government subsidies to assist in affordability, consumers will have a bevy of options to choose from.

The good news for the country’s health systems is that this insurance explosion should increase the number of previously non-covered people who are now covered and seeking preventive and primary care. This has prompted the above-mentioned hospital systems to expand even further in the provision of health care, by creating their own health insurance products.

By doing so, the health systems can increase their presence in the marketplace and make attempts to create an additional revenue stream.  This comes at a time when the marketplace will be focused on keeping patient care ambulatory through better disease management and care coordination, thus emptying hospital inpatient beds.

The goal for providers by entering this insurance market is two pronged: 1) Insure these potential customers through these exchanges, and 2) Channel those patients into their own facilities.  This new customer base also enables providers' ability to manage care and costs, which results in a positive effect for consumers as providers can then offer lower insurance premiums.

April 25, 2013

By Steven Bisciello 

Last month, Marilyn Tavenner, the acting administrator for the Centers for Medicare and Medicaid Services, reiterated that the ICD-10 implementation deadline of Oct 1, 2014 is here to stay.  This means that health care organizations need to start working on their ICD-10 implementation plan ASAP.

Recent survey results show that a very large number of small to mid-sized hospitals have yet to start any form of education or training for their respective coders and clinical staff.  ICD-10 utilizes over 72,000 procedure codes, a tremendous increase from ICD 9’s 4,000 procedure codes.  Documentation by physicians must capture the specificity of the ICD-10 implementation. 

 
The lack of planning and implementation is consistent with the feedback we have received during all of our health care update sessions in the fall of 2012. Failure to properly educate and prepare coders and clinicians in a timely fashion greatly threatens the respective hospital/health care organization’s revenue cycle.

We recommend to our hospital and health care organization clients that they take the necessary steps to properly prepare for the ICD-10 transition.  These steps include: ICD-10 education sessions, a documentation and revenue risk review, creation of a customized implementation plan, and, finally, a post-implementation assessment.
 

April 23. 2013

By Maureen Doherty 

One of the major changes for medical practices and hospitals with ICD-10 approaching is clinical documentation improvement.

Providers will need to improve documentation so diagnoses and procedures can be coded to the highest level of specificity. A more complete and accurate patient’s medical record will help ensure patient quality of care and support medical necessity of the procedures submitted for reimbursement.

ICD-10 will include an expanded injury category. Documentation for an injury must include the following elements: specificity, laterality, acute vs. chronic, external cause, activity, location and relief vs. no relief. In addition, the code set will have a seventh character extension to identify the encounter.

The character extensions are:  

•  A – initial encounter
•  D – subsequent encounter
•  G – subsequent encounter with delayed healing
•  S – sequela

Provider documentation reviews should start to take place now to ensure you’ll meet all the requirements before October 1, 2014.
 

April 12, 2013

By Michael McLafferty, CPA 

We have commented previously that we believe the acquisition of physician practices by hospitals will continue. In fact, most of our health care contacts believe the rate of growth will increase. A study by staffing firm Jackson Healthcare appears to confirm what we see in the marketplace and feedback from our contacts.

Hospitals' interest in purchasing physician practices is on the rise, with 52% of the 118 hospital executives surveyed by Jackson Healthcare revealing that their organizations plan to acquire practices this year, marking a gain from 44% in 2012. The survey indicates that 54% of the executives polled are interested in family practices and 26% are interested in general internal medicine practices. (Furthermore, 70% said physicians are approaching them with offers to sell.) As for the reasons why they are acquiring practices, 58% cited a desire to build a competitive advantage and 57% want to maintain their competitive advantage. Meanwhile, the U.S. Federal Trade Commission is more closely scrutinizing these deals in regard to antitrust laws, recently issuing a complaint to block Boise, Idaho-based St. Luke's Health System's acquisition of Saltzer Medical Group, the state's biggest independent multispecialty physician practice group, because it would have too much market power to set rates and would control 60% of the primary care market.

Assuming the trend to acquire practices continues, the health care marketplace will consolidate at a faster pace than predicted. The resulting health care systems will be larger and more complicated to manage successfully in the future.

April 3, 2013

By Steven Bisciello  

On Monday, April 1, 2013 the state of Vermont made history by becoming the first state to publish the proposed 2014 individual health insurance rates under the federal health law. Vermont Governor Peter Shumlin had reported that there was no backlash or “rate shock” in the new premiums, despite contrary earlier predictions. 

Be advised, however, that Vermont is unique in that it is only one of seven states in the country which have “community rating regulations,” meaning that it already prohibits insurers from utilizing a patient’s health status to determine what the individual’s premiums will be. The state also requires insurance premium prices to be the same regardless of the insured’s age. These regulations are similar to the health law’s biggest changes: prohibiting insurers from 1) utilizing health status to calculate premiums and 2) charging the elderly population at much higher rates than the younger population. 

That being said, the state of Vermont is probably not the best measuring stick on what the effect of the heath overhaul on premiums will be. 

Some examples of monthly premium costs which have been released by both Blue Cross and Blue Shield of Vermont and MVP Health Care range from $265 for catastrophic coverage for young adults to $609 for “platinum coverage.”  When comparing these ranges to actual rates being offered today, the governor’s office found these rates to be very comparable. 

Starting Oct. 1, 2013, individual and small group insurance coverage, such as the examples mentioned above, will be sold online in the new state “exchanges,” as required by the Affordable Care Act.