United States

Revenue integrity webcast series: Part 2 recap


Our second installment in our health care industry Revenue integrity webcast series focuses on regulatory updates recently released from the Federal Register. Key discussion points included how regulatory provisions affect:

  • Medicare inpatient prospective payment system (IPPS) rates
  • National cost and charge ratios
  • Medicare Disproportionate Share Hospital and Uniform Commercial Code adjustments
  • 340B Drug Pricing Program requirements
  • Medicare bad debts

In addition, IPPS key drivers were outlined related to revenue integrity improvements and financial and cost reporting opportunities, including pricing strategy insights and wage index provisions. An overview of outpatient PPS was also reviewed along with provider-based changes.

Also, briefly discussed was the Department of Health and Human Services Office of Inspector General’s (OIG) recently released 2016 work plan. The document summarizes new and ongoing activities for the current fiscal year and beyond, and serves as an important guide for health care organizations to assess their own systems and operations. The following includes noteworthy OIG directives and insights.

Two-midnight rule

  • Substantial change to the criteria around this rule, which physicians must follow when deciding to admit patients
  • Organizations should determine the extent of variation of use of outpatient and inpatient stays among hospitals

Oversight of payment and delivery reform

  • Organizations should address changes to Medicare programs designed to improve efficiency and quality of care to promote integrity and transparency
  • Examine the transition from volume- to value-based payments and the effectiveness of payment structures, care coordination and administration of new payment models

Reconciliations of outlier payments

  • Provides additional payments to hospitals for beneficiaries who incur unusually high costs
  • Centers for Medicare & Medicaid Services (CMS) reconciles outlier payments based on most recent cost-to-charge ratios from hospital’s cost reports
  • Organizations should determine if timely reconciliations and final settlements occur so that funds may be properly returned to the Medicare trust fund

Analysis of salaries included in hospital’s cost reports

  • Employee compensation may be included as an allowable cost to the extent it represents reasonable compensation for managerial, administrative, professional and other services related to the operation of the facility and furnished in connection with patient care

Medicare oversight of provider-based status

  • Allows facilities owned and operated by hospitals to bill as hospital outpatient departments
  • Provider-based status can result in higher Medicare payments for services furnished at provider-based facilities
  • The Medicare Payment Advisory Committee has expressed concerns about financial incentives presented by provider-based status and stated that Medicare should seek to pay similar amounts for similar services

Duplicate GME payments

  • Organizations should review Intern and Resident Information System (IRIS) information to determine whether hospitals receive duplicate or excessive Graduate Medical Education (GME) payments
  • Assess effectiveness of IRIS in preventing duplicate payments for GME costs
  • Prior OIG reviews have determined that hospitals have received duplicate reimbursement for GME 

IME payments

  • Prior OIG reviews have determined that hospitals have received excess reimbursement for Independent Medical Exams (IME)
  • Teaching hospitals with residents in approved GME programs receive additional payments for each Medicare discharge to reflect the higher indirect patient care costs of teaching hospitals compared to those of nonteaching hospitals
  • Additional payments are calculated using the hospital’s ratio of resident full-time equivalents to available beds

Hospital wage index data

  • Prior OIG audits have identified hundreds of millions of dollars in incorrectly reported data
  • As a result, CMS policy changes have occurred with regard to how deferred compensation is reported

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