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Weekly Update

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June 23, 2000

WEEKLY UPDATE for June 23, 2000

Patient Protections- Behind the Scenes!
Balanced Budget Act of 1997 Funding Restorations
The Medicare RX 2000 Act
Enhanced Budget Surplus
HCFA Holds Town Hall Meeting on Evaluation and Management Documentation Guidelines
HCFA Sends Letter to Physicians Regarding Payment Errors
OIG Issues Semiannual Report


Patient Protections- Behind the Scenes!

Republican patient protection conferees are pursuing two paths toward crafting a Patients' Bill of Rights-one by holding talks between Republican and Democratic conferees and another by holding intense discussions between House and Senate GOP conferees. House and Senate Democrats are unified in their desires for passage of something very close to the Norwood-Dingell bill (HR 2990); however, the Republican leadership has been divided on some of the key components of a bill. This week there have been almost daily meetings between House and Senate Republicans with House Speaker Dennis Hastert (R-IL) pushing for resolution and a bill the President can sign. Hastert's personal involvement reflects his own interest and his understanding that a compromise measure is essential for Republicans this election year.

Though not a member of the conference on patient protections, Rep. Charlie Norwood (R-GA) has been a participant in the internal GOP negotiations, indicating the GOP leadership in both chambers is ready to move to the end game on the Patients' Bill of Rights. Norwood suggested the recent Supreme Court decision on managed care could influence discussions and that the main difference continues to be the "scope" of bill. Rep. Norwood believes that Republicans will ultimately achieve a compromise that he and many Democrats can support, thus ensuring its passage.

During a meeting this week with ACEP, Rep. Norwood's chief health staffer confirmed that the conference on the bill is stalled, at least for the moment. There are no separate talks going on between Democrats and Republicans. However, Senate and House Republicans are meeting to see if they can achieve a compromise proposal that will pass both Houses. Rep. Tom Coburn, MD (R-OK) told ACEP President Dr. Michael Rapp in a recent meeting that he too was optimistic about the chances for a bill this year.

Despite the absence of formal conference progress on the Patients' Bill of Rights, discussions continue over the 1 hour /3 hour call-back provision. It now appears conference staff and Members are considering revisions to that portion of the bill. Earlier this week several Republican House Members told ACEP that if a Senate Republican pushes to change the language, they will push the change through.


The House and Senate are scheduled to begin the Fourth of July recess on July 1 and return on July 10. With just 30 legislative days when they return, Members will be under intense pressure to pass legislation important to their constituents. It is therefore extremely important that you make every effort to meet with or call your Representative and Senators during the July 4 recess. Next week's 911 Update will include talking points on the Patients' Bill of Rights, the appropriations bills, and other pertinent legislative issues.

Balanced Budget Act of 1997 Funding Restorations

This week President Clinton announced his support for a plan to increase Medicare payments to health care providers by $21 billion over five years in an effort to off-set deeper than anticipated cuts caused by the BBA of 1997. The proposal would cost $40 billion over 10 years. Under the plan, hospitals would receive $5 billion over five years and a "full allowance for inflation." Special payments for teaching hospitals and facilities that serve primarily indigent patients also would increase. The proposal also calls for a one-year delay in the 15% payment cut to the home health care industry. Home health agencies hard hit by 1997 Medicare cuts, would receive $2 billion over five years and a 3.4% inflation allowance, rather than the 2.3% currently provided by law. Clinton's plan offers nursing homes $1 billion over five years, postpones restrictions on physical, occupational and speech therapy for one year. This approach has the support of key Democrats and Republicans in Congress. Ways & Means Chairman Rep. Bill Thomas (R-CA) has pledged to correct the unintended inequities of the 1997 law. It is almost a certainty that additional Medicare "givebacks" will reach the President's desk later this year.

The Medicare RX 2000 Act (HR 4680)

Almost every legislator up for reelection has been talking about the need to give seniors a prescription drug benefit under Medicare this year. In a 23-14 party-line vote, the House Ways & Means Committee approved Rep. Bill Thomas' (R-CA) "The Medicare RX 2000 Act." Republican leaders hope to hold a floor vote before the July 4 recess believing that their bill will pass the House with a handful of Democratic supporters. The Congressional Budget Office estimates that the House bill would cost $39.7 billion over five years.

In the Senate, Democrats used a parliamentary maneuver to bring their own plan to an unsuccessful floor vote that was killed by Senate Republicans in a 53-44 party line vote. House Republicans favor private insurers providing the benefit, with subsidies for low-income seniors and seniors with extremely high costs. The Democrats' plan would provide a benefit through Medicare for all seniors, regardless of income. Seniors would pay a $250 yearly deductible, after which the government would pay part of drug expenses under $4,000 and all expenses over that amount. The Democrats' plan would cost an estimated $240 billion over 10 years. The full text of the Chairman Thomas' bill is available at:

Enhanced Budget Surplus

According to unnamed budget experts, this fiscal year's budget surplus is expected to be $60 billion greater than forecasted in February 2000. If this projection is substantiated by the Congressional Budget Office and the Office of Management and Budget, the budget surplus will reach $230 billion. Tax cut proponents in the House and on the campaign trail will renew their calls for tax cuts. Others will see the opportunity to start new programs and expand existing ones.


HCFA Holds Town Hall Meeting on Evaluation and Management Documentation Guidelines

On June 22, the Health Care Financing Administration held a town hall meeting to discuss the current status of the agency's work on revising the documentation guidelines for evaluation and management (E/M) services. HCFA has drafted a new version of the E/M documentation guidelines, based on the 1995 guidelines. HCFA believes that the current guidelines are too complex and that its new draft is simpler and less burdensome for physicians. The agency noted that while most physicians are honest, there is inconsistency in coding for identical services. HCFA noted that the OIG has found that incorrect coding is a major factor in improper payments to physicians, especially for E/M services. HCFA stated that E/M services represent about 18 billion dollars in Medicare spending, accounting for about 40 percent of spending for physician services. Until new guidelines are finalized, tested, and implemented, Medicare contractors will be instructed to continue review of medical records according to the 1995 and 1997 E/M documentation guidelines.

HCFA stated that its goal is to develop and implement new E/M documentation guidelines that are consistent with documentation practices within the physician community. HCFA seeks to ensure that its requirements are clinically appropriate and facilitate consistency, improve reliability of medical review, facilitate accurate payment, and ensure work equivalency among specialties. At the meeting, HCFA discussed the concerns that have been raised by physicians regarding the 1995 and 1997 E/M documentation guidelines and its concerns with the guidelines proposed by the AMA CPT Editorial Panel in June 1999.

HCFA conducted a number of technical assessments of the current guidelines, and found that the 1995 E/M documentation guidelines result in more consistent, reliable medical review than the 1997 guidelines or the AMA's 1999 proposal. Therefore, the 1995 guidelines were used as a starting point for HCFA's new draft. HCFA also found that some of the problems with documentation are attributable to the structure and descriptors of the CPT E/M services. HCFA stated that it would support an effort to revisit the current CPT structure and descriptors. In addition, the agency seeks to minimize counting in the documentation guidelines and to develop an alternative method for distinguishing between levels of service.

An important element of developing the new documentation guidelines will be developing specialty-specific vignettes for multi-system exams, single system exams, and medical decision-making. HCFA will work with specialty societies to develop vignettes for all levels of service. HCFA hopes to develop the vignettes over the next three to four months. HCFA will also conduct two studies of the new draft guidelines. The first will weight each key component of the guidelines equally and the second will assign significantly greater weight to the medical decision-making component. There was a lot of discussion at the meeting regarding HCFA's plans for pilot testing the guidelines with records for E/M services that would be voluntarily provided by physicians. HCFA stated that it would not be able to provide any "immunity" for volunteers. Many physician representatives noted that they would not advise their members to participate in the study without immunity. It was suggested that HCFA consider reviewing de-identified records. HCFA will consider this approach.

Working with an outside contractor, HCFA hopes to complete initial studies of the new draft guidelines by the spring of 2001, with the goal of implementing them by January 2002. HCFA pledged to work closely with the physician community throughout the entire process. The agency is seeking comments on the draft guidelines and its plans for testing by August 11. The next meeting of the Practicing Physicians Advisory Council (PPAC), scheduled for September 11, will be devoted to E/M documentation guidelines.

HCFA Sends Letter to Physicians Regarding Payment Errors

In early June, Health Care Financing Administration Administrator Nancy-Ann Min DeParle sent a letter to all physicians participating in the Medicare program regarding reducing payment errors. The letter emphasized the importance of paying close attention to billing requirements, especially for documenting services delivered and the reason for care. The letter announced that HCFA has instructed Medicare contractors that process Medicare claims to establish toll free lines this fall. The letter also asked physicians to cooperate with the Office of Inspector General if the physicians' claims are randomly selected as part of the OIG's FY 2000 error rate study.

The letter is available on HCFA's web site at:

OIG Issues Semiannual Report

The Office of Inspector General recently released its semiannual report for the period October 1, 1999 to March 31, 2000. The OIG reported savings of $9.5 billion, including $8.4 billion in actions that put funds to better use, $40.5 million in audit disallowances and $968.1 million in investigative receivables. In addition, the OIG reported 1278 exclusions of individuals and entities, 205 convictions and 198 civil actions. The OIG noted that while the majority of health care providers submit claims to Medicare for services that are medically necessary, billed correctly and documented properly, documentation errors and medically unnecessary services continue to be pervasive problems. The OIG reported that during the six month period, the OIG collected $643,000 in settlements for EMTALA violations from 24 hospitals and physicians. In addition, the OIG reported that under the physicians at teaching hospitals (PATH) initiative, six institutions have entered into settlements totaling $75 million to resolve potential False Claims Act liability related to improper claims for Part B physician services submitted in the teaching setting. Reviews completed at four other institutions revealed no major problems with either billings in the teaching setting or upcoding.

The OIG's semiannual report is available on the OIG's web site at:

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