2010 SSI Ratios Published – SSI ratios for the FY 2010 Medicare DSH calculation were published on September 11, 2012. According to our calculations, the average change in providers’ SSI ratios from FY 2009 is a decrease of approximately 0.0005 for FY 2010. These FY 2010 ratios have been corrected from an earlier version that was published and summarily removed from the CMS website in May 2012. Of 3541 IPPS hospitals on the list, 3324 hospitals (almost 94 percent) have seen an increase from the previously published numbers for FY 2010; 136 have experienced no change; 81 hospitals’ SSI ratios have decreased.
According to information published on the CMS website, the methodology used to calculate the FY 2010 ratios is the same methodology used to calculate the FY 2006 to 2009 ratios: Medicare Advantage patient days were included in the ratios and the ratios were calculated in accordance with Ruling CMS-1498-R, which requires inclusion of Part A exhausted benefit days in both the numerator and denominator of the SSI fraction and inclusion of all labor and delivery room inpatient days that meet the requirements for inclusion, regardless of whether the patient had first occupied a routine care bed. See CMS-1498-R, available by clicking here. The IPPS SSI ratios are available by clicking here. The IRF SSI ratios are available by clicking here.
Reporter, Susan Banks, Washington, D.C., +1 202 626 2953, sbanks@kslaw.com.
Ninth Circuit Affirms Ruling That Providers May Not Challenge RAC Reopening Decisions – On September 11, 2012, the Ninth Circuit held that a provider is not entitled to challenge a Medicare Recovery Audit Contractor’s (RAC’s) determination to reopen a claim during its appeal of a revised determination, even if the RAC is unable to demonstrate good cause for the reopening. (Palomar Medical Center v. Sebelius, 9th Cir., No. 10-56529, Sept. 11, 2012). The court reasoned that 42 C.F.R. § 405.980(a)(5) specifically states that the “contractor’s, QIC’s, ALJ’s, or MAC’s decision on whether to reopen is binding and not subject to appeal.” Additionally, the court pointed to 42 C.F.R. § 405.926(l) to further support its decision that a provider is not entitled to challenge a RAC’s reopening decision. 42 C.F.R. § 405.926(l) provides that “[a] contractor’s, QIC’s, ALJ’s, or MAC’s determination or decision to reopen or not to reopen” is “not [an] initial determination[] and [is] not appealable.” The court agreed with the Secretary’s interpretation that a contractor’s decision to reopen a claim may not “be challenged at any time for any reason,” as the court found this interpretation to be the “most natural reading of the regulations.”
42 C.F.R. § 405.980 provides that a “contractor may reopen and revise its initial determination or redetermination on its own motion . . . [w]ithin 4 years from the date of the initial determination or redetermination for good cause as defined in § 405.986.” A revised initial determination issued after a reopening is appealable. See 42 C.F.R. § 405.984. Palomar contended that while a reopening decision may not be challenged immediately after the reopening, a Medicare provider was entitled to challenge a revised determination based on lack of good cause for the reopening. Although the court held that a Medicare provider could not challenge whether a RAC had “good cause” to reopen in its appeal of the revised determination, the court noted that this was not an easy question because of the following two competing principles: (1) “Congress wanted an effective recovery audit program to reduce Medicare payments with resulting benefits for Medicare beneficiaries and taxpayers, under procedures set by the Secretary,” and (2) “the provider has a legitimate interest in finality of determinations on its revenue for medical services.”
In holding that the issue of good cause is not appealable, the court reasoned “that if good cause for reopening could be raised on appeal after a revised determination, this would result in inefficiency in any case where ‘good cause’ was later rejected, because all of the evidence and proceedings on the merits of medical necessity would be wasted.” Accordingly, the court concluded that “the regulations mean what they say: reopening decisions are final, and final means they cannot be challenged after an audit and revised determination.”
To view the Ninth Circuit decision click here.
Reporter, Stephanie F. Johnson, Atlanta, +1 404 572 4629, sfjohnson@kslaw.com.
OMB Issues Report on Likely Effects of Sequestration – The Office of Management and Budget (OMB) issued a report on September 14, 2012 detailing the magnitude of impending across-the-board cuts to Federal spending beginning on January 2, 2013 in a process known as "sequestration." These cuts stem from the failure of the so-called congressional "supercommittee" to agree on a plan to reduce the Federal budget deficit by $1.2 trillion by 2021 as mandated by the Budget Control Act of 2011. The Budget Control Act caps the sequestration of Medicare payments to providers and suppliers at two percent. The report estimates that the two-percent reduction in Medicare payments will result in a total dollar amount of nearly $11.1 billion in FFY 2013. Non-defense discretionary spending is expected to fall 8.2 percent while defense discretionary spending will fall 9.4 percent. The report calls these potential cuts "devastating" and urges congressional intervention to stave them off.
The report estimates that CMS itself will face a $63 million cut in "program management" funds and will incur a $40 million cut for demonstration project grants in FFY 2013. Grants to the affordable insurance exchanges established by the Affordable Care Act face a $66 million reduction. Certain specific programs and divisions of CMS are ostensibly "exempt" from sequestration because their budgets are considered intragovernmental transfers. These programs—such as the budget for the Office of Medicare Hearings and Appeals, and Medicare EHR Incentive Program payments—will not themselves face cuts; rather, the overall program budget for CMS (what the report calls the "paying account") will incur the reductions. This exemption process spares these programs from facing double sequesters. CMS and other agencies retain discretion, however, in how to distribute budget cuts across such programs.
The OMB report is available here.
Reporter, Christopher Kenny, Washington, D.C., +1 202 626 9253, ckenny@kslaw.com.
Draft LCD Restricting IRF Admission After Single Joint Replacement Rescinded by Cahaba – Cahaba GBA published in mid-July, and just recently rescinded, a draft local coverage determination (LCD) titled "IRF Admission after Single Joint Replacement with CMGs A0801-A0806 (DL32816)." The draft LCD discussed that while post-joint replacement rehabilitation is supported by literature, such rehabilitation does not necessarily need to occur in an inpatient setting. Cahaba explained that under the Inpatient Rehabilitation Facility (IRF) Prospective Payment System, payment is based on a coding process utilizing a prospective payment “grouper” known as the Case Mix Group (CMG), with the first character in each CMG representing a comorbidity tier. The comorbidity tier of “A” represents “no comorbidities.” Cahaba proposed that IRF admissions with the following Case Mix Groups would not be considered medically necessary: A0801-A0806. See draft LCD here.
During the comment period for such LCD, the American Hospital Association (AHA) drafted a response urging Cahaba to rescind the draft and stated that the LCD restricted national coverage of IRF services, which Cahaba was not permitted to unilaterally determine. The AHA also noted that such LCD would ignore a physician’s clinical assessment of medical need for the patient, which is a required element of determining whether IRF treatment is medically necessary. The AHA’s comment letter may be read here. Recently, Cahaba posted an update dated September 13, 2012 regarding the draft LCD on its website, stating, "The draft LCD for Surgery: IRF Admission after Single Joint Replacement with CMGs A0801-A0806 (DL32816) has been rescinded and will not be finalized." See Cahaba posting here. Notwithstanding Cahaba’s rescission of the draft LCD, it is likely that medical auditors will scrutinize IRF admissions for single joint replacements and may question the medical necessity of such admissions, whether Cahaba is the CMS contractor or another organization is.
Reporter, Christina A. Gonzalez, Houston, +1 713 276 7340, cagonzalez@kslaw.com.
Census Bureau Reports That the Number of Uninsured Individuals Decreased in 2011 – According to a report issued this month by the U.S. Census Bureau titled, “Income, Poverty, and Health Insurance Coverage in the United States: 2011,” the overall percentage of uninsured individuals in the U.S. decreased from 16.3 percent in 2010 to 15.7 percent in 2011. The number of uninsured individuals decreased from 50 million in 2010 to 48.6 million in 2011. The percentage of people insured by government health insurance programs, which includes Medicare, Medicaid, military health care, CHIP and other individual state health plans, rose from 31.2 in 2010 percent to 32.2 percent in 2011. The uninsured rate among people ages 19 to 25 decreased in 2011 from 29.8 percent to 27.7 percent in 2010. The Census Bureau also reported that for the first time in the last ten years, the rate of private health insurance coverage did not decrease from 2010 to 2011, and the rate of people covered by employment-based health insurance did not change.
For a copy of the Census Bureau’s report, click here.
Reporter, Kate Stern, Atlanta, +1 404 572 4661, kstern@kslaw.com.
Healthcare Roundtable on Healthcare Executive Liability – On Friday, September 28, 2012, at 1:00 - 2:30 P.M. Eastern Time, King & Spalding will host an Atlanta-based Roundtable focused on recent developments in healthcare executive liability. Participants will be able to attend in person or via Webinar.
The Roundtable will include the following topics:
- Government resources allocated to healthcare fraud investigation and prosecution after Health Reform;
- OIG's increasing use of exclusion authority to target healthcare executives;
- Discussion of factors reviewed by OIG in exclusion decisions and proactive steps to consider;
- Criminal liability for executives under the responsible corporate officer doctrine;
- Director and officer liability insurance policies, undertakings, "Upjohn warnings," and defense issues for consideration by individuals; and
- Lessons learned from recent high-profile prosecutions and exclusion proceedings against healthcare executives
More information about this Roundtable is available by clicking here.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.
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