Providers have their hands full

Saturday, January 31, 2009

At the end of 2008, providers found themselves in a familiar posture - anticipating changes to their business plans in response to new directions from CMS and Congress. But year-end business planning was more difficult than it was when fee schedules merely went up or down in response to changes in the CPI or legislation, thanks to the current regulatory climate. Here is a list of the top issues that are likely to impact providers in 2009.

Oxygen payment cap

Providers who furnish oxygen are struggling to respond to recent CMS regulations that redefine the relationship between providers and oxygen patients. Effective Jan. 1, 2009, providers were no longer required to transfer ownership of oxygen equipment to Medicare beneficiaries at the end of a 36-month rental period. Instead, reimbursement for oxygen equipment “caps” after three years. The provider retains ownership of the equipment and must service the beneficiary for the remainder of the equipment’s five-year useful life or the end of medical necessity, whichever is first. The challenge for providers is CMS’s expansive view of the provider’s obligation to beneficiaries after the 36-month payment cap.

Providers must continue servicing Medicare beneficiaries for as long as another 24 months without any additional compensation except payment for oxygen contents. This means that providers are not paid for supplies, repairs or other services (except routine maintenance in 2009) furnished to a beneficiary after Medicare payments cap. Providers are also required to service beneficiaries who travel or move outside the provider’s service area after the 36th month. Although CMS has promised to provide providers with additional guidance, it was still forthcoming when this article went to print.

Fee schedule reductions

Providers that furnish any of the products that were subject to competitive bidding saw a 9.5% cut in Medicare reimbursement for those items effective Jan, 1, 2009. The payment cuts were mandated by Congress under the Medicare Improvement and Patient Protection Act of 2008 (MIPPA), the law that delayed the first round of competitive bidding. Items that were not included in the first round saw a payment increase of 5%.

Competitive bidding

MIPPA cancelled the first round of competitive bidding, delayed the program and required CMS to change how it runs the program. In response to Congress’ direction, CMS disbanded the existing Provider Advisory and Oversight Committee (PAOC) and solicited nominations for new members. A new PAOC had not been configured when this article went to press. By year-end, CMS was also on track to publish a revised competitive bidding rule, but it has not announced the schedule for new rounds of bidding.

Surety bonds, provider standards and accreditation

Two more important rules will impact providers’ operations and bottom lines in 2009. In May, new providers and those undergoing a change of ownership will have to obtain a $50,000 surety bond for each of their NPI numbers in order to enroll in Medicare. Existing providers will need the bond in October.  The new rule applies to all DME providers except certain government-owned providers and certain practitioners that are not affiliated with a DME provider. Providers are also likely to see new provider standards, as well as significant “clarifications” to the existing standards. The new standards could include a requirement for minimum business hours, restrictions on subcontracting professional staff and an expansion of the prohibition against telephone contacts with beneficiaries. Finally, all providers must be accredited by Sept. 30, 2009, in order to continue billing Medicare.

CPAP and sleep testing

Providers that furnish CPAP will not be able to bill Medicare for the device if they are affiliated with the person or entity that furnished the sleep study used to qualify the patient. An “affiliation” includes ownership interests or compensation arrangements. Although there is an exception for certain facility based sleep studies, the new prohibition on payment for CPAP is broad and likely to affect many current business arrangements.

Added to the mix are a new administration and Congress, a drive for healthcare reform that seems to be gaining traction and the relentless focus by policymakers on fraud in the Medicare DMEPOS benefit.  Providers have their hands full in 2009.

Healthcare attorney Asela Cuervo is based in Washington, D.C.