[Federal Register Volume 59, Number 203 (Friday, October 21, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26161]
[[Page Unknown]]
[Federal Register: October 21, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
[BPO-124-PN]
Medicare Program; Data, Standards, and Methodology Used to
Establish Fiscal Year 1995 Budgets for Fiscal Intermediaries and
Carriers
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Proposed notice.
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SUMMARY: This notice describes the data, standards, and methodology
that will be used to establish fiscal intermediary and carrier budgets
for fiscal year 1995, which begins October 1, 1994. Fiscal
intermediaries and carriers are public or private entities that
participate in the administration of the Medicare program by performing
claims processing and benefit payment functions. This notice is
published in accordance with sections 1816(c)(1) and 1842(c)(1) of the
Social Security Act, which require us to publish for public comment the
data, standards, and methodology we intend to use to establish budgets
for Medicare fiscal intermediaries and carriers.
DATES: Comments will be considered if we receive them at the
appropriate address, as provided below, no later than 5 p.m. on
December 20, 1994.
ADDRESSES: Mail written comments (1 original and 3 copies) to the
following address:
Health Care Financing Administration, Department of Health and Human
Services, Attention: BPO-124-PN, P.O. Box 26676, Baltimore, Maryland
21207.
If you prefer, you may deliver your comments (1 original and 3
copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,
Washington, DC 20201, or
Room 132, East High Rise Building, 6325 Security Boulevard, Baltimore,
Maryland 21207.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code BPO-124-PN. Comments received timely will be available for
public inspection as they are received, generally beginning
approximately 3 weeks after publication of a document, in Room 309-G of
the Department's offices at 200 Independence Avenue, SW., Washington,
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m.
(phone: (202)-690-7890).
FOR FURTHER INFORMATION CONTACT: Phyllis Mosmiller, (410) 966-7528
SUPPLEMENTARY INFORMATION:
I. Background
Under sections 1816(a) and 1842(a) of the Social Security Act (the
Act), public or private organizations and agencies may participate in
the administration of the Medicare program under agreements or
contracts entered into with the Secretary. These Medicare contractors
are known as fiscal intermediaries (section 1816(a) of the Act) and
carriers (section 1842(a) of the Act). Fiscal intermediaries perform
bill processing and benefit payment functions for Part A of the program
(Hospital Insurance) and carriers perform claim processing and benefit
payment functions for Part B of the program (Supplementary Medical
Insurance). When bills are submitted by providers, and claims by
beneficiaries, physicians, and suppliers of services, fiscal
intermediaries and carriers are responsible for:
Determining the eligibility status of a beneficiary;
Determining whether the services on the submitted claims
or bills are covered under Medicare and, if so, what are the correct
payment amounts; and
Making appropriate payments to the provider, beneficiary,
physician, and/or supplier of services.
Fiscal intermediary and carrier performance is monitored by HCFA at
the central office and regional office (RO) levels. In general, issues
that affect policies on a national level are addressed by the central
office, and issues dealing with regional and local policies, as well as
those of an operational nature, are addressed by the ROs. Continuous
communication between HCFA and the fiscal intermediaries and carriers
is established through consultation workgroups that meet on a regular
basis and are comprised of representatives from the central office,
ROs, and Medicare contractors.
II. Fiscal Intermediary and Carrier Budget Process
HCFA's central office is responsible for developing a national
contractor budget for Parts A and B of the Medicare program. The budget
is formulated over an 18-month period, beginning in March of the
calendar year preceding the fiscal year (FY) to which it applies. Input
from the contractor community, HCFA, the Department of Health and Human
Services, and the Office of Management and Budget (OMB) is received and
included before submission to the President for approval and forwarding
to the Congress. Once the national contractor budget has been approved,
HCFA issues Budget and Performance Requirements (BPRs). BPRs specify
the level of effort required for contractor functions and serve as the
statement of work for contractor use in preparing their individual
budgets for submission to HCFA.
The budgets submitted by contractors are reviewed by the ROs during
a budget level determination process that is based on current claims
processing trends, legislative mandates, administrative initiatives,
current year performance standards and criteria, and the availability
of funds appropriated by the Congress. We subsequently allocate funding
within these constraints.
This notice contains the proposed data, standards, and methodology
that we intend to use to establish a national contractor budget for
fiscal intermediaries and carriers for FY 1995. As in prior years, we
have had, and will continue to seek, extensive input from the involved
parties, particularly contractors, when establishing the national
contractor budget. The national contractor budget (the FY 1995
President's budget) has already been presented to the Congress.
Nevertheless, to the extent that we receive comments during this
comment period, which warrant revisions to the data, standards, and
methodology we used, we will make the necessary changes before
publishing the final notice.
In accordance with Executive Order 12866, this final notice was not
reviewed by the Office of Management and Budget.
III. Overview of FY 1995 National Medicare Contractor Budget
A. Data, Standards, and Methodology
The FY 1995 national Medicare contractor budget request was
submitted to the Congress in February 1994. The workload for the FY
1995 request is expressed in terms of work processed. For Part A, the
FY 1995 estimated workload (129.2 million bills) is 9.2 percent more
than the FY 1994 estimate. For Part B, the estimated workload (655.6
million claims) results in a 4.2 percent increase over the FY 1994
estimate.
Our estimates involved the use of a regression model that uses the
last 36 months of actual contractor workload data. For the FY 1995
projections, we used November 1993 data, which were the latest
available to us at the time. The resulting projections will be updated
monthly to assure that the most timely data are available for budgeting
purposes.
The FY 1995 unit costs for processing bills and claims were
calculated based on the FY 1994 level adjusted for savings achieved due
to productivity, Electronic Media Claims, and reduced funding for
incremental workload. This calculation resulted in a new unit cost,
which, when multiplied by the Part A or Part B workloads, determines
the total amount required for bill and claim processing in FY 1995.
Feedback received from contractors and ROs during the past several
years has led us to believe that contractors can make major
improvements in performance if given the authority to manage their
budgets. The FY 1994 BPRs gave the ROs the authority to set a budget
and the contractors the authority to manage their budgets on a bottom-
line basis. Once funding was issued, each contractor had the
flexibility to optimally manage the budget consistent with the
statement of work contained in the BPRs. Prior to FY 1993, contractors
were not allowed to ``shift'' more than 5 percent of funds from one
line item to another in their budget, as determined by the lesser of
the two line items. This restriction was intended to give contractors
some latitude with regard to reporting their costs, yet still allow
HCFA to maintain control over the national budget. With the exception
of the ``Payment Safeguards,'' ``Productivity Investments,'' and
``Other'' line items, contractors now have total flexibility in the use
of funds. There is a 5 percent limitation on the amount of funds that
may be shifted out of individual ``Payment Safeguards,'' with unlimited
shifting into ``Payment Safeguards.'' Shifting into or out of
``Productivity Investments'' and ``Other'' line item funding, not
governed by contract modifications, may not exceed 5 percent. Each
``Other'' line item is treated separately. The ``Productivity
Investment'' line item is treated as a whole and not by a separate
project. Funding that is governed by contract modifications may not be
shifted to other functions or line items.
B. Medicare Contractor Functional Areas
The Medicare contractor budget consists of functional areas of
responsibility that are performed by the fiscal intermediaries for Part
A and the carriers for Part B. The eight functional areas of
responsibility for fiscal intermediaries under Part A are:
Bill Payment;
Reconsideration and Hearing;
Medicare Secondary Payer;
Medical Review and Utilization Review;
Provider Audit (Desk Review, Field Audit, and Provider
Settlement);
Provider Reimbursement;
Productivity Investments; and
Benefits Integrity.
The nine functional areas of responsibility for carriers under Part B
are:
Claim Payment;
Review and Hearing;
Beneficiary or Physician Inquiry;
Provider (physician/supplier) Education and Training;
Medical Review and Utilization Review;
Medicare Secondary Payer;
Participating Physicians;
Productivity Investments; and
Benefits Integrity.
These functions are funded from the Hospital Insurance and
Supplementary Medical Insurance trust funds. The data, standards, and
methodology used in these functional areas are discussed in section IV.
of this notice. In the following national budget summary, we have
combined the discussion of functional areas that are common to fiscal
intermediaries and carriers. However, data specific to Part A or Part B
are provided under each heading. Workload estimates are provided for
all functional areas where the development of the budget is
predominantly workload driven. Workload estimates are not provided for
functional areas that are not predominantly workload driven, or for
which a workload is uncertain until final negotiations with the
Medicare contractors are complete.
1. Bill and Claim Payment (Part A and Part B)
We currently estimate the Part A processed workload to be 129.2
million bills in FY 1995. The Part B processed workload is currently
projected at 655.6 million claims and is based on the current funding
available.
2. Reconsideration (Review Under Part B) and Hearing (Part A and Part
B)
This function includes all activities related to guaranteeing due
process of law as a result of contractor action, for example,
disallowances on bills and claims. The estimated workload volume is
expected to total approximately 10.9 million for FY 1995.
In FY 1995, we expect to maintain efficiencies achieved in prior
years through the use of shorter decision letters and the experimental
use of the telephone to conduct reviews and reconsiderations.
3. Medicare Secondary Payer (Part A and Part B)
The Medicare Secondary Payer (MSP) function is the first of four
initiatives (Medicare Secondary Payer, Medical Review and Utilization
Review, Benefits Integrity, and Provider Audit) we developed as
``Payment Safeguards'' to safeguard the Medicare program against
improper payments. The focus of the MSP initiative is to ensure that
the Medicare program pays for covered care only to the extent required
after payment by the primary insurer.
Medicare contractors are responsible for identifying MSP situations
and aggressively pursuing the recovery of improper payments from the
appropriate party. The standard for determining the amount of MSP
funding a contractor will receive in FY 1995 is based on workload
volumes, required systems changes, and any special projects that may be
assigned to contractors.
Based on actuarial analysis, we develop specific savings goals for
each contractor. The goals are developed on estimates of savings to be
achieved by contractors for the MSP categories of working aged,
disabled, workers' compensation, end-stage renal disease, and liability
or no-fault insurance. After assigning goals to contractors, funds are
allocated based on the various MSP activities a contractor must perform
such as processing prepayment claims, postpayment claims, inquiries,
outreach, and hospital reviews.
In FY 1995, the Initial Enrollment Questionnaire (IEQ) will be
operational. The IEQ eliminates the need for first claim development on
approximately 85 percent of the new enrollees. This initiative will
improve service to beneficiaries on a national basis by providing
detailed information on the MSP program at the time a beneficiary
enrolls in Medicare.
We have also included funding to process the workloads based on the
Internal Revenue Service (IRS)/Social Security Administration (SSA)/
HCFA data match project created by section 6202 of the Omnibus Budget
Reconciliation Act of 1989 (OBRA '89), Public Law 101-239. The funds
are allocated on the basis of the number of report identification
numbers a contractor will process.
In addition to the IRS/SSA/HCFA data match, we will continue to
pursue other data matches with State Motor Vehicle Administrations,
Workers' Compensation, and Medicaid Agencies, and the Departments of
Defense, Labor, and Veterans Affairs.
4. Medical Review and Utilization Review (Parts A and B)
In addition to processing and paying claims from providers of
services and Medicare beneficiaries, contractors perform medical and
utilization reviews of claims to determine whether services are covered
under the program and are medically necessary. The distribution of
Medicare contractor funding is based on each contractor's proportion of
the workload and individual contractor medical review/utilization
review projects.
Fiscal intermediaries are responsible for medical and utilization
review of home health agencies, skilled nursing facilities, outpatient
hospital services (excluding surgery), and other outpatient services
such as those provided by rehabilitation facilities, rural health
clinics, and similar entities. This review assures that medical care
received is necessary and appropriate, and that quality medical
services are delivered to Medicare beneficiaries.
Carriers are responsible for medical and utilization review of Part
B providers and suppliers. All carriers will utilize data analysis
capabilities to target on focused medical review in FY 1995. Through
focused medical review, carriers will identify aberrancies from
national or local carrier data and further investigate aberrancies to
determine which require appropriate corrective actions to eliminate
overutilization. These actions will include provider education
(individual or group), development and revision of local medical review
policies or screens, identification/recoupment of overpayments, and
referral of cases to HCFA's Benefit Integrity staff.
Additionally in FY 1995, HCFA will support the Medical Review
activities of the four Durable Medical Equipment Regional Carriers
(Regional Carriers). The Regional Carriers will conduct prepayment and
postpayment review of durable medical equipment, prosthetic, orthotic,
and supply claims to identify areas of potential abuse and
overutilization and prevent payment for non-covered items and services.
Through focused medical review and analysis of data, the Regional
Carriers will initiate corrective action for the recoupment of
overpayments and the targeting of suppliers with aberrant billing
patterns. They will also continue to revise regional medical review
policies and screens and make referrals where appropriate to the HHS
Office of Inspector General.
5. Provider Audit (Part A Only)
For FY 1995, we have planned a modest increase in the number of
onsite reviews/audits for all types of providers to help in the
identification and prevention of improper payments. This increase is
made possible by reducing the amount of resources needed to perform
desk reviews, and by applying these resources to onsite reviews,
focused reviews, and field audits. In addition, we will encourage all
contractors to retain a knowledgeable audit staff and provide training
in accordance with Government Auditing Standards. All contractors are
expected to respond to provider appeals and file position papers with
the Provider Reimbursement Review Board.
A large percentage of the hospitals paid under the Prospective
Payment System (PPS) are expected to appeal their capital cost
reimbursement because of adjustments made for the purpose of setting
their capital PPS rate. Also, there is an expected increase in the
number of appeals to be filed for payments made for graduate medical
education based upon per-resident amounts.
6. Provider Payment (Part A Only)
In FY 1995, Medicare contractors are expected to provide payment
services to approximately 34,300 health care providers. This represents
an increase of approximately 7.5 percent over the number of providers
requiring payment services in FY 1994. These payment services include
establishing and adjusting interim rates, recouping provider
overpayments, and providing consultative services to providers for
maintaining and adjusting their accounting systems to ensure accurate
data for preparing claims and cost reports.
We will distribute funds in proportion to workload by provider
type.
7. Productivity Investments (Part A and Part B)
The costs of implementing new initiatives that are designed to
improve the effectiveness of Medicare program administration are
referred to as productivity investments (PIs). PIs generally provide
start-up funds for new or revised contractor activities. Once these
projects are operational, their funding becomes part of the
contractor's ongoing costs. The criteria for selecting PIs to be
implemented are varied. For example, some PIs are required by statute
or regulation. We also fund projects that will improve administrative
cost efficiency, such as Contractor Resource Sharing.
There is no single distribution methodology for the allocation of
PI funds. After we determine the national cost of a PI, funds are
distributed among the contractors. These funds are based on the
contractors' cost estimates or through formulas that we derive, which
are based on project specifications. Other PI initiatives require equal
effort by all contractors regardless of size and, therefore, funds are
distributed equally among contractors. Finally, some PIs, such as the
Common Working File and Contractor Resource Sharing, are given only to
contractors that are involved in the specific projects.
8. Beneficiary or Physician Inquiry (Part B Only)
The Medicare contractors are the direct link between beneficiaries,
providers, physicians, other suppliers, and the Medicare program. It is
the responsibility of HCFA and the contractors to provide the most
effective and efficient service to beneficiaries, providers,
physicians, and other suppliers, and to continue to expand their
awareness and understanding of the Medicare program. Funding will
continue to be provided to contractors so they may continue to provide
toll-free telephone lines for beneficiaries and expand the use of Audio
Response Units.
In FY 1995, carriers will receive an estimated 40.4 million
inquiries by telephone, in writing, or through direct contact. This is
an increase of 3.2 percent over FY 1994.
9. Participating Physicians/Suppliers (Part B Only)
Participating physicians and suppliers are those who agree to
accept assignment on all Medicare claims in return for certain
incentives or benefits. All physicians must be given an opportunity to
enroll or disenroll in the participation program annually.
For FY 1995, the FY 1994 funding was used as the base and was
adjusted in proportion to the workload within the limits of the funding
available to HCFA.
10. Provider (Physician/Supplier) Education and Training (Part B Only)
The success of the Medicare program depends upon the continuing
cooperation of individuals and institutions providing health care
services. The funding provided in FY 1995 will allow carriers to
perform the activities outlined in the BPRs.
11. Benefit Integrity (Part A and B)
In FY 1995, HCFA will provide funding to continue its efforts in
deterring and detecting emerging Medicare fraud and abuse. The carriers
will improve the quality of referrals to the Office of Inspector
General by expanding data analysis capability. The Medicare fraud focus
will include a full range of Medicare fraud detection activities
through our fiscal intermediaries and carriers. The fiscal
intermediaries will concentrate on home health agencies and skilled
nursing facilities and Medicare carriers will focus their detection
activities on medical laboratory, radiology, anesthesia, and ambulance
claims. Also, in FY 1995, Medicare carriers will standardize the method
of how fraud units treat billing and assignment violations.
12. Printing Claim Forms (Part A and Part B)
Although this activity is not among the seven Part A and nine Part
B contractor functional areas, it is a part of the national Medicare
contractor budget. In the interest of maintaining standard formats and
quality of Medicare entitlement and report forms, fiscal intermediaries
and carriers supply beneficiary enrollment and provider cost reporting
forms. The use of these forms is essential to beneficiary notification,
effective and efficient contractor operations, and other program
objectives.
C. Contractor Unit Cost Calculations
A key step in the contractor budget process is the development of
contractor unit costs for processing Part A bills and Part B claims.
These bottom-line unit costs encompass all of the budget's line items
except ``Provider Audit,'' ``Productivity Investments,'' ``Other,''
and, in FY 1995, ``Provider Reimbursement.''
As first implemented in FY 1992, the complexity index (CI) was
designed to improve efficiency and reduce contractor-by-contractor cost
inequities, and was based on the application of the Industrial
Engineering (IE) study commissioned by HCFA. The IE study provided HCFA
with an actual weighted unit cost for each claim type; that is,
inpatient or outpatient, and method of submission (electronically
submitted or hardcopy) of a bill or a claim. After adjustment for
changes in program emphasis, these unit costs were applied to each
contractor's individual workload mix to develop a weighted unit cost
that reflects the complexity of its workload mix. We published an
explanation of the CI in our FY 1992 Federal Register notice on January
2, 1992 (57 FR 57). Each contractor had a percentage goal in FY 1992
for increasing the submission of claims electronically.
We adjusted the unit costs to reflect achievement of the goals.
After adjusting for various savings and increases associated with
initiatives, such as the Unique Physician Identifier Number and
sections 6111(b), Clinical Diagnostic Laboratory Tests (Annual
Monitoring and Certification) and 6204, Physician Ownership of, and
Referral to, Health Care Entities (Annual Monitoring Cost) of OBRA '89,
we then arrayed the contractors' unit costs and identified the
contractor at the 60th percentile. Each contractor with a unit cost
higher than the 60th percentile was held to the 60th percentile unit
cost, multiplied by the contractor's CI. Each contractor at or below
the 60th percentile retained its own unit cost, multiplied by its CI.
We believe that the use of the CI over the last three FYs has
enabled us to successfully achieve the goals of improving efficiency in
contractor operations and reducing contractor-by-contractor cost
inequities. Since we have achieved these goals, and believe that costs
can be controlled, we will base each contractor's FY 1995 unit cost on
the FY 1994 level, adjusted for savings achieved due to increased
productivity, Electronic Media Claims, and reduced funding for
incremental workload.
D. Overall Budget Considerations
It should be noted that limitations on the FY 1995 budget could
require across-the-board cost cutting measures. In that case, each RO
will determine the amount of budget reduction for its contractors.
IV. FY 1995 National Medicare Contractor Budget: Data, Standards, and
Methodology
Since the submission of the President's FY 1995 Medicare contractor
budget request to the Congress in February 1994, we have been
developing BPRs to be issued to the contractors. These requirements
outline the statement of work and level of effort that fiscal
intermediaries and carriers are expected to perform during the upcoming
FY in each of the functional areas for which they are responsible.
The draft BPRs were released to the ROs in May, and the final BPRs
scheduled for release in June 1994. Each fiscal intermediary and
carrier will have been given its individual requirements to be used in
preparing its FY 1995 budget request in June 1994. The ROs will send
any additional information that is pertinent to the fiscal
intermediaries and carriers within their region. Fiscal intermediaries
and carriers are to submit their budget requests to HCFA no later than
6 weeks after the issuance of the BPRs.
After the fiscal intermediaries and carriers review the BPRs, they
prepare their budget requests. The central office and RO staff review
the fiscal intermediary and carrier budget requests as they are
submitted. The RO staff negotiates a final and mutually acceptable
budget, within the limits of the funding available to HCFA, with each
fiscal intermediary and carrier. The central office prepares a
financial operating plan for each RO that provides total regional
funding authority for each functional area. The ROs, in turn, prepare a
Notice of Budget Approval (NOBA) for each fiscal intermediary and
carrier that provides a full year budget plan subject to quarterly cash
draw limitations.
A. Standards
The basic statement of work, along with new and special activities
that fiscal intermediaries and carriers are expected to perform, is
described in the BPR package. Fiscal intermediaries and carriers are
expected to perform the work as described in the BPR package and in
accordance with the standards included in the Contractor Performance
Evaluation Program (CPEP) for FY 1995. For consideration in developing
their initial budget requests, a copy of the draft CPEP standards will
be sent to contractors. Final FY 1995 CPEP standards are published in
the Federal Register.
B. Data
The following sources of data that contain various workload
volumes, functional costs, and manpower information are used in
developing the individual fiscal intermediary and carrier budgets for
FY 1995:
Forms HCFA-1523/1524 (a multipurpose form that serves as
the Budget Request, Notice of Budget Approval, and Interim Expenditure
Report);
Forms HCFA-1523A/1524A (Schedule of Productivity
Investments and Other);
Forms HCFA-1523B/1524B (Schedule of Credits, EDP, and
Overhead);
Forms HCFA-1523C/1524C (Schedule of Appeals);
Forms HCFA-1523D/1524D (Schedule of MSP Costs);
Forms HCFA-1523E/1524E (Schedule of MR Costs);
Forms HCFA-1523G/1524G (Schedule of Fraud and Abuse);
Form HCFA-1525A (Contractor Auditing and Settlement Report
(CASR));
Schedules A, B, & C;
Provider Reimbursement Profile;
Schedule of Providers Serviced;
MSP Savings Report;
Medical Review/Utilization Review Savings Report;
Form HCFA-2580 (Cost Classification Report);
Form HCFA-3529 (Facilities and Occupancy Schedule);
Forms HCFA-1565/1566 (Carrier Performance Report/
Intermediary Monthly Workload Report);
HCFA Actuary's Workload Estimates;
OMB's Economic Assumptions of 2.6 Percent;
Savings from Prior Productivity Investments;
New Legislation Costs;
Regional Office Recommendations; and
Contract Provisions.
C. Methodology
The Medicare contractor budget is organized around the previously
listed functional areas that are performed by the fiscal intermediaries
for Part A and the carriers for Part B. FY 1992 was the first year in
which we developed a bottom-line unit cost for each individual
contractor. The following narrative describes the methodology used to
calculate individual line-item costs. This methodology will be
considered as general reference for contractors as they develop their
FY 1995 budgets, and also to provide additional explanation in
determining how certain costs and savings were determined.
1. Bill and Claim Payment
The individual fiscal intermediary and carrier workload levels for
FY 1995 are determined by using a statistical forecasting model. Using
the same data, we are also projecting the number of bills or claims a
fiscal intermediary and carrier may expect to have pending at the end
of the FY 1994. We then combine the FY 1995 receipt estimate with the
anticipated end of FY 1994 pending level, and subtract the estimated FY
1995 pending for each fiscal intermediary and carrier to establish a
processed workload; that is, Estimated FY 1995 receipts + Estimated end
of FY 1994 pending - Estimated end of FY 1995 pending = Estimated FY
1995 Processed Workload.
In order to price individual contractor bill and claim workload, we
develop a unit cost that is the cost of processing a single bill or
claim. The individual fiscal intermediary and carrier unit costs for FY
1995 are calculated from the unit costs in the FY 1994 Notices of
Budget Approval. The calculations include increases to recognize the
cost of new legislation. Savings achieved from operating efficiencies
also are part of the formula employed in computing FY 1995 target unit
costs. The ROs will negotiate with the fiscal intermediaries and
carriers to resolve any differences within the limits of the funding
available to HCFA.
2. Reconsideration (Reviews Under Part B) and Hearing
We will allocate funding based on the amount of dollars spent (line
2 of Forms HCFA-1523/1524) in the prior years, adjusted for inflation
and changes in volume. Specifically, we will adjust the previous year's
costs for reconsiderations and hearings by the estimated percentage
change in workload.
The individual fiscal intermediary and carrier budget allocations
for reconsiderations, reviews, and hearings are estimated by
multiplying forecast workloads by the adjusted unit costs.
The ROs will negotiate with the fiscal intermediaries and carriers
to resolve any differences between HCFA's allocations and the
contractors' requests within the limits of the funding available to
HCFA.
3. Beneficiary and Provider Inquiries (Part B Only)
To establish a budgeted amount for beneficiary and provider
inquiries, the prior year's cost is increased by the projected workload
change. We also consider special conditions unique to specific carriers
in negotiating the budget. We will use the data to develop a budgeted
cost for beneficiary and provider inquiries by multiplying forecasted
processed volume times unit cost. The ROs will negotiate with the
carriers to resolve any differences between HCFA's allocations and the
carriers' requests within the limits of the funding available to HCFA.
4. Provider Reimbursement (Part A Only)
In determining individual fiscal intermediary budgets for
reimbursement activities, we first calculated a FY 1993 unit cost by
using the funding included on the latest FY 1993 NOBA (Form HCFA 1523)
and dividing that amount by the workload reported on the Schedule of
Providers Serviced (SPS) for the same period. The SPS is a listing of
all the facilities serviced by the fiscal intermediary. The SPS is
submitted with each initial budget request so that a part of the
analysis is the comparison of the composition of the provider community
serviced by the fiscal intermediary and any change reported between
fiscal years.
The ROs will negotiate with the fiscal intermediaries to resolve
any differences between HCFA's allocations and the fiscal
intermediaries' requests within the limits of the funding available to
HCFA.
5. Provider Audit (Part A Only)
For FY 1995, the provider audit function is divided into three
major activities: field audits, desk reviews, and settlements. The
Contractor Auditing and Settlement Report (CASR) (Form HCFA-1525A)
provides a breakout of audit activities and costs by type of provider,
and documents the savings incurred as a result of audit activity. Using
this as a base, the desk review costs are developed by projecting the
number of providers serviced by the unit cost per desk review
(developed for the latest CASR for FY 1993) to determine the cost of
handling the FY 1995 workload at the FY 1993 unit cost.
Settlement costs are based on the workload projected in the fiscal
intermediary's budget request, multiplied by the unit cost for
settlements found in the most recent CASR for FY 1993.
The first priority of all audit efforts is the completion of any
special activities required by legislation. The second priority is that
all cost reports be reviewed and, to the extent possible, settled.
The ROs will negotiate with the fiscal intermediaries to resolve
any differences between HCFA's allocations and the fiscal
intermediaries' requests within the limits of the funding available to
HCFA.
6. Medicare Secondary Payer
We will review the estimated workload data, reported backlog data,
and any other items, for example, proposed MSP systems enhancements, to
determine MSP funding allocations. Each contractor's case mix is
analyzed to adjust for specialized workloads such as home health claims
or durable medical equipment (DME).
In FY 1995, the budget will be allocated based on the above
considerations, adjustments created by shifts in the DME workload from
all carriers to the four specialty carriers, and other shifts in
workload that may require adjustments.
The ROs will negotiate with the fiscal intermediaries and carriers
to resolve any differences between HCFA's allocations and their
requests within the limits of the funding available to HCFA.
7. Medical Review/Utilization Review (MR/UR)
The individual fiscal intermediary and carrier MR/UR budgets for FY
1995 will be calculated in three segments: (1) Prepayment medical
review, (2) postpayment medical review activities, and (3) data
analysis and screen development. The BPR describes the activities and
workload requirements that the fiscal intermediaries and carriers are
expected to meet. As part of the BPRs, we will ask the fiscal
intermediaries and carriers to estimate the required funding to meet
their requirements. We will allocate prepayment and postpayment medical
review funding to contractors based upon the workload that a fiscal
intermediary or carrier projects for FY 1995.
The ROs will negotiate with the fiscal intermediaries and carriers
to resolve any differences between HCFA's allocations and the
contractors' requests within the limits of the funding available to
HCFA.
8. Participating Physicians/Suppliers (Part B Only)
In determining the individual carrier funding levels for the
participating physician/supplier program for FY 1995, we considered the
following factors:
The number of physicians/suppliers in the carrier's
service area;
The carrier's current participation rate;
The carrier's recent performance in increasing its
participation rate;
The statement of work to be performed as outlined in the
BPRs; and
Last year's cost experience.
Since participating physicians/suppliers are eligible for toll-free
telephone lines for electronic billing, allowance has been made for
these expenses. Carriers with lower participation rates will receive
greater funding for the limiting charge violation monitoring. We have
discontinued carrier monitoring of the elective surgery disclosure
requirement. We now require carriers to investigate beneficiary
complaints on a case-by-case basis.
Carrier monitoring funds are allocated based on the national
percentage of nonparticipating physicians/suppliers. All carriers will
receive the same funding amount for reporting participation statistics.
In FY 1995 the participating physician incentive payment will be
discontinued due to the implementation of the Resource-Based Relative
Value Scale fee schedules that have contributed largely to the increase
in the number of physicians participating in the Medicare program. Non-
participation is discouraged by the ``limiting charges'' imposed under
Physician Payment Reform.
The ROs will negotiate with the carriers to resolve any differences
between HCFA's allocations and the carriers' requests within the limits
of the funding available to HCFA.
9. Productivity Investments (PIs)
The costs of implementing legislation and new initiatives that are
designed to improve the effectiveness and efficiency of Medicare
program administration are referred to as PIs. Several allocation
methodologies will be employed in calculating the PI budgets for
individual fiscal intermediaries and carriers. For those projects
involving only single contractors or small groups of contractors, we
will allocate funds based upon the specifications of the particular
project. For those projects involving all fiscal intermediaries or
carriers, where the costs are driven by bill or claim volume, we will
distribute the funding based upon our workload projections for each
contractor. Finally, for those projects involving all fiscal
intermediaries or carriers that require equal effort, regardless of the
contractor's size, we derived a standard allocation to be given to all
contractors.
The ROs will negotiate with the fiscal intermediaries and carriers
to resolve any differences between HCFA's allocations and the
contractors' requests within the limits of the funding available to
HCFA.
10. Provider (Physician/Supplier) Education and Training (Part B Only)
Distribution of funds made available to HCFA for provider
(physician/supplier) education and training is based upon the ratio of
physicians and suppliers in each carrier's service area to the national
total of physicians and suppliers.
11. Benefit Integrity (BI)
In allocating the FY 1995 BI budget to individual fiscal
intermediaries and carriers, HCFA will consider:
The prior year's effectiveness in initiating fraud
referrals to the Office of Inspector General;
Initiating overpayment recoveries when appropriate;
Prioritizing workload to concentrate on high dollar and
multi-state fraud;
The extracted workload and cost data from the Schedule of
Fraud and Abuse (forms HCFA 1523G/1524G);
The Medicare Fraud Unit Workload Report;
The fraud unit's level of sophistication to determine BI
funding allocations;
The completion of any special activity required by
legislation will be an overriding priority; and
The networking costs, which will be determined by the
personnel cost to support the Medicare Fraud and Abuse Information
Coordinator, travel costs, and the other expenses needed to conduct
networking for the area assigned.
The ROs will negotiate with the contractors to resolve any differences
between HCFA's allocation and the contractors' requests within the
limits of the funding available to HCFA.
V. Response to Comments
Because of the large number of items of correspondence we normally
receive on documents published for comment, we are not able to
acknowledge or respond to them individually. We will consider all
comments we receive by the date specified in the ``DATES'' section of
this notice, and, we will respond to the comments in our final notice.
In accordance with Executive Order 12866, this notice was not
reviewed by the Office of Management and Budget.
Authority: Sections 1816(c)(1) and 1842(c)(1) of the Social
Security Act (42 U.S.C. 1395h(c)(1) and 1395u(c)(1)).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: August 16, 1994.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.
[FR Doc. 94-26161 Filed 10-20-94; 8:45 am]
BILLING CODE 4120-03-P
