On December 15, 2000, Congress approved a package of Medicare changes that is intended to increase program reimbursement to hospitals, home health agencies, skilled nursing facilities, Medicare+Choice organizations and other providers and suppliers by approximately $35 billion over the next five years.
Commonly referred to as the "Medicare 'Give-Back' Bill," because it is intended to restore funds cut from the program by the Balanced Budget Act of 1997 (BBA), the final package is properly titled the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA).
The BIPA is the second attempt to reverse the effects of the BBA in as many years and comes just one year after the last such effort, the Balanced Budget Refinement Act of 1999 (BBRA), which restored approximately $13 billion over a five year period.
The Medicare legislation was approved as part of a larger conglomeration of bills, which included, among other things, funding for several federal departments and agencies. Despite threats to veto the legislation as it worked its way through the final stages of the legislative process, President Clinton is expected to sign the popular bill.
This Health Law Update highlights the significant elements of the Medicare related portions of the BIPA. However, the BIPA also makes substantial changes to the Medicaid, State Children's Health Insurance and PACE programs. Please consult your regular MW&E attorney or any of the attorneys listed below if you have questions about the Medicaid, SCHIP, or PACE provisions, or any of the provisions discussed below.
Hospital Payment Updates
Prior to enactment of the BIPA, all hospitals, except sole community hospitals (SCHs), were to receive a market basket minus a 1.1 percentage increase for inpatient services for federal fiscal years (FFYs) 2001 and 2002. SCHs were to receive a full market basket percentage increase for FFY 2001 but revert to market basket minus 1.1 for FFY 2002. The BIPA provides a full market basket percentage increase for all hospitals, including SCHs, for FFY 2001 (the market basket percentage for FFY 2001 is 3.4 percent).
However, because FFY 2001 is well underway, hospital payments for all hospitals, other than SCHs, will actually be increased by the market basket percentage minus 1.1 for discharges occurring during the period October 1, 2000 through March 30, 2001 and market basket percentage plus 1.1 for discharges occurring during the period April 1, 2001 through September 30, 2001. For FFYs 2002 and 2003, payments for inpatient services for all hospitals will be increased by market basket minus 0.55.
The BIPA also provides improved updates for outpatient services. Under the current law, Medicare is to update outpatient payments using the same market basket percentage used to update payments for inpatient services. For calendar years (CYs) 2000 through 2002, however, the update was to be limited to the market basket minus 1 percentage. The BIPA modifies the updated provisions for the period April 1, 2001 through December 31, 2001. As a result, hospital outpatient payments will be updated by the amount established by HCFA effective January 1, 2001 plus 0.32 percent.
Disproportionate Share Hospital (DSH) Payment Adjustments
Presently, most urban hospitals with more than 100 beds qualify for a supplemental payment when the total number of Medicare/Supplemental Security Income and Medicaid eligible patient discharges exceeds 15 percent of the hospital's total discharges. Most rural hospitals, on the other hand, qualify for such additional payments when the sum reaches 30 percent; urban and rural hospitals with fewer than 100 beds qualify when the DSH totals exceed 40 percent and 45 percent, respectively. The BIPA reduces the eligibility threshold for all hospitals to 15 percent beginning April 1, 2001.
The BIPA retains the payment adjustment formulae currently in effect for urban hospitals with more than 100 beds but establishes new payment adjustment formulae for rural hospitals and small urban hospitals, which are different, and in most instances, lower than the adjustments applicable to large urban hospitals with comparable discharge experiences.
In analyzing the impact of these changes on your institution, remember the BBA, as amended by the BBRA, reduced the DSH payment adjustment for eligible hospitals by 3 percent in FFY 2001 and 4 percent in FFY 2002. The BIPA reduces the BBA/BBRA cuts to 2 percent in FFY 2001 and 3 percent in FFY 2002.
Provider-Based Status Requirements
The BIPA includes several provisions that will delay and modify new provider-based status requirements. First, the BIPA provides that any facility that was treated as provider-based as of October 1, 2000 shall continue to be treated as such for two years, and the criteria used to determine provider-based status, the prohibition against conferring provider-based status upon joint ventures, the requirements applicable to management contracts and the prohibition against conferring provider-based status on facilities that furnish services under arrangements, shall not apply to facilities treated as provider-based before October 1, 2000 until September 30, 2002. The Health Care Financing Administration (HCFA) currently is interpreting this legislative two-year moratorium as applying only to entities that (a) have a provider-based determination from HCFA or (b) can demonstrate through Medicare payment history that HCFA has treated the entity as provider-based. It is not enough that the main provider itself regards the entity as provider-based.
Second, the BIPA provides additional ways in which entities not already treated as provider-based, which must seek a determination under the new regulations, may satisfy the geographic location test required under the regulations. Specifically, a hospital may also satisfy the geographic location requirement if it (a) is located within 35 miles from the main campus of the hospital or (b) is owned by a hospital that is a unit of state or local government, is a public or private nonprofit entity that is formally granted governmental powers by a unit of state or local government, or is a private hospital that has a contract with a state or local government to operate off-campus clinics and has a disproportionate share hospital percentage of 11.75 or greater. This latter provision appears to be designed to benefit a limited number of providers.
Finally, the BIPA provides that any entity that requests a provider-based status determination between October 1, 2000 and September 30, 2002 shall be treated as provider-based until such time as a determination is made.
Wage Index Improvements
The BIPA includes a provision that will benefit hospitals that qualify for geographic reclassification, especially those that have a history of qualifying sporadically. Specifically, the BIPA provides that a decision by the Medicare Geographic Classification Review Board to reclassify a hospital for purposes of its wage index shall now be effective for three years, rather than the current one-year duration.
This provision becomes effective starting with hospitals that qualified for geographic reclassification for FFY 2001. Additionally, the BIPA requires HCFA to establish a mechanism whereby states could adopt a statewide wage index that would apply to all areas within the state. Any state that adopts a statewide wage index likely would be advantaging the rural hospitals within the state at the expense of the urban and rural hospitals that reclassify into urban areas.
Indirect Medical Education ("IME") and Graduate Medical Education ("GME") Payment Adjustments
Medicare compensates hospitals for indirect costs attributable to the involvement of residents in patient care through an add-on to payments made for inpatient services provided to Medicare beneficiaries. Under the BBA, as amended by the BBRA, the IME adjustment for FFY 2001 was reduced to 6.25 percent for each 10 percent increase in a hospital's ratio of interns and residents to beds. The BIPA maintains the IME adjustment at 6.25 percent for the period October 1, 2000 through March 30, 2001 but increases it to 6.75 percent for discharges occurring between April 1, 2001 and September 30, 2001. The adjustment remains 6.5 percent in FFY 2002, but returns to 5.5 percent in FFY 2003 and subsequent years.
The BBRA established a new methodology for paying hospitals for direct GME costs based on the national average per resident amounts modified by geographic adjustment factors. The BIPA establishes a floor for direct GME payments whereby a hospital's approved per resident amount for cost reporting periods beginning during FFY 2002 would not be less than 85 percent of the locality adjusted national average per resident amount.
Additionally, the BIPA alters the way that hospitals are reimbursed for nursing and allied health education costs. Effective for portions of cost reporting periods occurring on or after January 1, 2001, a hospital will receive nursing and allied health payments for Medicare+Choice enrollees based on its per day cost of allied and nursing health programs and the number of days attributed to Medicare enrollees compared to other hospitals.
Sole Community Hospitals
The BBRA included a change that allowed SCHs to use inpatient cost data from the 12-month cost reporting period beginning during FFY 1996 for purposes of determining the hospital’s most advantageous target amount. However, because of a technical error in the legislation, the option was limited to those facilities that were paid on the basis of the target amount for cost reporting periods beginning during FFY 1999. The BIPA now allows all SCHs to use FFY 1996 cost year data, if such data would improve Medicare reimbursement, to the hospital. This change is effective immediately.
Medicare Dependent Hospitals
Under current law, a hospital may qualify as a "Medicare Dependent, Small Rural Hospital" and for special payment for inpatient services if it meets several criteria, including that no less than 60 percent of its inpatient days or discharges during the cost reporting period beginning during 1987 were attributable to inpatients entitled to benefits under Medicare Part A. The BIPA amends the qualification criteria such that a hospital, which meets all other criteria, may also qualify if at least 60 percent of its inpatient days or discharges were attributable to inpatients entitled to benefits under Part A during two of the three most recent audited cost reporting periods.
Current law limits the amount of bad debt attributable to deductibles and coinsurance that may be treated as an allowable cost for cost reporting purposes to 55 percent. The BIPA increases that limit to 70 percent.
Inpatient Rehabilitation Services
Under the prospective payment system (PPS) for inpatient rehabilitation services, HCFA is required to set payment rates at a level such that overall program payments during FFYs 2001 and 2002 would be 98 percent of the overall program payments had PPS not been implemented. The BIPA maintains the 98 percent reduction for the first year of the PPS but requires HCFA to increase payments to a level such that payments under the PPS for FFY 2002 would approximately equal payments made under the existing cost-based system. Additionally, BIPA permits hospitals to make a one-time election to be paid on a fully prospective basis, rather than a blend of PPS rates and cost-based payments, during the PPS transition period.
PPS Exempt Hospitals and Units
The BIPA increases the supplemental incentive payments available to psychiatric hospitals in the years before the PPS is implemented from 2 percent of the target amount to 3 percent. The BIPA also provides supplemental payments to long-term care hospitals and units by increasing the national cap by 2 percent and the target amount by 25 percent. Additionally, the BIPA requires HCFA to examine the feasibility of basing the new PPS for long-term care hospital services on the PPS used for acute care hospital services.
During the first three years of the recently implemented hospital outpatient service PPS, Medicare makes supplemental payments on a limited cost past-through basis for certain innovative medical devices, drugs and biologicals. The BIPA requires HCFA to modify the procedures and standards that it previously established for purposes of identifying and reimbursing devices eligible for the pass-through.
Under the new standards, devices that are currently not eligible for pass-through payments because they were payable under Medicare prior to 1997 may now be eligible. Additionally, reimbursement amounts for eligible devices will no longer be established on a device-specific level. Rather, reimbursement will be established on a category level and based on the average cost of the devices classified in the category, which may lead to over- and under-reimbursement situations depending on how devices are grouped together. Pass-through payments will continue to be available for a limited period of time only, at the conclusion of which payments for such devices will be included in the underlying PPS payment.
Critical Access Hospitals (CAHs)
The BBA established the Medicare Rural Hospital Flexibility Program, which, among other things, allows states to designate hospitals meeting certain criteria as CAHs. CAHs are reimbursed under Medicare on a cost basis. The BIPA makes numerous substantive and technical changes to the CAH program, including changes concerning reimbursement and beneficiary cost-sharing obligations for clinical diagnostic laboratory services, the amount of reimbursement for professional services furnished in CAHs, an exemption from the skilled nursing facility PPS for swing beds in CAHs and special payment rules for ambulance services furnished by CAHs.
Skilled Nursing Facilities (SNFs)
The BIPA makes several significant changes to payment rules and amounts for SNF services. Generally speaking, the SNF PPS is composed of three components: nursing care services, therapy services and non-case-mix services (e.g., capital, maintenance and dietary) that are summed to determine overall payment. The BIPA requires HCFA to increase the current reimbursement amount for the nursing care component of each Resource Utilization Group (RUG) by 16.6 percent for SNF services furnished between April 1, 2001, and September 30, 2002.
The BIPA also repeals the requirement that HCFA implement consolidated billing for all Part B services furnished to nursing home residents, which require Medicare-certified SNFs to consolidate and submit all bills for services provided to Medicare beneficiaries. Under the change, consolidated billing requirements will continue to apply to items and services furnished to beneficiaries residing in a Medicare-certified SNF under a Part A stay (i.e., beneficiaries who are resident in the nursing home immediately following discharge from a hospital and whose stay in the nursing home qualifies for reimbursement by Medicare) and to therapy services regardless of whether the beneficiary's stay is covered under Part A. Consolidated billing, however, will not apply to non-therapy items and services furnished to beneficiaries who are not under a Part A stay.
Current law requires HCFA to update payments for SNF services annually using a market basket percentage adjustment similar to that used to update payments for inpatient hospital services. Prior to the enactment of the BIPA, the update for SNF services was to be the market basket percentage minus 1 percent for FFYs 2001 and 2002. The BIPA increases the update to the full market basket percentage for FFY 2001 and to the market basket percentage minus 0.5 percent for FFY 2002. However, because FFY 2001 is well underway, SNF payments will actually be increased by the market basket percentage minus 1 percent for services provided between October 1, 2000 and March 30, 2001 and the market basket percentage plus 1 percent for services provided between April 1, 2001 and September 30, 2001.
Additionally, the BIPA permits HCFA to establish a process for geographic reclassification of SNFs similar to the process under which hospitals are reclassified.
Home Health Agencies (HHAs)
The BBA required HCFA to establish and implement a PPS for home health services and to implement an interim payment system during the transition to the PPS. The BBRA delayed until one year following implementation of the PPS a 15 percent payment reduction that would have otherwise applied effective October 1, 2000. The BIPA further delays the one-time 15 percent payment reduction, until October 1, 2002. Additionally, the BIPA increases the HHA PPS annual update to 2.2 percent for HHA services furnished between April 1, 2001 and September 30, 2001. It also clarifies the definitions of "parent office" and "branch office" for purposes of determining payment and liberalizes the definition of "homebound" to permit persons who are absent from the home for purposes of medical care or adult day-care to be considered "homebound."
Ambulatory Surgery Centers (ASCs)
In 1998, HCFA proposed to implement a new procedure classification system and new facility payment rates for services furnished in Medicare-certified ASCs. The BIPA prohibits HCFA from implementing new payment rates for ASCs before January 1, 2002, requires HCFA to phase-in new payment rates for ASCs over four years if such rates are based on facility cost data collected before 1999 and requires HCFA to implement new payment rates based on facility cost data collected after 1999 by January 1, 2003.
The BBA established a $1,500 cap on the amount of outpatient physical, occupational and speech therapy services that are reimbursable in a calendar year.
The BBRA suspended the cap during CYs 2000 and 2001. The BIPA extends the suspension through 2002. This change represents a significant benefit to beneficiaries, therapists and certain facilities (e.g., SNFs) that were subject to the cap and fought to extend the moratorium.
Renal Dialysis Rate
The BIPA increases the composite rate for renal dialysis services by 2.4 percent - rather than the 1.2 percent increase that otherwise would have applied - for services furnished during CY 2001. Additionally, the BIPA extends to July 1, 2001 as the deadline for submitting a request to be exempt from payment based on the composite rate.
The BIPA increases the base Medicare per diem payment rate for hospice services furnished during the period April 1, 2001 and September 30, 2001 by 5 percent.
The BIPA provides a full inflation update for payments made under the ambulance service fee schedule for CY 2001, rather than the inflation minus 1 percent update that would otherwise have applied but makes the change in two parts: payments for services furnished between January 1, 2001 and June 30, 2001 will be updated by inflation minus 1 percent, whereas services furnished between July 1, 2001 and December 31, 2001 will updated by 4.7 percent.
Rural Health Clinics (RHCs)
Under current law, payments to RHCs for services furnished by such clinics are subject to a statutory cap, but RHCs owned by rural hospitals with fewer than 50 beds are exempted from the cap. The BIPA extends the cap exception to RHCs owned by hospitals with fewer than 50 beds, regardless of location in a rural area.
Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS)
The BIPA increases updates for payments made under the DMEPOS fee schedule (other than for oxygen and oxygen equipment) for CY 2001. As in other cases, the payment updates previously scheduled to apply during CY 2001 will apply for items furnished between January 1, 2001 and June 30, 2001 but supplemental updates will be made for items furnished between July 1, 2001 and December 31, 2001.
Additionally, the BIPA establishes new rules for suppliers of custom orthotics and prosthetics that require such suppliers to, among other things, be licensed (if required by the state) or certified by an approved credentialing organization.
The BIPA expands Medicare's authority to pay for services provided through telehealth. Specifically, the BIPA requires HCFA to begin making payments for certain telehealth services to physicians and facilities located in rural areas or operating under a telehealth demonstration project.
Payments to physicians and other practitioners will equal the amount that would have been paid to such person if the service had been furnished to the beneficiary in person and without the use of a telecommunications system. A $20 facility payment will be made to the physician or practitioner office, CAH, rural health clinic, federally qualified health center or hospital where the beneficiary receives the telehealth service (facility payments will be increased by the Medical Economic Index beginning in 2003). These changes become effective October 1, 2001.
The BIPA clarifies that HHAs may provide services via telecom-munications, providing that the physician order does not require "in-person" service, and the service is not considered a home health visit for purposes of eligibility or payment.
The BIPA makes many important changes to the M+C program. While the final version of the BIPA contained a few improvements for M+C organizations (M+COs) from earlier versions, it also includes some less favorable terms. The major question is whether these changes will be sufficient to persuade M+COs to return to the program or even to persuade companies that remain in the program for 2001 to renew contracts in subsequent years. The key changes are described below.
Minimum Payment Amount
For 2001, the minimum payment amount is raised to $525 for M+COs in metropolitan statistical areas (MSAs) with a population of more than 250,000 and $475 for M+COs in other areas. The payment rates for 2001 cannot exceed 120 percent of the amount that M+COs received in the area for 2000. The minimum update is increased from 2 percent to 3 percent in 2001. The payment increases take effect March 1, 2001.
Phase-In of Risk Adjustment
The current risk adjustment methodology, under which 10 percent of payment is based on risk-adjusted inpatient data, is frozen through 2003. Beginning in 2004, the risk adjustment would be based on data from inpatient and ambulatory settings and would be phased in at 30 percent for 2004; 50 percent for 2005; 75 percent for 2006; and 100 percent for 2007 and subsequent years.
Transition to Revised Payment Rates
Within two weeks of enactment, HCFA will be required to provide notice of the new M+C rates for 2001. An M+CO that gave notice prior to the date of enactment that it was terminating its contract or reducing its service area will be allowed to continue participation for 2001 if it notifies HCFA and provides the required information within two weeks after the date the revised rates are announced. Essentially, health plans have until mid-January to decide if they want to re-enter the program.
M+COs that already notified HCFA that they are remaining in M+C for all or a part of their service areas will be required to submit revised Adjusted Community Rates (ACR) to HCFA within two weeks after the date the revised rates are announced.
Permitted Uses of Additional Funds
M+COs that will receive higher capitation payments under BIPA may use the extra funds only to reduce premiums, reduce cost sharing, enhance benefits, utilize stabilization funds or stabilize or enhance beneficiary access to providers. It would appear that this last category, as added to the final version of BIPA, would allow M+COs to increase reimbursement to providers.
Ironically, it appears that non-renewing M+COs that decide to return to M+C will have more flexibility then continuing M+COs as to how to structure their ACR filings, since they are not limited by the restrictions noted above on the use of the new funds by continuing contractors.
Premium Reductions Are Permitted as Additional Benefits Under M+C Plans
As part of providing additional required benefits, M+COs may elect a reduction in enrollees' Part B premiums with respect to a M+C plan. The amount of the reduction may not exceed 125 percent of the otherwise applicable premium and must apply uniformly to each enrollee of the M+C plan to which the reduction applies.
Revision of Payment Rates for End-Stage Renal Disease (ESRD) Patients Enrolled in M+C Plans
For payment rates for ESRD patients beginning in January 2002, HCFA is required to provide for adjustments to increase the rates to reflect the rate used in the Social HMO ESRD capitation demonstration. These rates are required to be computed taking into account factors such as renal treatment, modality, age and the underlying cause of the ESRD. Within six months after enactment, HCFA is required to publish, for public comment, a description of the appropriate ESRD adjustments, which are required to be published in final form no later than July 1, 2001 so companies can factor these rates into account in making their 2002 participation decision.
Avoiding Duplicative Regulation
The BIPA expands the M+C pre-emption provisions to provide that cost sharing requirements are pre-empted, in addition to benefit requirements. Thus, for example, if a state pharmacy benefit includes cost sharing requirements, such requirements would not be applicable if the M+CO offers a pharmacy benefit. The legislation specifically pre-empts "requirements relating to marketing materials and summaries and schedules of benefits regarding a Medicare+Choice plan." In other words, M+COs do not need to obtain approval from state regulators of their marketing materials.
Increased Penalties for Mid-Year Terminations
The BIPA increases to $100,000 (or such higher level as determined by HCFA) the maximum civil monetary penalty that could be imposed for an M+CO that terminates its M+C contract other than as authorized under such contract. This provision appears to have been added as a compromise in lieu of what the White House sought, which was to lengthen the term of the M+C contract to two years.
Special Treatment for SNFs
M+COs are now required to cover post-hospitalization skilled nursing care through an enrollee’s "home skilled nursing facility" (Home SNF) under certain conditions. A Home SNF is defined to include (a) a facility where the enrollee resided at the time of the hospital admission; (b) a facility that is providing the services through a continuing care retirement community in which the enrollee resided at the time of admission or (c) a facility where the spouse of the enrollee is residing at the time of the enrollee’s hospital discharge. If the Home SNF is not participating with the M+CO, it has the right to agree to accept substantially similar payment under the same terms and conditions that apply to similarly situated SNFs that are under contract with the M+CO. The enrollee would be required to receive coverage for SNF care at the Home SNF that is "no less favorable" than what they would receive at another SNF. This provision, which appears essentially to create "any willing provider" types of obligation on M+COs regarding Home SNFs, is effective for M+C contracts entered into or renewed on or after the date of enactment.
Other Important Changes
The M+C 5 percent new entry bonus applies to areas where M+COs were exiting for 2001 as well as 2000.
HCFA is required to report by January 1, 2003 on the inclusion of the costs of military facility services furnished by the Departments of Veterans Affairs and Defense in calculating M+C payment rates.
If HCFA makes a national coverage determination or there is a change in benefits that will result in a significant increase of costs to an M+CO, HCFA is required to adjust the rates to the M+COs during the contract year.
HCFA may not implement, other than at the beginning of the calendar year, regulations that impose significant new regulatory requirements on a M+C plan.
If a M+CO submits marketing material that follows the HCFA language without modification, the period for approval is reduced from 45 to 10 days.
The BBRA had changed the effective date of enrollee elections and changes in elections to the month after the month the change was made. The BIPA now returns to an effective date on the first day of the next month. This applies to all elections and changes as of June 1, 2001.
Generally, ESRD individuals may not enroll in an M+C plan. However, the BIPA provides that an individual who developed ESRD while enrolled in an M+C plan can enroll in another M+C plan if his or her original plan is terminated or non-renewed. This provision is also applied retroactively to individuals whose plan was discontinued before January 1, 1999.
To facilitate the offering of M+C plans under contracts between M+COs and employers, labor organizations or trustees, HCFA is given the authority to waive or modify any requirements that hinder the design of, the offering of or the enrollment in such M+C plans. This provides HCFA with significant authority to facilitate these arrangements.
Current Medicare costs contractors are now allowed to expand their service areas, and the Social HMO demonstration projects are extended until 30 months after HCFA submits a report to Congress on how to transition Social HMOs to M+C.
Benefits and Cost Sharing
Screening Pap Smears
Medicare covers screening pap smears for women once every three years, except for women who are deemed to be at high risk for cervical or vaginal cancer who are allowed screenings covered annually. Under the BIPA, Medicare will now cover screening pap smears for women who are not at high risk once every two years. This change becomes effective July 1, 2001.
The BIPA establishes a new benefit that will cover annual glaucoma screenings for persons determined to be at high risk for glaucoma, individuals with a family history of glaucoma and individuals with diabetes. This change is effective January 1, 2002.
The BBA established Medicare coverage for periodic colorectal cancer screenings but limited coverage to only certain types of screenings for most individuals. At present, Medicare covers a screening colonoscopy only for beneficiaries who are at high risk for colorectal cancer. The BIPA expands this benefit to permit any beneficiary who qualifies for a fecal-occult blood test or screening flexible sigmoidoscopy to instead elect to receive a screening colonoscopy. However, Medicare will cover a screening colonoscopy for beneficiaries who are not at high risk for colorectal cancer only after 10 years following the previous screening colonoscopy or four years following the previous screening flexible sigmoidoscopy. These changes become effective July 1, 2001.
The BIPA eliminates the statutorily prescribed payment rate for screening mammographies and specifies that these services are to be paid under the physician fee schedule at rates to be established by HCFA. These changes become effective January 1, 2002. The BIPA also authorizes specific supplemental payments for mammographies using new technologies that are furnished between April 1, 2001 and December 31, 2002.
Nutrition Therapy for Beneficiaries with Diabetes or Renal Disease
The BIPA authorizes Medicare to cover medical nutrition diagnostic, therapeutic and counseling services for beneficiaries with diabetes or renal disease provided by a registered dietician or qualified nutrition professional, pursuant to a referral by a physician. Payment will be based on amounts specified under the physician fee schedule. This change becomes effective January 1, 2002.
Amyotrophic Lateral Sclerosis (ALS)
Currently, a person must wait 24 months to qualify for Medicare coverage on the basis of a disability. The BIPA waives that waiting period requirement for persons with ALS. This change becomes effective July 1, 2001.
Under the hospital outpatient PPS, beneficiary coinsurance amounts initially will be significantly more than 20 percent of the total hospital allowed charge, sometimes as much as 50 percent of the amount due to the hospital. The BIPA establishes new limits on beneficiary cost sharing, which will hasten progress toward the traditional 80/20 split. However, the BIPA does nothing to increase Medicare's share of the overall payment, and thus the reduced copayment amounts will mean less per-service payment for hospitals.
Drugs and Biologicals
Currently, Medicare covers drugs and biologicals furnished incident to a physician service if such items "cannot" be self-administered. The BIPA modifies the coverage rule to provide that such drugs and biologicals will be covered if they are of the type that are "not usually" self-administered. This change is effective immediately.
Medicare currently covers immunosuppressive drugs used by organ transplant recipients but only for a limited number of months following the transplant operation. The BIPA extends coverage indefinitely. The changes made under this provision are effective immediately.
Prescription Drug Billing Limits
Effective January 1, 2001, the BIPA establishes a new requirement that persons or entities receiving payment for a covered drug or biological may do so on an assignment-related basis only, which means that they must accept the specified Medicare payment and copayment amounts as payment in full.
While some of the BIPA's provisions are self-implementing, others may not be implemented until HCFA prepares regulations. Our Washington, D.C. health law practice was actively engaged in lobbying a number of the issues encompassed in the BIPA and expects to be equally involved in the regulation-drafting processes.
Additionally, MW&E attorneys intend to be involved in legislative efforts in 2001, when the new Congress turns its attention to a number of high-profile unresolved health-related matters, including Medicare prescription drug coverage, patients' rights and privacy and physician collective bargaining, as well as numerous technical Medicare provider reimbursement matters.