Attorneys

• Diane S. Millman

Johnson & Stark Issue Recommendations for Improvement of Medicare Program

On May 15, 2001, Chairman of the House Ways and Means Health Subcommittee Nancy Johnson and Ranking Member Pete Stark released a letter to Health and Human Services Secretary Tommy Thompson detailing a number of joint recommendations for improving the Medicare Program. The letter is the culmination of Subcommittee hearings held to identify ways of improving the Program. All of the changes described in the bipartisan letter may be accomplished administratively, without any legislation, and the letter directs the Secretary to make these program modifications "as quickly as possible."

The proposed modifications are divided into three sections: HCFA Management; Strengthening Fee-For-Service Medicare; and Medicare+Choice. Each of these sets of recommendations is described separately below.

HCFA Management

The letter focuses to a large extent on proposals to improve HCFA management. Suggestions include improving accountability over regional office activities, as well as improving oversight of HCFA contractors, including carriers and intermediaries.

The letter also suggests improving the regulatory process in a number of ways. For example, Congressmen Johnson and Stark suggest that the agency announce regulatory changes once every six months and establish a strict timeline to be followed for the progression of proposed to final rules. It also recommends that HCFA implement a system of formal consultation with congressional committees and providers to assure that new rules comply with the governing law and that they can be implemented in a timely fashion.

The letter recommends improving provider education and providing increased assistance to providers in interpreting new regulations and policies. In a related suggestion, Congressmen Johnson and Stark request HCFA to release more information and data on the impact of regulatory changes.

Fee-for-Service Program Improvements

The letter also proposes a number of policy changes with respect to various aspects of the Medicare Program. A number of modifications are advised for HCFA’s processes that determine Medicare coverage for drugs and biologicals. For example, the letter suggests that Medicare provide coverage for drugs and biologicals listed in the United States Pharmacopeia-National Formulary (USP-NF), as well as the United States Pharmacopeia-Dispensing Information (USP-DI), and that HCFA expedite the implementation of coverage of new drugs and biologicals through the timely issuance of Program Memoranda.

In fact, the letter specifically directs HCFA to improve access to other new technology as well. In this regard, the letter suggests a number of specific changes that may result in more expeditious coverage for new technologies including, for example, quarterly updates of the HCPCS coding system and increased coordination of local medical review policies (LMRPs).

The letter calls HCFA’s attention to the extraordinary paperwork burdens that the Medicare program places on providers, especially hospitals, home health agencies and nursing facilities. The document suggests that HCFA review the current hospital cost reporting forms and instructions in order to simplify hospital cost reporting, and also requests that HCFA refrain from conducting audits of facilities when the changes would not directly affect reimbursement. It also focuses on a number of other forms used by various other facilities, including the advance beneficiary notices (ABNs) used by home health agencies; Medicare as Secondary Payer (MSP) reporting; and the Medicare Summary Notice (MSN), which provides the beneficiary with information regarding claims allowances and denials.

Additionally, Johnson and Stark propose a number of substantive changes in policy. They advise the agency to refrain from implementing the administrative expansion of the Emergency Medical Treatment and Active Labor Act (EMTALA) to include non-emergency care sites. The letter also suggests the modification of the coding and payment process for ambulance demand bills, the elimination of provisions in the provider-based status regulations that preclude full service management contracts, and the expansion of the established safe harbor that enables dialysis facilities to subsidize the costs of treatment of indigent patients.

Medicare+Choice

Johnson and Stark suggest that HCFA consolidate regulatory authority for Medicare+ Choice into a single HCFA Office of Managed Care in order to improve efficiency and responsiveness. In addition, they indicate that risk adjustment, which was initially required by the Balanced Budget Act of 1997, should be improved by developing a risk adjuster that is based on accurate data and that reflects the cost of care provided to beneficiaries. Finally, they suggest eliminating the potential conflict caused by the requirement that plans’ marketing information be approved by both HCFA’s central office and the Regional Offices. Furthermore, once marketing materials are approved, they should be valid for the entire duration of the plan contract.

The operational and policy suggestions included in the letter to Secretary Thompson are likely to be taken seriously, especially if providers and other concerned parties take advantage of the momentum to press for implementation of the proposed changes. In addition, the letter clearly signals the Hill’s increased responsiveness to provider complaints about the administrative burdens and overreaching policies imposed by the agency.