Hugh Aaron's Medicare Weekly Update  | HCPro

In this issue - July 15, 2008

  1. Note from Hugh

  2. CMS Regulations

  3. CMS Transmittals and MLN Matters articles

  4. Other CMS and OIG Issuances

  5. CMS Public Events this Week

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Hugh Aaron's Medicare Weekly Update
July 15, 2008
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Welcome to Hugh Aaron's Medicare Weekly Update!

This e-zine provides a weekly update for healthcare coding, billing, and compliance professionals who must stay current on government regulations and guidance relating to Medicare coverage, billing, and payment for inpatient and outpatient hospital services.

Today's issue covers regulatory developments released last week.

I hope that you find this publication a valuable resource. Feel free to forward this newsletter to your clients, colleagues, and peers.

Note from Hugh

CMS issued a transmittal (Change Request 6088) last week titled “Pathology Services: Notification of the Sunset for the Payment of Physician Pathology Services for Independent Laboratories.” Because of the use of the terms “Physician” and “Independent Laboratories,” many hospitals may have assumed that this transmittal was not relevant to hospitals. That would be a mistake.

This issue has a long and interesting history. Apparently, for many years after the implementation of the Inpatient Prospective Payment System (i.e., DRGs), CMS permitted non-hospital laboratories to provide, bill and be paid for the technical component of pathology services furnished to hospital inpatients. This arguably resulted in Medicare overpaying for such cases because DRG payments are generally intended to include payment for all non-physician services furnished to hospital inpatients. CMS attempted to “fix” this problem in 1999 by promulgating regulations preventing non-hospital laboratories from being paid for technical component pathology services furnished to hospital patients.

However, in response to industry concerns, Congress temporarily delayed implementation of the 1999 CMS regulation until December 31, 2006 (at least with respect to certain “grandfathered” laboratories). Congress then extended the implementation delay under December 31, 2007.  Following that extension, Congress extended the delay for another six months until June 30, 2008. 

The purpose of Change Request 6088 is to announce that the Congressionally mandated delay has now expired and that CMS has implemented the 1999 regulation effective for dates of service on or after July 1, 2008.

What does this mean for hospitals? It means that, effective for dates of service on or after July 1, 2008, hospitals must include the charges for technical component pathology services furnished to their patients on the hospital claim. Outside laboratories may no longer bill Medicare directly for these services. Importantly, this applies to be both hospital inpatients and hospital outpatients.

One issue that I have not analyzed is the extent to which hospitals could still obtain technical component pathology services from an outside laboratory “under arrangements.” However, even if that is permissible, it would require that the outside laboratory bill the hospital rather than Medicare. Hospitals that are interested in exploring some sort of “under arrangements” relationship with an outside laboratory should consult regulatory counsel for guidance.

The bottom line is; however, as of July 1, hospitals will be responsible for the cost of technical component pathology services furnished to their patients. Hospitals will be able to bill Medicare for these services; however, hospitals will generally not receive any additional payment for technical component pathology services furnished to inpatients because payment for such services will generally be treated as included in the DRG payment. On the other hand, hospitals will generally receive separate payment for technical component pathology services furnished to outpatients unless such services are treated as “packaged” under the outpatient prospective payment system.

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CMS Regulations

CMS issued no significant regulations affecting hospital billing this week.

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CMS Transmittals and MLN Matters articles

CMS maintains existing National Coverage Decision (NCD) of percutaneous translumnial angioplasty (PTA) with stenting
On July 11, CMS issued a transmittal announcing that it will not change its existing NCD for PTA with intracranial stenting.
Effective date: May 12, 2008
Implementation date: August 11, 2008
View the transmittal.
CMS issues guidance on billing for the technical component of pathology services furnished to hospital patients
On July 7, CMS issued a transmittal providing guidance on the implementation of a regulation prohibiting non-hospital laboratories from billing Medicare directly for the technical component of pathology services furnished to hospital patients. See “Note from Hugh” above for more information.
Effective date: July 1, 2008
Implementation date: July 7, 2008
View the transmittal.
CMS releases MLN Matters article
CMS released an MLN Matters last week relating to a transmittal previously announced in the Medicare Weekly Update.

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Other CMS and OIG Issuances

CMS issues press release announcing nearly $700 million in improper Medicare payments recovered by Recovery Audit Contractors (RACs)
On July 11, CMS issued a press release announcing that the RAC program has recovered nearly $700 million in improper Medicare payments. The finding was part of an evaluation report of the three-year demonstration portion of the program.
View the press release.

OIG issues report on excessive payments for outpatient and inpatient services processed by Blue Cross and Blue Shield of Georgia (BCBSG)

On July 8, the OIG issued a report on excessive payments for outpatient and inpatient services processed by BCBSG. The OIG determined that of the 94 high-dollar payments that BCBSG made to providers in calendar years 2004 and 2005, 12 payments totaling $264,000 were inappropriate.

View the OIG report.

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CMS Public Events this Week

CMS Hospital Open Door Forum conference scheduled for July 17

The next CMS Hospital/Hospital Quality Open Door Forum conference call is scheduled for July 17 at 2 p.m. eastern time. To access the call, dial 800/837-1935, and enter 53531737 as the conference ID.

CMS will also allow access to the "encore" (i.e., recorded) playback of this call beginning Monday, July 21, 2008. It will expire after three business days. To listen to the encore playback, dial 800/642-1687 and enter 53531737 as the conference ID.

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Avoid compliance risks with Medicare's three-day payment window

Medicare’s three-day payment window provides both opportunity and risk for hospitals. Join HCPro on July 30 at 1 p.m. (Eastern) for the live audioconference Demystify Medicare's Three-Day Payment Window: Understand the Rule and Maintain Best Practices. You'll discover the compliance perils surrounding the rule, plus recent changes in CMS policy. You'll also hear from HCA Inc. on how the organization operationalized the rules, changed policies and procedures, and achieved compliance.

To order, visit HCPro's Healthcare Marketplace or call customer service at 800/650-6787 and mention Source Code EZINEAD.


Ensure your clinical trial billing meets government standards
The Healthcare Compliance Professional?s Guide to Clinical Trials will help you sort through the various rules and establish policies and procedures that guarantee Medicare-covered research is reimbursed appropriately. You'll discover methods for your facility to minimize compliance risk in the important research that it conducts. This book provides customizable forms to conduct a Medicare Coverage Analysis, proven sample auditing and monitoring templates to develop your own review plan, as well as lessons learned from real-life clinical trial situations.

For more information or to order, call 800/650-6787 and mention Source Code EZINEAD or visit HCPro's Healthcare Marketplace.

Medicare made a lot of changes for 2008. 
If you don’t fully understand how to apply the rules, then you can’t miss HCPro’s Medicare Boot Camp ®  - Hospital Version, an intensive, five-day course that will provide you with a detailed understanding of Medicare coverage, billing, coding and payment for hospital outpatient and inpatient services. Our programs are offered nationwide.

To register call 800/780-0584 and mention source code EZINEAD or visit


Brian Murphy
Senior Managing Editor

Editor's note: HCPro welcomes comments from readers of the Medicare Weekly Update. While Mr. Aaron is unable to answer individual questions, questions from readers will be considered for possible inclusion in the "Note from Hugh" section of future editions of the Medicare Weekly Update or in the Q&A sections of other HCPro publications and Web sites (in which case, you will receive a copy of the Q&A prior to or upon publication).


Volume 2 Issue 28

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