A Medical Device Daily

Erroneous billing continues to occupy a high place on the priority list at the Centers for Medicare & Medicaid Services, which recently published a statement on improper billings to Medicare, Medicaid and the State Children's Health Insurance Program, or SCHIP.

The agency's Nov. 17 statement indicates that such efforts are paying dividends, albeit more slowly than policymakers would have it.

According to CMS, its efforts have "protected roughly $400 million of taxpayer dollars as improper payments for Medicare [Part B] fee-for-service (FFS) decreased" from 3.9% in fiscal 2007 to 3.6%, or $10.4 billion, in the current fiscal year.

On the other hand, its numbers for Medicare Part C, alternately known as Medicare Advantage (MA), show that 10.6% of payments made to managed care providers in calendar year 2006 were erroneous, a figure that comes out to about $6.8 billion. Despite the fact that the dollar figure is lower than that for the notorious Part B program, this finding is sure to excite action on Capitol Hill, given that Democrats have traditionally opposed the program. Max Baucus (D-Montana), chairman of the Senate Finance Committee, has spoken of the need to "level the playing field" between MA plans and Part B providers in discussing his recent proposal to reform healthcare.

According to the CMS statement, most erroneous payments to Part B providers "are due to claims for services that were medically unnecessary or incorrectly coded," and do necessarily reflect attempts to defraud the taxpayer. Acting CMS administrator Kerry Weems said in the statement that the agency is "using the most effective information-gathering tools available to help us identify and eliminate improper payments in our efforts to protect the integrity of CMS programs."

The report's inclusion of national composite error rates for Medicaid and SCHIP for 2007 is a first. By CMS's reckoning, the Medicaid composite error rate is 10.5%. This comes out to a total of $32.7 billion, with federal taxpayers on the hook for $18.6 billion and state taxpayers the balance of $14.1 billion. CMS states that the error rate for SCHIP is 14.7%, or $1.2 billion. Uncle Sam's share of that sum is $800 million.

According to CMS, "the vast majority of Medicaid and CHIP errors are due to inadequate documentation," consisting of a failure on the parts of providers to submit information to support their claims or failure to "submit additional data when requested, a similar trend seen with Medicare Parts A and B in previous years." Other billing problems reflect treatment of those who were either not eligible for the program or not eligible for the services provided.

Still, the picture for fiscal prudence is improving, with payment errors in Part B falling "from about 14% in 1996 to the 2008 rate of 3.6%," CMS indicates. The agency added that it "expects the error rates for Medicare Advantage, Medicaid and SCHIP to decline similarly through program maturation and the agency's use of tools that include statistical sampling, medical reviews and error rate reduction plans."

Bariatric surgery coverage clarified

Getting a handle on diabetes depends in part on getting control of one's weight, and bariatric surgery is widely seen as one effective way to do that. Hence, the Nov. 17 proposal by CMS "to clarify its policies for Medicare coverage of bariatric surgery as a treatment for beneficiaries with Type 2 (or non-insulin-dependent) diabetes" will determine whether many such procedures will be paid by the program.

The agency is proposing that Medicare will pay for bariatric surgery for Type 2 diabetics when the patient has a body mass index (BMI) of more than 35, a setting that is generally seen as reflecting morbid obesity. Weems said in the statement that the procedure is "a viable option for many morbidly obese patients who have not been successful with other weight loss programs."

The statement notes that while recent reports "claimed that bariatric surgery may be helpful for these patients, CMS did not find convincing medical evidence that bariatric surgery improved health outcomes for non-morbidly obese individuals." The open comment period runs 30 days from the posting date of Nov. 17, and a final decision memo will be published 60 days later.

HHS drafts final rule for PSOs

Collecting the data to establish the safety profiles for drugs and devices is no small task, hence the effort at the Department of Health and Human Services to foster patient safety organizations (PSOs) to help ensure the needed data are collected, analyzed and disseminated in a timely fashion. The initial proposal came out at the beginning of the year (Medical Device Daily, Jan. 11, 2008), and the final draft goes into effect on Jan. 19, 2009.

According to the Nov. 21 announcement, the Agency for Healthcare Research and Quality, which administers the program, already has accredited 15 PSOs. Those first 15 will have to tweak operations so as to comply with some of the changes encoded in the final rule. These changes include a requirement that a PSO "notify providers if the patient safety work product it submits is inappropriately disclosed or its security is breached," according to the HHS statement.

On the other side of the equation, the statement also notes that requirements for how a PSO "maintains separation between itself and its parent organization(s) have been made more flexible."

HHS Secretary Michael Leavitt said in the statement that he expects "the final rule and the creation of Patient Safety Organizations to greatly improve the quality of health care for all Americans ... by making it easier for clinicians and health care organizations to report and learn from adverse events without fear of new legal liability."