Based on the FY 1990 cost report, a hospitalspecific payment rate will also be determined for all hospitals. The rate will be adjusted for case mix and updated to FY 1992 based on the increase in national average capital costs per discharge. "Hold Harmless" Payment Methodology Hospitals that have a FY 1990 hospital-specific rate for capital above the federal rate will receive the higher of either: o 90 percent of the reasonable costs associated with the old capital (a "hold harmless" payment), plus a payment for new capital based on a proportion of the newly created federal rate, or; o 100 percent of the federal rate or the blended rate, if lower. Hospitals receiving the full federal rate could not subsequently change to "hold harmless" payments. However, hospitals could switch from the "hold harmless" payment to the federal rate when declining capital costs and payments made it more advantageous. After the transition period, all hospitals would receive a fully federal payment rate. Fully Prospective Payment Rate Methodology Hospitals with an FY 1990 hospital-specific rate for capital below the new federal rate would be paid a fully prospective payment rate based on a blend of their hospital-specific rate and the federal rate. The FY 1992 payment would be based on a blend of their hospital-specific rate and 10 percent of the federal rate. Over the next 10 years, the federal portion of the payment would increase by 10 percentage points per year, while the hospitalspecific rate would decrease by the same percentage. In the tenth year, hospitals would be paid 100 percent of the federal rate. Hospitals paid a fully prospective rate could make a one-time change to "hold harmless" payments if their FY 1991 cost reports show actual costs in that year to be greater than the federal rate. Market Basket Update For FY 1992 through 1995, the update to the federal and the hospital-specific rates is based on actual increases in capital-related costs per case that occurred two years previous to the current federal fiscal year. For example, FY 1994 rates would be updated based on FY 1992 data. Beginning in FY 1996, we propose to determine the update by taking into consideration the capital "market basket" index, changes in capital requirements, and new technology. Increased Payments and Budget Aggregate capital payments will increase by 5 percentage points, as specified by law, reflecting a reduction in the payment discount from 15 to 10 percent. Total Medicare payment for capital under the new payment system will be budget neutral for FY 1992 through FY 1995; that is, total payments will be equal to 90 percent of what they would have been under the cost-based payment system. Puerto Rico and Excluded Hospitals A specific federal rate for capital-related inpatient hospital costs will be used for Puerto Rico. Hospitals and hospital distinct part units that are currently excluded from PPS will continue to be paid for capital-related costs on a reasonable cost basis. Question. How much do you expect this plan to save, and to what extent will it reduce overcapacity? Answer. The plan is budget neutral. We generally expect capital prospective payment to help encourage hospitals' more efficient use of resources. Although it is logical that reduced capital would affect excess capacity, we have no specific estimates of this effect. EXCEPTIONS PROCESS Question. Will exceptions be granted for specific hospitals that can demonstrate dire hardships resulting from implementation of this plan? Answer. An exceptions process would be provided for hospitals that would be otherwise financially disadvantaged during the transition. For FY 1992, the regulation proposes that: O Hospitals with capital costs greater than 150 o Rural sole community hospitals and large urban hospitals with low-income patient percentages of over 30 percent would receive an exceptions payment of 75 percent of capital costs in excess of 100 - 125 percent (on a sliding scale) of Medicare capital payments. Question. ALTERNATIVES TO USER FEES As an alternative to user fees, have you considered proposing that Medicare providers be charged a small claims processing fee, of perhaps one dollar per claim, to help offset the growing cost of Medicare Contractor operations? Answer. This approach has not yet been considered. We are concerned, however, that physicians would pass on this cost to beneficiaries whose claims are unassigned. CLAIMS PROCESSING FEES Question. Would such a claims processing fee be administratively feasible, perhaps by deducting it from reimbursement checks? Answer. The amount could be withheld from checks in a manner similar to the reductions for deductible and Gramm-Rudman percentage withholdings. Those monies withheld would be considered program dollars saved, but costs would continue to be classified as administrative. POTENTIAL HARDSHIP CAUSED BY CLAIMS PROCESSING FEE Question. Would such a fee impose a hardship on certain providers and physicians, such as those with small volumes of services in rural areas? Answer. Such a fee would certainly be regressive in the sense that ability to pay and volume of Medicare services would not be considered. It would hit harder, in total percentage, small providers billing for inexpensive items. It might provide an incentive to bill for higher priced items. DELAYS IN MEDICARE CLAIMS PROCESSING Question. Is it true you expect Part B claims processing times to increase from an average of 17 days to 24 days? Answer. The average processing time for all Part B claims in FY 1992 in expected to be 20.5 days. This is a 3.5 day increase from the FY 1990 average for all Part B claims. It is expected that the electronic claims will continue to be paid in 17 days, while paper claims will take slightly longer. Efforts are under way or being developed to increase the electronic media claims (EMC) submission rates among providers. These efforts should aid in reducing the funding required for claims processing and in lowering the average claim processing times. ADDITIONAL FUNDING TO MAINTAIN CLAIMS PROCESSING TIMES Question. How much more would have to be added to the Medicare Contractor budget to maintain current claims processing times? Answer. In order to maintain current 17 day average processing times, an additional $10.2 million would be required ($3.5 million for Part A claims and $6.7 million for Part B claims). Additional funds will also be required for the supporting functions related to the additional claims. These include: $1.6 million for medical review, $1 million for Medicare Secondary Payer and $1 million for hearing and appeals. PRESSURE ON CLAIMS PAYMENT Question. Wouldn't you expect a continuing squeeze on Medicare Contractor funding to put greater pressure on just paying claims without reviewing them? Answer. Inherent in the claims processing system is a responsibility to assure that payments are being made accurately. This responsibility is supported by HCFA as well as its Contractors. Our first priority continues to be prompt payment of claims, but HCFA and its Contractors have demonstrated historically that they remain firmly committed to maximizing payment safeguard savings. MEDICARE WASTE Question. I have received correspondence from a physician in Iowa concerning waste in the Medicare program. Apparently Medicare would only pay for antibiotics if the patient remains in some sort of facility, such as a Skilled Nursing Facility, which costs $237 per day. It would save a lot of money to pay for these antibiotics at home. What is the rationale for this policy? Answer. While the statutory provisions that apply to services provided in hospitals and skilled nursing facilities include coverage of drugs, there is no statutory provision that authorizes an outpatient drug program. Certain provisions of the Medicare Catastrophic Coverage Act (MCCA) of 1988 amended the Social Security Act (the Act) to provide for an outpatient drug benefit, however, these provisions of the MCCA of 1988 have been repealed. Although there is no outpatient drug benefit, section 1861(s) (2) of the Act does provide for the coverage of services and supplies, including drugs that cannot be self-administered, that are provided as part of a physician's professional services. Thus, antibiotics that are furnished to the patient in a form that cannot be self-administered, such as an intravenous (IV) injection, may be covered as part of physician's professional services if provided under the direct supervision of the physician. This coverage would not include pills and other oral medication. Also, infusion pumps intended for home use are covered by Medicare as part of the durable medical equipment benefit, which is defined at section 1861(n) of the Act. Through an administrative decision, Medicare allows coverage of drugs that are necessary for the effective use of infusion pumps by outpatients in their homes. In accordance with this policy, antibiotics provided via an external infusion pump in the home setting may be covered by Medicare for those patients for whom Medicare contractors, using their medical consultants, decide that the therapy is safe and effective for home use. Because of safety and effectiveness considerations, coverage is not allowed |