Volume V, Number 11; August 2000

Contents

• Simplified Guidelines for Physicians to be Tested
• HCFA Increases Flexibility for Medicare+Choice Organizations
• Message from the Administrator
• Medicare Establishes New Payment System for Home Health
• Senior Advisors Named at HCFA
• Selected Health Issues On the Web
• In the Limelight
• Calendar of Events
• New Regulations/Notices

Simplified Guidelines for Physicians to be Tested

Continuing its efforts to simplify Medicare’s requirements for doctors, the Health Care Financing Administration will pilot test new, simplified documentation guidelines for physician visits.

The new draft guidelines streamline existing requirements and make it easier for physicians to document the level of service that they provide to individual Medicare beneficiaries. The new guidelines reflect reasonable documentation standards that practicing physicians follow.

The revised guidelines for physician visits represent the latest step in HCFA’s ongoing efforts to ensure that doctors receive fair and accurate compensation for the services that they provide to more than 39 million elderly and disabled Medicare beneficiaries.

"We want to make it as easy as possible for physicians to do their jobs and provide appropriate, quality care to their patients," HCFA Administrator Nancy-Ann DeParle said. "These simpler guidelines should make it easier for physicians to focus on patient care while ensuring that Medicare pays them appropriately for their services."

DeParle directed a team of physicians at HCFA to develop the new documentation guidelines as a way to simplify earlier guidelines, reduce the time physicians spend on administrative tests, and ensure consistent and fair medical review. HCFA now will conduct pilot tests to ensure that the new, simpler guidelines work in the real world of clinical practice.

Properly documented medical records help ensure good clinical care by allowing clear communication among physicians and other health care professionals. They also help Medicare to pay appropriately for services.

In part, due to the efforts of doctors and other providers, Medicare’s efforts to pay accurately and to reduce waste, fraud and abuse, have achieved measurable results by reducing Medicare’s improper payment rate to almost half of what it was just three years ago.

Medicare’s improper payment rate, as estimated by the Inspector General, was less than 8 percent in Fiscal Year 1999 -- down from the 14 percent estimate for Fiscal Year 1996. However, the latest audit shows that more progress needs to be made. In the latest review, documentation errors accounted for the largest category of errors.

In 1995, HCFA and the AMA issued the first set of documentation guidelines to help physicians under-stand codes as defined by the AMA’s Current Procedural Terminology coding system, which physicians use to bill when they evaluate patients’ medical needs or manage their treatment.

HCFA and the AMA updated the guidelines in 1997 to try to accommodate the requests of various specialty societies to add detail to recognize the more narrow focus of specialists’ clinical services. Despite these cooperative efforts, many physicians expressed concern that the 1997 guidelines became too cumbersome to use in practice.

To respond to such concerns, a team of physicians at HCFA worked to develop a simpler alternative based on the 1995 guidelines. At a recent town hall meeting, HCFA updated the medical community on its progress and plans for pilot testing the new guidelines.

The tests will focus on the revisions to the 1995 guidelines that seek to minimize "counting" -- the need for physicians to count elements of their services -- and include a series of scenarios for physical examinations and medical decision-making to assign an appropriate service level. HCFA also will test a second version that focuses more on how physicians make medical decisions and less on history and physical examination. It involves little or no counting.

Throughout this process, HCFA will develop comprehensive educational materials to help physicians use the new guidelines effectively and efficiently. HCFA plans to use a range of training approaches and materials during the pilot tests, and maintain an array of the most effective training options when new guidelines are put in place nationally.

HCFA will seek physician advice throughout the process and will make appropriate changes based on the pilot tests’ results, which should be available next year. New guidelines could be in place as early as 2002.

"Physicians helped develop these guidelines, and we want physicians to tell us whether the revisions being tested are, in fact, better for them in the real world of day-to-day clinical practice," DeParle said. "Working together, we can have a simpler, clinically meaningful, and non-intrusive approach to documentation that works for patients, the doctors who care for them, and the taxpayers."

The streamlined guidelines are part of HCFA’s ongoing efforts to make it easier for physicians and other health-care providers to understand and meet Medicare’s requirements.

The table in the left column on page 7 lists a number of important high-lights related to the development of the streamlined guidelines.

• HCFA has doubled the number of physicians in high-ranking positions, with physicians now in charge of the Center for Health Plans and Providers and the Office of Clinical Standards and Quality. Another physician leads Medicare’s oversight of private claims-processing contractors, and physicians work as managers throughout the agency.
  
  
• HCFA has created a Physicians Regulatory Issues Team to review, clarify and simplify rules, and to ensure clinicians’ concerns are heard as policies are being developed.
  
  
• In 1999, HCFA expanded its successful, innovative national education program to help doctors and other health-care providers understand Medicare’s billing procedures properly. The project features interactive computer courses - accessible through the Internet at www.hcfa.gov- to allow providers to study specific topics about Medicare policies to ensure accurate claims.
  
  
• In May, DeParle sent letters to more than 800,000 physicians, home health agencies and durable medical equipment suppliers explaining how to avoid some common claims errors and asking for their help in assuring that Medicare correctly pays for their services. HCFA sent similar letters to all health-care providers last year regarding Year 2000 computer issues.
  
  
• HCFA is requiring all the private companies that process and pay Medicare claims to establish toll-free lines for doctors and other providers to call with billing questions. These lines will become operational by this fall.

HCFA Increases Flexibility for Medicare+Choice Organizations

New Rules Will Insure Quality for Medicare+Choice Enrollees

In mid-June, the Health Care Financing Administration released the final Medicare+Choice regulation, which allows the agency to continue to ensure that Medicare beneficiaries enrolled in Medicare+Choice plans will receive quality health care without imposing new, unnecessary costs on the organizations that provide the care.

In addition, HCFA is planning to extend the transition period for risk adjustment responding to concerns of the health plans that there is a need for a more gradual phase-in of risk adjustment to ease the transition to the new system and allow plans to respond to the incentives risk adjustment gives to enroll and retain sicker members.

The recent announcements continue HCFA’s efforts to streamline the Medicare+Choice program. The new regulation improves earlier regulations by:

• Increasing flexibility in establishing a provider network, which will allow more health care providers to serve plan enrollees;
• Improving freedom of choice by allowing plans to offer beneficiaries a point of service option that broadens access to health care services from both in-network and out-of-network providers;
• Allowing organizations that left Medicare+Choice to return in two years, instead of five; and
• Easing compliance plan reporting by eliminating the self-reporting component of the Medicare+Choice program.

The regulation implements the Balanced Budget Act of 1997 (BBA) and includes provisions from the Balanced Budget Refinement Act of 1999 (BBRA) as well as responding to the hundreds of pages of comments received from advocates, the managed care industry and others on the interim final regulation which was published on June 26, 1998.

On June 8, 2000, HCFA issued the 2001 Medicare+Choice Contract and Marketing Guide along with modifications to existing requirements for participation in the program to Medicare+Choice plans.

Medicare managed health care options have been available to some Medicare beneficiaries since 1982. About 70 percent of the more than 39 million seniors and disabled people covered by Medicare are in areas served by at least one managed care plan. About 6.2 million, or 16 percent of all Medicare beneficiaries, currently have chosen to enroll in a Medicare HMO. The Balanced Budget Act of 1997 created the Medicare+Choice program to provide Medicare beneficiaries with a wide range of health care options and an information campaign to educate beneficiaries about those options.

The final regulation and proposed extension of the transition to risk adjustment demonstrate HCFA’s commitment to working with the Medicare+Choice organizations that contract directly with HCFA to provide care to beneficiaries. The regulation simplifies the requirements for health plans to participate in the Medicare+Choice program while ensuring that taxpayer funds are spent appropriately and that beneficiaries receive the benefits, protections and information they need and deserve.

The first phase of the risk adjustment method, which pays plans more for treating sicker enrollees, began January 1, 2000. Medicare+Choice payments are based in part on the illnesses reported on inpatient hospital bills. The original transition schedule for risk adjustment was modified by the BBRA and would have risk adjustments make up lower percentages of total payments than HCFA originally proposed. The BBRA also required that reports related to risk adjustment and its implementation be made to the Medicare Payment Advisory Commission on risk adjustment and HCFA. The specific phase-in schedule and blended rates will be announced next year, based on the reports and continued implementation of risk adjusted payments.

The regulation also includes a number of key elements that were part of the earlier Medicare+Choice regulations:

• Strengthen the appeals process to ensure that beneficiaries have their appeals heard quicker, based on their health needs.
• Simplifies the certification of payment data and adjusted community rate (ACR) submissions by Medicare+Choice organizations which establish a "good faith" standard for the certification of data. Medicare+Choice organizations will now certify the accuracy of payment information to their "best knowledge, information, and belief."
• Clarifies provider anti-discrimination rules that state Medicare+ Choice organizations can no longer discriminate against providers based solely on the providers’ licensure and certification. However, this requirement does not preclude organizations from contracting with the providers they choose and setting their payment rates, consistent with their quality and cost control responsibilities under the statute.
• Allows out-of-area Medicare beneficiaries to convert to a Medicare+Choice plan expanding upon the availability of a seamless conversion for those beneficiaries who wish to continue receiving health care services through their managed care organization when they become eligible for Medicare.
• Implements the bonus payment program called for in the BBRA to encourage Medicare+Choice plans to begin to serve beneficiaries in areas that currently do not have Medicare+Choice options.

Message from the Administrator
Nancy-Ann DeParle

System to Help Ensure Appropriate Reimbursements for Quality, Efficient Home Health Center
Medicare Establishes New Payment System for Home Health

A new Medicare payment system was finalized the last week of June by the Health Care Financing Administration.

The new payment system continues the efforts of the Clinton Administration and Congress to protect the home health benefit while curtailing the unsustainable costs and inappropriate payments that began in the early 1990s.

On October 1, 2000, as required by law, Medicare will begin paying all home health agencies under a prospective payment system.

The change was mandated by the Balanced Budget Act of 1997 (BBA) and amended by the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1998 and the Balanced Budget Refinement Act of 1999.

"Home health care enables seniors, including the frailest beneficiaries, and disabled Americans to receive many services in their homes," said Administrator Nancy-Ann DeParle of the Health Care Financing Administration.

"Prospective payment marks a major step forward in our effort to strengthen and preserve Medicare for beneficiaries today and in the future."

The new system will complete the transition from the pre-BBA cost-based system, which encouraged inefficiency, waste and abuse. It will replace the BBA-mandated interim payment system that has been in effect since October 1997.

Visit www.medicare.gov

Under the final prospective payment system, the final regulation was published in the Federal Register on July 3, 2000, describing the following rules:

• Medicare will pay home health agencies for each covered 60-day episode of care. As long as beneficiaries continue to remain eligible for home health services, they may receive an unlimited number of medically necessary episodes of care. Payments cover skilled nursing and home health aide visits, covered therapy, medical social services and supplies.
  
  
• Medicare will pay home health agencies a higher rate to care for those beneficiaries with greater needs. Payment rates are based on relevant data from patient assessments conducted by clinicians as already required for all Medicareparticipating home health agencies.
  
  
• For each 60-day episode, the payment system will use national payment rates – ranging from about $1,100 to $5,900, depending on the intensity of care required by each beneficiary – with adjustments to reflect area wage differences.
  
  
• Agencies will receive additional payments for an individual beneficiary if the costs of that care were significantly higher than the specified payment rate. Such "outlier" payments should account for the unusual resource needs of specific beneficiaries.
  
  
• To ensure agencies are paid adequately up front, HCFA will pay 60 percent of the initial episode payment when the agency first accepts a new Medicare patient as part of a streamlined approval process. Agencies will receive the remaining 40 percent at the end of the first 60-day episode. For subsequent episodes, payments will be divided equally between the start and end of the episode.
  
  
• Payment rates will be adjusted to reflect significant changes in a patient’s condition during each Medicare-covered episode of care.
  
  
• Home health agencies will receive less than the full 60-day episode rate if they provide only a minimal number of visits to beneficiaries.
  
  
• Medicare will pay home health agencies and other suppliers separately for medically necessary durable medical equipment provided under the home-health plan of care. In the Balanced Budget Refinement Act of 1999, Congress eliminated an earlier law that would have required agencies to bill for this equipment even if outside suppliers provided it.
  
  
• To ensure agencies provide adequate services to beneficiaries, HCFA will conduct extensive medical review to obtain early feedback on common errors, vulnerabilities and trends. HCFA also will monitor the quality of patient care using information from the comprehensive patient assessments already used by agencies.

Senior Advisors Named at HCFA

On June 22, 2000, Nancy-Ann DeParle, Administrator of the Health Care Financing Administration, announced the appointment of three senior staff members. They will help assure high quality health care for the millions of Medicare beneficiaries and that beneficiaries and taxpayers pay appropriately.

Mark E. Miller, Ph.D., a former official in the President’s Office of Management and Budget, was appointed Deputy Director of HCFA’s Center for Health Plans and Providers, which oversees HCFA’s interactions with health care providers and managed health care organizations and develops the agency’s purchasing strategies.

Hugh F. Hill III, M.D., J.D., who has been serving as acting Director of HCFA’s Coverage and Analysis Group, became Deputy Director of the agency’s Program Integrity Group, which assures that benefit payments are made correctly.

Sean Tunis, M.D., M.Sc., a former senior research scientist with the Lewin Group, was appointed Director of the Coverage and Analysis Group, which manages the Medicare coverage decision-making process.

“Mark Miller, Hugh Hill and Sean Tunis bring strong credentials and rich backgrounds in health care policy, practice and research to their new positions,” DeParle said. Their appointments are in keeping with HCFA’s effort to bring the best private sector expertises to our work of assuring the highest quality of care possible to the more than 39 million beneficiaries covered by the Medicare, Medicaid and the State Children’s Health Insurance Program.

Miller was branch chief of OMB’s Health Financing Branch, which oversees budgeting for Medicare, Medicaid, the State Children’s Health Insurance Program and health care reform. Before joining OMB, Miller worked with the Urban Institute’s Health Policy Center, where he researched hospital and physician payment issues.

Hill has been acting Director of the Coverage and Analysis Group, which oversees the Medicare coverage decision-making processes at HCFA since April 1998. Before that, he led the Physicians’ Regulatory Issues Team, which is the HCFA administrator’s project to address the regulatory burden on practicing physicians. Hill is currently on assignment from the Johns Hopkins University School of Medicine where he serves on the faculty of the Department of Emergency Medicine.

Tunis designed and conducted research into managed care organizations and medical group practices for The Lewin Group, a health care policy research and management consulting firm. Previously, he was Director of the Health Program at the Congressional Office of Technology Assessment and served as a health policy advisor to the Senate Committee on Labor and Human Resources. Tunis also holds an adjunct faculty position in the Department of Medicine at the Johns Hopkins University School of Medicine, and practices as an emergency room physician.

Selected Health Issues On the Web

http://www.hcfa.gov/link_rec.asp?URL=http://www.ahrq.gov/news/vnewsix.htm
The Federal Agency for Healthcare Research and Quality (AHRQ) unveiled this newly redesigned Web site on June 22, 2000.

This Web site provides concise information on AHRQ initiatives, news announcements, publications and products. A new feature is the Latest Headlines section, which includes the most recent press releases and links to topical areas of health care research.

newfederalism.urban.org/pdf/anf_b20.pdf"
EXTENDING MEDICAID TO PARENTS: AN INCREMENTAL STRATEGY FOR REDUCING THE NUMBER OF UNINSUREDS

There are 9.7 million uninsured parents in the United States. As many as 3.5 million are living below the Federal Poverty Level who could readily be made eligible for Medicaid.

http://www.hcfa.gov/link_rec.asp?URL=http://www.med.monash.edu.au/shcnlib/dehsj
DIRECTORY OF ELECTRONIC HEALTH SCIENCES JOURNALS

Information on the electronic versions of key English language peer-reviewed print journals in clinical medicine is featured. This also includes biomedical research, nursing and allied health.

In the Limelight
Chicago Resident Honored for Her Work in Helping People with Disabilities

A Chicago resident has received an award for assisting people in Illinois with mental retardation and/or developmental disabilities who are served by Medicaid get the support services they need to remain in their homes and communities.

HCFA Administrator Nancy-Ann DeParle selected Becky Selig as the Health Care Financing Administration’s employee of the month for April. A seven-year

HCFA employee, Selig works in the Medicaid division in the Chicago Regional Office.

HCFA honored Selig for her work as a team leader in reviewing Illinois’ Medicaid program that serves persons with mental retardation and developmental disabilities.

As a result of the review, Illinois requested many regulatory changes eliminating persons with mental retardation and developmental disabilities from residing in foster care homes, and establishing quality assurance systems. The changes created the protections needed for persons with mental retardation and developmental disabilities to live more independently in the community.

"Becky Selig has worked diligently to help increase communication between state agencies in Illinois and outside organizations about the treatment of mentally retarded and disabled people under Medicaid," DeParle said. "As a result of her excellent efforts, these individuals can live healthier, more productive lives."

Medicaid, a joint federal-state health insurance program, provides medical help for certain low-income and needy people. Each state operates its own Medicaid program and receives federal matching funds.

Selig’s team investigated instances where quality of care concerns were identified and worked with the Illinois Department of Public Aid to develop a new program to protect the individuals living in these settings.

In addition, Selig initiated discussions between legal organizations that work to protect the rights of these beneficiaries and Illinois state agencies. These meetings resulted in an agreement allowing beneficiaries and their families active participation in the decision-making process for housing arrangements.

The Calendar of Events will return in the September 2000 issue.

New Regulations/Notices

Medicare Program; Sustainable Growth Rate for the Year 2000 [HCFA-1110-FN]--Published 4-10. This final notice implements section 211(a)(2)(C) of the Public Law 106-113, the Medicare, Medicaid, and State Children’s Health Insurance Program Balanced Budget Refinement Act of 1999 (BBRA), that requires us to publish a notice in the Federal Register not later than 90 days after the date of enactment. This notice includes, based on the best available data, our determination of (1) allowed expenditures for physicians’ services under the Medicare Supplementary Medical Insurance program (Part B) for both the nine-month period of April 1, 1999 through December 31, 1999, and for calendar year 1999, (2) estimated actual expenditures for Part B physicians’ services in 1999, and (3) the sustainable growth rate (SGR) for calendar year 2000. This notice also discusses our plans for making available to the Medicare Payment Advisory Commission and the public, by March 1 of each year beginning with 2000, an estimate of the sustainable growth rate and the conversion factor for the next year and the data used in making this estimate, as required in section 211(a)(2)(A) of the BBRA. The provisions of this notice are effective April 10, 2000.

Medicare Program; Deductible Amount for Medigap High Deductible Options for Calendar Year 2000 [HCFA-2893-N]-- Published 4/10. This notice announces the annual deductible amount of $1,530.00 for the Medicare supple-mental health insurance (Medigap) high deductible options for 2000. High deductible options are those with benefit packages classified as F or J that have a high deductible feature. The deductible amount represents the annual out-of-pocket expenses (not including premiums) that a beneficiary who chooses one of these options must pay before the policy begins paying benefits. The effective date is January 1, 2000.

Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 2000 [HCFA-1005-CN]-- Published 4-11. This document corrects technical errors that appeared in the final rule with comment period published in the Federal Register on November 2, 1999, entitled "Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule for Calendar Year 2000." The effective date is January 1, 2000.

State Children’s Health Insurance Program; Final Allotments to States, Commonwealths and Territories for Fiscal Years 1998 and 1999 [HCFA- 2064-N] -- Published 5/24. This notice sets forth the final allotments of Federal funding available to each State, Commonwealth and Territory for fiscal years (FYs) 1998 and 1999 under title XXI of the Social Security Act (the Act). The final allotments are the same as the reserved allotments previously published in the Federal Register on February 9, 1999. Established by section 4901 of the Balanced Budget Act of 1997 (Public Law 105-33), title XXI of the Act authorizes payment of Federal matching funds to States, Commonwealths and Territories to initiate and expand health insurance coverage to uninsured, low-income children through a State Children’s Health Insurance Program (SCHIP), an expansion of a State Medicaid program, or a combination of both. Recent legislation, the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Public Law 106-113), enacted November 29, 1999), amended title XXI of the Act in part by modifying the allotment formula, effective with the FY 2000 allotments. The FY 1998 and 1999 allotments contained in this notice were determined under the allotment formula in existence prior to the enactment of Public Law 106-113.

State Children’s Health Insurance Program; Final Allotments to States, the District of Columbia, and U.S. Territories and Common-wealths for Fiscal Year 2000 [HCFA-2067-N]--5/24. This notice sets forth the final allotments of Federal funding available to each State, the District of Columbia, and each U.S. Territory and Commonwealth for fiscal year (FY) 2000 under title XXI of the Social Security Act (the Act). Established by section 4901 of the Balanced Budget Act (BBA) of 1997, (Public Law 105-33), title XXI of the Act, authorizes payment of Federal matching funds to States, the District of Columbia, and U.S. Territories and Commonwealths to initiate and expand health insurance coverage to uninsured, low-income children under a new State Children's Health Insurance Program (SCHIP). States may implement SCHIP through a separate State program under title XXI, an expansion of a State Medicaid program under title XXI, or a combination of both. Recent legislation, the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Public Law 106-113, enacted November 29, 1999), amended title XXI of the Act in part by modifying the SCHIP allotment formula effective with the FY 2000 allotments. The FY 2000 allotments contained in this notice were determined under the new SCHIP allotment formula.

State Children’s Health Insurance Program; State Children’s Health Insurance Program Allotments and Payments to States [HCFA-2114-F] --Published 5/24. This rule sets forth the methodologies and procedures to determine the allotments of Federal funds for each Federal fiscal year (FY) available to individual States, Commonwealths and Territories under title XXI of the Social Security Act. This rule also specifies the allotment, payment, and grant award process that will be used for the States, the Commonwealths and Territories to claim and receive Federal financial participation (FFP) for expenditures under the State Children’s Health Insurance Program (SCHIP) and related Medicaid program provisions. Established by section 4901 of the Balanced Budget Act (BBA) of 1997, (Public Law 105-33), title XXI of the Act, authorizes payment of Federal matching funds to States, the District of Columbia, and U.S. Territories and Commonwealths to initiate and expand health insurance coverage to uninsured, low-income children under a new State Children's Health Insurance Program (SCHIP). States may implement SCHIP through a separate State program under title XXI, an expansion of a State Medicaid program under title XXI, or a combination of both. Recent legislation, the Medicare, Medicaid and SCHIP Balanced Budget Refinement Act (BBRA) of 1999 (Public Law 106-113, enacted November 29, 1999), amended title XXI of the Act in part by modifying the SCHIP allotment formula effective with the FY 2000 allotments. The FY 2000 allotments contained in this notice were determined under the new SCHIP allotment formula.

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