CHA Blog

Through passing the American Taxpayer Relief Act of 2012 (ATRA), Congress yet again avoided cuts to the Medicare physician fee schedule and extended the therapy caps extension process through December 31, 2013.

This extension, section 603 of ATRA, means that Medicare beneficiaries who are receiving medically necessary physical therapy, occupational therapy, and/or speech language pathology services and reach the 2013 threshold amount of $1,900 may continue to receive their Medicare-covered therapy services. As long as the therapy provided is reasonable and medically necessary, requires the specialized skills of medical professional, can be justified by supporting documentation in the beneficiary’s medical record, and their provider submits a “KX modifier” on their claim form, the additional services over the threshold amount should be covered. The “KX modifier” on the claim indicates that the requirements for an exception to the therapy cap have been met. The Centers for Medicare and Medicaid Services (CMS) has clearly stated that claims exceeding the cap that do not include the KX modifier will be denied.

CMS also noted that an automatic exceptions process will not apply in 2013; and the manual medical review process for annual per beneficiary services over $3700 in 2013 is in the process of being determined.

For more information, see CMS’ website announcement and their Therapy Cap Fact Sheet (PDF).

An increasing number of Medicare beneficiaries receiving inpatient hospital care are being held in “observation status” versus being fully admitted as a hospital patient. At first glance, it may seem like no big deal, as beneficiaries receive the same care and services regardless of their official hospital status. Yet, the real and quite significant “big deal” lies in who covers the bill. Medicare only covers hospital care when a patient is officially admitted as an inpatient, not when held as an outpatient, or in observation status. Also, Medicare only covers critical after-care (including rehabilitation services) in skilled nursing facilities (SNFs) when it follows a 3-day inpatient hospital stay. This means that beneficiaires held in observations status face an overwhelming burden of huge medical bills that would otherwise be covered by Medicare.

Brown University recently released a report finding a 34% increase in the ratio of observation stays to inpatient hospitalization when looking at claims data from 2007 to 2009. Medicare policy guidelines state that observation stays ideally are concluded within 24 hours and should rarely go beyond 48 hours. But the number of observation stays of 3 or more days is growing. For example, in 2009, 44,843 Medicare patients were held for observation stays for 72 hours or longer, which is an 88% increase from 2007.

Originally, the designation of outpatient observation status was created so that hospitals could assess whether a patient should receive more treatment or be discharged. Hospitals use criteria like illness severity and the intensity of medical services to determine whether a patient qualifies for inpatient care or an observation stay. Yet because of the crack down on Medicare fraud and rise in audits on hospital billing practices (which includes looking for improper or fraudulent hospital admissions for short stays), hospitals have increasingly been keeping patients in observation status as a way to avoid some of this scrutiny.

While the goal of cracking down on hospital billing fraud makes sense, some of unintended consequences, namely beneficiaries being held in observation status at hospitals without knowing it and not being able to access their entitled Medicare coverage, are unacceptable.

The Center for Mediare Advocacy and the National Senior Citizens Law Center jointly filed a class action lawsuit, Bangall v. Sebelius last November against the federal government on behalf of 7 beneficiaries who represent numerous beneficiaries across the country being hurt by this practice. Among many things, the lawsuit also claims that patients aren’t given proper notice when they are on observation stays or when their status is changed from inpatient to outpatient. They point out that federal policy actually permits hospitals to change an inpatient designation to an outpatient observation status before the patient is released with no required beneficiary notification. The lawsuit also argues that patients don’t have a clear-cut right to appeal their observation status, leaving them with little access to refute their case and get their hospital and after-care bills paid.

Also, while federal legislation (H.R. 1543) that was introduced last year would treat observation status as an inpatient stay for the purpose of obtaining Medicare coverage in a skilled nursing facility after receiving care at a hospital, it has not yet passed and is currently being referred to the Subcommittee on Health for review.

Many Medicare advocates fear that hospital’s use of “observation status” will continue to rise as the Affordable Care Act, which penalizes hospitals with “execessive readmissions rations,” is fully implemented.

See the Center for Medicare Advocacy’s “Observation Status” section on their website for detailed information on the lawsuit and links to numerous articles on the topic.

With ambulance rides being one of the most expensive modes of transport, Medicare has strict medical necessity guidelines to prevent overuse of this benefit. If Medicare has reason to doubt medical necessity in a beneficiary’s ambulance transport, Medicare will often deny payment of the claim. While these strict guidelines are understandable, advocates across the state have seen a rise in denied payment of beneficiaries’ ambulance services, even when medical necessity is seemingly a given.

One problem we’ve seen is that often the billing codes submitted by the ambulance transport company determines whether a beneficiary’s transport meets the medical necessity requirements. If the ambulance company doesn’t submit the proper codes that denote medical necessity, Medicare will often automatically deny a claim and then it is up to the beneficiary to file an appeal. Also, American Medical Response (AMR), one of the primary ambulance transport service providers in California, has had a policy that if Medicare denies an ambulance service, the beneficiary must pay the bill, or set up a payment plan within 30 days; otherwise, their bill goes to a collection agency. This 30-day policy is hardly enough time, especially if a beneficiary has been in the hospital and/or rehab, for s/he to find out about Medicare’s denied payment and file an appeal.

To remedy this situation, two Medicare advocates in Santa Cruz County, Health Insurance Counseling and Advocacy Program (HICAP) Program Manager, Debbie Reed, and Senior Medicare Patrol (SMP) Liaison, Evelyn Taylor set up a meeting with AMR and also arranged for them to speak at our recent biannual Medicare training conference in Pasadena, California. The meetings were a success and as a result, HICAP Program Managers and their volunteer counselors have a specific contact at AMR to call regarding ambulance billing questions. Also, if a HICAP/SMP advocate calls and states they are working with a beneficiary to appeal/resolve their ambulance trip directly with Medicare, AMR’s billing service, Patient Business Services (PBS) will automatically put the beneficiary’s account on hold for 90 days; this is two times as long as the previously noted 30-day policy. This will prevent the beneficiary’s claim from going to a collection agency while an appeal is filed and awaiting Medicare’s redetermination on the claim.

This is a great step forward in advocate and provider collaboration and a great win for beneficiaries. An article on a beneficiary whose successful ambulance appeal relates directly to this new agreement will be posted soon.

See Medicare’s Coverage of Ambulance Services (PDF), for more information on Medicare’s coverage of ambulance services.

As of January 1st of this year, all beneficiaries who are denied coverage for a drug are entitled to receive a standardized written notice from the pharmacy explaining their Part D appeal rights.  This change is due to the Affordable Care Act (ACA). Prior to this year, pharmacies could either hand out this information or just post a notice in the pharmacy without specifically alerting an affected beneficiary to their appeal rights. In addition, prior to this year none of these appeals rights forms were standardized. The new rule from the ACA requires pharmacies to use a new standardized form, Medicare Prescription Drug Coverage and Your Rights (instructions and form can be downloaded here). A Spanish version will also be posted soon.

This requirement and standardized form is an important change for beneficiaries in terms of them being aware of and accessing their Part D appeal rights. Currently, the way the Part D appeals system is set up, the appeals process is NOT triggered when a beneficiary cannot obtain their drugs at a pharmacy. Nothing will happen unless the beneficiary proactively takes action and requests a “coverage determination” or “exception.” Only once an adverse coverage determination is initiated will the appeals process begin. (See our Part D appeals section for more info). Therefore, making sure each beneficiary who cannot get his/her drugs knows about their rights and HOW to start the appeals process is imperative to them having full access to their entitled benefits.

Questions regarding this new standardized notice can be sent to PartD_Appeals@cms.hhs.gov.

Additional information including frequently asked questions are included in the Centers for Medicare and Medicaid Services (CMS) memorandum sent out to all Part D sponsors entitled Revised Standardized Pharmacy Notice (CMS Form – 10147) (PDF).

We have 2 new Medicare podcasts available in English and Spanish, covering the topics of low-income assistance programs for Medicare beneficiaries and Medicare appeals. English and Spanish transcripts are also available for each.

All Medicare beneficiaries have the right to appeal a decision that denied them coverage or payment, yet not all beneficiaries are aware of these rights or know how to use them.

In addition, many people who qualify for low-income assistance to help pay for Medicare costs are unaware that these programs exist. The programs, such as Medi-Cal, the Medicare Savings Programs, and the Part D Low-Income Subsidy help cover people’s Medicare premiums, deductibles and copayment, therefore ensure people can afford and access their health care.

Podcasts are a simple and effective way to get this important information out and they make the information available especially to people with visual impairments, and those with low literacy levels. Beneficiaries, their families, caregivers and friends can listen together in English and/or Spanish and view the transcripts in both languages as well.