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The Useful 5: Regulatory Roundup for Rev Cycle Leaders

Analysis  |  By Amanda Norris  
   November 02, 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.

This article appears in the November/December 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 October, including a CMS audit and payment adjustments for low-volume hospitals.

Here are the five updates you need to know.

The OIG said CMS' oversight of hospital compliance needs work.

The Office of Inspector General (OIG) released a report in October to assess the results of 12 Medicare hospital audits from 2016 through 2018 and identify CMS' actions as a result of OIG recommendations made in those audits. The OIG explains that while CMS has taken some actions to ensure that the recommendations were implemented, it could strengthen internal controls to prevent payment of certain high-risk claims.

The 12 audits identified more than $5 million in overpayments by CMS, with 54 of the 387 improperly paid claims identified as outpatient claims that resulted in $53,729 in net overpayments.

The OIG report further explains that the most frequent mistake behind the outpatient claims being improperly paid was due to the implementation of incorrect HCPCS codes. Roughly 56%, 30 of the 54 improperly paid outpatient claims, had this problem.

“These errors included claims with HCPCS codes that were not supported by the medical records and claims with the improper number of units billed,” the report states

The second-most frequent reason for overpayments was the incorrect implementation of bypass modifiers. 17 of the 54, or 31% of the audited claims had this issue.

The document also identified that improper reporting of units for services was a reason for overpayment. This problem affected four of the 54 checked claims, or 7%. The hospitals incorrectly coded for multiple units of outpatient surgery procedures when they should have billed for only 1 unit.

The last 6% of the improperly paid outpatient claims were attributed to incorrect skilled nursing facility (SNF) consolidated billing.

The OIG made 36 recommendations as a result of the audits to CMS to “improve program oversight.” The most significant recommendations that the OIG provided to CMS were:

  • Continue to follow up on overpayment recovery
  • Improve tracking and responding on the status of claims identified in OIG reports as they proceed through the appeals process

Other recommendations included exercising diligence to identify, report, and return any overpayments in accordance with the 60-day payment rule, and strengthening internal controls to ensure full compliance with Medicare requirements.

CMS concurred with some of the recommendations and partially followed them. The OIG's report says that CMS provided “insufficient information” that it had implemented the recommendations to providers to repay overpayments. CMS asserted that it has consistently provided information as claims go through appeals processes with the OIG teams through the Audit Management System.

In response to the strengthening of internal controls, CMS directed its hospitals' MACs to perform self-assessments. However, the OIG reported that only four of the 12 originally audited hospitals completed the self-assessments and repaid their overpayments by the 60-day payment rule deadline.

Ten of the 12 originally audited hospitals took action to strengthen internal controls by implementing quarterly reviews, hiring external firms to audit, and providing additional training to coding and billing staff.

CMS released the 2023 Medicare Advantage and Part D star ratings.

On October 6, CMS published a news alert regarding the star ratings for 2023 Medicare Advantage and Part D Prescription Drug Plans.

Approximately 51% of MA plans that offer prescription drug coverage will have an overall rating of four stars or higher in 2023, while 72% of people currently in MA plans with drug coverage are enrolled in a plan that earned four or more stars.

The average star rating for all Medicare Advantage plans with prescription drug coverage is 4.15% for 2023, a decrease from the 2022 average of 4.37%. The number of five-star contracts fell significantly from 74 in 2022 to 57 for the coming year.

Overall, there are 67 contracts that earned 4.5 stars (96 last year), 136 that earned four stars (152 last year), 116 that earned 3.5 stars (122 last year), and 90 that earned three stars (25 last year).

The decline in ratings for 2023 isn't necessarily performance-based, as CMS adjusted its methodology to account for the COVID-19 pandemic no longer being at the height it was in recent years.

CMS published a fact sheet on the star ratings on the same date.

CMS is vacating the differential payment rate for 340B-acquired drugs in 2022 OPPS final rule.

On October 13, CMS published a note in MLN Connects regarding the ruling prohibiting CMS from applying a different payment rate for 340B-acquired drugs at average sales price (ASP) minus 22.5%. CMS will revert to paying the default rate (ASP plus 6%) for these drugs for the rest of the year.

CMS will also reprocess claims that the CMS contractors paid on or after September 28, 2022, using the default rate.

Biden-Harris administration strengthens oversight of nation’s poorest-performing nursing homes.

On October 21, CMS published a press release regarding updates to the special focus facilities (SFF) program to toughen requirements for completion of the program and increase enforcement actions for facilities that fail to demonstrate improvement. These updates are part of a series of actions this administration is undertaking in an attempt to increase accountability of bad actors in the nursing home industry, improve quality, and make nursing homes safer. There are currently 88 nursing homes in the country participating in the SFF program.

CMS published a memorandum discussing the specific changes to the program on the same date.

Are you a low-volume hospital? You may be catching a payment break. 

On October 21, CMS published one-time notification regarding implementation of an extension for the low-volume hospital payment adjustments and Medicare Dependent Hospital (MDH) programs under the Continuing Appropriations and Ukraine Supplemental Appropriations Act of 2023.

The low-volume hospital payment adjustments and MDH programs that were originally supposed to end on October 1, 2022, have now been extended through December 16, 2022. These changes may affect designations of MDH programs as sole community hospitals in certain circumstances, and low-volume hospitals must send written requests to their MACs by November 16 to receive the applicable low-volume percentage increase for payments for FY 2023 discharges occurring before December 17. 

CMS published MLN Matters 12970 on the same date to accompany the transmittal. 

Amanda Norris is the Director of Content for HealthLeaders.

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