By George G. Olsen, JD
A Medicare Makeover Administrative changes to Medicare gain support on Capitol Hill. On March 6, 2001, Congressman Pat Toomey (R-Pa) and Congresswoman Shelley Berkley (D-Nev) introduced the Medicare Education and Regulatory Fairness Act of 2001 (MERFA). As of this writing, MERFA has 194 cosponsors—only 24 members short of a majority of the House of Representatives. The legislation was referred to the House Committee on Energy and Commerce and to the House Committee on Ways and Means. A companion measure was introduced in the US Senate by Senator Frank H. Murkowski (R-Alaska) and Senator John F. Kerry (D-Mass). This bill, S 452, has 32 cosponsors, nearly one-third of the Senate. MERFA would reform HCFA in four basic areas: (1) broad regulatory reforms; (2) changes in billing practices; (3) increased provider education and communication; and (4) ensuring proper implementation of certain physician regulations. With respect to fundamental regulatory reforms, HR 868 would clarify that health care providers need comply with a regulation that has been issued by HCFA only after the final rule has been promulgated. In other words, HCFA may not apply a final rule retroactively. In addition, MERFA would allow providers to pursue a judicial challenge to the constitutionality or legality of Medicare laws or HCFA policies. MERFA would make several significant changes to Medicare billing practices including: allowing health care providers the option of entering into a repayment plan for overpayments rather than HCFA automatically offsetting future payments, thereby preventing HCFA from unilaterally recouping an alleged overpayment while an appeal is still pending; prohibiting HCFA from using random prepayment audits without cause; allowing providers to waive co-payments for existing patients who have financial hardships; permitting providers up to 1 year to return overpayments without penalty or audit if they discover the mistake before HCFA confronts them; preventing HCFA from using statistical extrapolation methods during the first overpayment assessment, ie, HCFA would not be able to use a small sample of just a few charts to project overpayment for all similar claims submitted by the provider without actually examining those claims; requiring consent settlement letters to state expressly that providers have the right to dispute an overpayment allegation without waiving the administrative appeal rights; and prohibiting HCFA from using prepayment reviews for longer than 180 days or after 75% of the claims have been approved, whichever comes first. MERFA would also make important changes in provider education and communication. The legislation would require federal funds to be dedicated to educating providers about proper documentation and billing. These monies would be made available from HCFA’s Medicare Integrity Program, part A fiscal intermediary funding, and part B carrier finances. The bill would also provide that providers may submit questions and documentation to HCFA to receive correct answers within 30 days. According to Congressman Toomey, the providers covered by MERFA include hospitals, skilled nursing facilities, outpatient rehabilitation facilities, hospices, home health agencies, ambulance services, and physicians. However, technical drafting questions have arisen concerning the types of providers covered by the proposal. To clarify their intent, the bill’s sponsors recently wrote to the chairwoman of the Subcommittee on Health of the House Ways and Means Committee advising that it was their recommendation that MERFA apply to all Medicare providers and that it was not their intention “to exclude anyone from regulatory relief who presently bills the Medicare program.” While MERFA has strong bipartisan support, it is not without its critics. On March 15, 2001, George Grob from the HHS Office of Inspector General testified at a hearing before the House Ways and Means Subcommittee on Health that “the Office of Inspector General cannot support this bill as written. While its objectives are worthy, we are concerned that many of the provisions will subject the Medicare Trust Funds to a high level of risk and possibly result in harm to beneficiaries.” On the same date, the ranking member of the Subcommittee on Health, Congressman Pete Stark (D-Calif) wrote to his colleagues arguing that “enactment of this legislation would provide unscrupulous providers a roadmap with clear directions about how to bill the program.” Despite the reservations advanced by the HHS Office of Inspector General and a limited number of members of Congress, MERFA enjoys a large number of cosponsors in both the House and Senate evincing strong support for HCFA reform. Providers who are interested in seeing legislation such as MERFA enacted in this Congress should contact their congressperson in the very near future. Administrative Proposals On May 14, 2001, Congresswoman Nancy Johnson (R-Conn), chairwoman of the House Ways and Means Subcommittee on Health, and Congressman Stark wrote to HHS Secretary Tommy Thompson outlining a number of administrative changes that would make Medicare more responsive to beneficiaries and providers. Among the proposed administrative changes are the following: First, recognizing that one of the recurring frustrations raised by providers arises from inconsistencies in regional interpretations of HCFA National Office policies on issues ranging from coverage decisions to program integrity, Representatives Johnson and Stark propose that a direct point of accountability within HCFA be established for oversight of regional office activities. This person should be charged explicitly with reviewing regional activities to identify inconsistencies that may need policy attention. Second, in light of the continuing stream of rules from HCFA with which providers are expected to comply, the letter proposes a regular schedule for release of all program guidances, including program memoranda, notices of proposed rule making, interim final rules, and final rules. These regulatory announcements would be made every 6 months, unless either the Secretary identified a compelling need for more timely action or earlier action is needed to comply with statutory requirements. In addition, the letter calls for a thorough review of all Medicare policies, including regulations and program manual instructions, to ensure consistency and promote simplicity. Third, Representatives Johnson and Stark contend that “a more aggressive system of education and technical assistance” must be developed to facilitate compliance with the extensive regulations confronting Medicare providers. To this end, they propose that HCFA contractors offer technical experts to visit providers and work with them to evaluate systems to determine compliance and to suggest more efficient or more effective means of fulfilling program obligations. Fourth, the letter recommends that HCFA develop and implement relevant standards from the best private industry practices for improving its processes for procurement and supervision of contractors. This proposal flows from the conclusion that HCFA has “experienced poor performance with its intermediaries and contractors, resulting in increased frustration from providers.” Fifth, the letter proposes a wide range of specific recommendations for strengthening the Medicare fee for service program and the Medicare + Choice program including suggestions concerning self-administered drugs and biologicals, diabetes self-management programs, patient assessment instruments and processes, standardization of local medical review policies, simplified cost reporting for hospitals, expansion of Emergency Medical Treatment and Active Labor Act requirements, home health services, ambulance billing, and the Medicare secondary payment program and Medigap. The letter to Secretary Thompson from Representatives Johnson and Stark represents a well-thought-out approach to making administrative reforms that should greatly benefit Medicare beneficiaries and providers. The real beauty of this effort is that legislation would not be required to implement these administrative reforms. George G. Olsen, JD, is a partner of the firm Williams & Jensen, PC, Washington, DC. He is also legal counsel for the National Association of Rehabilitation Agencies.
