A A A

EisnerAmper Blog

An EisnerAmper Health Care Services Blog

Unnecessary Health Care

 Permanent link

May 11, 2015

Bisciello_Steven(1)By Steven Bisciello, MBA, CMPE

Our newspapers and journals routinely update us on Medicare and Medicaid fraud committed throughout our country. In these fraud cases, patients’ identities and insurance information have been stolen, sham-clinics are opened where tests are billed for visits that never occurred, etc. The effects these fraud cases have on the costs of health care in the United States are well-documented.

Another area being brought to light is one we will call ‘unnecessary care.’   A recent article in The New Yorker written by Atul Gawande, a general surgeon,  goes into great detail about the amount of unnecessary care being performed today. The article references a recent study performed on 1 million Medicare patients.

From this study, researchers determined these patients had received a litany of unnecessary tests from their respective physicians. To be more specific, the article shows that the researchers reported “twenty-five to forty-two per cent of Medicare patients received at least one of the twenty-six useless tests and treatments”  – those that have been determined to either  1) have no medical benefit for the patient, and/or 2) be directly  harmful to the patient. Some examples of these tests, as presented in the article, include: “Performance of an EEG for an uncomplicated headache, doing a CT or MRI scan for low-back pain in patients without any signs of a neurological problem, or putting a coronary-artery stent in patients with stable cardiac disease.”

The author also talks about performing some research on some of his own new patients. This involved reviewing their medical records prior to being referred to him. Out of 8 new patients he saw and researched, he found that seven of them had received unnecessary care.

The results of unnecessary care can have a dramatic financial impact on both the patient’s wallet and the overall costs of health care.  Even more disturbing is the physical harm that can be done to patients who had received this unnecessary care (excessive radiation exposure, unnecessary surgeries, prescription medication, etc.) and resulting unnecessary treatments and further testing from a lack of results or findings from the original unnecessary tests. 

This is a very slippery, dangerous and expensive slope to be on and reinforces the need to continue to perform preventative medicine and treat the glaring issues, such as obesity, high blood pressure, and diabetes, which lead to numerous health complications and expensive on-going treatment for patients.

Sustainable Growth Rate (“SGR”) Repealed After 10 Years of Effort

 Permanent link

April 30, 2015

McLafferty_MikeBy Michael McLafferty, CPA, MBA, FACHE, FHFMA, FACMPE

The Senate recently voted to repeal the SGR and avert a 21% reduction in Medicare payments to physicians. The House had repealed this legislation on March 25, 2015.

Congress did pass the Medicare Access and Children’s Health Insurance Program (“CHIP”) Reauthorization Act. There are three major components to this legislation as follows:

  1. Eliminates a 21% payment cut that went into effect April 1, 2015 and eliminates any future erases future SGR cuts. The legislation also provides a 5-year period of stable, annual updates of 0.5% in order to transition to a new payment system. 
    • Physicians will receive an annual update of 0.5% in each of the years 2015 through 2019. The first 0.5% update will begin July 1, 2015. The second 0.5% update will begin January 1, 2016.
     
  2. Financial incentives are included for physicians who move into alternative payment models (“APMs”). 
    • There’s an opportunity to earn a 5% bonus for eligible professionals who receive a significant share of their revenue through an APM from 2019 through 2024.
     
  3. Sunsets the financial penalties associated with the Physician Quality Reporting System (“PQRS”), the value-based payment modifier (“VBPM”), and meaningful use (“MU”) in 2018. Established a new program called the Merit-Based Incentive Payment System (“MIPS”).

The legislation also reverses the Center for Medicare & Medicaid Services' decision to eliminate the use of 10- and 90-day global surgical codes in Medicare. There has been a significant amount of lobbying and hard work by many health care professional organizations to influence Congress to initiate these legislative changes.

Senate Repeals SGR Formula

 Permanent link

April 16, 2015

Clark_NancyBy Nancy Clark, CPC, CPC-H, CPB, CPMA, CPC-I

On April 14, the Senate voted to approve HR 2, the Medicare Access and CHIP Reauthorization Act.  The bill had passed the House of Representatives on March 26.  This legislation repeals the Medicare Sustainable Growth Rate (SGR) formula.  Following are highlights of the bill:

  • The law averts the 21% pay cut for providers that went into effect on April 1, 2015.  For the next 5 years, physicians will see annual increases of .5%.  The first increase will occur on July 1, 2015 and the next on January 1, 2016.  
  • The bill provides a 5% bonus for eligible professionals who receive a significant portion of their revenue from an alternate payment model from 2019 to 2024.
  • Implementation of the “2-Midnight Rule” is further delayed until September 2015.  Medicare administrative contractors are instructed to utilize the current “probe and educate” approach instead of allowing the recovery audit contractors to review claims.
  • Bundled payments for global surgical periods will stay intact.  However, the Centers for Medicare and Medicaid Services will be required to periodically collect information on the services that surgeons perform in the global period to ensure that payment amounts for these procedures are accurate.  
  • Physician Quality Reporting System, Meaningful Use and the Value-Based Payment Modifier programs will be combined into one Merit-based Incentive Payment System beginning in 2019.  
  • The bill also affects Medicare beneficiaries, implementing income-related premium adjustments for Parts B and D beginning in 2018.
  • There is no language directing any delay of ICD-10 implementation.  This indicates that ICD-10 is scheduled to be implemented on October 1, 2015.

The bill is now forwarded to President Obama for his approval.  The White House has indicated that the President will sign the bill into law.

Hospital Productivity Growth Spurt

 Permanent link

April 2, 2015

Bisciello_StevenBy Steven Bisciello, MBA, CMPE


The trend for the past few years continues to be the shift from inpatient care to outpatient care.  The continued result of this trend has been the rallying cries for accountable care, the sharing of responsibility for the control of costs, and the measurement and reporting of improved outcomes, all of which lead up to a large probability of reimbursement being based heavily on quality of care.  We have seen reports and read articles on the rising costs of health care as well as the financial burden in treating patients with recurring, severe illnesses such as diabetes and heart-disease and conditions such as obesity.  We have also read articles on the resulting legislation that has been proposed and implemented as a result of these rising costs and illnesses. 

Another question and request should be “how well are our country’s hospitals performing in the treatment of their patients?”  Recently, there was a refreshing article written in Health Affairs  which sheds some light on answers to the above question.

The article reports how a study was conducted on the productivity by hospitals in treating Medicare patients between the years of 2001-2011. These patients suffered from conditions such as heart failure and pneumonia.  The results show that “the rates of annual productivity growth were 0.78 percent for heart attack, 0.62 percent for heart failure, and 1.90 percent for pneumonia. However, unadjusted productivity growth appears to have been negative. These findings suggest that productivity growth in US health care could be better than is sometimes believed, and may help alleviate concerns about Medicare payment policy under the Affordable Care Act.” 

Health Care Industry Concerns Grow Regarding Federal Exchange Subsidies to Enrollees

 Permanent link

March 9, 2015

McLafferty_MikeBy Michael J. McLafferty, CPA, MBA, FACHE, FHFMA, FACMPE

The Supreme Court is scheduled in June to determine the legality of subsidies to federal exchange enrollees. The wording in the Affordable Care Act (“ACA”) suggests that subsidies can only be paid to enrollees from state-controlled exchanges. The implication of a negative ruling by the high court could place a number of enrollees in a position where they can no longer afford their health care premiums.

There are estimates from the Urban Institute suggesting that in 2016 total spending on hospital care could be reduced by $6.3 billion. The Administration and Congress has been approached regarding what is their “Plan B” if the Supreme Court rules against the subsidies. Neither party has come forward to discuss their Plan B.

A negative Supreme Court ruling will be financially significant for the hospital industry. There are a number of reasons for concern, including:

  • the Administration’s FY 2106 budget indicated material reductions in Medicare Reimbursement, 
  • States are suggesting they need to reduce their Charity Care payments to hospitals and 
  • new payment models that introduce quality metrics are being introduced to the industry.

Prepare Now for ICD-10 Implementation

 Permanent link

January 29, 2015

Clark_NancyBy Nancy Clark, CPC, CPC-H, CPB, CPMA, CPC-I

The Centers for Medicare and Medicaid Services (“CMS”) issued confirmation last week that the compliance date for ICD-10 is October 1, 2015.   CMS has posted ICD-10 timelines and is directing providers to begin or continue implementation efforts now.  Health care providers, payers, clearinghouses, and billing services must be prepared to comply with the transition to ICD-10.

ICD-10 will affect diagnosis and inpatient procedure coding for everyone covered by the Health Insurance Portability and Accountability Act (“HIPAA”). ICD-10 diagnosis codes must be used for all HIPAA entities in the United States, and ICD-10 procedure codes must be used for all hospital inpatient procedures. Claims with ICD-9 codes for services provided on or after the compliance deadline will not be paid by major insurance carriers.

Providers need to continue to work on their implementation strategy, including an assessment of the impact on their organization, a detailed timeline, and a budget.  It is important to check with their billing service, clearinghouse and practice management software vendor to ensure that they are currently testing submissions in both ICD-10 and ICD-9 formats.   Since claims may be submitted or appealed well after the date of service, both types of submissions will need to be available to providers for an extended period of time.

Most personnel will need some type of ICD-10 training.  Coders and billers need detailed code set training.  Office staff responsible for authorizations will need to understand the new code set in order to properly obtain preapproval for procedures.  Clinical personnel will need to be versed in the coding requirements in order to appropriately document services. 

Include staff members involved in medical records, coding, clinical functions, information technology and finance when coordinating transition efforts and training sessions.  Lack of preparation for ICD-10 implementation may result in lack of reimbursement for services rendered on or after October 1, 2015.  For more information on ICD-10 implementation, see the CMS website.

Physician Pay Fix Update

 Permanent link

January 26, 2015

Bisciello_StevenBy Steven Bisciello, MBA, CMPE

As far as health care reform goes, the only item unresolved longer than ICD-10 is the issue regarding the repeal of the sustainable growth (“SGR”) formula. This past week we saw the first efforts to either temporarily or permanently repeal the SGR formula used to calculate Medicare physician payments .

These efforts came in the form of a two-day hearing held by the House Energy and Commerce Health Subcommittee.  This first hearing was entitled “A Permanent Solution to the SGR: The Time Is Now.”

As we know, the current deadline set for the SGR to go forward is March 31.  From the first round of testimony, it was reported that there is an agreement that one of the greatest challenges Congress faces is how to pay for repeal of the SGR--and not with a new Medicare payment policy for physicians. Last year, the committees in charge agreed on a plan which would have instilled a legislative package that would repeal the SGR and replace it with stable rates which could also be altered based upon performance-based incentives. This plan passed the House but went no further due to a lack of consensus about how to offset the cost.

Some suggestions that were provided on how to appropriately pay for SGR reform included the implementation of the new physician incentive payments from 2023 to 2018, allowing non-physician providers to participate, and increasing deductibles.

Subcommittee Chairman Joe Pitts (R-PA) said House leadership has stated that “only an SGR bill that can be paid for will be considered and that efforts to move a bill that is unpaid for is unrealistic.” Other committee members argued that “offsets are not needed for repealing the SGR but that if offsets are used they should come from a combination of tax increases and unused funds from military operations, not from the Medicare program.”

In this first round of meeting, there was no discussion, however, about cutting non-physician Medicare providers although that remains a strong possibility. Some of the provider cuts Congress is considering currently are cuts to graduate medical education, critical access hospitals, inpatient rehabilitation facilities, skilled nursing facilities, long term care hospitals, home health, clinical lab services, Medicare bad debt, and durable medical equipment.

We will continue to stay tuned as the next rounds of talks are completed.

EisnerAmper is an independent member of PKF North America.
PKF North America is an independent member of PKF International.