Overview

On December 15, 2000, Congress passed H.R. 4577, an omnibus package containing four annual appropriations bills, including the Labor/Health and Human Services/Education bill, and an agreement for Medicare "givebacks" to further restore cuts in Medicare funding that were made in the 1997 Balanced Budget Act. The total bill is about $384 billion.

The Department of Health and Human Service will receive about $260 billion for FY2001. Included in this funding is $270 million for the Agency for Healthcare Research and Quality (AHRQ), of which about $50 million would go toward patient safety initiatives. Aside from this AHRQ funding there are no additional provisions in the bill regarding patient safety/medical errors.

The Medicare portion of the bill is the "Medicare, Medicaid and SCHIP Benefits Improvement and Protection Act of 2000" (BIPA 2000). BIPA 2000 totals about $35 billion over five years. An approximate breakdown of the increased reimbursements is as follows: Hospitals - $14 billion M+C plans - $11 billion Direct benefits for beneficiaries - $7 billion Home health agencies - $1.7 billion Nursing homes - $1.6 billion

Highlights of BIPA 2000 of Interest to the QIO Community

Medicare Appeals: This provision establishes the new beneficiary right to a reconsideration of initial determinations made by fiscal intermediaries, carriers, and PROs. PROs will continue to provide initial determinations (case review), but their decisions could be subject to an independent review by qualified independent contractors (QICs). The Secretary is directed to contract with 12 qualified independent contractors (QIC) for a period of 3 years. Any entity making initial determinations is prohibited from becoming qualified independent contractors, including fiscal intermediaries, carriers, and PROs.

In addition to these changes, the legislation contains provisions related to appeals of hospital issued notices of non-coverage (HINNs) which could either be interpreted to preserve this PRO responsibility or give it to the QICs. AHQA is working under the worst-case assumption that the PROs no longer perform HINN reviews, but is still trying to clarify the legislative intent. It is also unclear whether PROs maintain their ability to perform reconsiderations/redeterminations of their own initial determinations. Current law gives PROs the responsibility to perform "reconsiderations," but this new statute does not specifically maintain this role for PROs. It does clearly state that fiscal intermediaries and carriers are able to do their own redeterminations. This appears to be a technical oversight and not a policy change.

In addition to issuing regulations specifying all aspects of the appeals process, the Secretary is directed to perform outreach activities to inform beneficiaries, providers, and suppliers of their appeal rights and procedures. It is not clear how this outreach activity will occur.

AHQA believes the QIC process is duplicative and unnecessary and finds no basis for creating a new entity to perform HINNs. AHQA will seek regulatory and/or legislative solutions to these issues before the effective date of October 2002.

M+C Reimbursement:

Increased Payments: The bill increases the minimum payment amount to $525 per member per month in 2001 in metropolitan statistical areas of more than 250,000, and $475 per member per month for all other areas, effective March 1, 2001. It also gives the plans a three percent increase 2001 and returns to the current law minimum update of two percent thereafter.

Phase-in of Risk Adjuster: Risk adjustment, designed to more fairly compensate physicians for the actual costs of caring for different patients, will be implemented gradually through 2007 rather than 2004. The provision specifically requires the full implementation of risk-adjusted payments for individuals with congestive heart failure.

Opportunity to Reconsider 2001 Pullouts: M+C plans canceling their contracts or reducing the service areas for 2001 would be able to reconsider their decision based on revised M+C capitation rates that will be published by the Secretary of HHS within two weeks after enactment.

New Fine for Pullouts: A $100,000 fine will be levied against managed-care companies that leave a region without the governmentÕs permission before their annual contract expires.

Modernization of Screening Mammography Benefit: The bill establishes two new payment rates are established that utilize advanced new technology for the period April 1, 2001 to December 31, 2001: 1) Payment for technologies that directly take digital images would equal 150% of what would otherwise be paid for a bilateral diagnostic mammography, 2) For technologies that convert standard film images to digital form, an additional payment of fifteen dollars would be authorized. The Secretary will determine whether a new code is required for tests furnished after 2001.

Exemption of Critical Access Hospital Swing Beds from SNF PPS: Swing beds in critical access hospitals (CAHs) would be exempt from the SNF prospective payment system. CAHs would be paid for covered SNF services on a reasonable cost basis.

EMTALA Study: The bill requests GAO to evaluate the impact of the Emergency Medical Treatment and Active Labor Act on hospitals, emergency physicians, and physicians on-call to emergency departments. GAO would have to submit this report to Congress by May 1, 2001.

GAO Studies and Reports on Medicare Payments: The provision would require the Comptroller General to conduct a study on the post-payment audit process for physicians' services. The study would include the proper level of resources HCFA should devote to educating physicians regarding coding and billing, documentation requirements, and calculation of overpayments. The Comptroller General would also be required to conduct a study of the aggregate effects of regulatory, audit, oversight and paperwork burdens on physicians and other health care providers participating in Medicare.

GAO Study on Certain Eligibility Requirements For Critical Access Hospitals: Within one year of enactment, GAO would be required to conduct a study on the eligibility requirements for critical access hospitals (CAHs) with respect to limitations on average length of stay and number of beds, including an analysis of the feasibility of having a distinct part unit as part of a CAH and the effect of seasonal variations in CAH eligibility requirements.