Why HIDA Opposes Part B Consolidated Billing.

Reasons this vendor organization thinks it's a bad idea

As this issue of Nursing Homes/Long Term Care Management went to press, the Health Care Financing Administration (HCFA) was gearing up to implement Part B consolidated billing for nursing facilities, starting January 1. This fulfills one of the final mandates from the 1997 Balanced Budget Act (BBA) affecting the long-term care industry. To many long-term care providers, Part B consolidated billing is inevitable. As we await HCFA's specific guidance about how these provisions will be implemented, we hope that, when and if consolidated billing finally becomes reality, we will be able to weather the transition.

On the surface, consolidated billing seems like a simple and logical way to hold skilled nursing facilities (SNFs) accountable for the appropriate utilization of Medicare Part B items and services. Indeed, this was the legislative intent of the provision. However, the nature of Part B billing is anything but simple, which is one reason for HCFA's apparent difficulty so far in issuing specific guidance about how it will be implemented. It is also the reason the Health Industry Distributors Association (HIDA) opposes implementation of consolidated billing and supports relief from this provision.

In ourview, the current system works well for beneficiaries, providers and suppliers. SNFs have long relied on Part B suppliers to provide specialized Part B items and services to beneficiaries and bill Medicare directly. It is true that until the BBA was passed, nothing in the law required suppliers to assume billing responsibility or prohibited SNFs from doing so. Nevertheless, Part B suppliers accepted the burden of understanding billing and coverage requirements for these items. They also accepted program integrity responsibilities, as well as the risk that coverage and payment might be denied by the Medicare program.

All of this changes under Part B consolidated billing. SNFs will bear these responsibilities directly. Suppliers will be removed from the billing and payment cycle and will await payment from SNFs instead of from the Medicare program. HIDA's primary concern about this is that the long-term care industry has shouldered enough of the BBA's impacts already. SNFs have weathered the Prospective Payment System (PPS) with difficulty, and yet the concurrent administrative burden of Part B consolidated billing poses yet more administrative and systems costs. In our view, such drastic changes in administering the Part B program are simply unnecessary.

There are a number of reasons for this. For one, the complexities of Part B billing will pose quite a challenge to providers, to put it mildly; the learning curve is steep. Few SNFs have expertise with the complexities involved, with most Part B bills processed currently by Durable Medical Equipment Regional Carriers (DMERCs), a group of four insurance companies contracted by HCFA to process Part B claims.

"A [nursing facility] will be hard-pressed to develop expertise in every Part B service or item it is responsible to provide and bill for under consolidated billing," observes Bill Blanchfill, chief compliance officer for McKesson HBOC Medical Group, Extended Care. "The [SNF] will be ultimately responsible to ensure that the claims it submits are accurate and compliant with all applicable medical policies and billing rules."

Specifically, SNFs will be responsible for billing for complex items such as parenteral/enteral nutrition (PEN) therapy and wound care. Both of these demonstrate unique reasons to keep Part B billing in the hands of the expert Part B billers/providers:

* Billing for PEN therapy is the most complex of all Part B items and services. Indeed, HCFA's own consolidated billing consultant has recommended that PEN therapies continue to be billed by suppliers. SNFs might not be aware that in addition to medical necessity documentation requested by a DMERC, Certificates of Medical Necessity (CMNs) are required for PEN therapy. Furthermore, only physicians can complete and sign one of the CMN sections. Physicians are not compelled by HCFA or the DMERCs to complete CMNs, and coordinating CMNs with physicians has proven to be a major headache for many suppliers.

* Within the wound care context, there are specific definitions of wounds that qualify for Medicare coverage and exacting treatment protocols to follow. Virtually every step of wound care--from the definition of the wound to the amount and type of treatment gels and bandages that are billed--must be carefully documented. Billers also must be prepared to document and defend the reasons certain brands were used.

McKesson's Blanchfill notes that under these circumstances, even the most seasoned supplier can find the complexity of Part B billing frustrating. Other objections to consolidated Part B billing are as follows:

Nursing facilities will face scrutiny from Part B program integrity. Consolidated billing threatens to undo Part B program integrity accomplishments achieved over the past several years. HCFA assigned DMERCs to process Part B claims from suppliers and to educate them on proper billing procedures. Suppliers assumed program integrity responsibilities and worked closely with HCFA and DMERCs through DMERC advisory councils and through other arrangements to enhance program integrity. But under consolidated billing, long-term care providers will be responsible for meeting program integrity requirements. In today's environment, where the scrutiny of nursing facilities is almost unbearable, it is hard to imagine that the industry would want to assume this additional scrutiny.

Fiscal intermediaries (FIs) are, of course, HCFA contractors who process Part A and a few Part B bills sent to them by SNFs. However, they lack the expertise necessary to handle complex Part B billing. While having all claims processed by a single FI might seem appealing, providers should be wary of the burden that will emerge if FIs fail in implementing this new responsibility.

"Prior to the implementation of, for example, a surgical dressing medical policy by the DMERCs," says McKesson's Blanchfill, "fraud, abuse and misunderstandings about billing of surgical dressings under Medicare Part B were running rampant. The DMERCs have turned this around through aggressive claims review protocols and sophisticated claims processing edits. FIs neither have the claims-processing system nor the knowledge to process surgical dressing claims with the same degree of competence and integrity."

Furthermore, the DMERC/supplier partnership works well. The Office of Inspector General recently praised DMERCs for their program integrity efforts, which have resulted in reduced incidence of fraud, abuse and honest mistakes, especially for complicated procedures.

Consolidated billing threatens the supply chain. HIDA worries that consolidated billing threatens the stability of the SNF supply chain. As it stands now, while DMERCs are concerned about ensuring that services are medically necessary and properly documented, they have not been concerned about the payment delays that can result from returning bills to suppliers or facilities. And it is likely that there will be a considerable volume of returned bills, especially in the early days of implementation of consolidated billing.

Since few SNFs have sufficient funds to pay suppliers up front (as hospitals do), suppliers are concerned that payment delays will become more common. Many suppliers are small or midsize firms that rely on a relatively steady cash flow to remain in business. Too many payment delays can easily upset their ability to maintain a steady supply chain to their customers.

HCFA is not ready to implement consolidated billing. As of press time, HCFA had yet to reveal the necessary details about consolidated billing. For example, although HIDA knows that HCFA envisions a consolidated biller, we are unsure (as of press time) whether this translates into a single, consolidated bill per patient or split billing to accommodate more complex bills.

If HCFA decides that FIs should become the route to process Part B bills, there is a lot of catch-up work to be done, and it must be done quickly. FIs will have to learn an entirely different set of billing procedures in the same time frame as SNFs. In addition, they will need to make at least two major system changes:

* First, HCFA will need to decide if it should make the Florida Shared System or the Arkansas Shared System the national FI standard (explanations of which go beyond the scope of this article).

* Second, HCFA will need to either modify Form UB92 to accommodate the data needed for consolidated billing or else train SNFs to use Form 1500, which is used by suppliers.

Of course, any significant change like consolidated billing should allow adequate time for training personnel and testing the system. HIDA has been told that HCFA will conduct extensive voluntary testing for SNF consolidated billing but has not, as of press time, heard of any actual testing or plans for testing.

Consolidated billing will be costly for the Medicare program. The BBA was quite explicit in embracing budget neutrality. But, in fact, consolidated billing will cost the Medicare program money to implement. HCFA will have to expend money and staff time to train SNF staff on DMERC policies and procedures, produce training materials and update manuals as part of its program integrity effort.

Furthermore,, consolidated billing will increase claims processing costs. We can expect a high incidence of denied claims submitted by inexperienced billing staff. These claims will have to be resubmitted by the SNFs and reexamined by the DMERCs, a process that will increase costs for both. Or, if FIs process claims, we can expect to see the kinds of mistakes from past years that cost the program money.

Is consolidated billing really necessary? And if so, is this the right time? To HIDA and our members, it looks as though the billing expertise that Part B suppliers have developed over the years will be wasted--this, despite the fact that these suppliers have worked with the DMERCs to meet regulations ordered by HCFA to standardize billing procedures and medical necessity policies, and their efforts have been judged successful.

"The threat that consolidated billing poses to the supply chain; the notion of undoing all the effort by HCFA, the DMERCs and suppliers to develop a process that works; and, above all, to unload more regulations on overburdened nursing facilities doesn't make sense," says HIDA President and CEO Matthew J. Rowan. "The Balanced Budget Act saved more money than anyone ever projected and has strained the long-term care industry to its limit. It's time to put a halt to further BBA provisions, especially those that do not save money as much as overload the very institutions that make Medicare work."

Ruth Ann Kaiser is director of government affairs at the Health Industry Distributors Association, the national trade association representing medical product distributors. HIDA members serve the nation's hospital, imaging, long-term care and physician/alternate care markets.