Volume VI Number 4

October 2000

The Newsletter of

D E K A Y E  Consulting, Inc.

231 Oakview Avenue
Oceanside, New York 11572
Phone / Fax: (516) 678-2754
E-Mail: Adkcmpa@aol.com
E-Mail: DKConsult1@aol.com
URL: http://www.dekaye.com

Vital Signs

Providers Beware - - Preparing for OIG 2001 !
by Allan P. DeKaye, MBA, FHFMA, President & CEO, D E K A Y E consulting, inc.

Just when you thought you had already completed OIG 2000, the issuance of Workplan Fiscal Year 2001 has been issued by the Department of Health and Human Services. It is interesting to note where the government is placing its resources, especially with the continued presence of some of the studies that debuted in 2000 which are still on the list. This article will focus on hospital and physician initiatives.

Hospital Focus

"One Day Hospital Stays" and "Hospital Discharges and Subsequent Re-admissions" are carried over from last yearís list. OIG cited that with 10% of all admissions being one day stays, they were going to continue to examine this area. While the OIG appears focused on the authorization controls, the quality of care element is probably a driving force. It certainly must be when examining, "Hospital Discharges and Subsequent Re-admissions."

Continued emphasis will be placed on "Related Hospital and Skilled Nursing Stays." This appears closely allied with the entry of "Satellite Hospitals" or "hospital-within-a-hospital" relationships. Given the recent trends in mergers and acquisitions, and the provision of "cradle to grave" services in an enterprise network, the need to conduct internal reviews and assessments will be very much in order.

"Transfers" continue to make the OIG list, but this time in a more expanded format. These now include: PPS Transfers, PPS Transfers between Chain Members, PPS Administrative Recovery, and those for PPS Transfers during Hospital Mergers. Clearly intent on following the migration of a patient through the health care system, count on the government developing edit routines to map patient movement between facilities, for what reason, the physicians involved and payments given to each. In what appears to be a follow-up study, "Post Acute Services for DRG Considered Transfers" will be an attempt to see how those patients with the Ten Transfer DRGís are now being treated.

"Uncollectible Beneficiary Deductibles and Coinsurance" continues to be on the OIG agenda. It will likely focus on reimbursement of Medicare providers who fail to collect these amounts.

There are also a series of initiatives aimed at DRG payments: DRG Payment Limits, Outlier Payments for Expanded Services. And in what may be a return of the "Three Day Rule" reviews is an effort entitled: "DRG Payment Window-Hospitals." This may be a re-examination of the procedures and effectiveness of the reduction of billing for outpatient services rendered in connection with a hospital admission. A similar effort entitled: DRG Payment Window-Part B Providers" seems to focus on a companion study to see if the Part B providers may have submitted related claims, with laboratories and ambulance companies cited as the potential focus of the review.

A review of the "Outpatient Prospective Payment System" is also on the OIG 2001 calendar. Emphasis will be placed on documentation, proper coding, and medical necessity. Reviews of "pass-through" costs will also be included.

The remaining three focus areas for hospitals include: Outpatient Pharmacy Services at Acute Care Hospitals, Outpatient Medical Supplies at Acute Care Hospitals and Follow-up on Peer Review Organizationsí Compliant Process.

Physician Focus

Right at the top of the list is PATH (Physicians at Teaching Hospitals). This sounds very much like a follow-up review to ensure that providers are now in compliance with these requirements.

"Reassignment of Physician Benefits" is again a carryover from OIG 2000 suggesting that it has only just begun to find areas of interest. It sounds as though some of the focus will also include the clinics who bill using physician numbers.

Podiatristsí Medicare Billing and Podiatry Services are both on the list, and the focus appears aimed at a national review to detect billing errors and increases in selected procedures. ABNís or Advanced Beneficiary Notices will be on the list to ensure that they are being used properly, and to determine their financial impact on beneficiaries and provides. Critical Care Codes will be examined, as will Bone Density Screening.

The role of non-physician practitioners (e.g., nurse practitioners, clinical nurse specialists, and physicianís assistants) will be part of this review. Finally, "incident-to" physician services will also be reviewed.

Preparing for 2001

Fueled by increases in funding, the OIG appears poised to continue several of its 2000 efforts, while embarking on a new range of reviews. Hospitals and physician groups are advised that now is not the time to rest contented on past compliance accomplishments (at least for those that have some). This ambitious workplan underscores the governmentís belief that "it ainít over yet," and that there is more waste (if not fraud and abuse) that can be squeezed out of the industry.

Providers, though faced with limited resources, will need to aggressively address their own areas of increased risk in light of these announcements. However, through continued educational awareness, effective compliance plans, and focused reviews and studies, especially in high risk areas, providers are likely to be in a better position to meet the challenges of OIG 2001.

Perspectives and Commentary

Seasonal Variation and Increasing A/R Trends
by Allan P. DeKaye, MBA, FHFMA, President & CEO, D E K A Y E consulting, inc.

It is not uncommon for hospital A/R to be influenced by seasonal variations. For example hospitals in the Northeast might be influenced in Winter with heavier admissions due to Influenza outbreaks. Hospitals in Western and Southern states will see increases in volume during Winter months as people from the North vacation. And facilities in states with high tourism will also see increases as vacation and holiday periods occur at various times during the year.

Hospital departments such as Admitting and Patient Accounts can be periodically influenced by surges in volume. Most departments are staffed based on annual averages of activities in Admitting, Patient Accounts and certain clinical areas. Most do not have the luxury of variable (or flex) staffing to add/subtract staff to meet peak demands.

While surges in revenue should be easy to detect from revenue reports, sudden A/R increases should be mitigated in the following months, as the decrement in activity in subsequent months should allow departments like Patient Accounts to recover. If the A/R does in fact go down, the "blip" can be attributed to seasonal variation. When it doesnít, it may be due to real (non-seasonal) volume increases. However, operational factors such as claim denials, utilization management reviews, as well as drop-offs in billing and collection productivity may be influencing factors.

One way to determine if the variation is truly cyclical is to measure several variables to see how they perform over time. Using graphic analysis to measure revenue, receivables and cash collections for the same period (usually monthly over a three year period) should bear out whether the variations are cyclical, or in fact, other problems that require attention. Variables such as the number of admissions, ER and clinic visits are also good barometers to measureĖkeeping in mind that additions of new clinicians or services also influence these volume indicators.

All to often, Patient Accounts directors tend to point to seasonal fluctuations, and seem content to ride out the storm. Unfortunately, not everything is so simple. So in fact, changes like APCís, audit factors like Medicare ADRís (Additional Documentation Requests), and other events that happen from time to time arenít always accounted for in the analysis of seasonal fluctuations.

It is suggested that increases be treated as increases! If the Patient Accounts department responds to reduce those increases, then when volume adjustments begin to work in the other direction, then they may actually see some pronounced decreases in open A/R. We find that it is easy to recite the various reasons why A/R went up (cyclical being one that happens in the Spring), but much more difficult to identify the reasons that A/R went down. The latter should not happen by "chance", but through the results of efforts to improve operations.

: Ask The Expert

by Allan P. DeKaye, MBA, FHFMA

Q:     We have lab x-ray charges that don't reach medical records in a timely manner.  What can we do?

A: Consider the following: in situations where one or more of the "cash flow cycle" departments know that lab, x-ray or other charges have been ordered and are missing or missing information, you cannot simply ignore them. Two basic principles apply: Cash and Compliance! First, cash flow is critical to all providers (e.g., hospitals, physicians , etc.). Once you become aware of such problems as missing diagnostic information (or the clinical reason why a test was ordered), there needs to be an effort made to gather the information. Private Referred ambulatory services is a growing area of service delivery; but it is also an area where hospitals, in particular, are likely to experience increases in accounts receivable, in part due to the situation described in the inquiry

Many providers have considered not permitting tests (in non-emergent, non-life threatening) situations. Often, they will re-schedule these procedures pending complete information. The alternatives: phone or fax ordering providers requesting the missing information; educate ordering providers, and patients. If not obtained, the result will be an uncollectible account. Lost revenue!

This leads to another concern: Compliance. You should be familiar with the prohibitions against the "routine waiving of deductibles and co-payments," and the "inducements to attract a (Medicare) patient."

By not billing for these services--in effect--"forgiving the debt," the provider can be said to have unduly influenced the patient to attend that facility. Aside from the concern the government has from unfair (pricing) competition in the marketplace, the resulting accounting errors that might arise by classifying these unpaid/unbilled charges as bad debt or charity care (which could happen) could lead to errors in cost reporting

The penalties associated with false claims and false reporting can lead to both civil and criminal prosecutions, penalties and/or imprisonment. While these collectible amounts seem small, I suspect that where there are a few, there are really many. Capturing the revenue, and collecting for them in the proper manner, beats the alternatives. In light of APC requirements, many of these services and problems should have been addressed in your recent implementation rollout scenarios.

For more information on these and related subject areas you can reference our web site for: "The Patient Accounts Management Handbook" (Aspen, Chapter 9, "The Charge Collection Process" -- Marrone), our compliance videotapes, "Safeguarding Healthcare's Cash Flow Cycle from Fraud and Abuse," and the On Target newsletter, January 1999 issue, "Essential Elements of Corporate Compliance Programs," and July 1998, "Effective Compliance: Building the Data Defense."

Q:    Are there any tips you can give us concerning time frames for medical records coding and "hold days" for inpatient and outpatient accounts?

A: It would be nice if coding was instantaneous, with hold days at "zero," but alas, a reality check is needed.

First for inpatient records. You must allow time for the chart to leave the clinical floor, and find its way to medical records where "assembly, abstracting and coding" will occur. Five (5) days would be considered a very good time frame, with three (3) even better if: the records are, for the most part, very complete, and staffing is at full levels. Of course, if a (mature) electronic medical record is in use, these numbers should be more easily reached on a consistent basis

HARA (Hospital Accounts Receivable Analysis) indicates that this number is closely to 10+ days nationally with variation by region and bed size. Late charge problems generally negatively impact hospital's ability to improve on these time frames. Coding backlogs also come into play, as does staffing--especially regarding credentialed coders.

For outpatient accounts, APC's have caused great concern. Up until now, outpatient coding was a potpourri of coding from check-off boxes, quick lists, etc., usually with staff without any medical records coding training. Now with new software designed to facilitate the coding process, finding qualified staff to use the new technology can be difficult, as is the process of educating physicians as to what "the reason for ordering the test is." 

Many hospitals allow at least a four day hold to ensure that there are no problems with a conflicting inpatient Medicare account to avoid problems with the Three Day (72hour) rule requirements. Usually, outpatient workflow or system limitations associated with the "opening/closing" of a visit record may also negatively influence this process.

Like shooting a round of golf: the lower the score the better. But given OIG concerns, adding days to ensure correctness makes sense; days added for inefficiency, don't.

Q:    How can we handle the documentation and timing requirements related to Medicare ADR's (Additional Documentation Requests)?

A: Medicare ADR's should be treated like "documentation audits." In order to prepare for them, and meet the requirements of both time frame and satisfactory documentation submission, you will need to review internal procedures to ensure readiness to respond in a timely and complete manner.

In our on-line newsletter, On Target, an article addressing ADR's appears in our January 1999 issue. You can access the article by visiting our web site, and selecting the On Target newsletter icon, and then "double-clicking" on the above noted issue.

The Contributor's Corner

Home Health Care Update

by Andrew B. Shulman, Manager, Holtz Rubenstein & Co., LLP

The world of Prospective Payment changes everything- dramatically altering the industryís financial incentives and focusing attention on technologies that will enable agencies to succeed in this new and ever-changing environment.

As home health care agencies prepared for implementation of PPS on October 1, 2000, agencies, once again, find themselves in that familiar, but somewhat uncomfortable environment of rapid change. PPS definitely represents an opportunity if the home health business is managed actively and well. In fact, for those who are managing efficient and effective agencies, PPS gives the chance to gain distinct and appropriate advantages. Immediately, agencies can set attainable operating targets by looking at direct and indirect costs, (cost per visits, per admission, per diagnosis and costs by home health resource group) and by looking at the anticipated revenues.

General Comments

The July 3, 2000 Federal Register contains the home health prospective payment system final rule by the Health Care Financing Administration (HCFA). The final rule improved several areas of PPS (LUPA cost per visit, wound care scoring, etc.) when compared to the proposed rule issued in October, 1999.

Unit of payment under HHPPS will be a 60 day episode beginning with the first billable visit with unlimited episodes for a patient.

The final standardized and budget neutral HHA prospective payment amount per 60 day episode for fiscal year 2001 is $ 2115.30

The number of home health resource groups remain at 80 while calculation of the HHRG is still based on clinical, functional and service utilization OASIS items.

Wage index amounts for each MSA and non-MSA have been updated to reflect the most current hospital wage index factors.

No changes from the proposed rule related to SCIC payments. Payment is based or a change in the patientís condition resulting in anew OASIS assessment and new HHRG classification.

No change from the proposed rule relating to a PEP. A PEP would occur when a patient either elects to transfer from one HHA to another HHA or is discharged and returns to the same HHA within a 60 day episode.

Outlier payments are additional payments for unusual variations in the amount of medically necessary home visits.

PIP would be eliminated with the implementation of PPS.

Starting October 1, 2000, payment for items and services provided to a beneficiary under a home health agencyís plan of care, with the exception of DME, will be made to the agency.

Finally, on October 1, 2000, Requests for Anticipated Payments (RAPS) will be held by the fiscal intermediary until the shared system can process them. However, HCFA has developed a "phases in" process for implementing HHPPS and has determined a way to pay provides during this phases in process. The special payment is calculated by using the estimated number of RAPS the provider would experience in the first month of HHPPS. Special payments would be calculated by multiplying each providerís total number of RAPS by the standardized rate, the multiplying that amount by the current RAP payment percentage of 60%.


The Home Health Prospective Payment System has be legislatively mandated to begin on October 1, 2000. However, to assure that implementation of the system proceeds smoothly and that the software systems supporting HHPPS are fully functional, HCFA has decided to phase-in its systemís implementation of the HHPPS in the first month, at least through October 31, 2000.

For more information about our services, or Strategic Alliance Partners, please write to us at: Adkcmpa@aol.com or DKConsult1@aol.com

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D E K A Y E Consulting, Inc.
231 Oakview Avenue, Oceanside, NY 11572  Phone/Fax: (516) 678-2754
URL: http://www.dekaye.com E-Mail: Adkcmpa@aol.com or DKConsult1@aol.com