2. New Pieces to The Medicare Puzzle: Observation Status, Improvement Standard and New Competitive DMEPOS Bidding Age & Disability Odyssey 4:00 p.m.- 5:15 p.m. Ballroom 301-302 Harbor Side

3. Presenters Kelli Jo Greiner, Team Lead –Minnesota Board on Aging Consumer Choices Team Kellijo.greiner@state.mn.us 651-431-2581 Robin Thompson, Senior Outreach Specialist –Minnesota River Area Agency on Aging Robin@rndc.org 800-333-2433 ext. 82016

4. MEDICARE COVERAGE OF SNF CARE Basic Requirements, 42 C.F.R. §409.30 –3-day qualifying hospital stay for medically necessary inpatient hospital care –Admission to SNF within 30 days of hospital discharge –Physician certification of resident’s need for SNF care –Resident requires daily skilled nursing or rehabilitation services –Medicare-certified facility; Medicare-certified bed –As a practical matter, inpatient care is needed, 42 C.F.R. §409.31(b)(3)

5. TWO OBSTACLES TO MEDICARE COVERAGE OF SNF CARE Observation services, which prevent coverage at admission to SNF The myth of medical improvement, which prevents continued Medicare coverage when the resident is not “improving”

6. OBSERVATION SERVICES Manuals say observation should not exceed 24-48 hours Now, increasingly, Medicare beneficiaries’ entire stay in an acute care hospital is called observation services –Cases of multiple days and weeks in the hospital, all in observation

7. Background: Observation Definition –Ongoing short-term treatment and assessment furnished while a decision is being made about whether or not to admit as an inpatient or discharge. –Outpatient service covered by Medicare Part B –Observation-specific clinical units becoming more common

8. Background: Criteria for observation and inpatient care Observation Criteria 1)General guidance: a)Reasonable and Necessary b)8 or more hours of service c)Medical record must contain: physician order, written request for observation and timeframe 2)Timing: Not rigidly specified Inpatient Admission Criteria 1)General guidance: Physicians should also consider predictability of adverse outcomes, severity, hospital resources and other factors 2)Timing: admit patients expected to need hospital care for 24 hours or more

9. Background: Medicare Economics of Observation Outpatient observation rate lower than equivalent inpatient rate –Observation Chest Pain: $720 –Inpatient Chest Pain: $7,600 Reported financial benefits of observation –Maximizes inpatient unit capacity –Reduces unreimbursed admissions –Reduces staffing costs

10. Background: Beneficiary Economics of Observation Beneficiary liability differs under observation –Coinsurance vs. deductible 20% observation coinsurance plus 20-40% coinsurance for other services Medicare Part D prescription drug cost sharing or denial of payment Medicare Part A deductible: $1,156 Time in observation not counted in SNF 3 day prior hospitalization policy, creates beneficiary liability

13. www.medicareadvocacy.orgwww.medicareadvocacy.org Copyright © Center for Medicare Advocacy, Inc. OBSERVATION SERVICES New CMS brochure, “Are You a Hospital Inpatient or Outpatient?”, CMS Product No. 11435 (Dec. 2009), http://www.medicare.gov/Publications/Pubs/p df/11435.pdf http://www.medicare.gov/Publications/Pubs/p df/11435.pdf –Misstates CMS Manuals by suggesting that beneficiary’s physician approved observation –Tells beneficiaries to ask if they are outpatients or inpatients –Does not identify any rights to appeal

14. Observation Status Observation status is considered “outpatient” and is covered by Medicare Part B –Cost sharing can be significant –Problems will getting prescription medications paid during an observation stay

15. Observation Status Improving Access to Medicare Coverage Act (H.R. 1179 and S. 569) –The Improving Access to Medicare Coverage Act, sponsored by Representatives Joe Courtney (D-CT-2) and Tom Latham (R-IA-2) in the House and Senator Sherrod Brown (D-OH) in the Senate, would clarify the law to count observation time towards the three- day requirement for SNF coverage.

16. Observation Status: The HHS Office of Inspector General work plan for 2013 includes provisions to examine: –The use of observation services from 2008-2011; –The characteristics of beneficiaries receiving observation services in 2011; –The amount paid by beneficiaries for observation and related services in 2011; and –The extent to which hospitals informed beneficiaries about observation services

17. Observation Status In the May 10, 2013 Federal Register CMS proposes that for 2014 –Propose that hospital inpatient admissions spanning 2 midnights in the hospital would qualify for Medicare Part A payment –Propose that hospital services spanning less than 2 midnights should be provided under Part B outpatient benefit, unless there is clear documentation in the medical record supporting the physician’s order and expectation that the beneficiary would require care spanning more than 2 midnights or the beneficiary is receiving a service or procedure designated by CMS as inpatient only.

18. Appeal Assistance Have the patient contact the Senior LinkAge Line® at 1-800- 333-2433 for appeal assistance Some things to advise your patients about: –Appeal process takes time – months, even years to resolve –In most situations, bills will need to be paid –Observation stays are covered by Medicare Part B Cost sharing of 20% paid by beneficiary Drugs may be covered by Part D plan –If appeal is won, then reimbursement would be made to patien t Goal of Appeals –Show that hospital stay should have been a Part A inpatient stay and met criteria for a skilled inpatient stay –Show that care and services provided in the SNF were skilled services and would have been Medicare covered if had a 3 day qualifying inpatient stay –Get Medicare Part A payment for hospital and SNF stay

19. Observation http://www.medicareadvocacy.org/self-help-packet-for- medicare-observation-status/

20. THE MYTH OF IMPROVEMENT Restoration potential is not a valid reason for denial of coverage –“Even if full recovery or medical improvement is not possible, a resident may need skilled services to prevent further deterioration or preserve current capabilities.” 42 C.F.R. §409.32(c) Example: “A terminal cancer patient may need some of the skilled services described in §409.33.” 42 C.F.R. §409.32(c)

21. The Medicare “Improvement” Standard Settlement reached on 10/16/12 –Class Action lawsuit, Jimmo v. Sebelius CMS will be –Revising the Medicare Benefit Policy Manual and other Medicare Manuals to clearly state that Medicare coverage is not dependent on improving –New policy provisions will state that skilled nursing and therapy services necessary to maintain a person’s condition can be covered by Medicare For up-to-the-minute information go to http://www.medicareadvocacy.org/hidden/highlight- http://www.medicareadvocacy.org/hidden/highlight- improvment-standard/

22. MAINTENANCE-LEVEL REHABILITATION Maintenance rehabilitation therapy is a Medicare-covered service –“... when the specialized knowledge of a qualified therapist is required to design and establish a maintenance program based on an initial evaluation and periodic assessment of a resident’s needs….” 42 C.F.R §409.33(c)(5)

23. INDIVIDUALIZED ASSESSMENT Medicare should not use “rules of thumb,” such as –Lack of restoration potential, CMS Pub. No. 100-02, Ch. 8, 30.2.2 (“When rehabilitation services are the primary services, the key issue is whether the skills of a therapist are needed. The deciding factor is not the patient’s potential for recovery, but whether the services needed require the skills of a therapist or whether they can be provided by nonskilled personnel.”)

24. INDIVIDUALIZED ASSESSMENT Fox v. Bowen, 656 F. Supp. 1236 (D. Conn. 1987) –Need for skilled nursing must be based solely upon beneficiary’s unique condition and individual needs –Court rejected “informal presumptions” or “rules of thumb” that denied coverage to beneficiaries who were not in weight-bearing stage of rehabilitation, amputees who did not have prostheses, beneficiaries who could ambulate 50 feet with supervision –Court held that the Secretary’s practice of denying Medicare coverage violated the Due Process Clause of the Fifth Amendment

25. MEDICARE RESOURCES Medicare statute, 42 U.S.C. §1395 –§1395d(a)(2)(A) [extended care services] –§1395x(h) [definition of extended care services] –§1395f(a)(2)(B) [conditions of payment for extended care services] Medicare regulations, 42 C.F.R. §409.30-.36 Medicare Benefit Policy Manual, CMS Pub. 100-02, Chapter 8, http://www.cms.hhs.gov/manuals/Downloads/bp102c 08.pdf http://www.cms.hhs.gov/manuals/Downloads/bp102c 08.pdf

26. THE MYTH OF IMPROVEMENT Medicare coverage of care and services in a SNF does not depend on the resident’s “improving”

27. Jimmo v. Sebelius (D. Vt., Civil No. 5:11-CV-17, Oct. 25, 2011) The lawsuit charged that Medicare uses a "covert rule of thumb" known as the "Improvement Standard" to illegally deny coverage to such patients. In fact, according to the complaint, neither Medicare's statute nor its regulations require improvement for continued skilled care."Improvement Standard" The Center for Medicare Advocacy and Vermont Legal Aid filed the lawsuit on behalf of five Medicare enrollees and the National Multiple Sclerosis Society, the Parkinson's Action Network, the Paralyzed Veterans of America, the National Committee to Preserve Social Security and Medicare, and the American Academy of Physical Medicine and Rehabilitation. Center for Medicare Advocacyfiled the lawsuit

28. Jimmo v. Sebelius (D. Vt., Civil No. 5:11-CV-17, Oct. 25, 2011 Medicare beneficiaries can no longer be denied coverage if they are not showing measurable functional improvement as the result of therapy. “Patients will be able to receive therapy services that maintain their current condition or slow further deterioration, regardless of whether their functional status is expected to measurably improve.”

29. Jimmo v. Sebelius (D. Vt., Civil No. 5:11-CV-17, Oct. 25, 2011 Although contractors have cited CMS Manual guidance to deny claims where improvement over time could not be shown, CMS and HHS claimed in court filings that such a standard does not exist as part of Medicare policy. Government lawyers are framing this settlement a clarification of policy.

30. Jimmo v. Sebelius (D. Vt., Civil No. 5:11-CV-17, Oct. 25, 2011 The Center for Medicare Advocacy, which represented the plaintiffs in the case, says that the improvement standard affects people living with chronic conditions such as multiple sclerosis, Alzheimer’s disease, diabetes, Parkinson’s disease, and stroke, as well as disproportionately affecting people with low incomes

31. Jimmo v. Sebelius (D. Vt., Civil No. 5:11-CV-17, Oct. 25, 2011 “This settlement has the potential to lower costs, because it will enable people to stay in their homes longer, as patient decline is slowed, hospital admissions and readmissions will be reduced. This is great way to keep people out of institutions—this is a welcome policy shift and money saver

32. Jimmo v. Sebelius (D. Vt., Civil No. 5:11-CV-17, Oct. 25, 2011 With the settlement now officially approved, the Centers for Medicare & Medicaid Services (CMS) is tasked with revising its Medicare Benefit Policy Manual and numerous other policies, guidelines and instructions to ensure that Medicare coverage is available for skilled maintenance services in home health, nursing home and outpatient settings. CMS must also develop and implement a nationwide education campaign for all who make Medicare determinations to ensure that beneficiaries with chronic conditions are not denied coverage for critical services because their underlying conditions will not improve.

33. Jimmo v. Sebelius (D. Vt., Civil No. 5:11-CV-17, Oct. 25, 2011 Encourage providers and/or patients to appeal should they be denied Medicare for skilled maintenance nursing or therapy because they are not improving. http://www.medicareadvocacy.org/self-help-packet-for- expedited-home-health-care-appeals-including-improvement- standard-denials/

34. Appeal Assistance Have the patient contact the Senior LinkAge Line® at 1-800-333-2433 for appeal assistance Some things to advise your patients about: –Appeal process takes time – months, even years to resolve –In most situations, bills will need to be paid –Observation stays are covered by Medicare Part B Cost sharing of 20% paid by beneficiary Drugs may be covered by Part D plan –If appeal is won, then reimbursement would be made to patien t Goal of Appeals –Show that hospital stay should have been a Part A inpatient stay and met criteria for a skilled inpatient stay –Show that care and services provided in the SNF were skilled services and would have been Medicare covered if had a 3 day qualifying inpatient stay –Get Medicare Part A payment for hospital and SNF stay

35. The Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Competitive Bidding Program

36. Medicare Part B Coverage Physician Services Durable Medical Equipment, Prosthetics, Orthotics, Supplies Ambulance Services Preventive Care Services Outpatient Physical, Speech and Occupational Therapy Blood Chiropractic Care Outpatient Mental Health Services Home Health Care X-rays and Lab Tests Limited Prescription Drugs

37. Historical Overview: The Way It Was Medicare’s competitive bidding program for DMEPOS is an important step towards paying appropriately for medical equipment and services. –The program reduces out-of-pocket expenses for Medicare beneficiaries and saves the Medicare program money while ensuring that beneficiaries continue to receive quality products from accredited suppliers. –The competitive bidding program strengthens protections against Medicare fraud. Under competitive bidding, DMEPOS suppliers have to meet certain quality and financial standards that make it harder for fraudulent suppliers to enter the Medicare program. Also, reducing excessive payment amounts makes competitively bid items less attractive targets for fraud and abuse.

38. What is DMEPOS? DMEPOS stands for –Durable Medical Equipment –Prosthetics –Orthotics –Supplies Equipment/supplies covered under Medicare Part B

39. Historical Overview: The Way it Was Medicare currently pays for most DMEPOS items using a fee schedule. –For most of these items, the “fee schedule” payment amounts are based on historical charges, adjusted for inflation at times, and not on current market prices. –Numerous studies by the Office of Inspector General and the Government Accountability Office have found that the prices paid by Medicare for certain DMEPOS items are excessive --- sometimes three or four times retail prices and the amounts paid by commercial insurers. Clearly, Medicare needs a better way to pay for DMEPOS items.

40. Historical Overview: The Laws The Prescription Drug, Improvement and Modernization Act of 2003, or MMA, mandated the development and implementation of the program. Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) made limited changes to MMA. –Implemented Round 1 of the program in 9 Metropolitan Statistical Areas (MSAs) Affordable Care Act expanded the program so Round 2 would increase to 91 MSAs instead of 70 MSAs the law originally required. –Parts of Minnesota were included

41. DMEPOS Competitive Bidding in 2013 Requires Medicare replace the current fee schedule payment methodology for selected DMEPOS items with a competitive bid process Not all products or items are subject to competitive bidding Competitive bidding was completed in the first nine geographic selected areas –First year savings of $202 million 42% when compared to costs expected under the fee schedule

42. DMEPOS Competitive Bidding in 2013 Competitive Bidding for DMEPOS begins in select zip codes in Minnesota –Only contractors whose bids are accepted by Medicare can be used by beneficiaries if they want to get Medicare coverage for their DMEPOS –DMEPOS = Durable Medical Equipment, Prosthetics, Orthotics and Supplies National Mail-Order Competition –The national mail-order competition CBA includes all ZIP codes in all parts of the United States, including the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa.

43. How the Program Works DMEPOS suppliers submit bids –Suppliers must submit a bid to be awarded a contract Medicare uses bids to determine payments Contracts will be awarded to sell/rent DMEPOS “Contract suppliers” will be those who –Offer the most competitive price –Meet eligibility, quality, and financial standards –Are accredited by an independent organization

44. How the Program Works Single payment amount replaces the fee schedule payment –Must be lower than the fee schedule amount Only contract suppliers will be able to –Provide competitively bid DMEPOS items –File claims with Medicare for payment of competitively bid items and services Contract supplier charge cannot exceed –Single payment amount based on bids received for an item –Medicare fee schedule allowed amount

45. Round 2 of Competitive Bidding Competitive Bidding Program will expand –Round 2 91 Metropolitan Statistical Areas (MSAs) –Areas of Minnesota Target effective date July 1, 2013 –National Mail-Order Program Entire state of Minnesota

46. Products Included in Round 2 (items in bold were added to Round 2; not part of Round 1)

47. Who will be Affected? Beneficiaries who have Original Medicare and –Permanently reside in a ZIP Code in a CBA –Obtain competitive bid items while visiting a CBA To find out if a ZIP Code is in a Competitive Bidding Area (CBA) Medicare Advantage enrollees can use suppliers designated by their plan (includes Medicare Cost Plan enrollees)

48. Using Contract Suppliers Must almost always use contract supplier if –Items and services are included in Competitive Bidding Program where a beneficiary lives in a CBA –Traveling to or visiting a CBA Doctors, treating practitioners, and hospitals can supply certain items (ex: walkers or folding manual wheelchairs) Nursing Facility can only supply directly if it becomes a contract supplier

49. Identifying Contract Suppliers Visit the DMEPOS Supplier Locator tool –www.medicare.gov/supplierwww.medicare.gov/supplier

53. Stay With Current Supplier Can stay with current non-contract supplier if all of the following apply: –Supplier elects to be “grandfathered” –Beneficiary permanently resides in a CBA –Renting certain equipment or oxygen when program starts in CBA If current non-contract supplier elects not to be “grandfathered” –Must switch to a contract supplier

54. Non-contract Supplier If in CBA, a non-contract supplier may not furnish bid items If non-contract supplier used, supplier must issue Advance Beneficiary Notice (ABN) –Says Medicare will not pay –By signing, beneficiary agrees to pay entire amount –If no ABN signed, beneficiary not responsible for payment

55. Traveling Beneficiaries To CBA: Must use contract supplier –If non-contract supplier used, supplier must issue Advance Beneficiary Notice (ABN) –If no ABN signed, beneficiary not responsible for payment To non-CBA: Can use any Medicare-enrolled supplier

56. Specific Brands Doctor must prescribe in writing Medical record must reflect need Contract supplier must –Furnish the specific brand or form as prescribed OR –Work with doctor or treating practitioner to find suitable alternative OR –Help locate another contract supplier that can furnish the specific brand or form as prescribed

57. Points to Remember Program does NOT affect which physicians or hospitals beneficiaries use May need to change DMEPOS supplier for Medicare to pay May be able to stay with current supplier if renting from supplier who elects to be “grandfathered” If in Medicare Advantage plan, beneficiary should check with the plan

58. Equipment Repair & Replacement For owned medical equipment –Any Medicare-enrolled supplier can make necessary repairs –For replacement must use contract supplier –For warranty repairs, follow the warranty rules For rented equipment –Repairs are included in rental payment – the supplier must fix at no charge

59. DMEPOS in Minnesota Entire state affected by the National Mail Order Competition Bidding for Diabetic Supplies Specific Zip Codes in Bloomington, Minneapolis and St Paul area but extends beyond those cities

61. DMEPOS Competitive Bidding: National Mail Order Competition National competition to furnish diabetic testing supplies that are delivered to a beneficiary’s residence Currently, beneficiaries can choose to pick up their diabetic supplies in person from a retail pharmacy or other local supplier, or have them delivered to their home

62. DMEPOS Competitive Bidding: National Mail Order Competition Suppliers awarded a contract by CMS will be required to furnish mail order diabetic testing supplies to Medicare beneficiaries in all parts of the United States Once implemented, only contract suppliers will be reimbursed by Medicare for providing diabetic testing supplies delivered to a beneficiary’s home If the supplies are shipped or delivered by any means to the beneficiary’s home, the supplier must be a contracted supplier in order for the supplies to be reimbursed by Medicare

63. National Mail Order: Diabetic Supplies Beneficiaries may choose to pick up diabetic testing supplies in person from Medicare-enrolled retail pharmacy locations or other local Medicare-enrolled supplier storefronts or have them delivered to their homes. –The term “mail-order” includes all home deliveries.

64. National Mail Order: Diabetic Supplies When the national mail-order program goes into effect, beneficiaries with Original Medicare will need to use a national mail- order contract supplier for any mail-order diabetic testing supplies delivered to their home.

65. National Mail Order: Diabetic Supplies The Medicare-approved amount for diabetic testing supplies will be the same regardless of where they are furnished. Medicare contract suppliers must always accept assignment on these items. This means they must accept the Medicare-approved amount as payment in full and cannot charge beneficiaries more than the 20 percent coinsurance and any unmet deductible. Beneficiaries may also choose to purchase diabetic testing supplies in person at any Medicare-enrolled supplier storefront; however, these retail locations may or may not accept assignment. Beneficiaries who use suppliers that do not accept assignment may pay more than the 20 percent coinsurance and any unmet deductible. Therefore, Medicare beneficiaries who choose to purchase their diabetic testing supplies in person at the store should check with the store to find out what their copayment will be.

66. Important for Beneficiaries to Know If you choose not to continue using your grandfathered supplier (or your supplier chooses not to be a grandfathered supplier) when the program begins, you must switch to a contract supplier to be covered by Medicare. If you switch to a contract supplier instead of using a grandfathered supplier, this may extend your rental period and result in additional months of coinsurance.

67. What Beneficiaries Need To Do Beneficiaries who live in or will visit a CBA and need medical items included in the program, should –Find out if the ZIP Code where they live or visit is included in a CBA –Find out if the items they need are included in the Medicare Competitive Bidding Program in that area –Find out which suppliers are contract suppliers for their items for the Medicare Competitive Bidding Program

68. Competitive Bidding– A Better Way to Pay Program will help people with Medicare − Save money − Get quality equipment, supplies and services Program strengthens protections against Medicare fraud

69. Other Medicare Updates Medicare Part D –Deeming for Low Income Subsidy for 2014 begin July 1, 2013 with the exchange of state data with CMS. –Open Enrollment begins October 15, 2013 – December 7, 2013 MNsure Open Enrollment –October 1, 2013 – March 31, 2013 –Mnsure DOES NOT address or handle any Medicare related issues or products; not a resource for Medicare beneficiaries –Consumers with Medicare should be referred to the Senior LinkAge Line® at 1-800-333-2433

70. Questions? Thank You!