Washington DC Healthcare Industry Law Firm : Reed Smith : Health Industry Washington Watch : Regulations, Medicare/Medicaid, Governmental Organizations

On December 10, 2008, CMS provided further guidance on accreditation requirements for suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) under the Medicare for Patients and Providers Act of 2008 (MIPPA). MIPPA exempts certain eligible professionals from the general September 30, 2009 accreditation deadline if unless CMS determines that the quality standards are specifically designed to apply to such professionals and persons. The eligible professionals to whom this exemption applies include physicians, physical therapists, occupational therapists, qualified speech-language pathologists, physician assistants, and nurse practitioners. Also as authorized by MIPPA, CMS has specified that certain “other persons” – specifically orthotists, prosthetists, opticians, and audiologists – are exempt from the general accreditation requirements. CMS will issue rules in 2009 on how the quality standards apply to these eligible professionals and other persons. CMS also has clarified that individuals not included in this exemption list, such as pedorthotists, mastectomy fitters, orthopaedic fitters/ technicians or athletic trainers applying for Medicare enrollment in order to bill for Medicare Part B services are not exempt from meeting the September 30, 2009 deadline for DMEPOS accreditation. 

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The OIG has issued an “early alert memo” on “Payments to Medicare Suppliers and Home Health Agencies Associated With ‘Currently Not Collectible’ Overpayments.” The OIG’s review of a small sample of Texas DMEPOS suppliers with outstanding Medicare debt (e.g., unreturned Medicare overpayments) found that a majority of suppliers were associated with other Medicare suppliers or home health agencies, and that complete ownership/management information was not always provided in public records. According to the OIG, the results suggest that individuals associated with Medicare debt could inappropriately receive Medicare payments by omitting owner/manager information on their enrollment applications and working through other DMEPOS suppliers and HHAs. Because this initial review examined a small number of suppliers using a limited set of issue questions, OIG intends to conduct follow-up work regarding the vulnerabilities raised in this memorandum.

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CMS has released the 2009 Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule. The update reflects payment changes mandated by the Medicare Improvements for Patients and Providers Act (MIPPA) of 2008. Specifically, MIPPA reduces the nationwide fee schedule amount of most items included in Round 1 of the DMEPOS competitive bidding program by 9.5% for 2009 (six oxygen codes included in Round 1 will receive a 0% update rather than the 9.5% reduction). Non-competitive bid items will receive a 5.0% update for 2009. 

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CMS has released the 2009 update of the Healthcare Common Procedure Coding System (HCPCS) code set.

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The OIG has issued a report entitled "South Florida Durable Medical Equipment Suppliers: Results of Appeals." The OIG followed up on a previous review that had led to the revocation of Medicare billing privileges for 491 suppliers that failed to meet Medicare supplier standards. The OIG found that nearly half of the revoked suppliers appealed the revocations, and billing privileges were restored for 91% of these suppliers. The OIG found that two-thirds of the suppliers whose billing privileges were reinstated subsequently had their privileges revoked again or inactivated, and some individuals connected to reinstated suppliers have been indicted. The OIG recommended that CMS strengthen the appeal process by developing criteria regarding the types of evidence required for hearing officers to reinstate suppliers' billing privileges; CMS agreed to consider establishing such guidelines.

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On October 30, 2008, the Centers for Medicare & Medicaid Services (CMS) released the text of its final rule updating the Medicare physician fee schedule (MPFS) for calendar year (CY) 2009.  As required under the “Medicare Improvements for Patients and Providers Act of 2008” (MIPPA), the rule increases physician payments by 1.1% in 2009, rather than the 5.4% cut CMS anticipated would result from the Sustainable Growth Rate (SGR) formula when it issued the July 7, 2008 proposed rule. Note that MIPPA did not amend the underlying SGR formula or modify payments for years after 2009; the Congressional Budget Office estimates that physician payment rates will be cut by 21% in 2010 unless Congress takes further action. In addition to making changes to physician payment rates, the sweeping rule includes many other policy changes, include the following.

• CMS has adopted changes to the antimarkup rule for diagnostic tests billed by an ordering physician. In the proposed rule, CMS had offered two alternative approaches to reforming the anti-markup rules. Under the first approach, the anti-markup provision would apply if the professional component (PC) or technical component (TC) of a diagnostic test is ordered by a billing physician and is either: (i) purchased from an outside supplier, or (ii) performed or supervised by a physician who does not share a practice with the billing physician or physician organization. A supervising or interpreting physician could "share" a practice as an employee or contractor of the single physician or physician group billing the test; otherwise the anti-markup restriction would apply. Under the second alternative approach, CMS would maintain the current regulatory text that applies the anti-markup provisions to the technical and professional components of diagnostic tests performed outside the “office of the billing physician or other supplier,” but CMS would more broadly define the “office of the billing physician or other supplier” to include space in which diagnostic testing is performed provided that it is located in the same building in which the billing physician or other supplier regularly furnishes patient care. In the final rule, CMS provides that a billing physician or other supplier can avoid application of the anti-markup provisions by meeting either alternative 1 or, on a case-by-case basis, the “site-of-service” approach of alternative 2, both of which were subject to certain modification in the final rule. Specifically, under alternative 1, a performing physician "shares a practice" with the billing physician group if he or she provides at least 75% of his or her professional services through the billing physician group-- even if the physician works for one or more billing physician groups or other health care entities. There are no restrictions on the location where the services can be performed under alternative 1. If the performing physician does not meet the 75% test, the billing physician may avoid the anti-markup rule if the performing physician is an owner, employee or independent contractor and the services are performed in the billing physician’s office. The “office” means any medical office space (regardless of the number of locations) in which the ordering physician regularly furnishes patient care and includes space where the billing physician furnishes diagnostic testing if the space is located in the same building where the ordering physician regularly furnishes patient care. 
• CMS did not adopt its proposal to require any physician or nonphysician practitioners organization furnishing diagnostic testing services (except diagnostic mammography services) to enroll as an independent diagnostic testing facility (IDTF) and meet most IDTF performance standards. Instead, CMS cites a MIPPA provision requiring accreditation of entities furnishing certain advanced diagnostic testing procedures by January 1, 2012. CMS states that it may reconsider finalizing the IDTF standard in a future rulemaking. CMS did, however, adopt its proposal to require entities providing mobile diagnostic testing services to enroll in Medicare, comply with IDTF performance standards and bill Medicare directly for their services (although CMS is not requiring mobile testing entities to bill directly for the services they furnish when such services are furnished “under arrangement” with hospitals). 
• CMS did not finalize in the rule its proposed exception to the physician self-referral rule that would have protected remuneration provided by a hospital to physicians on its medical staff under incentive payment or shared savings programs under certain conditions. Instead, in order to finalize the exception(s) CMS is reopening the comment period and soliciting detailed information on 55 specific questions related to such issues as the definition of key terms, safeguards against patient or program abuses, and various aspects of program design. 
• The final rule expands the quality measures that eligible professionals may report to qualify for incentive payments under the Physician Quality Reporting Initiative in 2009thatequal to 2% of their total Medicare allowed charges.  It also provides new PQRI reporting periods and provides for certain PQRI data to be submitted via clinical registries. In addition, as authorized by MIPPA, physicians and other eligible professionals who use a qualified electronic prescribing (e-prescribing) system to transmit prescriptions to pharmacies and submit required information on the claim may earn an incentive payment of 2% of their total Medicare allowed charges during 2009 (in addition to any PQRI incentive payment). 
• In the final rule, CMS is refining relative value units (RVUs), continuing the transition to a new “bottom up” methodology for practice expense RVUs, and applying the budget neutrality adjustment factor to the overall conversion factor (rather than applying the adjustment only to the physician work RVUs).
• CMS is codifying changes to the Part B drug average sales price payment methodology resulting from the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) that went into effect April 1, 2008, including the use of a volume-weighted methodology and revised payment rules for certain inhalation drugs. CMS had proposed several changes to the competitive acquisition program (CAP), which offers physicians the option to acquire certain injectable and infused Part B drugs from an approved CAP vendor rather than buying and billing the drugs directly. On September 10, 2008, CMS announced it was postponing the 2009 CAP indefinitely. In light of this postponement, CMS is not adopting changes in the CAP at this time, but the agency continues to solicit public feedback on a range of CAP issues.
• The final rule updates the End Stage Renal Disease (ESRD) facility wage index, implements a MIPPA provision providing a 1% increase to the ESRD composite rate and establishing a site-neutral base composite rate for hospital-based and independent dialysis facilities, and provides no update to the drug add-on payment.
• CMS has adopted a series of enrollment and documentation-related changes. Currently, newly enrolled physicians and non-physician practitioners may retroactively bill Medicare for up to 27 months prior to the effective date of their enrollment. The new enrollment rules will significantly limit retroactive billing by physicians and non-physician practitioners to no more than 30 days prior to the effective date of enrollment. In addition, the rule requires physicians and nonphysician practitioners to report to their carrier any changes of ownership, adverse legal actions, or change in practice location within 30 days (versus the current 90 days) or face revocation of Medicare billing privileges and the recoupment of Medicare payments from the date of the reportable change. Physicians and non-physician practitioners are barred from billing for services furnished after certain adverse actions. The final rule also requires providers and suppliers to maintain ordering and referring documentation (including the referring physician’s National Provider Identifier) for 7 years (rather than the proposed 10 years) years from the date of service, and it requires physicians and nonphysician practitioners to maintain written ordering and referring documentation for 7 years (rather than 10 years) from the date of service. CMS also clarifies the effective date of Medicare billing privileges.
• The final rule implements a MIPPA provision related to Medicare coverage of oxygen equipment. Specifically, MIPPA repeals a requirement that a supplier of oxygen equipment transfer title of the equipment to the beneficiary at the end of a 36-month rental period. Medicare payment for oxygen equipment will continue to be capped at 36 months (although payment will continue to be made for the oxygen contents). MIPPA requires the supplier that furnishes oxygen equipment during the 36-month rental period continue to furnish the equipment after the rental period ends for any period of medical need for the remainder of the “reasonable useful lifetime” of the equipment, even if the beneficiary moves out of the supplier’s normal service area. In addition, if a break in medical need occurs following the 36-month rental period, the supplier must resume furnishing the oxygen equipment when the beneficiary once again has a medical need for the oxygen equipment.  While MIPPA authorizes CMS to make maintenance and servicing payments for non-routine maintenance and servicing of supplier-owned oxygen equipment, CMS has determined that it is not reasonable and necessary to make such payments. However, for CY 2009 only, CMS will make payments when the supplier performs a routine maintenance and servicing visit (but not replacement parts) for oxygen concentrators and transfilling equipment following each period of continuous use of 6 months after the 36-month rental period ends. CMS welcomes comments on this issue, especially regarding whether these payments should continue past CY 2009.
• The final rule includes numerous other policy and payment changes, including provisions to address: potentially misvalued services; an expansion of the procedures subject to the multiple imaging procedure payment reduction; updates to the telehealth policy; potential refinements to geographic practice cost indices; revisions to the conditions of participation and other requirements affecting comprehensive outpatient rehabilitation facilities; changes to rehabilitation agency requirements, including provisions related to extension locations and emergency care; a prohibition on payment to suppliers of a continuous positive air pressure device when the supplier or its affiliate is directly or indirectly the provider of the sleep test that is used to diagnose a Medicare beneficiary with obstructive sleep apnea (although in the final rule CMS provides an exception for attended facility-based polysomnography); a new payment methodology for therapeutic shoes; and codification of other MIPPA self-implementing provisions, including an extension of the therapy cap exceptions process and changes to payments for clinical laboratory and ambulance services, among others. 

CMS has released the advanced text of the rule, and the official version is scheduled to be published in the Federal Register on November 19, 2008.  CMS is accepting comments on a limited number of provisions until December 29, 2008, including the exception for incentive payment and shared savings programs; certain MIPPA provisions, interim RVUs and pricing information for selected codes; and physician self-referral designated health services codes.

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CMS has released updated final quality standards for Medicare suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). The new version, dated October 2008, includes a number of changes from the August 14, 2006 version, including: requirements that the supplier furnish appropriate quality equipment and services; expanded documentation requirements; additional protections related to infection control; protections against adulterated and counterfeit equipment; and a variety of revisions to the product-specific quality standards. Also with regard to suppliers, CMS is seeking final regulatory clearance from the White House Office of Management and Budget for its final Medicare DMEPOS supplier standard and security bond requirements. The text of the rules is not available at this time, but they could be published in the Federal Register in the near future.

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On October 6, 2008, CMS announced expanded efforts to combat Medicare DMEPOS and home health fraud and abuse, including targeted reviews of home health agencies (HHAs) in Florida and greater scrutiny of DMEPOS suppliers in Florida, California, Texas, Illinois, Michigan, North Carolina, and New York. In particular, CMS will be reviewing DMEPOS items with high expenditures and high growth rates, such as oxygen supplies and equipment, power mobility devices/power wheelchairs, and diabetic test strips. Targeted steps will include:

• Closer reviews of new DMEPOS suppliers’ applications, including background checks to ensure that owners and managers have not been suspended by Medicare;
• Unannounced site visits of suppliers and HHAs;
• Extensive pre- and post-payment review of claims submitted by suppliers, HHAs, and ordering or referring physicians;
• Validation of claims submitted by physicians with high-volumes of orders for certain items or services, and verification of the relationship between such physicians and the beneficiaries for whom they ordered these services; and
• Interviews with high-risk beneficiaries to ensure they are appropriately receiving ordered items and services.

In addition, CMS has announced that it has awarded contracts to four permanent Recovery Audit Contractors (RACs) to review all Medicare Part A and B paid claims to identify Medicare overpayments and underpayments. The RACs will be paid on a contingency fee basis on both the overpayments and underpayments they find. The nationwide RAC program follows a three-year demonstration program in six states that collected over $900 million in overpayments and returned nearly $38 million in underpayments. Finally, CMS is consolidating the Medicare’s program safeguard contractors (PSCs) and the Medicare Drug Integrity Contractors (MEDICs) with new Zone Program Integrity Contractors (ZPICs), which eventually will be responsible for ensuring the integrity of all Medicare-related claims. 

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On October 14, 2008, CMS is hosting a conference at CMS headquarters in Baltimore for non-accredited suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS)   At the event, CMS will provide technical guidance on how to comply with the DMEPOS quality standards.

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The Centers for Medicare & Medicaid Services (CMS) has posted a fact sheet on the durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) accreditation provisions of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA), including the provisions related to exemption of certain providers from the accreditation requirements. MIPPA section 154(b) exempts certain professionals from the accreditation requirement unless CMS determines the quality standards are specifically designed to apply to such professionals. Under this provision, CMS is exempting the following professionals: physicians; physical therapists; occupational therapists; qualified speech-language pathologists; physician assistants; nurse practitioners; clinical nurse specialists; certified registered nurse anesthetists; certified nurse-midwives; clinical social workers; clinical psychologists; registered dietitians; nutritional professionals; orthotists; prosthetists; opticians; and audiologists. In addition, MIPPA mandates that all existing non-exempt DMEPOS suppliers be accredited as meeting DMEPOS quality standards by September 30, 2009 (new suppliers have been required to be accredited before applying for enrollment since March 1, 2008). To ensure time for accreditation organizations to process the applications, CMS is directing suppliers to submit a complete accreditation application to an approved accreditation organization by January 31, 2009.  On October 14, 2008, CMS is hosting an on-site conference at CMS headquarters in Baltimore for non-accredited DMEPOS suppliers to provide technical guidance on how to comply with the DMEPOS quality standards.   In a related development, CMS announced on a September 3, 2008 Open Door Forum that it intends to issue a proposed rule next year establishing new supplier standards for Medicare providers of orthotics and prosthetics.

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A new OIG report raises questions about the effectiveness of CMS’s Comprehensive Error Rate Testing (CERT) program, along with the validity of CMS estimates of improper Medicare payments for durable medical equipment (DME).   Based on the CERT contractor's medical review, CMS had reported that the FY 2006 DME error rate was 7.5 percent, or about $700 million in improper payments. However, the OIG’s independent contractor’s reviews of beneficiaries’ medical records found errors in Medicare DME claims that CERT contractor had not identified and concluded that the estimated error rate for the FY 2006 CERT DME sample was actually 28.9 percent. The OIG attributes these review discrepancies to the CERT contractor’s reliance on clinical inference rather than additional medical records available from health care providers, CMS’s inconsistent policies regarding proof-of-delivery documentation, physicians’ lack of understanding of documentation requirements, and CMS’s lack of procedures for obtaining information on high-risk DME items from beneficiaries. The OIG recommends that CMS: (1) require the CERT contractor to review all available supplier documentation, (2) establish a written policy to address the appropriate use of clinical inference, (3) require the CERT contractor to review all medical records necessary to determine compliance with medical necessity requirements, (4) document oral guidance that conflicts with written policies, (5) instruct its Medicare contractors to provide additional documentation training to physicians, and (6) require the CERT contractor to contact beneficiaries named on high-risk claims to help determine whether the beneficiaries received the items and the items were medically necessary. CMS generally agreed with the OIG’s findings and recommendations. 

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On September 3, 2008, CMS is hosting a Special Open Door Forum to provide guidance to durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) providers on the supplier accreditation provisions in the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA).  MIPPA states that eligible professionals and other persons are exempt from meeting the September 30, 2009 accreditation deadline until CMS determines that the quality standards are specifically designed to apply to such professionals and other persons.  MIPPA also states that CMS may exempt such professionals and persons from the quality standards based on their licensing, accreditation or other mandatory quality requirements that may apply.  The call will take place from 2 pm-3:30 pm Eastern Daylight Time. To participate, dial: 1-800-837-1935 and Reference Conference ID: 61231070. 

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On July 15, 2008, CMS is hosting a DMEPOS Accreditation 101 Audio Conference/Q&A Session, focusing on accreditation issues for new suppliers. Preregistration is required. The presentation materials are posted here.

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CMS has scheduled a June 16, 2008 meeting of the Program Advisory and Oversight Committee (PAOC) in Pikesville, Maryland. The registration deadline is June 12.

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CMS has released the names of the 325 suppliers that have signed contracts to participate in round one of the Medicare durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) competitive bidding program. Effective July 1, 2008, Medicare beneficiaries in 10 geographic regions will be required to obtain certain types of DMEPOS from one of these contract suppliers (with very limited exceptions). In connection with implementation of round one, CMS has issued new Medicare manual provisions to reflect competitive bidding payment policies, and it has announced special transition rules for certain power mobility devices.  In addition, CMS has posted sample letters for non-contract suppliers to use to notify beneficiaries whether or not they have elected to become a grandfathered supplier.   Finally, CMS has issued revised accreditation deadlines for round two of the competitive bidding program, which is expected to go into effect in 70 areas next year. Suppliers in these regions must be accredited or have applied for accreditation by July 21, 2008 (instead of May 14, 2008), and they must be accredited by January 14, 2009 (instead of October 31, 2008). For more information on accreditation, click here.

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