American Association for Clinical Chemistry
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June 2010 Clinical Laboratory News: Regulatory Profiles

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June 2010: Volume 36, Number 6

CMS Proposes Cutback in Hospital Reimbursement

The Centers for Medicare and Medicaid Services (CMS) has proposed an average 0.1% cut in payments to hospitals in 2011, a $142 million decrease compared to 2010.

The proposed rule includes both increases, cuts, and other policy changes that add up to the 0.1% drop. An initial market-basket update of 2.4% is in the package for hospitals that submit data on quality measures, with hospitals not submitting data receiving a smaller 0.4% update. But the proposed rule also includes a 2.9% cut to eliminate the effect of coding or classification changes that CMS says did not reflect true increases in patients’ severity of illness. This estimate does not include the 0.25% mandated market basket cut that was included in the healthcare reform law. When that cut is added, average payments will decrease by 0.35% compared to 2010 payments.

The American Hospital Association (AHA) released a statement deploring the cuts and taking issue with CMS’s assertion that inpatient payments have increased solely due to coding changes. AHA contends that payments have increased because hospitalized patients are more severely ill than in the past.

CMS has a fact sheet available about the proposed changes on its website, and will accept comments until June 18.


Report Identifies Top Medicaid Payment Errors

The Office of the Inspector General (OIG) for the Department of Health and Human Services released an investigation of Medicaid that identifies four major error types for providers seeking payment.

Of the 1,356 medical review errors that OIG analyzed, four types accounted for 78% of the errors and 95% of the net improper Medicaid overpayments. The four error types were insufficient documentation, no documentation, services that violated state policies, and medically unnecessary services. Of the 202 data processing errors that OIG analyzed, four types accounted for 78% of the errors and 64% of the net improper Medicaid overpayments. The four error types were pricing errors, noncovered services errors, rate cell errors for managed care claims, and errors in the logic edits of claim processing systems.

In its report, OIG recommends that in the future, the Center for Medicare and Medicaid Services (CMS) develop analytical data similar to that in its report and encourage states to use the data to help ensure that payments comply with federal requirements. CMS concurred and plans to put into practice the recommendations starting with the fiscal year 2010 measurement cycle.

The report is available from the OIG website.

WHO Accepts New Tests for Malaria

The World Health Organization (WHO) completed a new assessment of 29 rapid diagnostic tests for malaria and found that 15 met minimum performance criteria for inclusion in WHO guidelines for treatment of the disease. The rapid tests are intended to help health workers quickly identify which patients have the disease and need immediate treatment, a goal of recent WHO recommendations to confirm diagnosis of malaria before treatment.

According to WHO, the rapid tests mean a major breakthrough in malaria control, allowing testing of people who cannot access diagnosis based on microscopy in remote, rural areas where the majority of malaria occurs. The evaluation program is co-sponsored by the Foundation for Innovative New Diagnostics, a non-profit Swiss organization that develops new diagnostic tests and platforms for diseases of poverty, including TB, malaria, and human African trypanosomiasis.

A copy of the WHO report is available online.

HHS Awards 15 Health IT Community Grants

Vice President Biden and U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius announced a list of 15 cities across the country that will serve as pilot sites for eventual wide-scale use of health information technology through the Beacon Community program. The awards vary from $12–$16 million, and total $220 million as set forth in the Recovery Act of 2009.

The funds are aimed to help the 15 communities to design and test their own health IT infrastructure and offer insight into how health IT can improve delivery of healthcare, said Secretary Sebelius.

The selected Beacon Communities will use health IT resources as a foundation for bringing doctors, hospitals, community health programs, federal programs, and patients together to design new ways of employing health IT. Each Beacon Community has elected specific and measurable improvement goals in each of three areas for health systems improvement: quality, cost-efficiency, and population health. The goals vary according to the needs and priorities of each community. 

A list of the 15 awards and how they will be used is available from the HHS health IT website.