In the post-Sept. 11 era of vanishing budget surpluses, increased defense spending and tax relief, healthcare providers have been left scrambling for federal table scraps instead of dining on larger Medicare payments and Medicare reform.
Lawmakers, perhaps aware of the role the healthcare system will be called upon to play in the war on terrorism, have offered something decidedly off-menu: In keeping with the Bush administration's vow to simplify government, they are dangling the prospect of some regulatory relief that may save providers an unknown amount of money.
"Congress wants to help providers, but the cupboard is bare," said Herb Kuhn, vice president of the Premier hospital alliance.
If one of two House bills becomes law, the rules changes-including clearer communication with providers and reforms in claims processing-would likely constitute Congress' single healthcare policy achievement of a chaotic 2001 session. Where once there was hope of comprehensive Medicare reform and enactment of a drug benefit for Medicare beneficiaries, a combination of partisan squabbling earlier this year and the overriding events of Sept. 11 ended hopes for more concrete healthcare policy changes.
The regulatory relief is contained in two similar bills approved separately-in rare unanimous voice votes-by the House Ways and Means Committee on Oct. 11 and the Energy and Commerce Committee on Oct. 31. While there are some small differences, they share one important similarity: Both were drafted with the goal of costing Medicare almost nothing and earning strong support from Democrats and Republicans.
Last week, the Congressional Budget Office estimated that the Ways and Means version would cost the federal government $41 million in 2002 and $548 million from 2002 to 2006. The biggest cost item would be contracting reform, which will cost $14 million in 2002 and $336 million over the five-year period, the agency said.
Neither the CBO nor any other organization has estimated the total fiscal impact of the legislation on providers.
Key common components of the two bills are:
* Once-a-month publication of final regulations drafted by the Centers for Medicare and Medicaid Services.
* Competitive bidding for Medicare carriers and intermediaries.
* Reforms to the appeals process for provider payment denials.
* Limits on random claims review to detect fraud.
* Better communication by Medicare and its contractors.
Energy and Commerce Chairman W.J. "Billy" Tauzin (R-La.) was one of the prime movers behind the idea of using regulatory reform rather than comprehensive Medicare restructuring to ease the burden on providers. "Earlier this year, this committee began a thorough and thoughtful bipartisan discussion about ways to improve and modernize the delivery of quality healthcare to patients and reduce the regulatory burdens placed on physicians," he said. He praised the committee legislation, saying it will "improve how (the) CMS informs and educates healthcare providers about the regulations it promulgates, and reform the manner in which (the) CMS contracts with and manages its Medicare contractors."
Providers welcomed the regulatory changes as at least a first step toward more-comprehensive Medicare reform.
"I think it's a combination of specific changes that will make the regulatory process fairer, and a sentinel effect that will send a signal that Congress wants Medicare to get right with the providers," said Charles "Chip" Kahn, president and chief executive officer of the Federation of American Hospitals.
The legislation's future is far from clear, however. Although the Energy and Commerce Committee plans on working out the differences between its legislation and the bill the Ways and Means Committee passed, the Senate has taken no action. Last week, members of the Senate Finance Committee said there may not be enough time left in this session of Congress to pass the legislation this year.
A spokeswoman for Sen. Charles Grassley (R-Iowa), senior Republican on the Senate Finance Committee, said the House bills are "moving in the same general direction" as Grassley, but he has yet to introduce a bill. Democratic aides, meanwhile, did not return phone calls seeking comment on whether Chairman Max Baucus (D-Mont.) will draft regulatory reform legislation. In general, Democrats on the committee don't want to pass legislation on Medicare "unless you do something that helps (beneficiaries)," said Sen. Jay Rockefeller (D-W.Va.), a member of the Finance Committee.
Unclogging the paper jam
Passage of regulatory reform legislation would be the culmination of years of lobbying by provider groups that have claimed federal Medicare regulations are confusing, burdensome and have led to unfair healthcare fraud prosecutions.
This year regulatory reform became a top priority of the American Hospital Association. The AHA published a study showing that for every hour of inpatient surgical or medical care, hospital workers must spend another 36 minutes on paperwork (May 7, p. 12).
The movement toward bureaucratic reform is in keeping with an antiregulatory environment in Washington. President Bush decried the complexity of Medicare regulations during his 2000 presidential campaign, and his views were reflected in his choices for the top healthcare posts in his administration. Former Wisconsin Gov. Tommy Thompson, now HHS secretary, and former Federation of American Hospitals chief Thomas Scully, now administrator of the CMS, both have complained about the federal healthcare regulatory burden in their previous positions.
The Energy and Commerce Committee bill is an outgrowth of its seven hearings this year to examine Medicare regulations and reform initiatives, although comprehensive Medicare restructuring was not a big part of those hearings.
In both that bill and the bill passed by the Ways and Means Committee, the savings for providers take the form of reduced paperwork and compliance obligations, streamlined administrative processes and speedier answers to billing questions.
Those providers forced to repay overpayments or facing billing-error inquiries would see a speedier process with a greater exchange of information.
Mary Grealy, president of the Washington-based Healthcare Leadership Council and a healthcare attorney, said the bill would benefit providers in a variety of ways.
"Anything that can reduce or simplify the regulatory morass that providers have to deal with is something that will enhance patient care," said Grealy, a former AHA lawyer. "The less time they have to spend on paperwork, the more time they can spend on patient care. This will reduce provider costs. Regulatory relief is like money on the table."
For example, because the government would provide education services, providers may not have to spend as much money on consultants and billing advisers, she said. There would be a toll-free hotline providing answers, reducing correspondence, paperwork and potential billing disputes.
"The problem is that the government has had all of the leverage and could make unfair demands of providers, who had no other recourse," she said. "What this (bill) accomplishes is a better balance and brings in some due process."
A concern over fraud enforcement
Richard Corlin, M.D., president of the American Medical Association, echoed Grealy's sentiment. Corlin said the bills would level the playing field for physicians and other providers.
"The entire process of auditing, finding and identifying errors needs to be corrected," Corlin said. "Medicare carriers tend not to give consistent information, and if physicians ask for written confirmation of advice, they don't get it. That's been a problem. This law changes that and offers physicians greater protections."
Indeed, that's a problem identified by the Medicare Payment Advisory Commission. The commission is preparing a December report on Medicare's regulatory load that is expected to recommend that Congress protect providers from prosecution in cases where they follow incorrect legal interpretations from the CMS.
Citing AMA studies, Corlin said the voluminous amount of paperwork-he said physicians spend 15 to 60 minutes completing government forms for every hour spent with a Medicare patient-is interfering with medical care.
"This law puts appropriate compliance into a system that makes sense," Corlin said. "The CMS will have to put resources into physician office education and live up to its commitment to have knowledgeable people answering phones who are accountable for the advice they give. It doesn't go as far as we'd have liked, but in this world, if you get 85% of what you seek, it's a victory."
That compromise almost didn't happen. The predecessor legislation to the two House bills-a version backed by the AMA, the AHA and other provider groups-contained some provisions to which government fraud-fighting agencies and consumer groups objected.
Kirsten Sloan, acting director of health issues at the 35 million member American Association of Retired Persons, said her group objected to an earlier bill's provisions that would have allowed physicians who overcharged Medicare longer periods to repay the money without interest. The AARP called that a virtual interest-free loan that would open the program to further fraud. The provision was dropped.
Sloan credited the Energy and Commerce Committee with building a consensus among interested parties, including consumers.
"That's why this bill has such broad bipartisan support," she said.
Sloan said the bills should have a positive impact both on providers and Medicare beneficiaries, especially the beefed-up provisions for prospective certification of claims through local carriers and staffing ombudsmen for providers and beneficiaries, enabling both to receive answers on coverage questions. The ombudsmen would function as resources to provide accurate information about which services Medicare pays for.
"If that leads to providers looking more favorably upon the program, then that's good for providers and beneficiaries," she said.
William Mahon, executive director of the National Health Care Anti-Fraud Association, a Washington-based organization representing government and private insurers and fraud-enforcement agencies, applauded the two pending reform bills for clearly stating that the new law would not scale back antifraud efforts.
Washington-based Taxpayers Against Fraud, a nonpartisan organization that supports the False Claims Act, even sent letters of support for the two bills, hailing their recognition of the importance of the Civil War-era act in fighting fraud. James Mormann, TAF president and CEO, said current bills are consistent with the accountability of providers and suppliers for the proper use of federal Medicare funds and are not likely to weaken federal antifraud enforcement.
Michael Hash, a former acting administrator of what is now the CMS and a principal with Washington-based Health Policy Alternatives, a consulting firm, said the bills are primarily designed to address "process issues," the ways in which policies and contracts for services are established and followed. He said the bills also provide relief for providers facing government inquiries about billing questions.
"For the most part the changes are addressed at the way the agency conducts its business," Hash said. "But it's a mixed set of consequences. There are some changes in procedures (in the bills) for determining overpayments, and that will reduce some of those costs for providers. There are longer repayment plans that providers have been seeking. But I'm not at all convinced that the changes related to the cycles for regulatory issuances will have the intended effect, which is presumably to accelerate the speed with which the agency promulgates its regulations. The unintended side effects could further impede publication of program policy."
He said some of the procedures-such as bringing more flexibility into the contracting process, moving away from cost-based contracts and toward competitive bidding and increasing the pool of potential contract applicants-mirrored proposals made to Congress in the past seven years by provider groups, including the AMA.
"Fortunately those (proposals) have finally taken root," he said.
Blues plans fear consequences
One healthcare interest group isn't cheering some of the contracting reform provisions. Blue Cross and Blue Shield plans, many of which now serve as Medicare intermediaries and carriers, fear that the performance standards in the contracting reform provisions will put them at risk for Medicare fraud prosecution.
"A lot of our plans look at these new liability provisions and say, `I don't know if I can continue to participate' " as a Medicare contractor, said Alissa Fox, executive director of policy at the Blue Cross and Blue Shield Association.
But a spokesman for the CMS, which supports the contracting reform measures, said the provisions would make contractors accountable should they be negligent in overseeing bill payment.
Hash said a provision that would transfer administrative law judge functions from the Social Security Administration to HHS and increase the number of judges for hearing appeals will be a popular move.
"From a provider's point of view, that's been a problem," he conceded. "The appeals time has been lengthy and getting longer, and there are significant backlogs of cases. Also, there have been questions about administrative law judges and their level of training in the Medicare program. This will improve responsiveness and speed the appeals process."