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The Useful 5: Regulatory Roundup for Rev Cycle Leaders

Analysis  |  By Amanda Norris  
   September 06, 2022

HealthLeaders' regulatory round up series highlights five essential governing updates that cover every aspect of the revenue cycle that leaders need to know. Check back in each month for more updates.

Editor's note: This article appears in the September/October 2022 edition of HealthLeaders magazine.

The revenue cycle is complex, detailed, and always changing, so staying on top of regulatory updates and latest best practices requires revenue cycle leaders' constant attention in this ever-changing industry.

In this revenue cycle regulatory roundup, there were an ample number of updates published by CMS and the OIG in August, including payment rate updates and revised COVID-19 billing guidance.

Here are the five updates you need to know.

Prepare for your organizations' payment rates to possibly change on October 1.

In August, CMS published the fiscal year (FY) 2023 IPPS final rule. CMS projects an increase in operating payment rates by 4.3% based on a projected hospital market basket update of 4.1% reduced by a 0.3% productivity adjustment and increased by a 0.5% statutory adjustment.

This operating payment rate is significantly higher than the 3.2% rate from April's proposed rule and follows a trend with the other final payment system rules released thus far in 2022 where the payment rate in the final rule is higher than that from the proposed rule.  

CMS finalized a return to using the most recent available data (including the FY 2021 MedPAR claims and the FY 2020 cost reports) for FY 2023 rate-setting with some modifications to account for any impact COVID-19 may have had. This includes calculating two sets of relative weights–one including COVID-19 claims and one excluding COVID-19 claims–and averaging those out to determine FY 2023 relative weight values. A full accounting of additional modifications CMS will make for rate-setting is discussed in the rule. 

Other policies finalized in the rule include: 

  • Approving 25 technologies for new technology add-on payments for FY 2023, but not continuing with a one-year extension for certain new technologies that are out of their newness period despite the authority to do so due to the public health emergency.
  • Due to certain statutory language and a recent federal court ruling (Milton S. Hershey Medical Center v. Becerra), CMS is modifying policies for teaching hospitals as well as for certain providers and cost years to address situations for applying the full-time employee (FTE) cap when a hospital's weighted FTE count is greater than its FTE cap.
  • As it has in other payment system rules for FY 2023, CMS is finalizing a 5% cap on any decrease to a hospital's wage index from its wage index the prior FY. 

The rule also contains a variety of quality reporting program changes and several changes to policies regarding maternal health. CMS finalized a proposal to create a new "birthing-friendly" hospital designation effective fall 2023.

As mentioned previously, in April CMS proposed an IPPS increase of 3.2% for FY 2023, an additional $1.6 billion. However, that proposal drew flak from the hospital lobby. The Federation of American Hospitals (FAH) called the proposed increase "woefully inadequate."

"It does not reckon for the hyper-inflation, staffing crisis, and the continuing pandemic, which will impact resources necessary for patient care well into the future," FAH said in April.

However, the bumped reimbursement rate in this final rule "pleased" the American Hospital Association (AHA).

"This update still falls short of what hospitals and health systems need to continue to overcome the many challenges that threaten their ability to care for patients and provide essential services for their communities," AHA Executive Vice President Stacey Hughes said in a media release.

"This includes the extraordinary inflationary expenses in the cost of caring hospitals are being forced to absorb, particularly related to supporting their workforce while experiencing severe staff shortages," Hughes says. "We will continue to urge Congress to take action to support the hospital field, including by extending the low-volume adjustment and Medicare-dependent hospital programs."

The rule is effective October 1, 2022.

CMS is requesting information that may pertain to your revenue cycle.

Also this month, CMS published a request for information in the Federal Register regarding how Medicare can work to improve equity, high-quality, and person-centered care through Medicare Advantage (MA) in a way that is affordable and sustainable.

Some of the specific questions CMS asked for input on include effective approaches to handle social determinants of health, what types of supplemental benefits MA plans do or should provide, and how MA plans use prior authorization.

The use of data for MA plan and program improvement is also found throughout the request. Specific and detailed asks concern what can be done to better leverage data for better outcomes. Some examples include:

  • The best data to advance equity. CMS seeks better data related to race, ethnicity, and language; sexual and gender identity; people with disabilities and language/communication hurdles; cultural identity and religious preferences; socioeconomic need; and people in rural and underserved communities.
  • A focus on socioeconomic data. CMS adds specific questions, including MA plan challenges in "obtaining, leveraging, or sharing such data."
  • Supplemental benefit use and outcomes. To improve both, CMS asks what "standardized data elements" it could collect and how they would also aid DOH, equity, and cost-sharing burdens. 
  • Applications for utilization management (UM). With a Senate bill aimed to improve PA headed to the house, CMS wants to know which of its data, if any, help with UM/PA application and how MA plan data could align for better efficiency.
  • Value-based contracting. Data to assess value-based contracting models within the MA program.
  • Competition dynamics. CMS seeks data on vertical integration and its MA market impact.

CMS released more guidance for your revenue cycle staff on COVID-19 billing.

On August 16, CMS updated its FAQs for Medicare providers regarding COVID-19 billing. CMS published two new FAQs in the document regarding Medicare coverage and billing for COVID-19 testing done solely for travel purposes.

For example, CMS was asked if it is appropriate for a clinical laboratory to bill and accept cash payments from Medicare Part B beneficiaries for COVID-19 testing solely for the purposes of travel.

According to CMS' answer to this question, providers are required to submit claims for Medicare-covered services. However, in general, if a service is not covered by Medicare because it is not within the scope of a Medicare benefit, providers may bill and accept direct payments from beneficiaries for those services.

CMS said it strongly encourages providers to issue an advance beneficiary notice of noncoverage for care that is never covered because it does not meet the definition of a Medicare benefit, including COVID-19 testing performed solely for the purposes of travel.

Did CMS just lighten the load for your revenue cycle staff?

On August 17, CMS announced it is discontinuing the use of certificates of medical necessity and durable medical equipment information forms for claims with dates of service on or after January 1, 2023.

CMS said it reached this decision due to stakeholder feedback that these forms are duplicative and burdensome, and CMS said that submission of these forms is particularly burdensome for small or rural providers.

Another OIG audit highlights the importance of accurate coding.

On August 23, the OIG published a review of whether select diagnosis codes that Cigna HealthSpring submitted to CMS for use in the risk adjustment program complied with federal requirements.

The OIG conducted the audit by sampling 200 enrollees with at least one diagnosis code that mapped to a hierarchal condition category (HCC) for 2015. This resulted in 1,470 HCCs associated with these enrollees. The OIG found that 69 of the 1,470 HCCs were not supported in the medical record, a far lower error rate than the OIG typically finds in these audits.

The OIG also found that there were an additional 18 HCCs for which the medical records supported diagnosis codes that Cigna HealthSpring should have submitted to CMS but did not.

Therefore, the risk scores for these sampled enrollees should have been based on 1,426 HCCs instead of 1,470, and Cigna HealthSpring received $39,612 in net overpayments for these sampled enrollees. 

The OIG recommended that Cigna HealthSpring refund the federal government for the $39,612 in net overpayments and improve its policies and procedures to prevent, detect, and correct noncompliance with federal requirements for diagnosis codes used in risk-adjusted payment calculations.

Cigna HealthSpring disagreed with the OIG's findings and recommendations from the draft report and questioned the OIG’s audit and statistical sampling methodologies. The OIG revised some of its original findings and recommendations but maintained that its methodologies were reasonable and properly executed.


“This update still falls short of what hospitals and health systems need to continue to overcome the many challenges that threaten their ability to care for patients and provide essential services for their communities.”

Amanda Norris is the Associate Content Manager of Finance, Payer, Revenue Cycle, and Strategy for HealthLeaders.

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