[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
SUBCOMMITTEE HEARING ON THE
IMPACT OF CMS REGULATIONS AND
PROGRAMS ON SMALL HEALTH CARE
PROVIDERS
=======================================================================
SUBCOMMITTEE ON REGULATIONS, HEALTH CARE AND TRADE
COMMITTEE ON SMALL BUSINESS
UNITED STATES HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
__________
MAY 14, 2008
__________
Serial Number 110-93
__________
Printed for the use of the Committee on Small Business
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
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HOUSE COMMITTEE ON SMALL BUSINESS
NYDIA M. VELAZQUEZ, New York, Chairwoman
HEATH SHULER, North Carolina STEVE CHABOT, Ohio, Ranking Member
CHARLIE GONZALEZ, Texas ROSCOE BARTLETT, Maryland
RICK LARSEN, Washington SAM GRAVES, Missouri
RAUL GRIJALVA, Arizona TODD AKIN, Missouri
MICHAEL MICHAUD, Maine BILL SHUSTER, Pennsylvania
MELISSA BEAN, Illinois MARILYN MUSGRAVE, Colorado
HENRY CUELLAR, Texas STEVE KING, Iowa
DAN LIPINSKI, Illinois JEFF FORTENBERRY, Nebraska
GWEN MOORE, Wisconsin LYNN WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania LOUIE GOHMERT, Texas
BRUCE BRALEY, Iowa DAVID DAVIS, Tennessee
YVETTE CLARKE, New York MARY FALLIN, Oklahoma
BRAD ELLSWORTH, Indiana VERN BUCHANAN, Florida
HANK JOHNSON, Georgia
JOE SESTAK, Pennsylvania
BRIAN HIGGINS, New York
MAZIE HIRONO, Hawaii
Michael Day, Majority Staff Director
Adam Minehardt, Deputy Staff Director
Tim Slattery, Chief Counsel
Kevin Fitzpatrick, Minority Staff Director
______
Subcommittee on Regulations, Health Care and Trade
CHARLES GONZALEZ, Texas, Chairman
RICK LARSEN, Washington LYNN WESTMORELAND, Georgia,
DAN LIPINSKI, Illinois Ranking
MELISSA BEAN, Illinois BILL SHUSTER, Pennsylvania
GWEN MOORE, Wisconsin STEVE KING, Iowa
JASON ALTMIRE, Pennsylvania MARILYN MUSGRAVE, Colorado
JOE SESTAK, Pennsylvania MARY FALLIN, Oklahoma
VERN BUCHANAN, Florida
(ii)
C O N T E N T S
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OPENING STATEMENTS
Page
Gonzalez, Hon. Charles........................................... 1
Westmoreland, Hon. Lynn.......................................... 7
Fallin, Hon. Mary................................................ 3
Altmire, Hon. Jason.............................................. 4
WITNESSES
PANEL I:
Hill, Mr. Timothy B., Director of the Office of Financial
Management, Centers for Medicare & Medicaid Services -
Accompanied by: Farris, Dr. James Randolph, Administrator,
Consortium for Quality Improvement and Survey & Certification
Operations, Centers for Medicare & Medicaid Services........... 5
PANEL II:
Dolan, Dr. William A., American Medical Association.............. 15
Wiesner, Mr. Dennis, R.Ph., H.E.B. Grocery Company............... 17
Schweitz, Dr. Michael, The Coalition of State Rheumatology
Organizations.................................................. 19
Smith, Dr. Karen L., American Academy of Family Physicians....... 21
PANEL III:
Allen, Ms. Terry, South Texas Oncology and Hematology, P.A....... 29
Schraad, Mr. Joseph A., Oklahoma Allergy and Asthma Clinic....... 31
Wolf, Ms. Rina, RedPath Integrated Pathology, Inc................ 32
Tieken, Ms. Mary Helen, Texas Association of Home Care........... 34
APPENDIX
Prepared Statements:
Gonzalez, Hon. Charles........................................... 43
Westmoreland, Hon. Lynn.......................................... 45
Hill, Mr. Timothy B.............................................. 46
Centers for Medicare & Medicaid Services: Information for the
Record......................................................... 54
Dolan, Dr. William A............................................. 56
Wiesner, Mr. Dennis.............................................. 65
Schweitz, Dr. Michael............................................ 80
Smith, Dr. Karen L............................................... 92
Allen, Ms. Terry................................................. 98
Schraad, Mr. Joseph A............................................ 114
Wolf, Ms. Rina................................................... 116
Tieken, Ms. Mary Helen........................................... 124
(iii)
SUBCOMMITTEE HEARING ON THE IMPACT
OF CMS REGULATIONS AND PROGRAMS
ON SMALL HEALTH CARE PROVIDERS
----------
Wednesday, May 14, 2008
U.S. House of Representatives,
Committee on Small Business,
Washington, DC.
The Subcommittee met, pursuant to call, , at 2:10 p.m., in
Room 1539, Longworth House Office Building, Hon. Charlie
Gonzalez [chairman of the Subcommittee] presiding.
Present: Representatives Gonzalez, Altmire, Westmoreland,
and Fallin.
OPENING STATEMENT OF CHAIRMAN GONZALEZ
Chairman Gonzalez. I will call this hearing to order. Today
we are going to be conducting a hearing to consider a rather
important issue under the heading of "The Impact of CMS
Regulations and Programs on Small Health Care Providers."
I want to start off by indicating that we have been
awaiting the arrival of the ranking member, Mr. Westmoreland.
He has been detained, but he will be here shortly. I thought I
would get my opening statement out of the way and we would
proceed.
Another observation is that we have a number of votes today
and that means we will be interrupted. I am going to ask for
everyone's patience. Everyone is going to get to testify. We
will have Members up here. I am not sure if Mr. Westmoreland
will be able to remain throughout the hearing, because I know
he has other matters that are of real pressing importance
regarding his district. I will proceed then with my opening
statement.
Medicare and Medicaid are essential components of our
nation's health care system. Many small health care providers
are dependent on reimbursements from these programs. Changes to
the programs can have profound economic effects on their
businesses. With many small providers struggling to stay
afloat, it seems a number of medical practices and pharmacies
are merely one reimbursement cut away from being forced to
close their doors.
As program costs have risen, Congress has taken steps to
cut them. All too often, CMS implementation of these efforts to
reduce costs has placed small health care providers on an
unlevel playing field and threatened their continued viability.
In some instances, CMS has adopted rules to implement cost
cutting measures, which is understood. When agencies, though,
make rules, the law requires them to consider their impacts on
small businesses and examine less burdensome alternatives.
The Small Business Committee has jurisdiction over this
important law known as the Regulatory Flexibility Act. The
committee has held several oversight hearings on CMS in the
110th Congress, and we have seen that the agency can do a
better job of meeting its obligations to small firms.
When CMS implements regulations and programs unfairly, it
hurts not just small providers, but also patients, and damages
the entire health care system for all Americans. Several CMS
programs are creating particular concern among small health
care providers. For instance, the Recovery Audit Contractor
program will be one of those. Because of the enormous scale of
Medicare, it is inevitable that some errors in the payment
process will occur. In some instances, providers may be
underpaid by Medicare. In others, they may be overpaid.
With the aim of reducing the amount of Medicare's improper
payments, Congress created the Recovery Audit Contractor
program, known as RAC. A pilot program for RAC concluded in
March of this year and now the program has become permanent.
While the law requires RACs to identify underpayments to
providers, it is clear that contractors are almost exclusively
focusing on correcting overpayments. For example, of the $371
million of improper payments identified by RACs in fiscal year
2007, over 96 percent were overpayments collected from
providers. Less than 4 percent of those dollars were
underpayments repaid to providers. It is hard to believe that
this number represents the true proportion of underpayments.
The manner in which RACs are compensated is also troubling.
RACs get a part of every dollar they bring in. This is the
first time ever that Medicare has paid a contractor on a
contingency fee basis. According to small providers, these
contingency fees, coupled with a lack of proper oversight at
CMS, have led to aggressive, and, in some cases, improper
pursuit of recoveries and a disregard for the accuracy of the
auditing process.
Another significant issue is one that impacts pharmacies
nationwide. They are facing major hardships from CMS's
implementation of the Deficit Reduction Act. The DRA directed
CMS to recalculate the way it reimburses pharmacies for
providing generic prescription drugs to Medicaid beneficiaries.
Last July, CMS released a final rule which could devastate
pharmacies and Medicaid recipients. The new formula
dramatically reduces reimbursements to pharmacies. GAO has
determined that they will be paid back for only 64 percent of
their costs of acquiring generic prescription drugs.
This rule will have a disparate impact on small retail
pharmacies, an impact that CMS overlooked when it wrote the
rule. Small retail pharmacies serve a higher proportion of
Medicaid beneficiaries and get more of the revenue from
prescription drugs. Implementation of this rule may force many
of them out of business, reducing access to care for millions
of Americans. It is clear that CMS needs to do a better job of
considering the needs of small health care providers when it
implements programs and regulations.
I look forward to today's testimony, and I thank the
witnesses for coming here to share their stories.
Chairman Gonzalez. At this time, I would be recognizing Mr.
Westmorelandfor an opening statement, but since he has been
detained, my preference will be that we then proceed.
I am happy, in the absence of Mr. Westmoreland, the ranking
member, to defer to a fellow Member and colleague from
Oklahoma, Ms. Fallin, for an opening statement.
OPENING STATEMENT OF MS. FALLIN
Ms. Fallin. Thank you, Mr. Chairman. Hopefully Mr.
Westmoreland will be here soon, but I also have an opening
statement and will try to assist him as he is busy with his
other committees too, but he should be here shortly.
I want to, first of all, thank all of our witnesses for
joining us here today and taking time out of your busy
schedules. Many of you have traveled from different areas of
the United States to be here to join us. I thank you for doing
that. I know I have a gentleman here from Oklahoma with the
allergy clinic, Mr. Schraad, who is here to help us give some
testimony from Edmond, Oklahoma. So thank you for joining us
here today and giving us some knowledge, all of you witnesses
giving us knowledge about CMS and working with this agency and
how we can better improve our relationship between the Federal
Government and the private sector as it relates to health care.
We are all here today to better understand how CMS
regulations impact small businesses and health care, and there
is no better way of learning about that than hearing from those
on the ground directly affected and interacting with these
regulations on a daily basis. Medicaid place a large role in
this area, and even small changes within the system can
reverberate rate throughout small businesses and health care
providers and pharmacies, as we just heard the chairman talk
about.
I do believe, as the chairman does, that we must seriously
evaluate the health care system as it stands today and how the
slight changes that we talk about can alter the landscape for
the providers as well as the beneficiaries in the future.
I often hear providers in my district say that they are in
a very precarious situation. They want to provide access to
health care and the best type health care, pharmaceuticals, but
yet at times, it is hard to have a viable business and sustain
that business under the rules and regulations that are imposed
upon them and that they have to operate in within the system.
Due to decreases in the Medicare fee payments, many
providers in my district reduce the number of Medicare patients
they see in order to effectively recoup the costs of the
services they provide. In many instances, the providers are
actually losing money on transactions because Medicare does not
reimburse the full costs of the services rendered.
I have also heard from many of my doctors in my district
that over the years, because of the amount of Federal
regulations and rules that are put upon them, that they
actually have to hire specific people just to work through all
the rules and the insurance policies and try to figure out how
to match those things up and what they can do and can't do and
what they will be reimbursed for and at what rate.
Under these circumstances, it is very difficult to see how
anyone is expected to sustain a healthy business practice.
Health care providers and beneficiaries in this country are
suffering, and it is time that we get to the bottom of this.
So I am looking forward to the testimony, both from CMS,
and I know that CMS has a very tough job and I appreciate their
Federal work and even having to work with Congress too. So we
appreciate both of you gentleman being here and we look forward
to the other testimony.
Thank you.
Chairman Gonzalez. Thank you very much. At this time, I
know Mr. Altmire is present and he may not be here when we get
to panel three and he would be introducing Ms. Rina Wolf. If
Mr. Altmire has some opening remarks, I would be happy to defer
to him at this time for that purpose.
OPENING STATEMENT OF MR. ALTMIRE
Mr. Altmire. Thank you, Mr. Chairman. I would just say to
be very brief that our witness from Pittsburgh is going to be
Rina Wolf, and we look forward to hearing her. She is the vice
president of Reimbursement and Regulatory Affairs for RedPath
Integrated Pathology in Pittsburgh. They have a very good story
to tell regarding the purpose of this hearing.
So I appreciate the opportunity to say a few words, and I
will listen with interest to the testimony. Thank you.
Chairman Gonzalez. Thank you very much, Mr. Altmire. To the
witnesses that are present, let me explain the system. You will
be given 5 minutes obviously to make your remarks. I know that
is going to be a summary of your written statement, of course,
which will be entered into the record in its entirety. So we
would ask that it be summarized within those 5 minutes.
When the green light comes on, obviously, the time will
start. When the yellow light comes on, I believe you will have
1 minute at that time. And then, of course, red, that means you
have consumed all of the time. If you feel that you haven't had
enough time to cover everything, believe me, during the
question and answer period, at that time you can supplement any
of your comments.
The first witness will be Mr. Timothy B. Hill. Mr. Hill is
the Chief Financial Officer and Director of the Office of
Financial Management for the Centers for Medicare and Medicaid
Services. As CMS's senior financial management executive, he is
accountable and responsible for planning, directing, analyzing
and coordinating the agency's comprehensive financial
management functions.
Mr. Hill, it is my understanding you will be assisted by
Mr. James Farris, but that Mr. Farris will not be giving
testimony, but is present here to answer any of those questions
that fall within the purview of his expertise.
Mr. Farris, I apologize, it is Dr. James Farris, he is the
Administrator to the Consortium For Quality Improvement and
Survey and Certification Operations for CMS. In this capacity,
he works with all of the CMS regional office components that
oversee quality improvement organizations and survey and
certification operations throughout the country.
STATEMENT OF TIMOTHY HILL, CFO AND DIRECTOR, OFFICE OF
FINANCIAL MANAGEMENT, CENTERS FOR MEDICARE & MEDICAID SERVICES,
ACCOMPANIED BY JAMES RANDOLPH FARRIS, ADMINISTRATOR, CONSORTIUM
FOR QUALITY IMPROVEMENT AND SURVEY & CERTIFICATION OPERATIONS,
CENTERS FOR MEDICARE & MEDICAID SERVICES
Chairman Gonzalez. At this time you may proceed, Mr. Hill.
Mr. Hill. Thank you, Chairman Gonzalez, distinguished
members of the Subcommittee, thank you for inviting us here
today to discuss the recovery audit contractor program and its
effects on Medicare providers that are small businesses.
In January 2008, the Office of Management and Budget
reported that Medicare is one of the top three Federal programs
making improper payments, with an estimated $10.8 billion in
improper payments made during fiscal year 2007. It is in this
context that Congress directed HHS to conduct a 3-year
demonstration program using recovery audit contractors (RACs)
to detect and correct improper payments in the Medicare
program.
Pursuant to the law, HHS began the demonstration in March
of 2005. During the demonstration, the recovery audit
contractors were tasked with the detecting of both overpayments
and underpayments in the Medicare program and correcting those
improper payments. I am pleased to report that as of its
conclusion in March of 2008, the demonstration had corrected a
total of more than $1 billion worth of improper payments in the
Medicare program. Even before the demonstration had been
completed, Congress recognized its potential by making the
program permanent and mandating that HHS expand it nationwide
by no later than January 1st, 2010.
During the demonstration and our planning for expansion,
CMS has worked very closely with physician and other provider
groups to make sure that they understood the demonstration
program as well as to solicit input about how to make the
program better. So, for example, we have standing monthly
meetings with the American Medical Association and members of
the affected State medical associations to discuss ongoing
operational issues. We created programs for specific e-mail
accounts for the demonstration that will continue during the
program expansion as a method for addressing individual
physician questions. After the companies, the permanent RACs,
are selected later this spring, CMS and the new RACs will
conduct extensive provider outreach, including visits, on-site
visits with local medical organizations and representatives in
each State. State medical associations are also currently
partnering with CMS to prepare a bulletin that will inform the
physicians about the expansion of the RAC program which will be
sent to the entire membership of each state's association.
CMS has also utilized its standard methods of provider
education and outreach, including e-mail list serve messages
that are distributed widely among national and regional
provider trade associations, open door forums, Medicare
learning network articles, press releases and various CMS and
contractor Web sites with links to frequently asked questions
and contact information for each RAC.
We believe that our ongoing outreach to physicians and
other Medicare providers has had a significant impact on our
ability to maximize the effectiveness of the program while
minimizing its burden on providers and physicians.
Some of the specific changes we have made to the program
were a direct result of the feedback we solicited from
providers. So, for example, both a medical director and
certified coding experts will be required to be employed by all
the permanent RACs. Under the demonstration project, no medical
director was required nor were coding experts required of the
RAC contractors.
Additionally, during the demonstration, RACs were only
required to pay back their contingency fees if they lost the
first level of appeal, but not at subsequent levels of appeal.
Permanent RACs must pay back their fees if they lose at any
level of appeal.
In the demonstration, there was no maximum look-back date,
meaning that RACs could review claims as old as four years. In
the permanent program, RACs will not be able to look back for
improper payments on claims paid before October 1, 2007.
CMS will require the permanent RACs to operate Web-based
systems so that providers involved in an audit will have secure
on-line access to information that explains the status of their
claims and the RAC audit process. None of the RACs in the
demonstration had this capability.
In the demonstration, CMS did not limit the number of
medical records that could be requested by a RAC. In the
national RAC program, CMS will establish a record limit that
will vary by a biller's size to protect small providers from
undue administrative burden.
Most importantly, I think, under the permanent RAC program,
CMS will place a much greater emphasis on provider education
and training. For example, RACs will be required to gain CMS
approval before beginning medical necessity reviews of provider
claims. CMS oversight will ensure that providers are not unduly
burdened by RACs. Additionally, CMS will require the permanent
RACs to identify and publish vulnerability analyses so that the
provider community can better understand where mistakes are
being made so they can correct these mistakes before an audit
begins.
To sum up, let me emphasize CMS's commitment to our
continued partnership with Medicare providers, particularly
physicians who are small businesses, as we move forward on this
new important program. Ultimately, we believe that the
implementation of this program will support ongoing beneficiary
access to care by ensuring the appropriate expenditure of
taxpayer resources and supporting the financial integrity of
the Medicare program.
Thank you for your time. Dr. Farris and I remain to answer
any of your questions and would be happy to take them now.
Chairman Gonzalez. Thank you very much, Mr. Hill.
[The prepared statement of Mr. Hill may be found in the
Appendix on page 46.]
Chairman Gonzalez. At this time the Chair is going to
recognize the ranking member, Mr. Westmoreland, for some
comments.
OPENING STATEMENT OF MR. WESTMORELAND
Mr. Westmoreland. Thank you, Mr. Chairman. I do want to
thank Chairman Gonzalez and his willingness as chairman of this
Subcommittee to have these hearings, where we look at how small
business is affected by government regulations. As a former
small business owner, I am very aware of the regulations and
the hurdles that government puts in front of industries and
small business in particular.
Our health care system is the envy of the world due to the
excellent patient care that we receive in this country.
However, the same cannot be said about the treatment of our
health care system and the treatment it receives from our
government.
So I hope, Mr. Chairman, in this hearing, that we will hear
some testimony from not only CMS, but from small business on
how these burdensome regulations slow down not only maybe their
production, but also their ability to provide health care for
their employees.
I have a written statement here I would like to have
unanimous consent to submit to the record.
Chairman Gonzalez. Without objection.
Mr. Westmoreland. With that, I yield back the balance of my
time.
Chairman Gonzalez. Thank you very much. I have already
explained, Mr. Westmoreland, to everyone that is here, that you
may have to absent yourself due to a very pressing issue there
in your district, and you better be there or you may not be
joining us next Congress. So I think it is kind of important.
Mr. Westmoreland. I appreciate that. I am going to leave,
if it is okay and go make another opening statement.
Chairman Gonzalez. My pleasure. It is my understanding that
substituting in place of the ranking member will be Ms. Fallin
from Oklahoma.
It is the prerogative of the Chair, of course, to lead off
with the questions. It is a good place to be, in many ways. But
I have some preliminary questions, Mr. Hill. I understand that
we had what would be a demonstration or the project in
different States, and now it is going to be permanent and there
are going to be some structural changes which may address some
of the concerns that some of the physicians and health care
providers have regarding professional staff that will be with
the permanent RAC, and I know that is the term we use now.
But I do have a question, and that is how many physicians
will each RAC be required to have on staff? I think you pointed
out that there is going to be a medical director, and I
understand that, as well as a coding expert. But we are talking
with physicians. Because I have been told we have non-
physicians, in essence, passing on a physician's judgment on
what was medical necessity.
So how many doctors, how many MDs are we going to have
required or mandated?
Mr. Hill. Right. The requirement for the permanent RAC
program is that each recovery audit contractor have a medical
director who is a physician. The concept here isn't to
enumerate the absolute number that has to be there, do they
have to have one or do they have to have five, but the concept
here is there is one medical director who is overseeing the
judgment of the other clinicians, whether they are nurses or
therapists or coding professionals, who are sort of making the
judgments on claims whether or not they are going to get paid
or on review or not, and it is that physician making the
ultimate determination. If, in the example you used, the RAC is
going to make a judgment to overturn a claim, the physician
would be the one overseeing that process and making that
judgment.
Chairman Gonzalez. What do you think would be, and I guess
it is a claim or a caseload of a medical director. When we say
the permanent RAC will have a medical director who is a
physician who is going to be overseeing the non-physicians and
such, but realistically, the demands on someone's time, how
many claims are we talking about? Is there a process that will
require the review by the medical director, or is that going to
be something that will be established within each independent
and permanent RAC?
Mr. Hill. Right. I think it will be established within each
permanent and independent RAC, but again, I think what we are
talking about here are processes as much as workloads, which is
to say it is not the notion here that the physician would look
at each and every claim.
So, for example, you may have a series of claims dealing
with one benefit category, one particular issue, and I think
that the job of the medical director would be to ensure there
are processes in place as the nurse reviewers or the therapists
or whoever making judgments on the claims are making those
judgments, they are making them consistently and in a way that
the physician could sign off on that ultimate disposition. Not
that they would look at each and every claim.
Chairman Gonzalez. What evaluation did you have before we
went into the permanent phase of how it operated, how the RAC
system operated in those other States? I have some information
that obviously has been provided to me, and it says that an
independent contractor reviewed a sample of medical necessity
decisions made by the California RAC and found an error rate of
at least 40 percent, or up to 40 percent.
I am just wondering, did you ever conduct, did you ever
have any kind of independent analysis of the work that was
actually being done by these RACs in these selected States?
Mr. Hill. Absolutely. And that independent evaluation that
you discussed there was something that I directed in California
in particular, which was our sort of poster child for bad
decision making on the part of the RACs. A lot of that, I would
say most of that, had to do with a particular benefit area in
patient rehab services in hospitals in California where the
RAC's judgment on medical necessity ultimately didn't end up
conforming with what CMS thought the right judgment would be.
And after we had heard from a series of folks, hospitals in
California, some Members of the California delegation, about
what was going on there, we sort of suspended that review, sent
in an independent evaluation to make sure that the RACs were
making--that particular RAC was making correct decisions on
those particular claims in California.
Now, that was specific to those sets of issues. It is also
the case that because of that we have built into the process an
independent evaluation of every RAC's reviews. So, say the RAC
does 100 claims. We are going to take a sample of those claims
and independently are going to review those and say did they
make the right decisions on that review that they did on a
sample. That will help us detect whether or not we need to do
corrective action with the RAC or whether they are going in the
right direction. But it is giving us a little more comfort that
they are making the right decisions on an ongoing basis.
Chairman Gonzalez. So that is going to be built in in the
permanent RAC arrangement where you actually will have some
oversight, again, taking a sample of those, let's say, medical
necessity challenges and claims and such.
Mr. Hill. Correct. And actually on the medical necessity
issue, even more important, because what I have just described
is what happens after the RAC has made a decision. So it has
already had the impact on a physician or a hospital. More
important than that, I think, is we have put in place a process
what we sort of euphemistically call in CMS a new issue review
process.
You can think about it this way: If an RAC wants to open up
a new set of reviews on a particular issue having to do with
medical necessity in a particular state, before they can begin
that review in earnest, in other words, before they can start
asking for a lot of medical records from a lot of different
providers, they need to come into CMS and they need to talk to
me as the CFO and they need to talk to the physicians who do
our coverage policy and the people who do our payment policies
who really write all the policies and explain how they are
going to do that review, the rules that they are using to do
that review, and we need to sign off and agree that what they
are doing comports with the policies that we have got in place,
precisely so we don't get in the situation like we did in
California where the RAC was reviewing rehab claims in a way
that ultimately we didn't agree with.
I think that, on the front end, puts a level of oversight
and discipline in the process that we don't have now, and,
quite frankly, we don't have for any of the other sorts of
review activities we have in Medicare. That would be unique to
the RACs. I think it will provide for me, anyway, a much
greater level of comfort and oversight for the RAC processes.
Chairman Gonzalez. I don't mean to misinterpret what you
are doing, and I think it is done in good faith, but I also
believe that you see some real potential for things going
haywire or not as we would prefer that it perform.
One thing that concerns me is this contingency fee
arrangement, which I understand that concept, but I have never
seen something like this, to be honest with you. Let me get
this straight.
If the RAC finds that a claim should be denied, a medical
necessity claim, a denial, it is that first step, are they
reimbursed at that point? In other words, are they entitled to
their contingency fee at what stage? At the initial finding?
Mr. Hill. They are only entitled to the fee when the
overpayment amount has been recouped by Medicare. So to the
extent that they have identified a claim, a medical necessity
claim that should be overturned and recouped by Medicare, to
the extent that Medicare recoups that amount, the RAC is
repaid.
If, for example, a provider, say it is a significant amount
and a hospital, this is typically the case in hospitals or a
home health agency, as I said, they would like to pay that
amount over time, they would like to have an extended repayment
plan, the RAC only gets a portion of each payment. They don't
get the full amount right away. They get the percentage as
Medicare gets its amount.
On the back end, to the extent a provider appeals that
determination, the way the Medicare process works now is
typically the amount is collected when the appeal happens. To
the extent the provider appeals and wins, in other words, that
appeal is overturned, the RAC has to pay that money back. They
don't get to keep that money. That is how it works.
Chairman Gonzalez. And I have another question. I am going
to reserve that and give myself a little additional time after
I allow my colleagues to have a question here.
At this time, the Chair will recognize Ms. Fallin.
Ms. Fallin. Thank you, Mr. Chairman. I thank you once again
for your testimony. I have a couple of questions.
If a physician appeals a claim and it goes to an appeals
judge, what percentage of those claims are overturned by the
appeals judge? Do you have an estimate on that?
Mr. Hill. I do. I actually have the numbers. If you think
about it in three buckets, you have got the total amount that
has been denied by the RAC. Of that total amount, roughly 4.5
percent ultimately get overturned on appeal. Of that total
amount, the number that are appealed is roughly 13 to 15
percent. So you get 100 claims, 13 to 15 of those get appealed,
and of those, roughly 30 percent get overturned. So it is
ultimately an overturn rate of about 4.5 percent. And that
compares--it actually compares favorably, or not favorably,
however we want to think about it, with the appeals rates that
we see with our normal FI and carrier operations who also do
this sort of work.
Ms. Fallin. We are talking about some issue. What is the
appeal rate for the FI and the appeals carriers?
Mr. Hill. Those rates are about the same.
Ms. Fallin. They are about the same.
Mr. Hill. Right. The initial--so the 13 percent is probably
a little lower, right? So fewer of the denials are appealed.
But of those denials appealed, more are overturned for the FIs
and the carriers. It is closer to a 50 percent overturn rate.
Ms. Fallin. Do you have any classifications of claims that
are automatically denied on the first time they are sent?
Mr. Hill. I do, but for the FIs and the carriers, the way
we do that is normally through the systems process, that is
Noble. I don't know that here. I can get back to you on that
for the record.
Ms. Fallin. My physicians frequently tell me that, that
they will submit a claim and it is just automatically denied. I
just wonder why we do that sometimes in Federal Government.
Mr. Hill. Well, there are certain circumstances where we
have what we characterize as correct coding on it, so they look
at the claim and make a judgment as to--the system makes a
judgment as to whether or not that procedure matches up with
the particular diagnosis code. You know, sort of the procedure
for fixing a broken arm wouldn't match unnecessarily with a
diagnosis of pneumonia. So those might get denied.
Others are what we call medically unbelievable edits.
Certain amounts of procedures that are done on a particular
day, the system would look at that and say that is medically
sort of unrealistic that that would happen, and those would get
denied on their face. So I am not going to say there aren't
certain circumstances that they would be believable. In those
cases, they get appealed and get overturned.
Ms. Fallin. Do you know of any particular illnesses that
are denied on the first claim?
Mr. Hill. Illnesses? No. Other than things that would not
have been normally covered for Medicare. But I can't think of
any illnesses that would be denied on the first blush.
Ms. Fallin. What do you think is the root cause for the
improper payments by the CMS contractors?
Mr. Hill. I think there are roughly four categories of
improper payments that we see. We see improper payments that
are the result of medical necessity. Those are the hardest
ones. Those are the ones where we are going in there and we are
saying the physician made a judgment, admitted somebody into a
hospital or facility and does a particular thing to a
particular person that perhaps could have been in a different
setting or should not have been done.
Roughly a third are what we characterize as coding. You
know, they just coded it incorrectly. The person needed a
service. They got the service. Somebody just put down the wrong
code for that service.
And roughly a third are what we would characterize as no
documentation or insufficient documentation. So something was
provided, but the information that we got back from the
facility, there is not enough information in the record that we
got back from the facility to support whether or not it should
have been provided. So it is those three.
I think sort of why do they occur, some of it is Medicare,
and medicine is very complicated, and sometimes the rules are
tough to follow, and so that is an obligation for CMS to do a
better job on provider education and outreach.
Sometimes it is people trying to game the system. As much
as we don't like to admit it, there are people who try to game
the system. And sometimes they are just straight out mistakes.
Ms. Fallin. In light of that, do you think that
proliferation of the contractors helps or hinders the medical
service provider's ability to deliver care to their patients?
Mr. Hill. Ultimately, it is CMS' position that it is going
to help. I understand the issues around RACs and sort of what
the provider community in particular believes or sort of
perceives as some of the issues.
My judgment has always been as CFO that, you know, a
physician or a supplier or a home health agency should have
competence in the process they are in. They may not like the
outcome, right? They may not like it that a claim was denied or
perhaps something was covered or shouldn't have been covered or
was. They may not like the outcome. But they should walk away
from the process saying CMS was fair, they were predictable, we
knew what was going to happen in the process.
That is what we are striving to do with all our integrity
efforts and, with the RACs in particular, we learned a lot in
the demo. I am not going to say that I achieved that vision in
the demo all the time, but we strove to, and I think as we roll
this out nationally that is what we are seeking to achieve.
Ms. Fallin. Thank you, Mr. Chairman.
Chairman Gonzalez. Thank you very much, Ms. Fallin. I am
going to follow up with a couple of questions, one that is
going to be on prescription drugs, generics. I referred to it
in my opening statement. GAO conducted a study and my
information is that it appears that they would say that a
pharmacy may well be only reimbursed at somewhere around 64
percent.
In my district, I have Caremark, and I think both Dr.
Farris and yourself know what Caremark represents. But I also
have the Ortiz Pharmacy there in the west side of San Antonio,
which is a poorer side. I have visited both and they are
totally different operations, I assure you.
But I do know that the Medicaid population in San Antonio
is going to depend on Ortiz before it depends on other. And I
guess I am somewhat concerned. I don't understand the average
manufacturer price. But the GAO report is very disturbing. How
do you reconcile that? Do you agree with the findings? Is there
anything that you are going to be doing? We are going to have
testimony later from the private sector, but what is your
understanding of that situation today?
Mr. Hill. Well, a couple of things. First, I know that as
we promulgated the rules and as we talked about AWP, we are
carrying out what we believe is the intent and sort of what
needed to happen as a result of the DRA.
I think with respect to the details and sort of whether or
not CMS believes that the GAO report was correct or incorrect
or the impact, I would sort of defer that for the record. Some
of that gets sort of complicated. There are people who work in
the Center for Medicaid and State Operations who are the real
experts, who are not here. I want to get you a fair answer, and
the right answer, and not sort of just sort of dance around
with it. With your indulgence, I would like to defer that for
the record.
Chairman Gonzalez. We will follow up probably with a
written question. Of course, members of the Subcommittee will
be given time to submit written questions and we would
appreciate a prompt reply.
The last question I have for you, of course, we come back
to RAC, which I understand that you are simply saying we are
following exactly what you and other Members of Congress told
us to do. Well, we understand that, but what we expect is that
you are going to have some sort of a fair process that is not
just going to be efficient and effective, but obviously fair to
the health care providers in this country.
There has to be an incentive, obviously, and if it is a
contingency fee, then it is those overpayments. Maybe I don't
understand, but they are also supposed to be looking for
underpayments. Common sense and human nature tell me that you
may not have the same motivation or inspiration, and I could be
wrong on that, to put as much effort in finding the
underpayments.
How do you address that particular side of the equation?
And, secondly, what is the incentive to identify under
payments?
Mr. Hill. The incentive to identify underpayments is
exactly the same as the incentive to identify overpayments. The
contingency fee, the proprietary fee that has been negotiated
with the RACs, is the same as a percentage of the overpayment
as it is on the underpayment. So if they find a $100
overpayment and they got a 10 percent fee, they are getting 10
bucks. If they find a $100 underpayment and they get a 10
percent fee, it is 10 bucks. The incentives are the same.
I take this next step lightly sort of dealing with the
chairman of the Small Business Subcommittee, but what we have
done on a random basis for 10 years now, 11 years now, having
nothing at all to do with the RACs, is a random assessment
under the Improper Payments Act of where Medicare makes
improper payments. A completely random sample. It is not
focused on overpayments, it is not focused on underpayments. We
just take a strict sample. Over 10 years, we have been doing
that.
For the 10 years we have been doing that, we do find that
there are not a lot of underpayments. The vast majority of the
improper payments, in the percentages you identified, 5 to 10
percent, being only the underpayments. We don't see a lot of
underpayments as we look at those records and we go back and
make a redetermination.
Now, whether that is--I don't know how to explain that,
whether or not the overpayments are the result of people trying
to game or the underpayments--not having underpayments is the
result of physicians or other just feeling like they don't want
to bill for more, for whatever reason. But we haven't seen over
time a remarkable amount of underpayments as we looked at our
improper payments across the program.
Chairman Gonzalez. The last question is probably the
toughest one for anyone that represents an agency or department
here, but under the leadership of Chairwoman Velazquez, who
takes this responsibility very, very seriously, under the
jurisdiction of this Committee comes the Regulatory Flexibility
Act. And what we always ask heads of departments,
organizations, cabinet members, it doesn't matter, we always
say, what do you do as you promulgate these regulations and
such to take into consideration the mandate and the
responsibility with which you are charged under the Regulatory
Flexibility Act.
One, it is applicable, I believe, and if you disagree, you
would say, Charlie, we are an exception to the rule or
something. But what do you do? Because it seems that has always
been the hardest question for everyone to answer when we pose
it.
Mr. Hill. Right. Well, I don't know what this is going to
say, but I am not quite sure it is that hard to answer, so
maybe it will be the wrong answer. But I am going to try. There
are two aspects of this for us.
On the demo side, there is the basic analytic due diligence
function for us, right? So we knew we were doing a demo. We
knew it was going to have a impact on a number of providers.
There was not going to be any regulations associated with it.
So the piece of the Regulatory Flexibility Act that talks about
the assessments that you need to do as you do regulations
wasn't going to apply.
But we did reach out quite aggressively with the Small
Business Administration to help them understand what we are
doing, sort of lay out our plans so they understood what we are
doing. Not that they were going to sign off or sort of say it
was the greatest thing since sliced bread one way or another,
but we did at least want to do that due diligence.
So for us, that is the two-pronged piece. There is the
Ombudsman Office at SBA that we work with as they get comments
in from providers and we proactively work with them to tell
them what we are doing. And as we roll the demo out nationally,
that is a group that we will work with quite closely so that
they understand the impact of what we are doing on the RACs.
Not just on the RACs. Whether it is regulations having to
do with home health agencies or DME or whatever, we work very
closely with that group to be sure we are in compliance where
we need to be with the Regulatory Flexibility Act.
Chairman Gonzalez. Thank you very much. The Chair is going
to recognize Ms. Fallin.
Ms. Fallin. Thank you, Mr. Chairman. I have one last
question I am just trying to get a feel of. Under the statute
for Recovery Audit Contractor, that they can review a payment
in a particular fiscal year or up to the four preceding fiscal
years as I understand it, is that right?
Mr. Hill. Under the Demonstration Act, that is correct.
Ms. Fallin. Under the Demonstration Act. Okay. Is it then
conceivable that the Recovery Audit Contractor could reexamine
a payment to a hospital or a physician that was ordered by a
Federal Court, including the possibility of even the United
States Supreme Court, that they could reexamine that, and does
CMS have any guidelines for your Recovery Audit Contractor from
reviewing the decisions of the Federal Court or Supreme Court?
Mr. Hill. That is a very interesting question. I think the
short answer is I never say never, right? I mean, it is
absolutely entirely plausible that a claim could get reviewed
and that claim could be the result of some sort of judicial
action, either a stipulation or a mandate that something occur.
I mean, off the top of my head, you know, under the
Medicare statute, a judge stipulating that something or
demanding that something is medically necessary, that is not
something I have seen come up before. I mean, I have seen where
a particular, whether it is a provider or a jurisdiction, be it
a State or local jurisdiction, is required to provide a set of
services to a set of individuals, but not that every service
has to provided and covered by Medicare. We still have to reach
those coverage decisions.
So, I mean, if there is more information there or if there
is something else I can do to sort of delve into that, I would
be happy to. It is a very interesting question, and I suspect
it will lead to all sorts of odd answers.
Ms. Fallin. Okay. All right. Thank you very much.
Chairman Gonzalez. Thank you very much, Ms. Fallin. And Mr.
Hill, Dr. Farris, thank you very much for your testimony. We
are going to go to the next panel. You may receive written
questions from members of the Subcommittee. Also I anticipate
that you may have to leave, but we will have representatives
from CMS that will remain throughout the hearing. It is always
very important to the witnesses to know that someone from the
government is there and listening to their specific testimony.
Mr. Hill. We will be here. Thank you very much.
Chairman Gonzalez. Thank you. You may be excused.
The Chair is going to call panel 2. We will have staff set
up the particular order.
I welcome the second panel of witnesses and thank you for
your patience. I know it took a little longer with CMS, but it
is always important when we have somebody here that can answer
some of the questions that I know you have had and hopefully
were reflected in some of the questions posed by the members.
I will indicate now that Ms. Fallin may also have to excuse
herself. We try to do everything in about 2-1/2 days when we
are here, and you are finding yourself in one of the busiest.
At this time what I will be doing is I will be recognizing the
witnesses individually, and I will introduce them as they are
about to testify.
Chairman Gonzalez. The first witness is Dr. William A.
Dolan. Dr. William A. Dolan was elected to the American Medical
Association Board of Trustees in June 2007. He is an orthopedic
surgeon from Rochester, New York, and has served on the AMA
Council on Medical Service since 2002 before becoming Chair
this year. The American Medical Association helps doctors help
patients by uniting physicians nationwide to work on the most
important professional and public health issues facing our
country.
Again, I will remind everybody, you have 5 minutes, and,
believe me, you will have plenty of time to expand on anything
during the question and answer.
Dr. Dolan, you may proceed.
STATEMENT OF DR. WILLIAM DOLAN, MEMBER, BOARD OF TRUSTEES
AMERICAN MEDICAL ASSOCIATION
Dr. Dolan. Thank you, Mr. Chair, and acting ranking member,
Ms. Fallin, and members of the Subcommittee. My name is Bill
Dolan. I am a member of the Board of Trustees of the AMA and a
practicing orthopedic surgeon in Rochester, New York. I want to
thank you for inviting us to testify here today on the impact
of the CMS regulations and programs of the small health
practitioners.
Chairman Gonzalez. Excuse me, Doctor. I don't think the
mike is on. If you can hit that button. I can hear you fine,
but they can't in the back.
Dr. Dolan. Approximately 75 percent of physician practices
are composed of fewer than eight physicians. For the majority
of these small physician practices, including mine, burdensome
regulations can take valuable time away from patient care. We
believe that this is particularly true with regard to the
Recovery Audit Contractor, or the RAC program, and the ICD-10
implementation.
Now, as you pointed out, the RAC program employs
contractors to analyze and audit physicians' reimbursement
claims for billing errors. The pilot program, which began in
2005 and will begin nationwide this year, has been extremely
burdensome on the affected physicians and does nothing to
educate them about common billing mistakes. Instead, the
program embraces the "bounty hunter" technique that provides
the RACs with incentives to deny claims.
While we strongly oppose the RAC program, we believe there
are things that CMS can do prior to the national rollout that
would improve it. Specifically, CMS should consult with the AMA
on RAC physician communications. In addition, they should make
RAC monthly financial reports public and maintain an accessible
list of commonly audited procedures.
CMS, in addition, should preclude RACs from reviewing
claims for the past 12 months. The failure to do so will result
in RACs reviewing claims still under review by carriers and
other fiscal intermediaries.
RACs should not be permitted to review billing issues
arising from evaluation and management services or medical
necessity determinations, as they are extremely individualized
and extensive clinical review is necessary.
CMS should limit the number of records requested from
individual physicians. I know of one neurologist from
California who had a request for 50 of his patients' charts.
CMS should also raise the minimum claim level from $10 to
at least $25.
Finally, CMS should encourage the pursuit of underpayments,
as you spoke about, as well as the overpayments, by requiring
RACs to accept case files from providers for underpayment
reviews and including as an underpayment those situations where
a physician mistakenly neglects to report a delivered service.
The AMA also concerns itself with the rollout of the ICD-
10, the 10th version of the international classification of
disease is used in outpatient and inpatient settings. While the
AMA recognizes the important action of updating the current
coding system, ICD-9, we believe that due to the complexity and
the cost of this extensive transition, a plan and timeline must
be developed prior to a national rollout. Any transition must
take into account the fact that physicians are already
struggling to implement the HIPAA electronic transaction
standard and also the transition to the national provider
identifier number.
Given the costs and complexities involved with the move to
ICD-10, the AMA suggests that the HIPAA electronic standards be
upgraded to version 50-10 prior to the national rollout as the
current standard, 40-10 is totally incompatible with the ICD-
10. In addition, the ICD-10 coding system should be pilot
studied and tested so that problems with it can be identified
and resolved in advance of a national rollout. Physicians,
their staffs, their coders and other national stakeholders will
need adequate education and training very early in the
transition process.
Due to the significant resources, administrative
complexities and advanced planning required to retool and
replace our systems and processes which currently depend upon
ICD-9 logic, HHS should work collaboratively with the health
care industry stakeholders to develop a realistic transition
process and timeline.
The AMA looks forward to working closely with the Small
Business Committee to ensure that physician practices,
especially the smaller practices like my own, are able to
manage the RAC audit process and prepare for the ICD-9 rollout
and transition without compromising health care to our
patients.
Thank you.
[The prepared statement of Dr. Dolan may be found in the
Appendix on page 56.]
Chairman Gonzalez. Thank you very much, Doctor.
Chairman Gonzalez. The next witness is Dennis Wiesner. Mr.
Wiesner is the Senior Director for Privacy, Regulatory,
Government, and Industry Affairs for H.E.B., a grocery company
in San Antonio. Beginning in 1905, H.E.B. Grocery Company is
now one of the largest independently owned food retailers, with
stores throughout Texas and Mexico.
When I make a comment that I have got Caremark in San
Antonio as well as the Ortiz, somewhere in the middle I have
grocery stores like H.E.B.
Welcome, Mr. Wiesner. You may proceed.
STATEMENT OF MR. DENNIS WIESNER, SENIOR DIRECTOR FOR PRIVACY,
REGULATORY, GOVERNMENT, AND INDUSTRY AFFAIRS, THE H.E.B.
GROCERY COMPANY, SAN ANTONIO, TEXAS
Mr. Wiesner. Thank you, Chairman Gonzalez.
Chairman Gonzalez and members of the Small Business
Committee, I am Dennis Wiesner, a registered pharmacist, and I
am senior director for Privacy, Regulatory, Government, and
Industry Affairs for H.E.B. Grocery Company, headquartered in
San Antonio, Texas. I am testifying today on behalf of the
National Association of Chain Drug Stores. Over half of the
NACDS membership operates 20 or fewer stores.
We appreciate this Committee's support for pharmacies,
particularly the leadership of Chairman Gonzalez, Chairwoman
Velazquez, Ranking Member Chabot, and others on the Medicaid
AMP issue.
As you may be aware, 20 percent of the Medicaid population
is located in rural areas of the country, and in Texas, many of
our stores are located in rural towns. For Medicaid
beneficiaries, we are often the most accessible supplier of
prescription medications, health information and critical
health care services. In particular, my company offers
immunizations in all of our locations. Pharmacies are the face
of neighborhood health care.
It is with this in mind that I express my concern regarding
the devastating cuts to Medicaid pharmacy reimbursement called
for by the Deficit Reduction Act of 2005 and the CMS
implementing regulations commonly referred to as the AMP rule.
For many pharmacies, the AMP cuts to Medicare reimbursement
place our businesses at risk and threatens patients access to
medication. Many pharmacists will not survive the AMP cuts
because they will be paid less for generic drugs than it costs
to purchase them. Many pharmacies may have to cut back services
or shorten their operating hours, and it has been estimated
that as many as 12,000 pharmacies across the country could
close their doors.
If patients lose access to vital medications it could also
lead to more emergency room visits and expensive catastrophic
care. Failure to take medications as prescribed is estimated to
cost $177 billion annually.
The AMP rule is fundamentally flawed in many ways, but in
particular, it fails to provide a thorough analysis of the
economic impact that this rule would have on small pharmacy
businesses as required under the Regulatory Flexibility Act.
In light of numerous statutory violations, a Federal judge
has blocked implementation over the AMP cuts. However, only
Congress can prevent these cuts with a permanent legislative
fix. That is why it is essential that Congress pass the Fair
Medicaid Drug Payment Act, H.R. 3700 and Senate bill 1951. I
urge all Members of the Committee to cosponsor this important
bill.
I would like to focus the rest of my statement on the
Medicare program and the impact of related CMS regulations on
beneficiary access to drugs, medical supplies and services.
When enacting the Medicare Modernization Act, Congress
recognized the value and trust patients place in their local
pharmacist and the need to preserve those relationships, many
of which go beyond the simple filling of a prescription. Thus
Congress included playing field provision to ensure that
patients can obtain their Part D benefits from any retail
pharmacy of their choice.
However, CMS' implementation and its guidance on how plans
should follow this provision are inconsistent with
congressional intent.
As a result, Medicare plans are steering patients to mail
order houses and discouraging 90 day supplies at retail by
offering lower reimbursement rates or by charging higher copays
for the patients. These practices deny patients a choice in
their health care provider.
Another area of concern involves new program requirements
and competitive bidding under the Medicare Part B for durable
medical equipment and supplies which will also harm patients'
access to their local community pharmacist, the most readily
accessible health care provider in the community. On this
issue, NACDS proposes the following recommendations, on which I
elaborate in my written statement.
First, State licensed retail pharmacies should be exempt
from the accreditation requirement. State licensed pharmacies
are licensed by their respective state board of pharmacy and
abide by strict State and Federal laws, including those related
to health care, fraud and abuse.
Next, diabetes testing supplies sold at retail pharmacies
should not be subject to competitive bidding. Expansion of the
program to include diabetic supplies sold at retail pharmacies
could harm patients' access to those products and create a
fragmented care in the management of diabetes.
Last, CMS should not create national or regional
competitive bidding areas for mail order items. The mail order
program is likely to compromise on the quality of products and
services, pose tremendous navigational obstacles to the low
income and minority beneficiaries, and could force patients to
either forego diabetes testing or do it in an improper and
limited manner. And this, of course, could have devastating
effects.
On behalf of my company, H.E.B., and NACDS, Mr. Chairman,
thank you again for the opportunity to testify today before the
Committee. I welcome any questions you may have.
Chairman Gonzalez. Thank you very much, Mr. Wiesner. We
will get back no doubt.
[The prepared statement of Mr. Wiesner may be found in the
Appendix on page 65.]
Chairman Gonzalez. The next witness is Dr. Michael
Schweitz. The doctor is a practicing rheumatologist and vice
president of the Coalition of State Rheumatology Organizations.
The doctor is here to testify on behalf of the Alliance of
Specialty Medicine, a coalition of 13 national medical
specialty societies representing more than 200,000 physicians.
You may proceed with your testimony.
STATEMENT OF DR. MICHAEL SCHWEITZ, VICE PRESIDENT, COALITION OF
STATE RHEUMATOLOGY ORGANIZATIONS, WEST PALM BEACH, FLORIDA
Dr. Schweitz. Good afternoon Mr. Chairman and members of
the Subcommittee. I am Dr. Michael Schweitz, a practicing
rheumatologist from West Palm Beach Florida. I would like to
discuss the experience of physicians and my own personal
experience impacted by one aspect of CMS regulations on small
health care providers, namely the CMS demonstration project
referred to as the Recovery Audit Contractor program, or RAC.
The implementation of the demonstration has created unfair
and expensive administrative burdens for physician practices,
which are, after all, small businesses with limited capacity
for dealing with arbitrary, ill-informed and often very
confusing policies of those contractors. Some of these problems
are detailed in our written documents and I will summarize some
of them for you.
Number one: Recovery and review of old and previously
adjudicated claims. In Florida, the RAC contractor, HGI,
demanded multiple physician refund payments throughout the
State for claims that had previously been reviewed and
adjudicated by the Florida Medicare carrier.
Two: Errors by RAC's misstating or misapplication of codes.
Records were requested or refunds demanded involving hundreds
of thousands of dollars from oncologists in Florida after the
RAC erroneously misstated the codes for IV hydration, which is
necessary during chemotherapy.
Three: Refund requests exceeding time limits. California
urologists were asked by the RAC to refund payments on the
basis of least costly alternative policy for drugs used to
treat prostate cancer. The RAC was discovered to be misapplying
CMS written policy by exceeding time limits for reviewing
claims.
Four: RACs have also taken on the role of interpreting
clinical guidelines governing utilization for procedures, such
as inpatient versus outpatient procedures for hysterectomies
and the implantation of cardiac devices.
Five: RACs have also applied new regulations retroactively
to previously performed procedures. In Florida, hundreds of
physicians were asked for refunds or records pertaining to
spinal joint injections to relieve pain based on a 2003
commentary in The Federal Register, when the actual CMS policy
had not been developed, distributed or published until
September of 2007.
Hundreds of practices were forced to hire consultants or
counsel and divert clinical and administrative staff in order
to retrieve, review and submit records to comply, and even some
had payments withheld, creating significant cash flow problems
for that practice. One practice, in fact, had the funds
withheld before the demand letter was received.
The RAC's decisions, if successfully reversed on appeal, do
not resolve secondary carrier withholds or demands that are
triggered by CMS notifications. This creates an exceptional
additional burden on these practices to interact with dozens of
carriers in order to reconcile hundreds of claims.
Our recommendations are outlined in our written testimony,
but I will summarize some. These include, number one: As
stated, changing the bounty hunter payment mechanism that seems
to embolden RAC behavior.
Two, precluding the RAC from reviewing work from the
current year. It is redundant. There are already contractors
who are doing that at the same time.
Three, shortening the look-back period to 12 months from
months 12 to 24. This should be a sufficient time.
Four, and most importantly, CMS should remove medical
necessity reviews from the RAC statement of work. We do not
think that these reviews are appropriate for the RAC program
and believe that they exceed the authority imparted to the RAC
by Congress. These reviews should be conducted by clinicians
with the relevant experience and expertise to make rationale
judgments. RACs do not appear to have used appropriately
qualified staff for their reviews. If CMS intends to
significantly reduce error rates in its transactions,
physicians should expect no less from the RAC.
For these reasons, we support H.R. 4105, the Medicare
Recovery Audit Contractor Act of 2007, or any other similar
legislation that proposes a much-needed moratorium on RAC
activities and expansion until the serious flaws are adequately
evaluated and addressed and demonstrably corrected.
Thank you, Chairman Gonzalez.
[The prepared statement of Dr. Schweitz may be found in the
Appendix on page 80.]
Chairman Gonzalez. Thank you very much.
The next witness is Dr. Karen Smith. Dr. Smith is the Board
Chair to the American Academy of Family Physicians. She also
practices family medicine in her own clinic in Raeford, North
Carolina. The American Academy of Family Physicians is the
National Association of Family Doctors. It is one of the
largest national medical associations, with more than its
93,000 members in all 50 States, and also Puerto Rico, the
Virgin Islands and Guam.
You may proceed with your testimony, Dr. Smith.
STATEMENT OF DR. KAREN SMITH, BOARD CHAIR, AMERICAN ACADEMY OF
FAMILY PHYSICIANS
Dr. Smith. Good afternoon, Chairman Gonzalez and members of
the Committee. I am Dr. Karen Smith, a family physician and
owner of a solo private practice in Raeford, North Carolina.
On Monday morning, October 24, 2005, two representatives
from AdvanceMed presented to my office with badges identifying
themselves as authorized subcontractors for CIGNA Medicare and
requested 72 charts for review of clinical documentation of
services rendered from July 1, 2004, through July 30, 2005. My
staff extracted the requested information from the electronic
record system, and I personally provided the walking tour of
the building, including inspection of State and Federal
licenses for medical business operations. The care of my
patients was disrupted in our open access rural family
practice, as patients, pharmaceutical vendors and other
visitors of the practice observed the unannounced review.
Five months later, on March 16, 2006, I received
notification that 72 claims with 154 services submitted were
reviewed and 91 of the 154 disallowed for payment. The actual
amount paid to the practice for the services questioned was
$1,551.11. This overpayment amount, when extrapolated to a
sampling frame size of 2,935 patients, resulted in an
overpayment calculation of $48,245. However, my practice
management system noted I only had 1,287 CIGNA Medicare
patients in the practice at that time. This discrepancy was
never acknowledged nor was it corrected in the final
calculations.
The reasons given for denial included incomplete or no
documentation, services incorrectly coded, services not covered
by Medicare, lack of documentation for drugs administered,
services not medically necessary in the judgment of the
reviewer, who was not a physician.
When my staff and I reviewed this summary, we noticed that
several items of documentation the reviewer cited as being
nonexistent were indeed present in our electronic medical
record system. I notified AdvanceMed of this discrepancy and
requested instructions for sending this information. They
responded that this information could be submitted only in an
appeal.
This answer was communicated in such an intimidating and
aggressive manner, prompting me to call a well-known
independent auditor. I participated in several of her coding
workshops and quickly recognized additional professional
assistance was going to be needed. At my request, the auditor
immediately contacted an attorney who also called AdvanceMed,
only to receive the same answer.
The appeal process was initiated and then delayed due to
AdvanceMed sending letters to the wrong medical office which
neither I nor my counsel ever received. Documentation was
finally accepted by CMS and forwarded to Q-2 administrators
hired by CMS to review the file and make an independent
decision.
The outcome from the CMS review was partially favorable in
that it decreased the overpayment amount from more than $48,000
to $18,158, a $30,000 error. But it was still based upon an
incorrect and inflated number of Medicare patients in my small
practice.
Our attorney reviewed additional options, including an
administrative law hearing for services performed, but required
additional appeal presentation. The practice, my family and
myself were at a point of stress never imagined. We were
exhausted and emotionally distressed after countless hours and
days of preparation and review during our third year in
business. Thus, we decided to halt further appeals and review.
We were financially drained and feeling the pressure to make
payroll, pay mortgage, as well as other expenses.
A loan was acquired from my personal home equity and a
check sent to CMS to satisfy the obligation. Ninety days later
I received notification from the U.S. Attorney's Office for a
possible levy of assets due to nonpayment of the CMS
recoupment. After providing documentation two times, it was
clarified that the payment had not been applied to our debt.
I established a technologically advanced primary care
practice in one the poorest counties in North Carolina. This is
a practice that adheres to the highest standards of care and
participates in quality-based projects and a goal of decreasing
medical errors, eliminating redundancy and State-of-art
communications with the hospitals located in the region.
The guilty until proven innocent audit we endured used
sampling and extrapolation calculations which are not properly
verified for validity. In addition to the disruption to patient
care and possible reputation damage by the surprise and abrupt
visit of badge-bearing authorities, the process quickly
exhausted our financial reserves.
It defies common business sense to run a highly qualified
medical practice using records in a financial environment where
Medicare does not recognize the true total costs for caring for
individual patients with many medical problems. The escalating
costs of health care cannot be subsidies for moneys taken out
of the businesses of small physician practices. We have the
compassion and the desire to remain in operation, but will not
be able to endure in a world of uncontrolled costs and
diminished payment.
Thank you for allowing me to testify.
[The prepared statement of Dr. Smith may be found in the
Appendix on page 92.]
Chairman Gonzalez. Dr. Smith, thank you very much. Quite a
compelling experience I would say. It wasn't a story, it was
reality.
We are going to have votes in a few minutes, but I think,
since I don't have any other members that are present, and
please do not interpret that as not having an interest. Believe
me, we are just pulled in every which way. If I wasn't
chairman, I probably would have been here and then I would have
been at another hearing.
All of your testimony, of course, is being recorded. Your
statements are part of the record. The questions that we have
here, probably the most important people will be our staff
members. Chairwoman Velazquez is not one to conduct a hearing
or allow us to conduct Subcommittee hearings without looking at
taking some sort of affirmative action on these things. She is
very proactive. So, believe me, this is incredibly important
and informative.
My first question, Dr. Dolan, you have recommended that the
minimum should be increased from, let's say a $10 overpayment
to $25. I guess it is a two-part question. What is the basis
for that? And simply, if the threshold is really low, obviously
you have multiple claims being challenged and overpayments and
such. I understand that. Is it worth it, even at $25, for the
physician to go through all the trouble to basically contest
it? That is the first question.
The other thing is if you don't contest and you just simply
pay, are you establishing some sort of record in that big
computer in the sky or whatever, that Dr. Dolan, because you
just didn't want to contest all these low ones or even
cumulatively, it was just not worth the expense? Is there some
fear on the part of a physician that somehow they are having
some sort of a record out there for someone to look at, and it
obviously would not be a good reflection that you had 1,000
claims, maybe they are all $10 or whatever, but nevertheless
there is no distinction. Is that a fear?
Let's just go back to you want to increase it from $10 to
$25, and what would be the basis for that?
Dr. Dolan. I personally would want to increase it to $100.
At $10, the physician will lose money, just listen to the story
next door here, will lose money in even trying to replicate the
records. Remember, we do not get paid like the hospitals get
paid for replicating the records, nor the postage nor anything
else. So you will lose quite a bit of money. Even if you have
to do one record, it is not worth it.
It is like us seeing Medicaid patients. It is not worth us
to charge. We do it for free. The same with $25. With all the
work you have to do, it is probably not worth paying a full
time equivalent to go back, find the record, $15-an-hour
payment, to file and then copy all those things and then get
the postage and send it off, filling out all the forms. It is
not worth it.
We know of no such dragon in the sky who is watching over
this. There may be. But if you are just dealing with several
items, unlike the multiple requests by the doctor, I would just
blow it away. It is not worth my time. It is not worth my
secretary's time. It is not worth the patient's inconvenience.
So I would do that.
Now, PPAC, which is the Physicians Advisory Counsel to CMS,
has recommended $25. That is where the $25 came in. But,
personally, I would go higher than that, because that is when
you are really going to fight, when it gets to be $100. That is
where that number comes in. It is an arbitrary number, and I
will have to say that.
Chairman Gonzalez. The fear, of course, is if you are on a
contingency basis and you go for all this low hanging fruit,
but the real reason is you simply know it is not going to be
contested and cumulatively you can make a lot of money, to be
honest with you, because obviously the other side, it is just
not a financially viable proposition for them.
I will instruct Committee staff if they will remind me to
follow up as to how CMS keeps these statistics and whether
there is any adverse effect on someone. In other words, if
there is a future let's say investigation or whatever it is,
they go back and they go, my gosh, look at all these claims,
not looking at the numbers or anything like that. So is a
physician or health care provider placed in jeopardy by simply
making that determination of not to oppose or to appeal or so
on.
I think that is a real concern. At the end of the day, you
are still a business. Your life span and profession always say
that, but, nevertheless, they are business considerations.
Then, Mr. Wiesner, let me ask, I am trying to figure this
thing out on the average manufacturer's price and how it plays
out and the different type of pharmacists that we have out
there. I think I have already described, I think I have all
three there obviously in my own district.
But you heard Mr. Hill from CMS, and he seemed to say, not
in reference to RAC, but what we are talking with here, that it
seems to be more of a work in progress still. Do you sense
that? Do you feel that you still have some input, that
something can still be done? Or is this a bygone conclusion and
you are going to be facing this. And then the potential impact
on someone like H.E.B. And what I refer to as my supermarket
pharmacies?
Mr. Wiesner. Correct. I don't believe at this particular
point we have that much more input that is going to change the
direction that we are going. Obviously, I did refer to the fact
that we have a temporary injunction so it is not in effect at
this point in time. But at some point, there will need to be a
benchmark to help determine the adequate cost basis for generic
products, and at this moment, AMP is a flawed definition of how
that is achieved.
It is intended to be really the average price paid by a
community retail pharmacy. But included in the information that
is gathered is prices from a large number of other facilities.
They could include clinics, they could include the mail order
operations, for example, and in each of those instances we are
not on a level playing field with those. I could elaborate, but
that would take a little while to do that.
So what we actually have is kind of a misnomer. It says
average manufacturer price. The real reality, it is the lowest
price that is reported. It is not an averaged weighted price
across all these various classes of trade. So it would be the
lowest price that would come in. And in many cases, as you
reported earlier, the GAO report, it has already been
determined and confirmed that 60 to 65 percent of the time, the
average community retail pharmacy would not be able to purchase
the product at the price that it is going to be set at.
Chairman Gonzalez. It is a fair statement though, if you
are looking, in essence it is going to be the lowest price. And
it is not a level playing field, for many reasons. A mail order
house obviously don't have the facility, the physical
structure, the employees and such, which creates jobs and
everything else in my district, by the way, and everybody
else's district, and the traditional pharmacist there. But,
nevertheless, you all would all come under this general
umbrella at arriving at that price. Everybody is basically
under it or in the same situation.
Mr. Wiesner. That is correct. We would all be underneath
that same umbrella. What that is going to really create is for
individual pharmacies to make some very tough decisions if
nothing is changed. They will each have to look at their own
financial situation, and the ones that would be most at risk,
more than any, would be pharmacies located in rural settings
that have a high percentage of Medicaid recipients.
It is important that the Medicaid recipients have providers
across-the-board for access, and if they have to make decisions
such as not participating in the program, there still needs to
be avenues for the Medicaid recipient to receive their
prescriptions. So that will then push that out into the
community and further overburden the rest of the pharmacy
community.
Chairman Gonzalez. I appreciate it. It is so important for
us as Members of the Congress to understand how the real world
works out there and the different competitors in the same
enterprise. So it is, when you are explaining to me the
difference between, let's say mail order, and you pointed that
out, I think it is an important distinction.
Dr. Schweitz, your testimony obviously was very interesting
and also very compelling. I do want to obviously be fair to CMS
and some of the concerns you had.
I just want to know if you believe they are going to be
adequately addressed? We know it is a pilot project. We know it
is in certain States. Mr. Hill indicated in his testimony
lessons were learned. They are going to improve on that
particular system.
Chairman Gonzalez. I just want to know if it provides you
and addresses your concerns. From his testimony, he says, for
example, they will now have both a medical director and
certified coding experts will be required to be employed at all
permanent RACs. That is an improvement. Does it go far enough?
Dr. Schweitz. That addresses the issue of medical necessity
reviews to some degree, but I think your question to the CMS
representative was right on the mark. What kind of volume are
we talking about and how is one medical director going to
address all of those necessity reviews from all of those
different specialties?
I would like my necessity reviews to be done by someone who
has expertise in my field to make a judgment on what I am
doing. I really don't know how a general medical practitioner
or general medical director can have the expertise to make
those determinations in all the different fields there are in
those kinds of volumes. So I have reservations about that part
of it.
Chairman Gonzalez. I think Mr. Hill was, again, very candid
and I think those decisions on how that process will operate
within that particular RAC is really going to be up to that
medical director, what he or she will actually be seeing. I
don't think that it is going to be every doggone claim. That is
the most obvious observation that we could be making.
In Florida, I forget the name of the outfit that you dealt
with. I don't know if--
Dr. Schweitz. Health Data Insights. HDI.
Chairman Gonzalez. HDI. Do you have an idea how much of an
area they were provided? I should have asked Mr. Hill this. I
am still not sure how many RACs we had out there during this
process. Let's say in the State of Florida, which is--
Dr. Schweitz. There were only three States that were part
of the demonstration project initially, Florida, California and
New York, and I believe there is one contractor in each State.
We only dealt with one.
Chairman Gonzalez. And now I see everybody shaking their
heads in the audience. I think they are all in agreement with
you. I am just wondering if when we expand this to all 50
States--and anybody else, I am really--again if that is what we
are going to do, it is going to be an overwhelming challenge I
would suspect. I am not saying that CMS is not attempting to do
the best they can. I am just saying now that we are going to
have 50 States, how many RACs are we going to--permanent RACs,
that is what we refer to them now. Nothing is really permanent
permanent, as you know, and that is why we have legislation.
You could also have lawsuits and so on. But I am hoping we have
a collaborative and come up some answers that address your main
concerns because obviously CMS is acting at the direction of
Congress. It is just the manner in which they are executing the
policy and that is what we are trying to arrive at.
Dr. Smith, I guess--I wanted to ask you when they paid this
visit and it was unannounced, you talked about people just
coming in. Your employees, your patients, and you have somebody
who comes obviously in an authoritative manner. I don't think
they flash badges or whatever it is, but in essence and that
actually occurred. You did not have any warning. There wasn't
any discussion--"we need to meet with you, this is what we are
going to do and we are coming by tomorrow."
I am not saying they give you 30 days notice. I understand
how the real world works. If they think someone is doing
something they don't want to give you any time to do anything
if they believe that you are a wrongdoer. Not that that is what
was happening in your case. But I understand that is the way
the government works. But nevertheless they came in; right? And
at some point it just isn't profitable to continue to resist;
is that correct?
Dr. Smith. Yes, that would be correct. And exactly as you
described, they appeared at the front window and they did flash
badges which placed us on notice immediately, which is why we
responded immediately and prepared this information.
Chairman Gonzalez. The other thing that was disturbing in
your particular circumstance, which is different circumstances
than what we have been talking about prospectively, what we
have already had in place and what goes on, is this sampling
when you extrapolate. I understand that concept, too. I just
don't think it is applicable in many instances.
And that is what they basically do. They find one or two
cases and say, well, you have 50 recipients, therefore we are
just going to go and figure that each and every one of those
then should reflect this overcharge of whatever it is; is that
correct?
Dr. Smith. Yes, that is the sampling frame size. And in our
situation, the sampling frame size was grossly incorrect. We
ran our numbers before taking the flight yesterday and as of
yesterday we had 1,487 Medicare patients. At the time of this
audit it was still noted that we had 2,935 patients. As of this
date we have never acquired that many patients and it was
extrapolated against that number.
Chairman Gonzalez. So the base number was wrong. The other
thing, too, I think you indicated some payment was tendered or
whatever. Obviously it wasn't applied. I think we all run into
that in some respects.
But for you, I mean, you are getting a letter, obviously--
and I don't remember if it was an Assistant U.S. Attorney or
someone in a legal capacity--which technically they could just
shut you down; is that correct? How were you able to remedy
that situation?
Dr. Smith. Fortunately, by that time we had maintained
copies of each piece of correspondence sent out from the
office. And so he immediately asked me to fax those to him. We
faxed it over. He called back to verify the information. We
also had a copy of the check that was written and also showed
on the back where it had been cashed, and we sent that to them.
And we thought the matter was resolved.
And literally 3 to 4 weeks later the same letter comes
again and we sent back the same information, this time with the
certified mail receipt showing where we sent it and we sent a
copy to CMS so they were aware of what the problem was.
Chairman Gonzalez. I want to thank you for your testimony.
One last question on the ICD-10. Dr. Dolan, I think you made
some reference to it. Based on your testimony, this is being
rolled out but we really have not had a pilot project. We
haven't had any kind of a test out there, any rollout. I know
what we did with RAC, but we don't have anything similar
regarding what we are going to be doing with coding and such.
And I was reading the staff's memorandum on this--and I
want to commend staff for doing such a good job because this is
quite complicated in many ways unless you are a physician or
you work in CMS--but it is an incredible expansion of the code.
The numbers that you have out there actually to apply and to
use--and I forget the exact number and I could find the
memorandum, but what you are saying is they are just going to
roll this thing out. You are going to have to adopt it, whether
you can reconcile it with what you have in an existing
framework or procedure. Is that correct?
Dr. Dolan. That is correct. The current plan of CMS is to
roll this out. The current terminology base, ICD-9, is not
compatible with ICD-10. All right? That is the 4010 software.
Chairman Gonzalez. Okay.
Dr. Dolan. Now, ICD-10 has 10 times the number of
diagnoses, procedures, et cetera. Since ICD-9 was started in
1970 and they never got the bugs out of it for 20 years, ICD-10
has 10 times the diagnoses numbers and procedures. And on top
of that, one, ICD-9 is a numeric base. ICD-10 will be an alpha
numeric base with at least three, sometimes four digits
following the main number.
So this is going to be very complex. And to get a software
that will be compatible with this is possible, but first you
have to apply the software to the new ICD-10, and then have at
least a 2-year pilot project to make sure it works. And once we
know it works, then teach everybody about it before you put it
into effect. This should take 4 to 6 weeks--4 to 6 years at
least before you can get a good enough shot.
Now, we don't deny that ICD-10 will be good. But you have
to think of the thousands, hundreds of thousands of nurses,
coders, doctors, who don't know a thing about this and they are
going to thrust this big complex system on top of them and it
is going to be Y2K all over again. So I just really would want
you to understand the complexity of this matter and the
problems that we are going to run into.
Chairman Gonzalez. And I know it was pointed out in simple
terms, ICD-10 has 200,000 codes.
Dr. Dolan. Correct.
Chairman Gonzalez. And that alone--then you are telling me
about the incompatibility of software and of course the
conversion and what that is going to take and so on. It seems
like a prudent thing--and I will educate myself on this as well
as in talking with other members of other committees that have
jurisdiction over this particular issue to address exactly what
you are describing here. Because it seems like if it is just
rolled out and dumped in everybody's laps, I am not even sure
it is a practical matter. And I am sure we have software
vendors and everybody out there that can tell you that they can
get their hands around it and can handle it, but I am not sure
of that.
Again, I just want to thank the witnesses for your
testimony. And, again hopefully we can come to some sort of
consensus in a collaborative effort. As I have always said,
short of lawsuits and short of major legislation which is
always hard to pass, in a regulatory scheme we are going to be
more nimble and we can react more quickly, and that is what the
Regulatory Flexibility Act was all about.
Let's do that but make sure we are getting the input. And I
am not real sure on some of this if CMS has met its duty under
the Regulatory Flexibility Act. And again we want to work with
them, of course, and see if we can find something that meets
the needs of CMS, the mandates of Congress, but at the end of
this, doesn't in any way imperil the care that our citizens
under the programs receive.
Again thank you very much. And I am going to ask the next
panel to come and have a seat. We are going to get as much done
as we can before the next votes, which should have already
happened, but I can get introductions.
Thank you very much. Again, you have been the most patient
because you are the last panel. And we will be interrupted, but
I am going to again ask for your patience. And I hope you are
not missing any flights or anything. Your testimony is very,
very important as I heard from the previous witnesses.
What I am going to attempt to do, because I have got about
10 minutes but that will allow me to go through the testimony
of one or two witnesses, and I don't want you to hurry. You
have your full 5 minutes. Your testimony is as important as all
the others, if not more important on some of the practical
aspects.
The first witness on Panel 3 will be Ms. Terry Allen. Terry
Allen is the Director of Reimbursement for the South Texas
Oncology and Hematology in San Antonio, Texas. South Texas
Oncology and Hematology offers a full range of treatment
options for patients facing cancer treatment. And you may
proceed at this time, Ms. Allen.
STATEMENT OF MS. TERRY ALLEN, DIRECTOR OF REIMBURSEMENT, SOUTH
TEXAS ONCOLOGY AND HEMATOLOGY, P.A., SAN ANTONIO, TEXAS
Ms. Allen. When I was asked to speak to the committee today
regarding the Medicare regulations, Lynn Kuhn asked me to speak
from a business office perspective because I get to deal with
them from across the board, from admissions talking to
patients, from the compliance standpoint for billing, auditing,
and looking at business applications going forward.
One of our largest challenges in cancer care is the
emerging technologies and the amazing advancements that have
come along. With that are some capital investment ventures that
come out. One of our hardest things with looking at capital
ventures and expanding our services is tied to emerging
technologies.
We offer radiation therapy services. An emerging technology
over the last several years has been stereotactic radiosurgery.
Stereotactic radiosurgery is for lesions, tumors, and other
radiation therapy needed services. It has been FDA cleared for
the entire body. This service to start out is 4 to $5 million.
As a small business we are looking at a patient population,
radiation therapy and that the service can cover the entire
body. So you are fixing to make a business decision based on
that information.
Next comes the G-codes. How are we going to bill for it and
pay for it? CMS has outlined some G-codes for stereotactic
radiosurgery. Unfortunately, only for the hospital, not for
outpatient. In working through the coalition and various
organizations, those codes were opened up for the outpatient
setting local carrier price. So we said that is great. So we
called and said we would like to purchase the system. We are
looking at the G-codes, it is carrier priced. Can we have the
price that you are setting for this payment?
No. Buy the equipment. Submit your claims individually and
we will determine the payment on a case-by-case basis. We
escalated the calls, we sent letters, we still are not at that
platform. The inconsistency of the regulations being applied is
difficult for us to manage.
Six other States have published what the States are going
to pay for the G-codes, so it is a daunting task for a small
business to look at making a substantial investment to better
the patients to keep at an outpatient setting without having to
duplicate the services in a hospital setting, but we are stuck
here.
The emerging technologies is really an interesting gambit
for us to look at and it is part of our ongoing viability as
reimbursement is cut for drugs and ongoing services throughout
the system.
And that leads me to probably one of the other Federal
regulations that seems to be going through a significant change
for cancer patients, and I would briefly like to touch on
erythropoietin stimulating agents. Unlike an emerging
technology, that is a technology that has been around for a
long time. It is a drug that is a support drug and helps us
continue to give chemotherapy treatments.
CMS has recently limited, outside the FDA guidelines, how
we can administer that drug to our patients. We are abiding by
that. Patients are having to delay chemotherapy treatments. We
can define a direct correlation to reduced prescriptions for
chemotherapy. And one of the hallmarks of good cancer care is
maintaining on-schedule correct dosing for your patients.
So ESAs are very troubling. The patients don't understand
it. They feel better with the product. They know that they are
able to tolerate the treatment and advance more quickly.
The negative impact to the patients is many of our patients
are saying we would like to pay for it out of pocket. So we are
filling out the appropriate paperwork and talking with them.
And many of our patients are going there. The other thing they
are asking us, are the other payers requesting the same
guidelines? No, they are not. CMS has taken a bold step and it
is the only payer that is limiting the guidelines for the use
of ESAs for chemotherapy-induced anemia.
Unfortunately, a lot of our patients are now looking to the
Medicare Advantage Plan. From an administrative burdensome
standpoint the Medicare Advantage Plan has been a major
stumbling block for our practice. Patients are signing up. They
are having salesmen come to their offices and homes and telling
them that it is just like Medicare and it is going to pay all
of your same benefits.
What they don't understand, they are no longer part of
Medicare Part B program. They are now part of Medicare Part C,
and they have just forfeited their dual eligibility rights. If
they don't purchase a product that again covers them for the
Medigap information, they are not going to be covered and 20
percent of chemotherapy is a substantial dollar amount. They
cannot afford it.
Even more troubling, if they are dual eligible to Medicaid,
Medicaid will not make the 20 percent coinsurance payment
because it is no longer Medicare Part B. We worked with a
nationally recognized carrier, Humana, for 6 months trying to
resolve these issues. Texas Medicaid sent us a letter back
saying it is not Part B, it is Part C and we don't cover it. We
were stunned. Out patients were stunned. So they are
disenrolling as quickly as they were enrolling.
Thank you for your time.
[The prepared statement of Ms. Allen may be found in the
Appendix on page 98.]
Chairman Gonzalez. Thank you, Ms. Allen. And obviously I am
fairly familiar with the situation there in San Antonio and
thanks for your effort, for the education that you have
provided me for the past few years, along with your colleagues.
The next witness is Mr. Joseph A Schraad. Joseph A. Schraad
is the Chief Operating Office of Oklahoma Allergy and Asthma
Clinic. And we need you in San Antonio and D.C. The Oklahoma
Health Center is the epicenter of research, health care
education, and technology for the community. It consists of 30
member organizations ranging from cutting agent biotechnology
companies to government education, patient care, and community-
supported institutions. And you may proceed with your
testimony.
STATEMENT OF MR. JOSEPH A. SCHRAAD, MHA, CHIEF EXECUTIVE
OFFICER, OKLAHOMA ALLERGY AND ASTHMA CLINIC, OKLAHOMA CITY,
OKLAHOMA
Mr. Schraad. Mr. Chairman and members of the subcommittee,
thank you very much for your time to allow me to come out here.
One of the challenges that we are faced with, I am sure
across the Nation but specifically in Oklahoma, is the number
of providers that will take Medicare. In Oklahoma, the Oklahoma
Allergy and Asthma Clinic as well as the Allergy Clinic in
Tulsa are the only two allergy clinics in Oklahoma that takes
Medicare. That is staggering whenever you look at the rural
areas. We get patients from Kansas, western side of Oklahoma,
as well as New Mexico coming to visit us because there is no
one else to take Medicare.
With the challenge of reimbursements and overhead, we have
to find unique challenges that will allow us to see these
patients and at the same time cover our overhead. With the
onset or the potential of Medicare reducing their fee schedule,
coupled with the fact that we are looking at implementing
electronic health records as mandated by Medicare, we are
having several challenges.
When I met with the board about 2 months ago over the
impact of these two situations, the first question was what
would happen if we just did not see Medicare? And that was a
situation that I did not want to address. Because I think we
need to see Medicare, we need to continue seeing Medicare, and
we just need to work a little smarter and making sure that our
patient population is taken care of it.
With the Medicare reimbursements fluctuating, a lot of the
commercial insurance carriers also fluctuate their payments
based on what Medicare does. If Medicare drops their payments
by 3 percent, 5 percent, 10 percent, they decrease theirs as
well. If Medicare increases it, the commercial carriers
increases theirs as well.
I am in the process now to determine if Medicare drops
their reimbursement by 5 percent, what kind of ripple effect
will that have across the board with other commercial
insurance, and it is staggering of how much we are going to be
losing as far as revenue.
One of the other issues with the Medicare is encouraging
people, all the practitioners, to take Medicare. And as we have
the challenge of having less reimbursement and more mandates,
there is less and less providers signing on for Medicare.
I have talked with some of my constituents in Oklahoma,
some of the CEOs and administrators, and asked them what they
were going to do. And they said they were going to basically--
if Medicare drops their reimbursements they are just going to
drop Medicare. They said they cannot survive, because we--a few
years ago I had two sole practitioners seeing Medicare and
Medicaid trying to build a practice. They had one staff member,
and they gave up. They went on back to teaching at a
university, because it failed because of the reimbursements
that they were trying to do, plus the dollars that they were
expending trying to deal with Medicare.
And at Oklahoma Allergy and Asthma Clinic I have two
members solely devoted to Medicare. All the other insurance
carriers, I only have four. That is a big impact on how we see
patients and some of the challenges that we are faced with.
[The prepared statement of Mr. Schraad may be found in the
Appendix on page 114.]
Chairman Gonzalez. I appreciate your testimony. We are
going to stand in recess until this series of votes. It could
be 30 minutes. I appreciate--I do have some questions. Now we
are getting into the real practical application of what is
going on out there, even outside of what we have had with RAC
and of course the codes and such.
So again we will stand in recess until after this last
series of votes, and I will be back.
[Recess.]
Chairman Gonzalez. The Chair calls back into order the
hearing. And at this time we are going to have Rina Wolf. And
Mr. Altmire more or less already introduced you, but I am going
to the formal introduction.
Rina Wolf is Vice President of RedPath Integrated
Pathology, Incorporated in Pittsburgh, Pennsylvania. RedPath
provides advanced molecular support for difficult oncology
cases. They serve pathologists, clinicians and patients by
resolving diagnostic dilemmas. And you may proceed with your
testimony, Ms. Wolf.
STATEMENT OF MS. RINA WOLF, VICE PRESIDENT, REDPATH INTEGRATED
PATHOLOGY, INC., PITTSBURGH, PENNSYLVANIA
Ms. Wolf. Thank you, Chairman Gonzalez and other
distinguished members of the committee. Good afternoon and
thank you for inviting me here today to share with you my
experience and challenges with Medicare regulations that are
not keeping pace with and hampering the evolution of medical
technology and personalized medicine in the United States.
RedPath Integrated Pathology is a genomics-based cancer
diagnostics company located in Pittsburgh, Pennsylvania.
RedPath operates as a fully accredited laboratory, providing
complex testing services that help oncologists and pathologists
to resolve indeterminate cancer diagnoses and shape cancer
treatment plans.
Our test, PathFinderTG, is based upon a powerful
proprietary technology platform that was under development for
15 years prior to commercialization. It is clinically validated
with strong peer review and support and is used by clinicians
in major cancer centers, including many of the major national
comprehensive cancer network cancer centers (NCCN) in the
United States.
PathFinderTG allows earlier and more informed diagnosis of
cancers, such as pancreatic cancer, a cancer that has
historically been very difficult to diagnose and is very
aggressive. When suspected but not definitively diagnosed,
physicians typically have two options: Watch and wait to see
whether or not cancer actually develops over time, or remove
major portions of the patient's pancreas to definitively limit
the spread of cancer.
Neither option is without serious consequence. Because of
the aggressive nature of this cancer, waiting and therefore
delaying treatment can have fatal results. However, removing
major portions of the patient's pancreas out of an abundance of
caution also has grave implications, including significant
surgical morbidity, as well as long-term consequences such as
leaving the patient with insulin dependent diabetes.
By providing a definitive diagnosis, PathFinderTG provides
information that can help to preserve the patient's quality of
life, while assisting physicians in selecting an appropriate,
timely and cost-effective treatment plan.
RedPath is part of a small, but growing, industry that is
translating knowledge gained from the Human Genome Project into
clinical practice by providing treatments that are tailored to
individual patients based on their DNA and the specific
molecular character of their disease. By understanding the
molecular nature of disease, new technologies increasingly
allow clinicians and patients to pick individually appropriate
treatment options, rather than basing treatment choices on
broad assessments of what works best for a population.
RedPath also is one of several new technologically-based
companies providing job growth for southwestern Pennsylvania as
its economy shifts from manufacturing and service to a life
science and robotics industry. In just 4 years we have grown to
51 employees, and as is the case with most life sciences
companies, our workforce is highly educated and well
compensated. We are not just providing jobs, but better quality
jobs to our region.
As you can imagine, ours is a highly regulated industry,
and rightly so. Poor quality is not an option. Lives hang in
the balance. It is important, in fact necessary, that Federal
and State authorities and nongovernmental accreditation
organizations provide rigorous oversight of our research,
methodologies, processes and outcomes. However, it is likewise
necessary that all regulatory regimes keep pace with this
rapidly evolving world.
Medicare date of service regulations generally provide that
any test furnished within 14 days after the patient's discharge
from a hospital is deemed to have been performed on the day the
specimen was collected; for example, when the blood was drawn
or tissue biopsied. This makes no sense, given that the
PathFinderTG and other specialized laboratory tests are
typically performed and reported to the treating physician
after the patient has left the hospital.
Hospitals are encouraging physicians to delay ordering
these tests until after the 14 days. Imagine, if you will, that
you or someone you love is faced with a suspicion of pancreatic
cancer. After the biopsy it can take 2 to 3 days to get the
initial pathology. Then, if PathFinder is indicated, the
hospital would decide to hold the test for 14 days. RedPath's
PathFinder takes 5 days. It can conceivably be 3 to 4 weeks
before you have an answer, with tremendous anxiety and
potentially negative impact on the outcome.
CMS almost certainly did not intend for Medicare's date of
service rule to restrict access to specialized in vitro
diagnostic tests, as it does. Nonetheless, the rule remains in
place.
We appreciate the agency's willingness to meet with us,
which they have, and review these serious issues, and we remain
hopeful that CMS will propose a new remedy for this problem. I
applaud this subcommittee for studying and focusing attention
on this important area and implore CMS to remove this
impediment to the promise of personalized medicine.
Again, thank you for inviting me here today and for
listening to my statement. I would be delighted it take
questions.
[The prepared statement of Ms. Wolf may be found in the
Appendix on page 116.]
Chairman Gonzalez. The next witness is Mary Helen Tieken.
Mary Helen Tieken is the President-Elect of the Texas
Association for Home Care in Floresville, Texas. With over
1,100 members, the Texas Association for Home Care is a
nonprofit organization aimed at improving acute, sub-acute,
rehabilitative and long-term care.
You may proceed with your testimony.
STATEMENT OF MS. MARY HELEN TIEKEN, RN, BSN, PRESIDENT-ELECT,
TEXAS ASSOCIATION OF HOME CARE, FLORESVILLE, TEXAS
Ms. Tieken. Thank you very much, Chairman Gonzalez,
distinguished members of the committee. Thank you very much for
allowing us to be here today to discuss our issues that have to
do with CMS regulations and programs on small health care
providers, particularly those of us in home health and hospice.
I am a registered nurse and the owner and administrator of
Nurses in Touch, Inc., a Medicare-certified home health and
hospice company. Currently we serve about 280 patients. I have
a 16-county service area that we cover, and we have employed
185 people.
I am also here today as the President-Elect of the Texas
Association for Home Care. It is a nonprofit trade association,
and we have 1,200 agencies in that group that provide home
health, hospice and personal assistance services in Texas.
Because of the time constraints, you have my written
testimony, but I want to go over the five burning issues that
we have.
The first issue deals with employee staffing. We need
flexibility to use contracted staff to meet the unique needs of
our patients and to accommodate a fluctuating caseload. This is
especially true for small home health agencies who serve
primarily rural areas, like mine. This is an issue because
current CMS rules limit our ability to use contracted staff.
As an example of this, if a majority of my nursing staff
became ill with the flu and could not conduct their patient
visits, I would not have the flexibility to use a staffing
agency. Yet hospitals are allowed to use this contracted staff.
We believe CMS should allow the same flexibility.
Second, in regards to telehealth and telemonitoring, CMS
does not recognize the technology and visit costs as
reimbursable under the current Medicare home health benefit,
even though CMS encourages the use. Telehealth and
telemonitoring methods are used by agencies to monitor patient
care without the nurse being present in the home. These
monitors can assist vital signs, weight and other valuable
parameters that alert the home health nurse to potential health
problems and possibly averting a visit to the emergency room or
even hospitalization. And if CMS moves to a pay-for-performance
model, those of us unable to invest in these technologies to
the degree that larger agencies can will certainly will be at a
disadvantage.
Third, gas prices. They have had an immediate impact on
home health and hospice care. Ladies and gentlemen, we drive to
see our patients. We don't walk down hallways to see them. Last
year, my staff drove 700,000 miles to see our patients, and it
is not unusual to have one of our nurses drive as many as 100
miles in a single day.
We are concerned that the rising prices have deterred
nurses and therapists from even working for home health and
hospice agencies. Larger agencies can purchase fleets of cars
for their employees, something that is not possible for small
agencies like mine to do. With no end in sight to rising gas
prices, we would like CMS to take into account increases in
gasoline prices when determining our reimbursement amounts.
Our fourth issue has to do with who is allowed to sign
orders for care. Currently, CMS rules require physician
certification on home health plans of care, and that means that
for home health, nurse practitioners and physician assistants
are not allowed to sign plans of care, even though they are
allowed to do so in other health care settings, and,
ironically, CMS did allow them to sign these orders on hospice
patients. So the question would be, why not home health? Not
only would allowing them to do so expedite patient care, it
would also reduce our administrative costs and allow us to bill
more timely for the services we have provided.
Congress should enact legislation to instruct CMS to allow
nurse practitioners and physician assistants to certify and
make changes to home health plans of care.
Fifth, regarding contingency plans for claim payment
delays, CMS should be required to have a contingency plan in
place and these plans should be accessible for all Medicare
providers, especially when there are changes in reimbursement
systems that impact claims payment.
In conclusion, Chairman Gonzalez and distinguished members
of the committee, I want to thank you for allowing me to be
here to testify today. I would be happy to answer any
questions.
[The prepared statement of Ms. Tieken may be found in the
Appendix on page 124.]
Chairman Gonzalez. Thank you very much, and we will have
questions. I will go ahead and proceed and ask a couple myself.
Ms. Allen, you all, you can tell I am from Texas with the
"you all," but you have educated me as well as other
specialists in oncology on the present setting in which cancer
patients receive their treatment. In what I refer to as the old
days or previous days it was a hospital setting. That is no
longer true.
There is one area of concern the past couple of years, more
than 2 years, and I just want to know what is the status, and
that basically was where the oncologist or the cancer treatment
facility was actually being reimbursed for the drugs that were
being utilized at something less than the actual cost to you.
Can you elaborate on that?
Ms. Allen. That continues to be an ongoing problem. The
Medicare Advantage Plan has certainly not helped that. The 20
percent, if we don't collect 100 percent of the allowed charge,
the 80 plus the 20, we are not covering the cost of the drug.
It certainly doesn't begin to address the pharmacist and
registered nurse and everything along with it. So that 20
percent for us to chase has become more vital just to our
survival at this point.
With Medicare Advantage coming on board and with the
reimbursement for drugs continuing to decrease, I have had to
add three additional staff members to access foundation
programs for coinsurance, which helps with some drug-specific
conditions, but certainly doesn't cover the entire 20 percent.
I think that is a total of about $115,000 that we have
expended, and that is just to try to maintain the revenue. We
are not gaining anything there but an additional cost.
We are putting in additional systems to try and streamline
our practices and to be more cost-effective, but at some point
you have to hire more people to chase dollars that are harder
to find. It is still a huge issue for a practice.
Chairman Gonzalez. So it continues. I know we have been
trying to get their attention and I know we have some meetings
set up for CMS not to basically recognize what have been the
past practices that actually were encouraged by them by
regulation and switching over a regulation. And I think that is
one of the reasons we are here today. So, again, thank you for
your testimony.
I would like to go to Mr. Schraad. This is interesting, I
guess. What happens? I mean, first of all you are telling me
because of the regulation, because of the unnecessary and maybe
burdensome regulatory scheme that we have, we have fewer and
fewer health care providers that are available to you to
utilize. I think that is the gist of your testimony. That is
the greatest impact. We have many other side issues. But first,
how about just availability and accessibility, which is going
to be major, and we are always reminded of that by the
different physicians.
I also want to ask, what is the practical aspect, if
something is challenged and we keep talking about denial and so
on, what happens to the payments that are pending or
prospectively while something is being examined for potential
denial, which already there has been a preliminary finding that
they are going to deny it or there is a problem. We have had
examples cited by different witnesses.
But what is the practical implication let's say to you as
far as billing and such?
Mr. Schraad. The impact is quite large. We have to--
basically on our company we are on a cash basis. So if we don't
have the revenue coming in, the actual payment coming in, we
just sit on it, and that is less revenue coming in per month.
But we look at all revenue by the month. Sometimes we don't get
payment for 10 or 11 months, depending on what the denial was.
So if we don't have it, we don't have it to spend either.
So that is just one of the challenges that the staff are
working on every day, and it is an everyday occurrence. This is
nothing new, it has been going on for years and years and
years. But at the Oklahoma Allergy and Asthma Clinic, we have
two devoted individuals who work very well and very close with
CMS to streamline this, and some things are rectified very
quickly and some things take several months.
Chairman Gonzalez. I appreciate it. I apologize for the
hoopla over there. Those are not Members of Congress, I assure
you. We are never that happy.
Ms. Fallin. They were cheering on their answers.
Chairman Gonzalez. It could be the answers. Let me go on to
Ms. Wolf. There was something that was very interesting, and
you lay it out. The end effect of this 14-day rule of when a
test is ordered, it relates back to the time that it is
actually ordered, which may be in the hospital setting, then
who is the responsible person, even though it may be even at
that point it is referred to someone else who makes that
determination. It still kind of goes back in time, and there is
a lot of liability issues there people that are assuming.
But this is the paragraph, and I know you touched on it.
But I just have to really get this in the record. "In light of
these and other administrative and financial disincentives,
hospitals are encouraging physicians to delay ordering the test
until after the 14 days."
Ms. Wolf. That is correct.
Chairman Gonzalez. If you can get a little closer to the
mike.
Ms. Wolf. That is correct. Because otherwise the hospital
will have to assume financial responsibility either by billing
Part B, if the specimen was collected during an outpatient
encounter, and that is very difficult because many of these
tests are billed using what they call miscellaneous codes,
which don't have coverage and coverage amounts with MACs other
than their home MAC, which would create a policy. Or if the
specimen was collected during an in-patient encounter, it has
to be absorbed by the hospital as part of their DRG payment,
which certainly are not developed to take into consideration
these expensive new technologies.
Chairman Gonzalez. But it is amazing that it impacts a
decision of a physician in a certain setting because of the
relating back aspect of it. I mean, I can't imagine--I am not
saying that a physician would delay anything that would be of
greatest importance where time is of the essence, but sometimes
we are not real sure. You know, we catch things, we don't
believe they are a problem at that point in time, but sometimes
a delay, no doubt--I know I would not want my test delayed
because of the 14-day relating back, that is the way I am going
to refer to it, the relating back.
You say CMS is listening. There is dialogue, there is
discussion?
Ms. Wolf. There is dialogue, but this dialogue has been
going on for quite a while and we cannot seem to get resolution
on this issue. And as you so rightly point out, it is typically
not the hospital itself that is making the decision that this
test needs to be ordered. It is a clinician as a follow-up to
the hospital encounter, and the results of this test and the
others that are impacted by this rule are used strictly for
patient management decisions that are made that are unrelated
to the encounter where that specimen was collected.
Chairman Gonzalez. Thank you very much for your testimony.
I would like to follow up on that discussion of the 14-day
rule. I understand there may be some logic to it, but, again,
the practical application, the theory is good and then the
practice is never.
Ms. Tieken, let me ask you a question. Obviously with
additional operating costs, gasoline is one of them, and we
have many Members that are here today and especially on the
floor that are always championing the rural aspects of health
care. Your operation, you have 700,000 miles to see home health
and hospice patients.
Ms. Tieken. Yes, sir.
Chairman Gonzalez. There is no way you can build in that
additional cost. Is Medicare, CMS, is anyone willing to say,
gee, because of the nature of your practice, of the health care
that you provide, which entails going to and obviously
transportation, that is not factored in?
Ms. Tieken. No, sir, it isn't. Under our current
reimbursement system, we are reimbursed on an episodic payment,
which means that there is a configuration of information that
goes in to Medicare. The conglomerate is a number that comes
up, and that is how we are paid, based on the diagnosis code
and some other numbers that go in, and that for that patient is
all we get. It is a one number deal for us. None of our costs
like that, none of our costs are separately considered in terms
of reimbursement. In the old days when we had cost
reimbursement, yes, those figures were looked at, but not
today.
Chairman Gonzalez. All right.
Ms. Tieken. So those are absorbed into any amounts that we
get back for reimbursement purposes.
Chairman Gonzalez. But it is such a relevant factor
depending on the setting of the health care provider, and it
has to be addressed one way or another.
Thank you very much. At this time the Chair is going to
recognize Ms. Fallin for her questions.
Ms. Fallin. Thank you, Mr. Chairman. I apologize. I had to
step out for a couple other scheduled meetings and things. But
I appreciate all of your coming up, and I appreciate my
gentleman from my district coming to testify with the allergy
clinic. I am sorry I missed your comments, but I do have them
in my book and looked them over before you came. Thank you very
much for being here. We appreciate your coming.
I had a couple of questions, and maybe all of you deal with
Medicare payments, if you can address this for me. I asked CMS
earlier today if there were any particular classifications of
procedures that they automatically denied, because I hear that
from my physicians at times, that they can file for
reimbursement for procedures, it is denied the first time, and
then they have to go through this long process of waiting for
them to be looked at again and going through the appeals
process.
But he said that CMS doesn't really just deny specific
procedures, at least that is what I thought he said, but if
they are coded wrong or if they think there is an excess of
procedures done in one day that may not make sense, then they
may deny them automatically.
So I guess my question is what percentage of your Medicare
submissions for payment are denied? Is there a particular
percentage that you see in your businesses? If you could answer
that one first of all?
Ms. Allen. We see probably about 5 percent of our claims
are denied. Being in oncology, we deal with a lot of not
classified codes, which historically require additional
information because they are just kind of generic codes at this
point.
The biggest part for oncology, especially with the advent
of the genome project and more specific diagnostic testing, is
that we actually get a cocktail back from that testing that
says this patient's DNA appears like it is going to work best
with this combination of drugs. Fabulous. We are going to cut
to the chase and get there. The problem is that the combination
of drugs that come back may not be FDA cleared for the cancer
type that has been identified.
We have Federal regulation on our side to a certain extent
that we can go ahead and create the necessary medical
documentation, document it, work through that, but then we wait
typically at least a year for payment. We go through the denial
process. Because we have to tell CMS I am billing you off label
and I know that I am billing it off label so we are not
creating a fraudulent incident.
So we inform them of that in this information. We go
through a first level of appeal. It is routinely denied
straight up. Nobody even looks at it. We get to a second level
of appeal. Even if there is overwhelming documentation that we
have met the Federal criteria for the use of anticancer drugs
off label, it is historically denied again.
You take it to an ALJ. At that point you are probably at a
year out. I pulled my last ALJ, the service was for June 7,
2006. I won at July 7, 2007.
We are not talking about a $10 payment. These cancer
payments are, depending on the drug, can be $20,000 for each
visit. That is a lot of money for a practice to loan out for 12
to 18 months. But it is the right thing to do medically.
So I think that is the precipice that physicians are at.
The medical decision has been made, but can they financially
afford to give the care. They do have access. We look towards
foundations to help ensure that we don't have to write a check
for the drugs and we look to the drug companies for that
information. But the patients have to financially qualify.
So I think the technology has certainly outpaced the
reimbursement, but that is the routine denial that our practice
sees, is truly the technology pacing and looking for additional
guidance.
I believe that Medicare is on the right track. They have
expanded the credible journals that will be accepted. It used
to be a very narrow list. The list is now longer. But still it
is an extraordinary investment in time. I think what is
difficult and a learning curve that we learned at our practice
is what you submit at your first level of appeal is what you
have to submit at the administrative law judge panel. You can't
add anything. So you know the first one is going to be kicked
out so you may not put as much effort because you are trying to
get through the process. But once you forfeit payment on the
first one, the administrative law judge says so sorry, why
didn't you give it to the first two? You lose it. So you figure
out you have to do the up front investment at the very
beginning.
Ms. Fallin. Mr. Schraad, do you have a comment?
Mr. Schraad. I have a couple. What is interesting is one of
our patients is on therapy which was given skin testing or
shots to help them out with their allergies. But when a patient
comes in and sees a physician and gets a shot the same day,
they reject the shot. So what we do is do a modifier 25 and
they pay it. So my first question is, why? What is the
difference between a modifier 25 or not? Just submitting it
with this other patient and the patient got the shot, so why
are they rejecting it?
Going back to your question, how many of ours are rejected
initially, I would be afraid to look. Because I mean we have
two people full-time doing Medicare, dealing with Medicare
patients--I am sorry, with the issues with the Medicare
patients we see.
Another one that is interesting, if a Medicare patient
comes in and they get skin testing and there is a couple of
sets, I am trying to recall the name of them, I want to say
sublingual and interdermal, one of them Medicare only pays for
20 skin tests. The other one they pay for 70. But what I got
notified just recently, which you have to laugh about it, if we
submit or do 21 skin tests, Medicare rejects the entire thing.
It doesn't pay for anything. But if we do 18, they will pay for
18. If we do 20, they will pay for 20, which I thought that was
kind of interesting, and that is where some of our challenges
are in play.
Ms. Fallin. If I can ask you one more question too about
the length of time for processing these claims. I thought I
heard some of you say it that takes up to 10 months at times or
a year for some of the processing of claims, especially once
they have been denied.
Mr. Schraad. Right now, we are in May, and we are still
working on the claims that were rejected in January. Some of
them we cleaned out were done in November and December.
Ms. Fallin. If they are not rejected, what is the length of
time to get reimbursed on Medicare?
Ms. Allen. Nineteen days probably. It is a quick turnaround
for clean claims.
Mr. Schraad. It is quick. Clean claims, yes.
Ms. Fallin. If everything was electronic, what do you think
your time payment would be? If everyone used electronics?
Ms. Allen. CMS, they are going to hold the claim for 14
days, because we time how we bill. They hold it for 14 days, it
goes to the banking floor for 2 days. You allow 1 day for
transmission. So the best you are going to have is probably 17
days. And we typically see 19.
Ms. Fallin. If I could ask Nurse Tieken a couple of quick
questions, I think our bell is ringing for voting, in your
testimony you mentioned something about the State operations
manual. How many pages are in that State operations manual?
Ms. Tieken. My goodness. I don't really know the count, but
I can tell you it is that thick.
Ms. Fallin. How do you keep up with all the changes made?
Ms. Tieken. That is an ongoing--if you do not pay attention
to that manual and don't keep up with the updates, you are
behind. It is a daily chore for me. I am a small administrator
in terms of numbers, so it is me. I am the one responsible for
keeping up with that. Some larger agencies have more staff that
they can devote that time to. So it is a burdensome task for
us, but it is absolutely imperative that we keep up with it. So
I do it by e-mail and just staying on line with them and
watching any of the information that comes out.
Ms. Fallin. Do you ever find that there are any of the
rules or regulations that might be more burdensome than they
are helpful, and if there are, could you identify them and send
them to us?
Ms. Tieken. Oh, yes, ma'am. Yes, ma'am. Yes. It is
unfortunate, and, you know, I would say that we want to work
with CMS. We don't want to fight with anybody. We want to take
care of patients and we want to do that the most efficient,
effective way that we can. Because the bottom line is who is
out there may be your mother or your father or your sister at
some point, and we want the best people out there taking care
of patients, not being burdened with a lot of bureaucracy and
paperwork that bogs us down frequently.
Ms. Fallin. I missed part of your testimony, but you do
telemedicine?
Ms. Tieken. Personally we make phone calls to patients, but
we do not have the monitors that I spoke about. Those monitors
cost anywhere from $1,200 to maybe $2,500, depending on the
elaborateness of that particular unit. It is a little bit out
of range for my size agency.
Ms. Fallin. Maybe one of you can answer this, but is
telemedicine reimbursable for Medicare?
Ms. Tieken. It is not for home health.
Ms. Fallin. I know in rural Oklahoma that telemedicine is a
very good asset to be able to deliver access to care and
especially specialty practitioners who might not get out into
the rural areas, and I am just curious if that is reimbursable?
Ms. Tieken. At this point it is not. CMS encourages it, and
even the quality improvement organizations that CMS designated
to help agencies and other facilities become more efficient and
work towards quality care, they have all encouraged the use of
it. It is the cost factor that is prohibitive right now.
Ms. Fallin. Thank you, Mr. Chairman.
Chairman Gonzalez. Thank you very much. The Chair is going
to recognize Mr. Altmire.
Mr. Altmire. I want to thank all of you for being here.
This is not easy to do, to prepare your testimony and travel
here and wait out these votes and wait to be on the second or
third panel. This is something that this committee realizes
that you have gone to extraordinary effort to be here today and
provide us with this testimony, and I want you to know that we
really appreciate your time here today.
In the interest of time, because we do have a vote coming
up, I just wanted to ask a question of Ms. Wolf. We have heard
a lot about the promise of personalized medicine. For those who
might not be as familiar, and especially for the record, for
the committee, can you tell us more about personalized medicine
and what it means for the future of health care?
Ms. Wolf. Certainly. Traditionally, the efficacy of medical
diagnostics and therapeutics has been proven suitable for broad
patient groups. Norms were developed based on groups rather
than specific patients. The reality we are finding out,
however, is that diagnostics and treatments that work for some
patients don't work for all and may even be harmful to some.
The mapping of the human genome now provides us the
potential to look at an individual patient or even that
patient's specific tumor, the molecular information, to
personalize diagnosis and treatment. In the past we would look
at cancer and make treatment decisions based on the organ. Now
we can look at gene expression profiling for breast cancer or
liver cancer, for example, and identify the most appropriate
and specific treatments.
So just to review, personalized medicine gives us the
ability to detect diseases at an earlier stage where effective
treatment may be possible and enable the selection, as my panel
member referenced, of optimal therapy, reduce trial and error
prescribing, which can be dangerous and highly expensive,
reduce adverse drug reactions and increase patient compliance
with their therapy because they believe they are getting the
right therapy.
Mr. Altmire. Very quickly, to conclude, how many companies
and services are similarly affected?
Ms. Wolf. Now there are probably less than a dozen. These
are not the routine tests that you would see done every day on
blood and tissue. These tests are developed by small
independent laboratories. They are proprietary tests that are
only done at these laboratories. They are typically the only
ones in the whole country that do them. And we do anticipate
more tests being developed that are like this if CMS clears the
way and allows us to be successful.
Mr. Altmire. Thank you. Thank you all very much.
Chairman Gonzalez. Thank you, Mr. Altmire.
First, I want to thank all the witnesses. I think Mr.
Altmire described our appreciation adequately, but I just want
to express my own personal thanks. I want to thank staff for
putting all this together. I don't think we ever say thanks.
But they prepare the memorandum, they provide us with your
testimony and they coordinate getting you here. I know that is
a tough job.
What we are trying to avoid is that we don't want a health
care professional to go out there having to sue the Federal
Government to stop them implementing regulations. We want a
streamlined system that promotes good practices and pays you
fairly and compensates you as you should be.
We really aren't that interested in having to go through
the legislative process if we can work it through our
regulatory scheme of things, and that is if CMS listens
carefully and makes sure it takes into consideration the
impact, the consequences of their regulations. That is
hopefully what we are doing here today. Hopefully we have those
lines of communication.
We understand that sometimes that lawsuit that people file
is necessary and surely that legislative intervention at times
is the only way. But please understand we are trying to do this
collaboratively. We appreciate your input.
I will ask unanimous consent that members will have 5 days
to submit statements and supporting documents for the record. I
thank my colleagues for their participation, and without
objection, that will be ordered.
This hearing is now adjourned.
[Whereupon, at 4:55 p.m., the subcommittee was adjourned.]
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