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Congressional Testimony
April 10, 2000, Monday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 4187 words
HEADLINE:
TESTIMONY April 10, 2000 DOROTHY BURK COLLIINS REGIONAL ADMINISTRATOR, REGION V
HEALTH CARE FINANCING ADMINISTRATION HOUSE GOVERNMENT REFORM
CARE FOR SENIORS
BODY:
TESTIMONY OF DOROTHY BURK
COLLINS, REGIONAL ADMINISTRATOR, REGION V HEALTH CARE FINANCING ADMINISTRATION
on MEDICARE REIMBURSEMENT before the HOUSE GOVERNMENT REFORM SUBCOMMITTEE ON
CRIMINAL JUSTICE, DRUG POLICY, AND HUMAN RESOURCES in FORT WAYNE, INDIANA April
10, 2000 Chairman Mica, Congressman Souder, thank you for inviting me to be here
today with you to discuss the Health Care Financing Administration's (HCFA)
efforts to improve Medicare guidance to hospitals and other providers, as well
as recent changes in Medicare hospital payment policies. I am grateful for this
opportunity to hear from you firsthand about your needs, concerns, and ideas.
HCFA is responsible for administering the Medicare program, which provides
health insurance coverage to about 39 million Americans. The Medicare program
provides coverage for hospital services in accordance with Medicare law, which
is very prescriptive. HCFA issues regulations governing the program based on the
law. And, also by law, HCFA contracts with private insurance companies, referred
to as intermediaries or carriers. These companies are directly responsible for
processing and paying claims to hospitals and other providers, in accordance
with the regulations we have established and their own local medical review
policies. Assuring and enhancing access to quality health care for beneficiaries
is a priority for HCFA. We are taking a number of pro-active steps to educate
providers about Medicare payment policy and procedures, and to increase our
oversight of the private insurance companies that process Medicare claims. We
want to ensure that our guidance is clear, and that providers and our
contractors understand Medicare rules and follow them appropriately. We also are
increasing our efforts to identify fraud, waste, and abuse. In addition, we
already have implemented over the majority of provisions in the Balanced Budget
Act of 1997 (BBA). We are also implementing additional changes included in the
Balanced Budget Refinement Act (BBRA), which became law late last year. The BBRA
makes substantial investments to meet the needs of our nation's hospitals and
their patients. The BBA changes, combined with efforts to fight fraud, waste,
and abuse in the Medicare program, have helped extend the solvency of the
Medicare Trust Fund until 2023. Improving our Guidance and Education The laws
governing Medicare are complex and extensive. We recognize this and are
increasing our efforts to reach out to all providers to ensure that our guidance
on Medicare policies, and that issued by our contractors, is clear and
understandable. As part of this education effort, we have initiated a wide range
of provider educational activities targeted specifically to hospitals. For
example, we are: - airing satellite broadcasts to hundreds of sites across the
country on topics of interest to providers such as resident training, as well as
women's health and adult immunization initiatives; - surveying health care
providers nationwide and analyzing data collected to develop new education
strategies for reaching out to Medicare providers; - developing computer-based
training modules for providers on topics such as proper claims submission,
Medicare Secondary Payer rules, and Medicare fraud and abuse efforts; - Writing
articles on timely topics for fiscal intermediary bulletins and other
publications targeted toward hospitals; - maintaining the HCFA web site,
www.hcfa.gov, to provide up-to- date, easily accessible material for hospitals
on a wide variety of issues, including interactive courses on the proper filing
and documentation of claims; - communicating on a regular basis through
conference calls with national and state hospital associations and mailings to
hospitals nationwide on issues of interest; - sharing feedback with providers,
both on an individual and community level, about how to correct and prevent the
types of errors identified in medical review of claims so we can reduce the
number of improper claims among the vast majority of providers who make only
honest errors; and, - enhancing our toll-free customer service lines at all
Medicare intermediaries to provide answers to questions hospitals and other
providers may have or to discuss problems they encounter in dealing with
Medicare. As part of our enhanced provider education efforts, we are launching a
multi-faceted education program to ensure that hospitals and their billing
vendors have both the information and training needed to implement systems
changes for the outpatient prospective payment system (PPS), which becomes
operational July 1. As part of this effort, this May we will conduct "train-the-
trainer" sessions for our Medicare fiscal intermediaries. Our intermediaries
will, in turn,, provide training to hospitals and their vendors. We will provide
intermediaries with a comprehensive guide and two days of intensive in-person
training. We are instructing all intermediaries to take steps to disseminate
program information to providers as soon as possible. intermediaries will post
these instructions on their Internet websites as well as publish articles in
provider bulletins and conduct other outreach efforts to get the message out to
providers. In addition, we have invited representatives from national and
state-level hospital associations to attend the training sessions in order to
facilitate the timely exchange of information. We are also hosting a national
satellite broadcast on June 1 so that all interested parties can learn about the
new regulation. Improving Oversight of Our Contractors We are also taking steps
to substantially strengthen oversight of the private insurance companies that
process and pay Medicare claims. The FY 2001 President's Budget invests $48
million in a contractor oversight initiative to improve internal controls and
financial management. We have also consolidated responsibility for contractor
management by establishing the new position of Deputy Director for Medicare
Contractor Management. And we have created a Medicare Contractor Oversight Board
to set policy regarding contractor-related activities. As part of this effort,-
we-also are working with the Inspector General's office to create individual
report cards on each contractor's performance against specific goals and
criteria. Contractors that perform poorly and fail to improve risk losing their
Medicare business. In addition, we are hiring additional physicians as claims
processing contractor Medical Directors to improve the effectiveness of medical
review and foster better understanding of program integrity issues with the
provider community. We are making more efficient use of prepayment review with
claims processing computer "edits" that automatically deny improper claims
before payment is made. We are also evaluating local review policies to
determine where national policy may be needed, and measuring how well individual
contractors perform medical review activities. We also have implemented a change
management process to manage and -coordinate changes to the Medicare
fee-for-service program in a more timely and effective manner. This process is
designed to allow our central and regional office staff, as well as our
contractors, to participate cooperatively in each phase of the development and
review process on Medicare Contractor manual issuances and program memoranda. It
also ensures that we provide a single, consistent voice to our contractors. In
addition, we are requiring contractors to report to our regional offices
quarterly on the implementation of Medicare instructions that directly impact
providers, such as payment and coding changes. Our regional offices will work in
consultation with the contractor to ensure that any implementation problems are
quickly resolved. The regions also will track the timeliness of the contractors
in addressing any needed changes-on an-ongoing basis, and will incorporate these
findings into the annual contractor performance evaluation process. Ensuring
Program Integrity We also are redoubling our efforts to identify fraud, waste,
and abuse in all of our programs. Today, our efforts are more effective than
ever before. From April-September, 1998, we stopped about $5.3 billion from
being paid to providers for inappropriate claims. Our anti-fraud efforts
returned nearly $500 million to the federal government, a 65 percent increase
over the previous year. And we have reduced the Medicare error rate by almost
half since 1996, and maintained that progress in 1999. The annual Medicare
financial audit helps us to identify areas where we can be better stewards of
the Medicare program. Each year it has led us, working in cooperation with
Congress, providers, and contractors, to improve the integrity of our program,
including our claims processing and payments. We realize that our efforts to
reduce fraud, waste, and abuse may have generated concern among some providers.
Let me be clear. We have no intention of prosecuting anyone for honest mistakes.
If providers do make billing errors, we want to find those errors, preferably
before we make payment. If we find errors after we make payment, make no mistake
about it--we do want the money back. However, we are not looking to put anyone
in jail for honest mistakes, and we are not going to refer providers to law
enforcement for occasional errors. We know that the majority of providers are
honest and conscientious. Let me also be clear, however, that we have zero
tolerance for fraud, waste, and abuse. Our goal is to receive accurate and
properly documented claims from providers and to pay those claims correctly. -
That way beneficiaries, taxpayers, and providers can all be confident that our
program is effectively managed, our tax dollars are appropriately spent, and our
beneficiaries receive the quality, affordable care on which they depend.
Balanced Budget Refinement Act Working together, Congress and the
Administration, enacted the BBRA last year, which includes a number of payment
reforms and other changes to address some of the BBA's unintended consequences.
A number of these refinements will be particularly helpful to America's
hospitals. These include: - modifying the hospital outpatient prospective
payment system (PPS); - increasing indirect medical education payments to
teaching hospitals; - reducing the geographic disparity in direct medical
education payments to teaching hospitals; - increasing disproportionate share
hospital payments; - increasing payments for PPS-exempt hospitals; and -
improving rural hospital programs. We also have taken a number of our own
administrative actions to moderate the impact of the BBA. These steps complement
the legislative changes included in the BBRA and will help hospitals and other
providers in meeting the needs of the patients they serve. For example, we are
postponing expansion of the BBA's "transfer policy" for all hospitals for a
period of two years, through 2002. As a result, the transfer payment limits will
apply only to the current 10 Diagnosis Related Group (DRG) categories, as
prescribed by the BBA. We are carefully considering whether further postponement
of this policy is warranted. The BBA created a new PPS for hospital outpatient
care that pays set amounts for services that are similar clinically and in their
use of resources. Responding to the concerns expressed by providers, the BBRA
modifies the outpatient PPS in several important ways. It smoothes the
transition to the new system, during the first three and a half years, by
creating payment floors, holding small rural hospitals with fewer than 100 beds
harmless for three and one-half years and cancer hospitals permanently harmless.
During the transition period, we are protecting hospitals by paying a part of
any reduced payments they might incur, under the new system, for outpatient
services. In addition, this new system makes additional payments to hospitals
for certain new medical devices and drugs, and it establishes an outlier payment
policy for high-cost cases. The BBRA makes important investments in our nation's
graduate medical education (GME) programs by increasing
Indirect Medical Education payments and reforming Direct
Medical Education. It reduces the geographic disparity in
payments to teaching hospitals; raises the minimum payment for hospitals to 70
percent of the national, geographically adjusted average; and limits growth in
payments for hospitals being paid more than 140 percent of the geographically
adjusted average. The BBRA also increases Medicare disproportionate share
hospital payments, makes adjustments to the PPS system for inpatient
rehabilitation hospitals, and requires the development of PPS systems for
long-term care and psychiatric hospitals. And it enhances a series of Medicare
policies designed to support rural hospitals. For example, it allows certain
rural hospitals to reclassify as Critical Access Hospitals, Community Hospitals,
or Rural Referral Centers; extends the Medicare dependent hospital program for
five years; provides exceptions to the residency caps for rural GME; and rebases
targets for Sole Community Hospitals and provides them with a full increase for
inflation in 2001. Using our administrative authority, we are building on the
BBRA changes to further assist rural hospitals. For example, we are making it
easier for rural hospitals, whose payments are now based on lower, rural area
average wages, to be reclassified and receive payments based on higher average
wages in nearby urban areas. This change will be included in the inpatient PPS
regulation that will be published shortly. As a consequence of this change,
these rural hospitals will receive higher reimbursement. Similarly, we are
helping rural hospitals adjust to the new outpatient PPS by using the same wage
index for determining a facility's outpatient payment rates that is used. to
calculate its inpatient rates. We will continue to closely monitor how laws and
regulations governing our programs affect beneficiaries and providers. We want
to hear from you about problems that Medicare providers and beneficiaries may be
having. And we will continue to examine our own regulations and policies to make
adjustments where we can under the law to ensure that beneficiaries continue to
have access to the quality care they deserve. Conclusion Ensuring that
beneficiaries have access to quality health care is a priority for-our Agency.
We are increasing our efforts to educate hospitals and other providers about
Medicare policies. And we are working closely with our fiscal intermediaries to
ensure they have the information, tools, and training they need to process and
pay claims appropriately and that their guidance to providers is clear.
Together, we can minimize honest errors, and prevent fraud, waste, and abuse in
the Medicare program. Through administrative actions, we have been working to
moderate the impact of the BBA where we can. We are implementing the numerous
changes contained in the BBRA that directly impact hospitals and other
providers. We welcome your input and assistance as these efforts move forward,
and we appreciate your continued interest. I am happy to answer your questions.
LOAD-DATE: April 26, 2000, Wednesday
