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News of the Day

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Leader Services, Inc.

The Evisceration of the Departmental Appeals Board

January 28, 2008

CMS Reorganizes, Eliminates Regional Offices, Makes Other Major Changes

January 24, 2008

In a Notice in the Federal Register (Volume 72) on December 28, 2007, CMS announced that it is abolishing all ten of its regional offices. The move comes with CMS’ Statement of Organization, Functions, and Delegations of Authority. In place of the regional offices, which handled many day-to-day operations of CMS’ practices, four new consortia (listed below) will be formed:

Consortium for Medicare Health Plans Operations (FAU)
Consortium for Financial Management and Fee for Service Operations (FAV)
Consortium for Medicaid and Children’s Health Operations (FAW)
Consortium for Quality Improvement and Survey and Certification Operations (FAX)
Specific functions to be fulfilled by each consortium are listed in the Notice.

The reorganization comes as a surprise, as CMS provided little word of the changes before the official notice. CMS still has yet to explain reasons for the reorganization. Many questions remain regarding the newly-formed consortia, including the location of the consortia, who will staff the consortia, the exact timing of the changes, and other unknowns. As of this time, CMS’ website still lists details regarding the regional offices.

Now This is a Classic - Having Ignored Bowen, the OBRA, and IDEA (in CMS-2261), HHS Now Issues a Notice of Proposed Rulemaking that Eviscerates the Departmental Appeals Board, Giving the HHS Secretary Authority Over Their Rulings

January 13, 2008

On December 28, 2007, the Department of Health and Human Services published a Proposed Rule in the Federal Register, which would revise the procedures for the Departmental Appeals Board (DAB).

The Proposed Rule would require that the DAB not only follow Federal statutes and regulations in hearings and appeals procedures, but also follow published guidance issued by the Secretary of the Department of Health and Human Services (Secretary) to the extent such guidance is not inconsistent with applicable statutes or regulations. The Proposed Rule would also provide the Secretary with the authority to review DAB decisions for errors in the application of statutes, regulations and interpretative policy.

According to the Secretary, the Proposed Rule is needed to ensure consistency in decision making and to ensure that the Secretary's policies are being correctly implemented.

In its current form, the Proposed Rule does not include a process for either party to request the Secretary's review or address briefing procedures. Instead, the Proposed Rule seeks to "maintain flexibility" so that the Secretary can tailor the review process to the needs of a particular case. However, the Proposed Rule does solicit comments on whether the regulations should specify procedures for the Secretary's review.  One can only presume such comments will be given the same careful consideration demonstrated by HHS/CMS in the recent past.

The changes contemplated by the Proposed Rule would impact various appeals procedures, including: (i) the review of certain determinations under 42 C.F.R. Part 498 and impacting certain provider's participation in the Medicare program; (ii) disputes governed by 42 C.F.R. Part 1005 and concerning the imposition of exclusions, civil monetary penalties and assessments related to health care fraud and abuse; and (iii) appeals governed by 42 C.F.R. Parts 422 and 423 and involving civil monetary penalties imposed on Medicare Advantage organizations and Medicare prescription drug sponsors.

The deadline for submitting comments on the Proposed Rule is January 28, 2008. Get those PCs humming.

Congressional Budget Office Says the Moratorium on CMS

Cuts to School Based Programs Will Not Result in any Cost

to the Federal Budget - or Will it?

January 9, 2008

Any federal legislation with potential fiscal impact must be “scored” by the Congressional Budget Office.  In the last Congress, CBO scored the Dingell and Kennedy bills at something over a billion dollars.  Even though the Dingell and Kennedy bills, with the 504 reimbursement issue discounted, merely maintained the status quo with regard to Medicaid, by some sleight of hand CMS managed to have the bills scored against the President’s proposed budget, which recommended cutting administrative and transportation services.  It was obvious that any legislation with a high score had little chance of passing.

CBO just scored the impact of the moratorium on administrative and transportation services.  According to CBO, the moratorium has zero impact on the federal budget and not just this year but through at least through 2017.  (see line 206). 

OR

To see the glass as half empty, perhaps the CBO scoring reflects the fact that the two programs had already been funded through the end of this Federal fiscal year, so there would be no impact now and, since they plan on doing away with the programs at the end of this Federal FY, there would be no future impact. 

We shall await clarification from CMS or CBO.  Stay tuned, and in any event, don't abandon your administrative and transportation services record keeping, 'cause the the fat lady has not even warmed up yet.

Implementation Date for 2287 is August 28th

January 8, 2008

From an email from CMS:

"The publication of the final school-based rule (CMS-2287-F) on December 28, 2007 does not affect the ability of States to submit claims for costs incurred prior to the effective date of the rule; the rule will be applied prospectively. However, as you know, there’s a six-month moratorium on CMS’ ability to enforce the rule, due to legislation recently signed into law. This moratorium is scheduled to end June 30, 2008.

Final regulations are typically effective 60 days after publication; however, due to the moratorium, that 60 day period starts once the moratorium ends. As a result, the implementation date for the rule will technically be September 1, 2008. CMS never intended States and schools to be in compliance with the final rule prior to the start of the 2008-2009 school year, so the moratorium really has no effect on that timeline.

With respect to claims for prior periods, all such claims must meet the timeliness requirements specified at 45 Code of Federal Regulations (CFR) 95.7. In addition, Section 1132(a) of the Social Security Act requires that a claim for federal financial participation (FFP) must be filed within a two-year period that begins on the first day of the calendar quarter immediately following the quarter in which the expenditure was made. The implementing regulations for timely filing are at 45 CFR Subpart A and provide specific guidelines for determining when an expenditure is said to have been made, so as to initiate the two-year filing period.

Finally, although I indicated that CMS was considering developing some sort of additional guidance to address questions surrounding implementation of CMS-2287-F, there are no official plans to do so at the current time and no format specified for any guidance that may ultimately be issued.

Hope this helps. Let me know if you have additional questions.
Thank you.

Sharon Brown | Administrative Claiming Team, Division of Reimbursement and State Financing | Financial Management Group | Centers for Medicare & Medicaid Services | (: 410-786-0673 | *: sharon.brown@cms.hhs.gov"

Hold the Champagne!  Federal Court Rules NCLB is Unconstitutional

(and tomorrow would have been the anniversary)

January 7, 2008

The Sixth Federal Circuit Court has ruled that NCLB is unconstitutional because the Fed did not provide clear notice to the states of the cost implications if the states accepted the money and that the the Secretary’s interpretation of the NCLB unfunded mandates provision was not correct.  Copy of the opinion is here.  This decision sends the case back to the lower court (Eastern District of Michigan) for another look.

Congressional Research Service Report on CMS-2287

January 4, 2008

The Congressional Research Service provides research and analysis for Members of Congress.  Attached is their report, dated December 20, 2007, on CMS-2287.

CMS 2287 Final Rule Published This Morning

December 28, 2007

This rule modifies  42 CFR Parts 431, 433, and 440.  A .PDF copy of the rule can be found here.

To: Congressional Health Staff
From: Carleen Talley
Director, Congressional Affairs Group
Office of Legislation
Centers for Medicare & Medicaid Services

Re: CMS Issues Final Rule on Medicaid Reimbursement for School-based Administration and Transportation

Today, the Centers for Medicare & Medicaid Services (CMS) placed on display at the Office of the Federal Register a final rule (CMS-2287-F) regarding Medicaid reimbursement for school-based administration and transportation. Improper billing by school districts for administrative costs and transportation services under the Medicaid program is a longstanding concern of the Department of Health and Human Services (HHS). Both HHS’ Office of the Inspector General (OIG) and the Government Accountability Office (GAO) have identified these categories of expenses as being susceptible to fraud, waste, and abuse.

Under the Medicaid program, Federal payment is available for the costs of administrative activities “as found necessary by the Secretary for the proper and efficient administration of the State plan.” The final rule would eliminate reimbursement under the Medicaid program for the costs of certain activities based on a Secretarial finding that these activities are not necessary for the proper and efficient administration of the State plan, nor do they meet the definition of an optional transportation benefit. Based on these determinations, under the final rule, Federal Medicaid payments would no longer be available for administrative activities performed by school employees or contractors, or anyone under the control of a public or private educational institution, and transportation from home to school and back for school-aged children.

The final rule would not affect the treatment of expenditures for direct medical services that are included in the approved State Medicaid plan and provided in schools, nor does it affect transportation of school-aged children from school or home to a non-school-based direct medical service provider that bills under the Medicaid program, or from the non-school-based provider to school or home. Under the final rule, CMS would continue to reimburse States for:

· School-based direct Medicaid services in their approved State plans;
· Transportation costs related to school-aged children from school or home to a non-school-based direct medical service provider that bills under the Medicaid program, and from the non-school-based provider to school or home;
· Transportation costs related to children who are not yet school-age and are being transported from home to another location, including a school, and back to receive direct medical services, as long as the visit does not include an educational component or any activity unrelated to the covered direct medical service;
· Administrative overhead costs that are integral to, or an extension of, a direct medical service and, as such, are claimed as medical assistance. These activities are properly reimbursed at the applicable Federal Medical Assistance Percentage (FMAP) rate for the related direct medical service, and include patient follow-up, assessment, counseling, education, parent consultations, and billing activities; and
· School-based administrative activities, such as Medicaid outreach and eligibility intake, that are conducted by employees of the State or local Medicaid agency.

These regulations are effective 60 days after the date of publication in the Federal Register; however, under recently passed legislation, there will be a six month delay in implementing these changes so school budgets in the 2007-2008 school year will not be affected. The final rule will be published in the Federal Register on Friday, December 28, 2007. A copy of the final rule attached. A media fact sheet will also be available on the CMS website shortly and may be accessed at: www.cms.hhs.gov/apps/media/fact_sheets.asp.

For questions or additional information, please contact Frankee Wright at (202) 690-5445 in the CMS Office of Legislation.

A Reprieve?

The Medicare, Medicaid, and SCHIP Extension Act of 2007

[S 2499]

December 19, 2007

This bill has cleared both chambers and is ready for the President's signature, which is likely, before Christmas.  PDF of the bill is available here.  See sections 201 (SCHIP extension) and 206 (moratorium on CMS cuts).

[Does anyone out there know how to remove that box?  It doesn't respond to any command I know.  Thanks.  greg8355@gmail.com]

MN Lawmakers Oppose CMS Regulations

December 12, 2007

Minnesota lawmakers say they will push legislation to head off new federal Medicaid rules that would cut reimbursement for programs serving abused and neglected kids and others, which could cost the state tens of millions of dollars in aid.  For the full story, click here

Finally, a Champion or Two !

December 11, 2007

 Representative Boozman Offers Bill to Protect Medicaid Reimbursements

Legislation places moratorium on proposed cuts

 Contact: Ryan James  (202) 225-4301

Washington, Dec 11 - U.S. Representative John Boozman (R-AR) today took steps to protect Medicaid reimbursements from cuts in financial support under rules proposed by the Administration.

Rep. Boozman joined with Rep. Mike Ross (D-AR) and Rep. John R. "Randy" Kuhl, Jr. (R-NY) to introduce H.R. 4355. The legislation, offered by Rep. Boozman, would place a moratorium on enforcement of a proposed rule from the Centers for Medicare and Medicaid Services that would eliminate hundreds of millions in federal funding for administrative, transportation and habilitative services for eligible children.

Reps. Ross and Kuhl are original co-sponsors of the legislation.

“This funding is important for the health of the children and families of Arkansas,” Boozman said. “This is common-sense legislation enjoying significant bipartisan support. It need not be held hostage by haggling over other legislation.”

“Many Arkansans rely heavily on the vital services of day habilitation programs,” Ross said. “As a member of the Health Subcommittee of the House Energy and Commerce Committee, I am proud to join with my colleagues to introduce legislation that will ensure that our patients will have continued access to these valuable services.”

“This bill will proactively eliminate a very large problem and expense that the proposed rule will create,” said Rep. Kuhl. “I applaud Congressman Boozman for his leadership on this issue.”

In Arkansas, state programs totaling $165 million are at risk, affecting nearly 21,000 Arkansans.

The language of the Boozman bill is the same language contained in the second State Children’s Health Insurance Program reauthorization plan put forward by House Democrats – a bill already vetoed by the administration and the subject of continued negotiations to find a bipartisan solution. Those negotiations have not proved fruitful.

“This is an important enough issue that it deserves to stand on its own. The battle over SCHIP continues in Congress, but it has yet to come to a point where enough people can put forward a bill which can become law. I offered this bill because I don’t want to see this important money cut due to being part of the SCHIP debate. I don’t know of any one in Congress who wants to see this money taken away, nor do I see any reason why this bill should not move quickly,” Boozman added.

Day habilitation services provide individualized training for people with disabilities in order to provide them with the life skills necessary to avoid institutional settings.

Here is the legislation, set forth in full:

SECTION 1. MORATORIUM ON CERTAIN PAYMENT RESTRICTIONS.

2258, 2261, 2287, 2237

Do You Think This is How Custer Felt?

Links

CMS-2258 (Final Rule Issued)

CMS-2261 (Published)

CMS-2287 (Published)

CMS-2237 (Published)

An Interesting Memo from the Congressional Budget Office Regarding SCHIP

December 11, 2007

Here is the CMS Fact Sheet for the Proposed TCM Reg

  The written transcript of the Waxman hearing is available here.

Video of the entire hearing

(Audio only plays when individuals are speaking into a microphone)

National Governor's Association

Letter of Opposition to CMS 2287

November 13, 2007

 Recent OIG Audits of Interest

November 5, 2007

Medicaid School-Based Services in Utah * Review of Payment Rates (A-07-06-04069)
http://www.oig.hhs.gov/oas/reports/region7/70604069.pdf

The State agency's claims for Medicaid reimbursement for school-based services generally were not in accordance with Federal requirements or the State plan.  We were unable to determine what portion of $36.8 million of the $37.9 million claimed was allowable as final payments.  The State agency did not perform a cost settlement reconciling interim payments to actual costs to determine final payments, as required by the State plan, because it considered payments made to school districts to be final payments.  The State agency's claims for the remaining $1.1 million, which were for nursing services that were paid based on the Medicaid fee-for-service schedule, were allowable.

We recommended that the State agency (1) work with the Centers for Medicare and Medicaid Services to determine what portion of the $36.8 million claimed based on interim payments is allowable and (2) perform cost settlements to ensure that future final payments for school-based services are based on actual costs.  The State agency concurred with the recommendations.
__________

Review of Minnesota Medicaid Reimbursement for Targeted Case Management Services for Fiscal Years 2003 and 2004 (A-05-05-00059)
http://www.oig.hhs.gov/oas/reports/region5/50500059.pdf

This audit was part of a nationwide review of targeted case management (TCM) Medicaid program payments.  Our objective was to determine whether the State agency's claim for Medicaid reimbursement of TCM services provided during fiscal years (FY) 2003 and 2004 complied with Federal and State requirements.

Based on our review of 118 claims in 100 sampled beneficiary-months, 7 claims included in 7 beneficiary-months were unallowable because the services were insufficiently documented or unsupported by the case records.  As a result, we estimate that during FYs 2003 and 2004, the State agency claimed $7,311,860 ($3,759,338 Federal share) in TCM costs that were unallowable.  We considered the remaining 111 claims included in 93 beneficiary-months to be acceptable.

We recommend that the State agency (1) refund to the Federal Government the $3,759,338 for undocumented and unsupported TCM services and (2) ensure that TCM services claimed under the Medicaid program are properly documented and meet Federal and State requirements.  In written comments on our draft report, the State agency did not address our recommendations.

The Administration’s Regulatory Actions on Medicaid:

The Effects on Patients, Doctors, Hospitals, and States

Chairman Waxman's Opening Statement, House Oversight Committee Hearing, 11/1/07

(Posted here in its entirety)

Throughout this year, our Committee has held a series of hearings on making government work again. We’ve focused on programs or agencies that once were effective but are now broken or dysfunctional.

Today’s hearing examines one of our government’s most important agencies — the Centers for Medicare and Medicaid Services at the Department of Health and Human Services. Called “CMS” for short, the agency is responsible for administering the country’s two largest health insurance programs, Medicare and Medicaid, which cover nearly 100 million Americans at a cost of over $600 billion. As the largest single purchaser of healthcare in the country, CMS has enormous power to do good or to do harm.

Over the past few months, public and congressional attention has largely been focused on the State Children’s Health Insurance Program, or S-CHIP. Legislation to strengthen S-CHIP and to expand it to cover 10 million children has cleared the House of Representatives on three separate occasions. Members of the House and Senate have already debated S-CHIP numerous times, and that debate is not yet over.

Medicaid is funded jointly by the federal government and the states. It covers more than 60 million low-income Americans. Medicaid is the largest insurer of infants and children in the United States, covering more than 28 million kids. It is also the largest insurer of people with disabilities, covering almost 10 million people. Medicaid is the single largest source of funding for our nation’s public teaching hospitals, children’s hospitals, community health centers, and public clinics — programs that benefit not only the poor, but everyone in their communities.

Unfortunately, little notice has been paid to a series of Medicaid regulations proposed by the Administration over the last ten months. But these proposals would have enormous impacts. They are a thinly disguised assault on the healthcare safety net. If implemented, they would cause major disruption to state Medicaid programs and the people and institutions that depend on them.

In total, the proposals would shift at least $11 billion in costs to state and local governments — the largest Medicaid regulatory cost shift in memory. Since these are federal matching funds, the real cuts in programs at the local level would be at least twice this amount. This would force states to make a difficult choice: either raise taxes or cut vital services. This scenario probably understates the potential for damage, as there are almost certainly more proposals to come.

This morning, our Committee will examine six rules the Bush Administration has proposed. These rules seek to:

Three of these proposed rules target some of our nation’s most vulnerable citizens by cutting funding and services to disabled children, disabled adults, and elementary school kids.

The other three would cut billions of dollars in federal funding from some of our nation’s most vital healthcare institutions — teaching hospitals that are training America’s future healthcare workforce, safety net providers that not only care for Medicaid patients, but millions of uninsured Americans, and public hospitals that support trauma centers, burn units, and other vital but unprofitable programs that benefit everyone in the community — insured and uninsured alike.

Indeed, many of the institutions that will be hardest hit by these CMS rules serve as the cornerstones of their community’s disaster response capability, and are therefore essential for homeland security.

What is almost as troubling as the impact of these rules is the manner in which they are being pursued. One of the proposed rules, the one that affects how states may raise funds for Medicaid and use this money to provide extra support for public hospitals, is a case in point.

Over the past few years, the Bush Administration has repeatedly sought to restrict states’ flexibility to finance the state share of Medicaid. But when bipartisan majorities of the last Congress rejected these efforts, the President sought to bypass the Congress through rulemaking. In response, 300 members of the House and 55 members of the Senate signed letters to Secretary Leavitt opposing the effort. Following the mid-term elections, the Administration renewed its effort in January, once again proposing to change the way Medicaid pays for public hospital costs. Again, bipartisan majorities of the House and Senate wrote to Secretary Leavitt to express “grave concern” or outright opposition to the Administration’s proposal.

Undeterred, CMS pressed ahead.

During the 90-day comment period on the proposed rule, CMS received more than 400 negative comments. The bipartisan National Governor’s Association, the bipartisan National Council of State Legislatures, the bipartisan National Association of Counties, numerous state and county governments, and a large number of hospital organizations, professional associations, and consumer groups all raised concerns. Not one person wrote in support of the rule.

In response, Congress imposed a one-year moratorium on CMS’s authority to implement the rule. Despite all this, CMS still moved ahead.

The very same day that President Bush signed into law the appropriations bill that contained the moratorium, CMS published its final rule, apparently to make sure that the new policy goes into effect immediately upon the expiration of the moratorium.

This is just one example. All of the proposed regulations are made up out of whole cloth by CMS. The most recent change in the underlying statutes that CMS is seeking to “redefine” was passed in 1991 during the first Bush Administration. One statutory provision they are “reinterpreting” hasn’t been changed in forty years. This is clearly lawless regulation, not anchored in statute. It does not have the support of the Congress and it deserves no deference from the courts.

Of course, CMS had other options. It could have gone back to the drawing board to put together regulations that do not threaten the emergency care capacity of many of our nation’s largest cities — cities that are the most likely sites for healthcare disaster needs, such as hurricanes, earthquakes, pandemic flu, and even bioterrorism. It could have developed regulations that do not suddenly shift billions in costs to the states and localities.

Instead, it launched an assault on Medicaid.

These actions, and the subsequent issuance of five more proposals that shift an additional $7 billion in costs to the states, bring us to today’s hearing.

The first panel will describe the effects of these rules on individual Americans, their community providers, and the states.

Dennis Smith, the official at CMS who wrote these regulations, will join us on the second panel.

If past comments are any indication, Mr. Smith will likely assert that CMS is pursuing these rules to preserve the “fiscal integrity” of Medicaid. As I understand this argument, CMS has to destroy Medicaid in order to save it. Let’s be clear: there is no committee in Congress more interested in the fiscal integrity of federal programs than this one.

But let’s also be clear: these regulations are not about program integrity. If they were, CMS would be refining guidance and improving accountability. Instead they seek to prohibit services that have been successful for decades and cut funding that the Congress has specifically preserved. This is not careful surgery on Medicaid; this is reckless amputation.

I very much hope that CMS will listen carefully to what our witnesses and the members of this Committee have to say about its proposals, and then go back to the drawing board. If there truly are fiscal integrity concerns that need to be addressed through new rules, this Committee will consider them. But we will not support an unauthorized regulatory offensive against the states, community providers, and Medicaid beneficiaries. 

Written Statement by Dreadful Dennis can be found here.  Written Testimony of the Other Witnesses Can be Found Below

Witnesses, Oversight Committee Hearing, 11/1/07

Links to written statements from witnesses.  

Transcripts of actual testimony to follow. 

•  Testimony of David Parrella
•  Testimony of Barbara Miller
•  Testimony of Twila Costigan
•  Testimony of Denise Herrmann
•  Testimony of Alan Aviles
•  Testimony of Sheldon Retchin
•  Testimony of Angela Gardner
•  Testimony of Marjorie Kanof

The Legacy

An Editorial

Ever wonder why CMS picks on children's health programs?  This might be one answer.

Every President wants to leave a legacy –  Roosevelt launching his New Deal, Eisenhower ending the Korean war, Kennedy with the promise of Camelot, Johnson with the Great Society, Reagan and the Berlin Wall.

This President's legacy is highly targeted and its audience is the Neocons.  The mission is simple – destruction of the Great Society programs.   In the first term, the focus was on Social Security.  That campaign failed, so the administration turned its attention to Medicaid, an easier target because of its reputation for waste and abuse and the relative political impotence of its beneficiaries.  

With Social Security, Bush took on the AARP and millions of Boomers who were looking forward to receiving the promises of the program in their Golden Years.  

With Medicaid - other than some service providers who would probably not take Title XIX patients if they had a choice, as Medicaid is not a profitable part of their business -   the President's opponents are the Medically Needy. 

Most Social Security recipients vote.  Many Medically Needy do not.

Because Medicaid is an entitlement program, limiting enrollment is not an option.  To reduce the cost of the Medicaid program, therefore, it is necessary to eliminate Fraud, Waste, and Abuse.   In a program with a budget of over three hundred billion dollars and climbing, there is bound to be a great deal of FWA. In some parts of Title XIX and its sibling, Title XXI, however, the Administration's search for FWA is as misguided as was its search for WMDs in Iraq. 

Make no mistake about it; the Bush administration is out to destroy children's health programs, from SCHIP to school-based health services.   CMS-2258/2213/2261/2287 are just the beginning.  To this administration, Bowen means nothing, nor does EPSDT, nor the 1989 OBRA, 1903 (c) of the SSA, the Medicare Catastrophic Coverage Act of 1988, or even IDEA.   Apparently, Mr. Leavitt and Mr. Smith were absent the day their high school civics instructors pointed out that you can't use a regulation to trump a statute or a Supreme Court decision.   That has not stopped them from trying.

In the area of foreign policy, George Bush's legacy will be an unnecessary and unwinnable war.  In domestic policy it will be the destruction of children's health programs.  The crippling of SCHIP and Medicaid in the schools may be a theoretical victory for Neoconservatives. For the rest of us, it means a generation of children without primary health care and the increased cost of delivering health services as intervention instead of prevention.  Our country will suffer from the Bush legacy in both areas.