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Parrish Action Letter C

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PARRISH, MOODY & FIKES, P.C.

CERTIFIED PUBLIC ACCOUNTANTS

7901 Woodway Drive — Waco, Texas 76712 — (254) 776-8244 — Fax (254) 776— www.pmfwaco.com 8277 General email:pmf @pmfwaco.com

July 2009

Action Items in This Issue Inside This Issue Highlights of FY2010 Inpatient PPS Proposed Rules

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Highlights of CY 2010 Policy and Pmt.Changes for Hospital Outpatient Depts. and Ambulatory Surgical Centers

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PS&R System Available Online

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SCHs Eligible for TOPS

Rebasing for Sole Community Hospitals 4 PMF Extranet

Main Office (254) 776-8244 Direct Lines: William M. Parrish, Jr., CPA (254) 756-8638 Michael L. Oatman, CPA/ABV (254) 756-8637 Kermit H. Lowe, CPA (254) 756-8631 Deborah R. Whitley, CPA (254) 756-8650 Carol S. McIntosh, CPA (254) 756-8633 Cass Sansom, CPA (254) 756-8642 Tommy L. Davis, CPA (254) 756-8616 Kneeley D. Lawdermilk, CPA (254) 756-8630 Christa S. Worley, CPA (254) 756-8651

1. Validate your mailing address with Texas RAC contractor, Connolly Healthcare (page 2). 2. Sole Community Hospitals—review TOPS payments impact. While a benefit is generally expected, it is possible that some SCH may have to repay some of these amounts. 3. Establish an IACS account with CMS and apply for approval for PS&R access (page 3). 4. For PMF Clients, establish your PMF-Extranet account for improved security related to electronic document transfers ( page 4). 5. SCH should contact us regarding the estimated impact from rebasing for IP services (page 4).

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Not all sole community hospitals will benefit from the addition of the hold harmless protection. For those hospitals that may already be receiving TOPS payments in 2009, a review of your cost report and interim payments is necessary to evaluate the effects of the payments on your facility. Sole community hospitals with no more than 100 beds are eligible again for the hold harmless provision (TOPS) for covered outpatient services furnished on or after January 1, 2009 and before January 1, 2010.

CMS RAC Review PhasePhase-In Strategy On June 29, 2009, CMS released the CMS RAC Review Phase-In Strategy. CMS is not handling this phase-in by provider type i.e. hospitals, physicians, etc. The RAC contract for this area had been awarded to Connolly Healthcare. All provider types are supposed to be available for RAC review once provider outreach has occurred in the state. Any reviews to be completed by the RAC must have been first approved by CMS and posted to the RAC website. This information related to Connolly is found at : www.connollyhealthcare.com/RAC/ pages/approved _ issues.aspx. CMS expects the first approved new issues to be posted in July/August 2009. The currently approved areas of focus for the RACS are as follows: • One-day-stay and short-stay inpatient cases for medical necessity and appropriateness of setting-particularly chest pain, back pain and gastroenteritis. • Three-day “skilled nursing facility (SNF) qualifying” acute care inpatient stays for medical necessity • Cardiac defibrillator and pacemaker surgical procedures for appropriateness of setting • Number of units billed (outpatient) to verify they did not exceed the maximum allowed in a single day • Claims not combined before billing (violations of Medicare’s three-day overlap rule) CMS RAC Review cont. on page 2


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Highlights of the FY 2010 Inpatient PPS Proposed Rules

CMS RAC Review continued from page 1

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Acute care discharge disposition conflict with post acute provider visits (SNF-Home Health) DRGs 210 and 211 Hip Repair Procedures DRG 148-Major Bowel Procedures DRG 217-Wound Debridement and Skin Graft DRG 263-Skin Graft & Wound Debridement DRG 397-Coagulopathy DRG 416—Sepsis

Earliest possible dates for reviews in Texas according to the CMS RAC Review Phase-In Strategy • Automated Review– Black & White Issues—June 2009 • DRG Validation-complex review-August/September Review 2009 • Complex Review for coding errors-August/September 2009 • DME Medical Necessity Reviews-complex review-fiscal year 2010 • Medical Necessity Reviews-complex review-calendar year 2010 As noted above, provider outreach is to occur prior to the beginning of any reviews. However, the scheduled outreach that was to take place earlier this year was cancelled-apparently due to health concerns related to the swine flu. According to the most recent information from Connolly, this has not been rescheduled. How this inconsistency will be resolved is not currently known. The RAC will initially use whatever address it currently has on file for a particular provider. Given the relatively short time frames available for response, it may be helpful to alert various departments in case they unexpectedly receive a request from the RAC. They will need to forward those to the appropriate person immediately. Also, it may be useful to contact Connolly Healthcare directly in order to verify they have the appropriate address and contact information in their file. Their toll free RAC Hotline is 866-360-2507. This may be able to direct your inquiry to the appropriate person. Other RAC Developments CMS is often asked about other claim types that may be affected by a full inpatient denial and if the RACs will deny other claim types associated with the inpatient stay, such as physician evaluation and management services. At this time the RAC will not automatically deny claims that are associated with a full inpatient denial. However, these claims may be reviewed individually and there may be a need to fully/partially adjust the claim based on the documentation submitted. Parrish, Moody & Fikes, p.c. is staffed with coders and clinical staff that are available to assist you in your RAC reviews. We are prepared to provide services now with an initial and when the reviews start with actual reviews and appeals.

CMS published the FY 2010 Hospital Inpatient Prospective Payment System (IPPS) proposed rule on Friday, May 1, 2009, which would apply to approximately 3,500 acute care hospitals and 400 LTCHs in the United States, and would be effective for most discharges on or after October 1, 2009. Below are some of the highlights:

Proposed market basket update for acute care hospitals of 2.1 percent subject to a -1.9 percent adjustment (-2.5 percent adjustment for MDHs and SCHs) to remove the effect of increases in aggregate payments due to changes in hospital coding practices that do not reflect increases in patients’ severity of illness. CMS expects additional adjustments for 2011 and 2012 of -6.6 percent due to these changes in hospital coding practices.

CMS proposed 4 new quality measures hospitals will have to report to get the full payment in FY 2011. Otherwise, there will be a 2.0 percent market basket reduction for not reporting.

Proposed market basket update for long-term hospitals of 2.4 percent less an adjustment of 1.8 percentage points.

Proposed changes to Critical Access Hospitals (CAHs): • Allow CAHs to receive reasonable cost-based payments for laboratory services when the patient is not present in a CAH at the time that the laboratory specimen is collected. • Change reimbursement under the optional method for outpatient services to reduce reimbursement to reasonable cost rather than 101 percent of reasonable costs. Proposed changes to the policies governing payments to Medicare disproportionate share hospitals: • Include labor and delivery patient days in the Medicare fraction of the DSH calculation. • Allows reporting of Medicaid inpatient days (the numerator of the Medicaid fraction for the DSH calculation) based on either the date of admission, the date of discharge or dates of service. A change methodology for counting days requires notification to CMS in advance. Exclude observation days from all components of the DSH calculation and IME adjustment. Proposed to eliminate IME adjustment to teaching hospitals in FY 2010. As stated in the FY 2010 proposed rule, CMS was to release a transmittal last month regarding the splitting of medical supplies and equipment cost center into a separate cost center for medical supplies and another for devices and DME. Separate cost-to-charge ratios are expected in FY 2013 for the IPPS and in calendar year 2013 for the OPPS due to a 3 year lag in the availability of cost report data.

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Highlights of the Proposed CY 2010 Policy and Payment Changes for Hospital Outpatient Departments and Ambulatory Surgical Centers CMS issued the CY 2010 Hospital Outpatient Prospective Payment System (OPPS) proposed rule on July 1, 2009. The proposed rule also addresses updates to payment policies and rates for ambulatory surgical centers (ASCs). The proposed regulations would be effective for CY 2010. CMS is accepting comments until August 31, 2009, with the final rule to be issued by November 1, 2009. The proposed rule is on file at the Office of the Federal Register and is scheduled to be published on July 20, 2009. Below are some of the highlights: Outpatient Prospective Payment System

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Proposed market basket update of 2.1 percent subject to a -2.0 percent adjustment for hospitals that did not successfully report the quality measures. A change in the physician supervision requirements allowing non-physician practitioners to directly supervise all hospital outpatient therapeutic services that they are able to personally perform within their scope of practice and hospital-granted privileges. Hospitals would receive payment for pulmonary and intensive cardiac rehabilitation services furnished in outpatient departments. Rural hospitals would receive payments for kidney disease education services furnished in their outpatient departments for Medicare beneficiaries with Stage IV chronic kidney disease. Proposed payment for hospital pharmacy costs of separately payable drugs and biologicals at the average sales price plus 4 percent.

Ambulatory Surgical Centers

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First year inflation update under the revised ASC payment system projected at 0.6 percent, which would update the conversion factor. Addition of 28 surgical procedures – 2 new procedure codes and 26 previously excluded procedures to the list of procedures paid by Medicare when performed in an ASC. 6 newly designated procedures as office based procedures with payment at the lesser of the national office practice expense payment to the physician or the national standard ASC rate. Update of the device-intensive procedures list and covered ancillary services and their rates.

Be sure to register online for our summer seminar at www.pmfwaco.com

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New PS&R System Now Available Online CMS Change Request 6519, dated June 26, 2009, contains information pertaining to the new electronic Medicare PS&R System. This Change Request is effective for cost reports with fiscal years ending on or after January 31, 2009, and requires attention by all hospitals. The PS&Rs will change in appearance and the way they are requested and received. Fiscal Intermediaries are no longer required to distribute PS&R log reports. For cost report filing purposes, each hospital is now responsible for downloading their respective PS&R logs. The new PS&R System will utilize Individuals Authorized Access to CMS Computer Systems (IACS) for authentication and security purposes. In order to access the system, all providers must establish an IACS account and also be approved for PS&R access. Since this application and approval process may take weeks to complete, it is imperative that each hospital begin their IACS registration as soon as allowed by CMS. This process must be completed before Medicare PS&R logs can be obtained for cost report preparation. The transition to the PS&R Redesign System will not impact or delay the submission of the cost reports. Below is a CMS Schedule of Registry that shows the date at which providers can start the application process. The Schedule of Registry is determined by cost reporting fiscal year end. Schedule of Registry

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If your fiscal year end is January 31, 2009 – June 30, 2009, it is very important to start this process immediately. July and August year end providers will begin registration on August 1, 2009. September year end providers will begin registration September 1, 2009. October, November and December year end providers will begin registration on October 1, 2009.

As stated above, your FY 2009 cost report cannot be completed without the Medicare PS&Rs, and to receive those logs, the providers must have enrolled and been approved in the IACS and PS&R Redesign System with CMS. In order to assist you with this process, we have compiled a step-by-step guide. Please contact Kermit Lowe at 254776-8244 as soon as possible for assistance to get started on this process.


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Rebasing for Sole Community Hospitals Medicare payments to sole community hospitals (SCHs) for inpatient hospital services are made on the basis of the federal rate per discharge payment amount or on the basis of its hospital specific rate per discharge amount from either FY1982, FY1987 or FY1996, whichever results in the largest payment. On July 15, 2008, Congress passed the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) which allows SCHs to use the hospital specific rate based on FY2006. TrailBlazer is in the process of reviewing the 2006 cost reports for SCHs in order to determine which facilities qualify for Sole Community Hospital rebasing. A SCH will qualify for rebasing if the hospital specific rate, based on the 2006 cost report, is greater than the previous hospital specific rate being used. This may result in a benefit if the new hospital specific rate is in excess of the federal rate. This is effective for cost reporting periods beginning on or after January 1, 2009. PMF estimated the potential benefit for sole community hospitals in our client base. We should be able to estimate the expected benefit as the computations of the hospital specific rate are confirmed with the intermediary.

PMF Extranet We now have available a website for increased security related to uploading documents and files requested in the course of work. It is referred to as the PMF Extranet Site. Among other things, it provides each client their own secure folder to hold their documents and also, solves the problem related to large e-mail attachments being refused by some e-mail systems. We are currently working with June 30 fiscal year clients to set up their folders. Our audit staff is available to provide onsite assistance during field work. Other clients are welcome to use this site. For detailed instructions, please contact Michael L. Oatman, CPA, Kneeley Lawdermilk, CPA or any other of your regular PMF contacts and we will be glad to assist you in setting up your account.

Parrish, Moody & Fikes, p.c. 7901 Woodway Drive Waco, Texas 76712 Phone: 254254-776776-8244 Fax: 254254-776776-8277 Email: pmf@pmfwaco.com The Parrish Action Letter is published four times per year for clients, employees and friends of Parrish, Moody & Fikes, p.c. For address changes, information or to receive by email, call Karen Rasberry at 254-7768244 or email pmf@pmfwaco.com.


July 2009 Parrish Action Letter  

Parrish Action Letter for July 2009 courtesy of Parrish Moody & Fikes p.c..

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