Baker Tilly healthcare update June 9, 2014

At the agencies

On May 29, the Health and Human Services (HHS) Inspector General released a report finding that in 2010, the Medicare program paid out $6.7 billion for healthcare visits that were improperly coded or that lacked proper documentation. The report found that 42 percent of diagnostic and assessment claims were improperly coded and that 19 percent of these types of claims were improperly documented. The report noted that though many coding errors are the result of legitimate mistakes, these errors tend to result in higher payments for physicians. On a related note, CMS recently conducted a “test-run” of the new ICD-10 coding system and reported that it accepted 90 percent of the claims using the new coding from the test participants. CMS will be conducting other ICD-10 test-runs before its full implementation in October of this year.

On May 28, the Department of Justice announced that Medtronic, a medical device company, will be paying a nearly $10 million settlement. The Minnesota-based company allegedly provided “improper financial incentives” to doctors who used their defibrillators and pacemakers. Some of these “kickbacks” included sports tickets, marketing costs, and paid speaking engagement fees.

On June 1, the Centers for Medicare & Medicaid Services (CMS) released an update of the initial hospital charge data disclosure that was first released last year. This new data covers typical billings for services for the 100 most common kinds of Medicare inpatient stays for 2012. After the initial data release last year that covered charges from 2011, many hospitals claimed that the data is not indicative of what the majority of patients or their insurance companies pay for those services.

On the Hill

Sylvia Burwell was confirmed by the Senate as the new Secretary of Health and Human Services on June 5. The vote was 78-17 in favor of her confirmation. She is expected to be sworn in on June 9.

Third parties

A report released on May 28 showed that the healthcare industry had a higher risk of cybersecurity breaches than any other industry. BitSight Technologies, a security ratings firm, drafted the report and claims that those in the healthcare industry do not make cyber security a priority in comparison to financial, retail, and utility industries. According to the report’s findings, cyber events in healthcare lasted almost a full day longer on average than cyber events in any other industry.

A report put out by Health Affairs revealed that safety-net hospitals may see a shortfall of disproportionate-share payments (DSH) from Medicaid. The report, put together by the UCLA Center for Health Policy Research and the Virginia Commonwealth University, predicts that hospitals in California, for example, would have to cover $1.38 to $1.54 billion in DSH costs in 2019. Pending DSH cuts are part of the Affordable Care Act (ACA), whose authors assumed that as more patients gained access to healthcare through the exchanges, the need for Medicaid DSH payments would decrease. This report found that the expected revenue for public hospitals due to an increase in patients with new ACA-exchange health plans may not materialize.

For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.