Question. What are the major factors driving the growth of Medicaid spending? Answer. There are a number of reasons why Medicaid expenditures are growing so fast. Federal laws have increased Medicaid costs (e.g., maternal and child expansions and nursing home reform). The AFDC and SSI programs are reporting sizeable increases in caseloads. Medicaid eligibility is closely tied to these programs. Participation rates for eligible groups are also rising due to aggressive outreach efforts. States have increased payments for hospitals (through both rate increases and disproportionate share adjustments), nursing homes and physicians. Lastly, with their constrained fiscal environments, many States are being more creative in maximizing their Federal funding, e.g., through donated funds and provider-specific taxes. Thus, Federal expenditures are rising faster than State expenditures. Question. How much do you expect Medicaid costs to grow over the next five years, based on current law requirements? Answer. It is estimated that Federal Medicaid expenditures under current law will grow from $59.9 billion in FY 1992 to $99.8 billion in FY 1996, an increase of $39.9 billion or nearly 67 percent. Provided below are the current law estimates for Federal Medicaid expenditures for FYs 1992-96. Question. Contractors' data processing centers are vulnerable to fires, vandalism, and water damage, and some national disaster recovery plan should be developed so that claims can continue to be processed in the face of these emergencies. What is your agency doing to take a leadership role in overseeing the development of these plans by Medicare Contractors? Answer. HCFA has taken a very aggressive leadership role in the improvement of disaster recovery planning during the past 3 years. In 1988, we updated contingency planning procedures for all Medicare contractors and surveyed their current plans. In 1989, we provided special training for regional office systems security coordinators. In addition, we conducted a survey of all Medicare contractor contingency planning and risk analysis activity. In 1990, we arranged for more comprehensive training for all appropriate regional and central office staff. We also initiated a series of central office and regional office in-depth reviews of the preparedness of 16 intermediaries. The intermediaries we have reviewed to date all could resume full Medicare operations within 24 to 72 hours of a disaster. In addition, we worked with the office of the Inspector General on improving our instructions to all intermediaries and carriers regarding contingency planning, and tightening regional office oversight of that planning. This work is continuing in 1991. MEDICAID MATCHING FUNDS Question. To what extent have State and local providers been subverting the intent of Congress with respect to providing Medicaid matching funds? Answer. Prior to OBRA 1990, 11 States had a tax and/or donation program in place. Since OBRA 1990, 16 States, or 40 percent of those without a tax or donation program, are considering one. As of January 24, 1991, we estimated that the FY 1991 Federal share attributed to tax programs would be $681 million and $879 million for donation programs. Question. What types of schemes are you uncovering to misrepresent the actual amounts of matching funds provided, and how can you control this type of abuse? Answer. The specifics of the donation and tax programs being considered by States as a method of financing the States' share of Medicaid financial participation vary widely. One common characteristic of the donation proposals seems to be that donations are tied to specific program expansions that would benefit donors. The States which have levied taxes on hospitals generally establish a fund for making additional payments to hospitals. The results of these transactions are a reduction in the States' net expenditures which affects State/Federal participation percentages. On February 9, 1990, we published a notice of proposed rulemaking in the Federal Register to revise current policies by requiring States to offset the revenues derived from all provider taxes and donations from Medicaid expenditures prior to calculating Federal financial participation (FFP). The objective of this policy is to ensure that FFP is not affected by States' use of tax or donation programs. Subsequent to the publication of the notice of proposed rulemaking, Section 4701 of OBRA 90 took away HCFA's ability to limit State taxing practices and precluded a final regulation on donations from being effective until January 1, 1992. Accordingly, we are developing a regulation with a January 1, 1992 effective date. EXPANSION OF ELECTRONIC CLAIMS SUBMISSIONS Question. What progress has been made to expand the amount of claims processed electronically? Answer. While the percentage of claims received electronically increased slightly from FY 1989 to FY 1990, recent HCFA efforts have begun to push these percentages even higher. Carrier figures for February 1991 show 41.3 percent of claims being submitted electronically. The corresponding figures for FY 1989 and FY 1990 were 35.8 percent and 37.2 percent respectively. At our intermediaries, the February 1991 figure is 75.1 percent of bills received electronically. Figures for FY 1989 and FY 1990 are 74.0 percent and 73.9 percent respectively. HCFA is continuing its efforts to expand electronic claims submissions, including issuing standard electronic formats, providing electronic access to data for electronic billers, and setting aggressive goals for its contractors to achieve in increasing electronic submissions. ELECTRONIC MEDIA CLAIMS COSTS Question. How much more does it cost to process paper claims than electronic claims? Answer. The results of the Industrial Engineering Study confirm that paper claims average $.50 more to process than electronic claims. ECONOMICS OF ELECTRONIC CLAIMS SUBMISSION Question. Is it economically feasible for small rural providers of Medicare services to convert to electronic claims processing? Answer. The Medicare program increasingly sets precedents that private insurers follow. Electronic claims processing is becoming more and more widely used among all types of insurance companies. Even if a rural provider submits a small number of Medicare claims, he or she could still decide that electronic claims submission is economically feasible since the associated hardware and software can be used to transmit claims to other insurers. There are also other factors that a rural provider would consider in evaluating purchase of automated systems, including receiving payment more promptly. FEE CHARGED TO DOCTORS AND HOSPITALS FOR FRIVOLOUS CLAIMS Question. It has been suggested that doctors and hospitals that repeatedly submit a large volume of erroneous or frivolous Medicare claims be charged an extra fee, to discourage the practice. Wouldn't this be a good source of funds to help meet the rising costs of Medicare claims processing? Answer. We feel that frivolous claims neither jeopardize the integrity of the Trust Funds nor constitute a significant percentage of claims received. Claims that represent fraudulent submissions are investigated by the Inspector General's office; inappropriate payments are recovered and providers are penalized for such submissions. Therefore, the benefits of creating this new fee are not clear. OTHER SUGGESTIONS FOR REDUCING IMPROPER CLAIMS Question. What other suggestions do you have for reducing improper claims? Answer. We are exploring ways of rejecting duplicate claims that have been automatically resubmitted before the Common Working File is queried. Other activities which reduce the number of erroneous claims include medical review, utilization screens and criminal prosecution. The more aggressive we are in our application of these existing methods, the fewer improper claims are submitted. We are also seeking to revise administrative policy on the development of incorrect claims, and we foresee the potential to derive savings from these efforts. TARGETING HOSPITAL CAPITAL INVESTMENTS Question. Please explain your plan to curtail Medicare spending on hospital capital investments. Answer. The Omnibus Budget Reconciliation Act of 1987 requires the Secretary, by regulation, to fold inpatient capital into the current prospective payment system (PPS) by October 1, 1991. When fully implemented, the capital prospective payment system will provide hospitals with a fixed amount for each Medicare admission, instead of paying a proportion of total costs. Ten Year Transition Period To protect hospitals from major disruption, the regulation proposes a lengthy transition that would phase in a fully federal payment rate over a 10 year period. Payment Methodology: Two Distinct Types of The proposed rule would establish a standard federal rate for all capital-related inpatient hospital costs based on the estimated FY 1991 national average Medicare capital costs per discharge for hospitals paid under PPS. Adjustments would be made to the federal rate to account for each hospital's case mix, extraordinarily costly or lengthy cases, geographic location, and higher costs experienced by certain hospitals that treat a disproportionately high number of indigent patients. |