Regulatory Developments

In late April 2003, the General Accounting Office (GAO) issued a reporten titled Medicare: Divided Authority for Policies on Coverage of Procedures and Devices Results in Inequities (GAO-03-175). The agency noted that even though Medicare covered in 2001 about 99% of the procedures and devices assigned codes by an American Medical Association panel or a committee of insurers, inequities in coverage still exist since Medicare's contractors can determine coverage for beneficiaries treated in their jurisdictions (if CMS has not issued a national coverage policy). The GAO provided the example of coverage for bilateral deep brain stimulation (DBS), a new treatment for debilitating tremors, that was allowed only for beneficiaries treated in some states ' until CMS issued a national coverage policy on DBS in April 2003. The GAO recommended that CMS should eliminate the development of local policy for procedures and devices that have established procedural codes and, instead, develop Medicare coverage policies through a new, single process that would enable the development of consistent, national coverage policies for procedures and devices.

Specialty Hospitals Subject of GAO Report

Are 'specialty hospitals' treating a different class of patients? In May 2003, the GAO issued a report titled Specialty Hospitals: Information on National Market Share, Physician Ownership, and Patients Served (GAO-03-683R) at the request of Rep. Bill Thomas, Chairman of the House Committee on Ways and Means, who requested the agency to provide information as to the prevalence of specialty hospitals, their characteristics, and the effect that they have on the traditional hospital communities in which they operate. The GAO pointed out that while specialty hospitals are a small, but growing segment of the health care industry (about 2% of the overall number of hospitals), general hospitals are concerned that specialty hospitals 'cherry pick' the most financially rewarding portions of their business by concentrating on the most profitable procedures and serving patients with fewer complicating conditions, which forces general hospitals to treat a higher-cost (and lower profit) patient population. The GAO confirmed that patients treated by specialty hospitals are not as sick as those treated by general hospitals, but did not determine the clinical or economic significance of this finding.

OIG Reports Its Accomplishments to Congress

In June 2003, the OIG posted its Semi-Annual Report to the Congress, covering the agency's accomplishments during the period of October 2002 to March 2003. Among the most noteworthy statistics discussed in the 111-page report are the following items:

• During this reporting period, the OIG reported savings of over $12 billion,which includes $11.6 billion in implemented recommendations, $40 million in additional recoveries, and over $187 million in investigative receivables;
• The error rate for Medicare fee-for-service payments matches last year's lowest-ever rate since improper payments made during the year amounted to about 6.3% of the total $212.7 billion in fee-for-service payments (or $13.3 billion) 'compared with the $23.2 billion that was first reported for fiscal year 1996;
• Between October 2002 through March 2003, OIG accepted 15 advisory opinion requests and issued eight advisory opinions;
• During this reporting period, OIG administered 1347 sanctions, in the form of program exclusions or civil actions for alleged fraud or abuse or other activities that posed a risk to federal health care programs and beneficiaries;
• OIG excluded 1,241 individuals and entities from participating in Medicare, Medicaid, or other federally sponsored health care programs, during the reporting period;
• Over $1.4 million in civil monetary penalties and assessments were collected under the Civil Monetary Penalties Law and other authorities;
• Civil monetary penalties of approximately $314,000 from ten hospitals and physicians under the Emergency Medical Treatment and Labor Act for 'patient dumping' violations were collected; and
• The government recouped more than $156.7 million through False Claims Act civil settlements related to the Medicare and Medicaid programs.

Newest 'Red Book' Issued by OIG

The new Red Book outlines areas where its recommendations could result in cost savings to the government. This month, OIG issued its annual 'Cost Saver Handbook,' known as the 'Red Book' to identify which of its cost savings recommendations for the Department of Health and Human Services have ' and have not ' been implemented, and the expressed reasons for the current status of these recommendations. This 88-page document is interesting readers for health care professionals and their counsel, since it identifies areas (new and old) that the agency views as too costly ' so that they can plan accordingly for future cutbacks in funding levels or heightened enforcement activities. For the OIG's new cost savings recommendations, hospitals are identified as the segment of the industry from which the largest possible cost savings can be obtained ($1.1 billion), followed by durable medical equipment (DME) suppliers ($132 million). As to the OIG's old and unimplemented cost savings recommendations, hospitals are far and away the industry segment from which the largest cost savings could be made if the OIG's recommendations are implemented, followed by Medicare Managed Care, and then DME.

• During this reporting period, the OIG reported savings of over $12 billion ' which includes $11.6 billion in implemented recommendations, $40 million in additional recoveries, and over $187 million in investigative receivables;
• The error rate for Medicare fee-for-service payments matches last year's lowest-ever rate since improper payments made during the year amounted to about 6.3% of the total $212.7 billion in fee-for-service payments (or $13.3 billion) 'compared with the $23.2 billion that was first reported for fiscal year 1996;
• Between October 2002 through March 2003, OIG accepted 15 advisory opinion requests and issued eight advisory opinions;
• During this reporting period, OIG administered 1347 sanctions, in the form of program exclusions or civil actions for alleged fraud or abuse or other activities that posed a risk to federal health care programs and beneficiaries;
• OIG excluded 1241 individuals and entities from participating in Medicare, Medicaid, or other federally sponsored health care programs, during the reporting period;
• Over $1.4 million in civil monetary penalties and assessments were collected under the Civil Monetary Penalties Law and other authorities;
• Civil monetary penalties of approximately $314,000 from ten hospitals and physicians under the Emergency Medical Treatment and Labor Act for 'patient dumping' violations were collected; and
• The government recouped more than $156.7 million through False Claims Act civil settlements related to the Medicare and Medicaid programs.

The new 'Red Book' outlines areas where its recommendations could result in cost savings to the government. This month, OIG issued its annual 'Cost Saver Handbook,' known as the 'Red Book' to identify which of its cost savings recommendations for the Department of Health and Human Services have ' and have not ' been implemented, and the expressed reasons for the current status of these recommendations. This 88-page document is interesting readers for health care professionals and their counse,l since it identifies areas (new and old) that the agency views as too costly ' so that they can plan accordingly for future cutbacks in funding levels or heightened enforcement activities. For the OIG's new cost savings recommendations, hospitals are identified as the segment of the industry from which the largest possible cost savings can be obtained ($1.1 billion), followed by durable medical equipment (DME) suppliers ($132 million). As to the OIG's old and unimplemented cost savings recommendations, hospitals are far and away the industry segment from which the largest cost savings could be made if the OIG's recommendations are implemented, followed by Medicare Managed Care, and then DME.

Medicare Providers' Progress with HIPAA: Good or Bad?

Are Medicare Part A providers meeting standards imposed by the Health Insurance Portability and Accountability Act of 1996 (HIPAA)? On May 2003, the Office of Evaluations and Inspections (OEI), Office of the Inspector General (OIG), Department of Health and Human Services (HHS) issued a report about the progress made by Medicare Part A providers in meeting various standards imposed by HHS as part of HIPPA implementation. See HIPAA Readiness: Administrative Simplification for Medicare Part A Providers (OEI-09-02-00421). As explained in the report, this study was conducted 'to determine if Medicare Part A providers expect to comply with the electronic data transaction standards and code sets mandated by ' [HIPAA] by October 2003. HIPAA Readiness ' Executive Summary, at 1. As part of its obligations under HIPAA, HHS promulgated regulations requiring that specific standards be used for eight different types of electronic transactions and medical code sets by October 16, 2003. See 45 C.F.R. Parts 160 and 162. The eight types of electronic transactions are:

• Health care claims or equivalent encounter information;
• Health care payments and remittance advice;
• Coordination of benefits;
• Health care claim status;
• Enrollment and disenrollment in a health plan;
• Eligibility for a health plan;
• Health plan premium payments; and
• Referral certification and authorization.

To determine how many providers expect to be ready to comply with this deadline, the OEI evaluated the results of a mail survey of a stratified random sample of Medicare Part A providers that submitted claims to Medicare fiscal intermediaries between July 1, 2001 and June 30, 2002. Id. The results from this sample are promising: Ninety-two percent of Part A providers report having made significant progress in meeting the HIPAA deadline, while another one-half are developing sequencing strategies and contingency plans in the event their system is not fully in compliance with the deadline. Id. at 1-2. The report can be obtained from the OIG's Web site, www.oig.hhs.gov/

GAO Report Outlines Inequities

In late April 2003, the General Accounting Office (GAO) issued a reporten titled Medicare: Divided Authority for Policies on Coverage of Procedures and Devices Results in Inequities (GAO-03-175). The agency noted that even though Medicare covered in 2001 about 99% of the procedures and devices assigned codes by an American Medical Association panel or a committee of insurers, inequities in coverage still exist since Medicare's contractors can determine coverage for beneficiaries treated in their jurisdictions (if CMS has not issued a national coverage policy). The GAO provided the example of coverage for bilateral deep brain stimulation (DBS), a new treatment for debilitating tremors, that was allowed only for beneficiaries treated in some states ' until CMS issued a national coverage policy on DBS in April 2003. The GAO recommended that CMS should eliminate the development of local policy for procedures and devices that have established procedural codes and, instead, develop Medicare coverage policies through a new, single process that would enable the development of consistent, national coverage policies for procedures and devices.

Specialty Hospitals Subject of GAO Report

Are 'specialty hospitals' treating a different class of patients? In May 2003, the GAO issued a report titled Specialty Hospitals: Information on National Market Share, Physician Ownership, and Patients Served (GAO-03-683R) at the request of Rep. Bill Thomas, Chairman of the House Committee on Ways and Means, who requested the agency to provide information as to the prevalence of specialty hospitals, their characteristics, and the effect that they have on the traditional hospital communities in which they operate. The GAO pointed out that while specialty hospitals are a small, but growing segment of the health care industry (about 2% of the overall number of hospitals), general hospitals are concerned that specialty hospitals 'cherry pick' the most financially rewarding portions of their business by concentrating on the most profitable procedures and serving patients with fewer complicating conditions, which forces general hospitals to treat a higher-cost (and lower profit) patient population. The GAO confirmed that patients treated by specialty hospitals are not as sick as those treated by general hospitals, but did not determine the clinical or economic significance of this finding.

OIG Reports Its Accomplishments to Congress

In June 2003, the OIG posted its Semi-Annual Report to the Congress, covering the agency's accomplishments during the period of October 2002 to March 2003. Among the most noteworthy statistics discussed in the 111-page report are the following items:

• During this reporting period, the OIG reported savings of over $12 billion,which includes $11.6 billion in implemented recommendations, $40 million in additional recoveries, and over $187 million in investigative receivables;
• The error rate for Medicare fee-for-service payments matches last year's lowest-ever rate since improper payments made during the year amounted to about 6.3% of the total $212.7 billion in fee-for-service payments (or $13.3 billion) 'compared with the $23.2 billion that was first reported for fiscal year 1996;
• Between October 2002 through March 2003, OIG accepted 15 advisory opinion requests and issued eight advisory opinions;
• During this reporting period, OIG administered 1347 sanctions, in the form of program exclusions or civil actions for alleged fraud or abuse or other activities that posed a risk to federal health care programs and beneficiaries;
• OIG excluded 1,241 individuals and entities from participating in Medicare, Medicaid, or other federally sponsored health care programs, during the reporting period;
• Over $1.4 million in civil monetary penalties and assessments were collected under the Civil Monetary Penalties Law and other authorities;
• Civil monetary penalties of approximately $314,000 from ten hospitals and physicians under the Emergency Medical Treatment and Labor Act for 'patient dumping' violations were collected; and
• The government recouped more than $156.7 million through False Claims Act civil settlements related to the Medicare and Medicaid programs.

Newest 'Red Book' Issued by OIG

The new Red Book outlines areas where its recommendations could result in cost savings to the government. This month, OIG issued its annual 'Cost Saver Handbook,' known as the 'Red Book' to identify which of its cost savings recommendations for the Department of Health and Human Services have ' and have not ' been implemented, and the expressed reasons for the current status of these recommendations. This 88-page document is interesting readers for health care professionals and their counsel, since it identifies areas (new and old) that the agency views as too costly ' so that they can plan accordingly for future cutbacks in funding levels or heightened enforcement activities. For the OIG's new cost savings recommendations, hospitals are identified as the segment of the industry from which the largest possible cost savings can be obtained ($1.1 billion), followed by durable medical equipment (DME) suppliers ($132 million). As to the OIG's old and unimplemented cost savings recommendations, hospitals are far and away the industry segment from which the largest cost savings could be made if the OIG's recommendations are implemented, followed by Medicare Managed Care, and then DME.

• During this reporting period, the OIG reported savings of over $12 billion ' which includes $11.6 billion in implemented recommendations, $40 million in additional recoveries, and over $187 million in investigative receivables;
• The error rate for Medicare fee-for-service payments matches last year's lowest-ever rate since improper payments made during the year amounted to about 6.3% of the total $212.7 billion in fee-for-service payments (or $13.3 billion) 'compared with the $23.2 billion that was first reported for fiscal year 1996;
• Between October 2002 through March 2003, OIG accepted 15 advisory opinion requests and issued eight advisory opinions;
• During this reporting period, OIG administered 1347 sanctions, in the form of program exclusions or civil actions for alleged fraud or abuse or other activities that posed a risk to federal health care programs and beneficiaries;
• OIG excluded 1241 individuals and entities from participating in Medicare, Medicaid, or other federally sponsored health care programs, during the reporting period;
• Over $1.4 million in civil monetary penalties and assessments were collected under the Civil Monetary Penalties Law and other authorities;
• Civil monetary penalties of approximately $314,000 from ten hospitals and physicians under the Emergency Medical Treatment and Labor Act for 'patient dumping' violations were collected; and
• The government recouped more than $156.7 million through False Claims Act civil settlements related to the Medicare and Medicaid programs.

The new 'Red Book' outlines areas where its recommendations could result in cost savings to the government. This month, OIG issued its annual 'Cost Saver Handbook,' known as the 'Red Book' to identify which of its cost savings recommendations for the Department of Health and Human Services have ' and have not ' been implemented, and the expressed reasons for the current status of these recommendations. This 88-page document is interesting readers for health care professionals and their counse,l since it identifies areas (new and old) that the agency views as too costly ' so that they can plan accordingly for future cutbacks in funding levels or heightened enforcement activities. For the OIG's new cost savings recommendations, hospitals are identified as the segment of the industry from which the largest possible cost savings can be obtained ($1.1 billion), followed by durable medical equipment (DME) suppliers ($132 million). As to the OIG's old and unimplemented cost savings recommendations, hospitals are far and away the industry segment from which the largest cost savings could be made if the OIG's recommendations are implemented, followed by Medicare Managed Care, and then DME.