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Industry Activities & Emerging Issues

Medicare Reimbursement Highlights

Acute Care Inpatient Prospective Payment System (IPPS)

The proposed final rule regarding fiscal year (FY) 2010 revisions to the Medicare acute care hospital IPPS, beginning October 1, 2009, was published in the May 21, 2009 issue of the Federal Register. The final rule can be reviewed in its entirety on the Federal Register site.

AHIMA IPPS Resources:

Hospital Outpatient Departments and Ambulatory Surgery Centers (OPPS/ASC)

The final rule regarding calendar year (CY) 2009 revisions to the Medicare Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgery Centers (ASC) was published in the November 18 Federal Register. This rule became effective on January 1, 2009 and can be reviewed in its entirety from the GPO's e-docket site.

AHIMA OPPS/ASC Resources:

Recovery Audit Contractors (RAC):

Section 306 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) required CMS to complete a three-year demonstration program to determine whether the use of RACs is a cost-effective means of identifying and correcting Medicare overpayments and underpayments in the Medicare Fee-For-Service Program.

In March 2005, this demonstration program began in California, Florida, and New York since they are the largest states in terms of Medicare utilization. In 2007, the demonstration program was expanded to three more states to include Massachusetts, South Carolina, and Arizona.

In March 2008, the RAC demonstration program ended and more than $1.03 billion in Medicare improper payments. Approximately 96 percent of the improper payments were overpayments collected from providers and the remaining four percent were underpayments paid to providers. The majority of the overpayments at 85% were collected from inpatient hospital providers; 6 percent were collected from Inpatient Rehabilitation Facilities (IRFs); and 4 percent were collected from outpatient hospital providers.

The permanent RAC Program requires the Secretary to expand the program to all 50 states no later than 2010. The latest CMS information about the permanent RAC Program can be found on the CMS RAC page.

AHIMA RAC Resources:

Medicare Advantage Program

In 2004, the Centers for Medicare and Medicaid Services (CMS) adopted the CMS-Hierarchical Condition Category Risk Adjustment (CMS-HCC RA) payment model. The ultimate goal of the model was to adopt a clinically sound risk adjustment model to improve payment accuracy. The model adjusts per-beneficiary capitation payments with a risk adjustment methodology using diagnoses to measure relative risk due to health status. The model uses select ICD-9-CM diagnostic codes to define disease groups, referred to as hierarchical condition categories, or HCCs.

The latest information about the MA program can be found on the CMS Medicare Advantage page.

AHIMA MA Program Resource:

The ABCs of Medicare Advantage, Journal of AHIMA

CMS Beneficiary Notices Initiative

Under the Medicare Fee-for-Service (FFS) and Medicare Advantage (MA) Programs, Medicare beneficiaries and providers have certain rights and protections related to financial liability. Beginning Monday, March 1, 2009, FFS providers, physicians, practitioners, and suppliers are required to use the revised ABN, Form CMS-R-131. The revised ABN manual instructions are available from the download section of CMS's FFS ABN-G and ABN-L page.

HIPAA Transactions: 5010

On January 16, 2009, HHS adopted X12 Version 5010 and NCPDP Version D.0 for HIPAA transactions. In this rule, HHS also adopts a new standard for Medicaid subrogation for pharmacy claims, known as NCPDP Version 3.0. For Version 5010 (for some health care transactions) Version D.0 (for pharmacy transactions), the compliance date for all covered entities is January 1, 2012. The compliance date for the Medicaid subrogation standard is also January 1, 2012, except for small health plans, which will have until January 1, 2013 to come into compliance. This rule can be reviewed in its entirety from the GPO e-docket site.

Version 5010 accommodates the ICD-10 code sets, and has an earlier compliance date than ICD-10 in order to ensure adequate testing time for the industry. These two rules apply to all HIPAA covered entities, including health plans, health care clearinghouses, and certain health care providers. The latest CMS information about 5010 can be found on the CMS's Transactions and Code Sets site.

AHIMA Version 5010 Resource:

Analysis of the Final Rule, January 16, 2009, Health Insurance Reform; Modifications to the Health Insurance Portability and Accountability Act (HIPAA) Electronic Transaction Standards

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