HBS Update - February, 2006

February 11, 2006:  Every year I worry that there will not be anything to update our clients and seminar attendees on regarding the operation and reimbursement of RHCs; however, our government never fails me and usually produces a rash of changes this time of year.  They did not fail me this year.  Here are a couple of things that we will be discussing in our seminars:

RHC Revenue Codes for billing purposes will be expanded dramatically on July 1, 2006. (Of course when you start with only 2 codes to begin with it is not hard to expand dramatically).  On February 1, 2006, CMS announced that revenue codes used for billing purposes in rural health clinics would be expanded effective July 1, 2006.  The new codes are as follows:

This information can be found in a Medlearn Matters article and a CMS Transmittal at the following website addresses: 

Medlearn:        http://new.cms.hhs.gov/MedlearnMattersArticles/downloads/MM4210.pdf

Transmittal      http://www.cms.hhs.gov/Transmittals/downloads/R820CP.pdf

Deficit Reduction Act of 2005 signed cutting $11 billion from Medicare and Medicaid and 2007 Budget proposes an additional $37 billion in cuts.

President Bush signed the Deficit Reduction Act (DRA) of 2005, See Washington Post Article which will reduce Medicaid spending by almost $5 billion and Medicare spending by $6 billion over the next five years. Additionally, the president's FY07 budget proposal was released, which includes a $36 billion cut in Medicare spending and a $1 billion cut in Medicaid spending over five years. The 2007 budget President Bush presented to Congress on Monday included $36 billion in Medicare cuts over five years, with $20 billion of those cuts resulting from lower reimbursement to hospitals.

DRA does contain some good news for physicians as the Medicare Part B payments will not be reduced by 4.4% as required under prior law. Payments will be frozen at the 2005 level and claims that already been paid with the 4.4% reduction factor will not have to be resubmitted.  The Medicare Carriers have been instructed to make an adjustment to the claims and send that payment to the providers and open the enrollment period for physicians for 45 days.

To download the Deficit Reduction Act of 2005 go to the following hyperlink:

http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:s1932enr.txt.pdf

To view the press release regarding the 2007 budget go the following hyperlink:

http://www.whitehouse.gov/news/releases/2006/02/20060206-2.html

The only specific mention of rural health clinics in the Deficit Reduction Act of 2005 relates to Medcaid managed care if I am reading the bill correctly.  I am not sure what this means; but, I am sure I will know by the time I get back from the National Rural Health Association meeting in Washington, D.C. in early March.  Here's the quote:

‘‘(4) COVERAGE OF RURAL HEALTH CLINIC AND FQHC SERVICES.—

Notwithstanding the previous provisions of this section,a State may not provide for medical assistance through enrollment of an individual with benchmark coverage or benchmark equivalent coverage under this section unless—‘‘(A) the individual has access, through such coverage or otherwise, to services described in subparagraphs (B) and (C) of section 1905(a)(2); and ‘‘(B) payment for such services is made in accordance with the requirements of section 1902(bb).’’. (b) EFFECTIVE DATE.—The amendment made by subsection (a)takes effect on March 31, 2006.

NPI Fact Sheet: CMS has released a fact sheet on National Provider Identification numbers.  This two page document summarizes providers role in obtaining a NPI number.  To download; go to:

http://www.cms.hhs.gov/NationalProvIdentStand/Downloads/NPIFactSheet_010906.pdf

Medicare Deductible for 2006 increases to $124.00 impacts Negative Adjustments

Table Two - Calculations

These tables illustrate the logic that intermediaries adopt when recouping money from RHCs through negative reimbursement.  Some intermediaries have different formulas for recouping; however, the basic concept is basically the same.

It is pretty easy to see that not only rural health clinics but all Part B providers are going to have adjust our collection efforts to focus on the individuals and not Medicare. In a few short years, the Medicare deductible will be in excess of $250 and Medicare will represent about 20% of the clinic's collection from the patient.  Right now the average percentage is 60% from Medicare and 40% from the patient. (A simple way to find out your percentage is look at your P S and R report from Medicare that is used to prepare your cost report).

There is not much a clinic can do to combat this trend; however, some clinics and Part B physicians have for years not billed any Medicare during January and February; so as not to be the clinic that gets stuck with deductible.  The assumption is another physician such a specialists will bill the service first and be the one who gets stuck with the deductible. Sort of a strange game of musical chairs.  Please don't send any 10 page dissertations on the ethics, or implications on cash flow, or office flow of work, etc., etc. of doing something like that.  I am just saying that some providers do this and they think it works for them; and, I am not advocating a particular strategy.