OPPS begins with shaky start and mixed reviews
Concerns remain over OIG’s response to mistakes
The wait is over, and the Health Care Financing Administration’s (HCFA) outpatient prospective payment system (OPPS) has arrived. The questions now are how reimbursement will be affected, and how the government’s fraud enforcers will respond to inevitable reporting errors on the part of providers. Originally planned for a July 1 launch, the system was held back for a month while it was fine-tuned, and finally went into operation Aug. 1.
"The decision to delay the PPS from July 1 to Aug. 1 was an extremely difficult one," according to HCFA administrator Nancy-Ann De Parle, "because it meant postponing the benefits of the new PPS."
Deborah Williams, senior associate director for policy development at the American Hospital Association in Washington, DC, says it’s too early to see how this will play out, "because for the most part hospitals haven’t received any payments on OPPS. A lot of hospitals are holding their claims until HCFA can straighten out the bugs."
And bugs there have been. The implementation of the expanded claim format experienced "limited processing problems," according to a message DeParle sent to hospital administrators.
Some outpatient billings will now be delayed until the first of the year.
"We continue to test the software, and hospitals have been using an improved version of the claims expansion and line-item processing form since June 5," DeParle wrote.
Williams, however, is skeptical. "Based on the results of limited tests, we’re not optimistic," she says. "We look at all the coding and rules. There is so much material on the Q&As that it’s really hard for people to put it all into place. It’s got to be complicated because HCFA has had so many problems of its own getting it up and running."
Many hospital administrators also expressed serious concerns regarding the reimbursement rate under the contingency plan. DeParle acknowledged the hospital industry’s difficulty with this factor. "As a result, we have increased the reimbursement rate to 85% of the historical Medicare payment level as opposed to the 70% level originally proposed," she assured administrators. "This will provide additional financial support to hospitals without jeopardizing the integrity of the Medicare Trust Fund."
One of the hospitals’ additional concerns is how the Office of the Inspector General (OIG) will deal with inevitable mistakes resulting from the new coding and billing system. The new system requires that each service furnished by a provider be reported on an individual line in the bill. This requires software adjustments that could be complicated for many hospitals and which already have proven difficult to implement at the HCFA end.
"We see no reason for hospitals to bear the risks associated with significantly restricted cash flow after the government’s decision to move forward with OPPS in the absence of reasonable assurances that the system would perform as intended," the AHA wrote in a letter to the OIG.
In her response to the AHA, June Gibbs Brown, the Health and Human Services inspector general, claimed that "under law, hospitals are not subject to civil or criminal penalties for innocent errors, mistakes, or even negligence. . . . When billing errors, honest mistakes, or negligence result in erroneous claims, the hospital will be asked to return the funds erroneously claimed, but without penalties. Nevertheless, inadvertent billing errors are a significant drain on the programs, and all parties need to work cooperatively to reduce the overall error rate."
Facing challenges in implementation
Brown said the OIG recognizes "that providers will face challenges in implementing the new payment system, and it is during such challenging times that providers need to be especially vigilant in identifying erroneous claims."
Though DeParle urged hospitals to continue to use their normal contacts as the first source for help and answers, HCFA also has made available several new sources of communication including:
- e-mail with separate electronic mailing lists for hospitals, community mental health centers, and other providers affected by PPS;
- dedicated PPS Web site at www.hcfa.gov/medlearn/refopps.htm;
- e-mail address for direct communication with HCFA: [email protected];
- flyer to explain the PPS to beneficiaries.
All services paid under the OPPS are classified into groups of ambulatory payment classifications (APCs), HCFA states on its Web site. Services in each APC are similar clinically and in terms of the resources they require. A payment rate is then established for each APC. Depending on the services provided, hospitals may be paid for more than one APC for an encounter.
Various hospitals and other health care centers were anticipating holding the OPPS at bay for a while longer until there was a greater comfort level with the new plan. But DeParle said that the delay until Aug. 1 took care of existing problems and no further delays could be justified at this time.
In her letter to administrators, she wrote that "we have established contingency plans in the unlikely event Medicare systems cannot process claims initially under the new PPS, either on a national scale or at the individual intermediary level."
HCFA offers help
She added that if a hospital is not up to speed or is unable to submit outpatient claims, HCFA will provide special payments with a simplified request and approval process. "In these cases we will ask the hospital to hold its claims until it is able to submit accurate claims."
However, HCFA announced Aug. 22 that OPPS claims are being processed correctly. The announcement stated that HCFA informed its fiscal intermediaries that Contingency Plan 1 is not needed because the systems are functioning. Contingency Plan 1 was designed to pay Medicare PPS claims in the event that HCFA’s systems were not processing the claims.
The announcement added that when processing errors occur due to the HCFA standard systems or HCFA’s outpatient code editor, the agency will be responsible for reviewing claims in question and making any payment adjustments.
The AHA had expected the first checks for billings to come out by Aug. 14. On the other hand, it was expected that HCFA could be later than usual delivering the first round of checks.
Williams says she’s only heard of one hospital being paid as of Aug. 25. "And that was one payment for one claim," she says.
Meanwhile, on its Web site, HCFA posted revisions to criteria to define new or innovative medical devices, drugs, and biologicals eligible for pass-through payments as well as corrections to criteria for the grandfather provision for certain federally qualified health centers.
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