On December 15, 2000, the U.S. Congress approved an approximately $35 billion Medicare "giveback" package as part of H.R. 4577, the final omnibus appropriations bill for fiscal year ("FY") 2001. President Clinton is expected to sign the package into law in the near future. Among other things, the 200-page Medicare portion of the bill includes changes in the consolidated billing requirements for skilled nursing facilities ("SNFs"). Specifically, effective January 1, 2001, the legislation limits consolidated billing requirements to services and items furnished to SNF residents in a Medicare Part A covered stay and to therapy services furnished in Part A and Part B covered stays. It does not modify requirements for Part A-covered stays. The Inspector General of the Department of Health and Human Services ("HHS") also is directed to monitor Part B payments to SNFs on behalf of residents who are not in a Part A covered stay.  (Reed Smith is preparing a client memo discussing the congressionally-approved Medicare giveback bill in greater detail.)

In anticipation of this Congressional action, the Health Care Financing Administration ("HCFA") issued two program memoranda in November 2000 clarifying SNF consolidated billing requirements. Most notably, the memoranda announce that HCFA is delaying indefinitely implementation of consolidated billing for non-therapy Part B services—a policy that parallels the Congressionally-approved provision.

In Program Memorandum A-00-88 ("PM A-00-88"), dated November 22, 2000, announced that while Part B physical, occupational, and speech therapy services remain subject to consolidated billing requirements, HCFA is not implementing consolidated billing for other services and supplies "until further notice" (although under the Congressionally-approved giveback bill, HCFA is precluded from adopting this change in the future). In other words, for residents not covered under a Part A stay, SNFs may choose to bill for non-therapy Part B services and supplies, or they may elect to have suppliers continue to bill Medicare directly for these services. The new guidelines do not change SNF consolidated billing for Part A residents. Section IV of the PM summarizes and clarifies those services excluded from the Part A SNF prospective payment system ("PPS") rate, which must be billed separately by the rendering provider or supplier. The instructions do not apply to Medicare beneficiaries enrolled in a Medicare managed care program (Medicare+Choice).

PM A-00-88 also contains detailed instructions for fiscal intermediaries ("FIs") regarding implementation of a Balanced Budget Act of 1997 ("BBA") requirement that Part B services provided to SNF residents be reimbursed according to the appropriate fee schedule. Moreover, it instructs FIs regarding new Common Working File ("CWF") edit requirements relating to Part A consolidated billing, contractor resolution procedures, and new CWF edit requirements to detect duplicate Part B claims billed by SNFs and other providers and suppliers. PM A-00-88 generally is effective April 1, 2001.

In addition, Program Memo B-00-67 ("PM B-00-67"), dated November 27, 2000, provides updated SNF consolidated billing instructions for Part B carriers regarding services and supplies furnished to a SNF resident in a Part A covered stay. PM B-00-67 reiterates that SNF consolidated billing will not apply to Part B stay services other than physical, occupational, and speech therapy services until further notice. It also provides instructions for implementing a new policy requiring that, for certain services provided on or after April 1, 2001, physicians will be required to forward the technical portions of any services to the SNF to be billed by the SNF to the FI for payment. Moreover, physicians will be required to enter the facility provider number of the SNF on the claim.

This Client Memorandum discusses the highlights of the lengthy program memoranda. Copies of the PMs are available on the HCFA internet site at: http://www.hcfa.gov/pubforms/transmit/memos/comm_date_dsc.htm, or you can get them from our office.

The BBA instituted a consolidated billing requirement for SNFs, under which the SNF must submit Medicare claims to the FI for all the Part A and Part B services that its residents receive, except for certain specifically-excluded services. For services and supplies furnished to a SNF resident covered under the Part A benefit, SNFs may not unbundle services and allow an outside provider to submit a separate bill directly to the Medicare carrier. Instead, the SNF must furnish the services or supplies either directly or under an arrangement with an outside provider, and the SNF must bill Medicare.

On July 1, 1998, consolidated billing went into effect for (1) those services and items that were not specifically excluded by law that were furnished to residents of a SNF in a covered Part A stay, and (2) physical, occupational, and speech therapies in a Part B stay. Due to systems limitations, however, HCFA did not implement at that time consolidated billing for residents not in a Part A covered stay (i.e., Part A benefits exhausted, post-hospital or level of care requirements not met). Certain other related requirements also were not implemented at that time, including requirements that: (1) the physicians forward the technical portions of their services to the SNF to be billed to the FI for payment; and (2) the physician enter the facility provider number of the SNF on the claim. Under the Balanced Budget Refinement Act ("BBRA"), certain additional items and services were excluded from Part A SNF consolidated billing. HCFA subsequently issued a series of program memoranda specifying certain services or supplies not subject to SNF Part A PPS consolidated billing, and postponing indefinitely consolidated billing for Part B services (except for physical, occupational, and speech-language therapy).

1. Consolidated Billing

   As noted above, PM A-00-88 provides that while Part B physical, occupational, and speech therapy services remain subject to consolidated billing requirements, HCFA is not implementing consolidated billing for all other services and supplies during a Part A stay "until further notice." In the interim, SNFs may choose to bill for non-therapy Part B services and supplies, or SNFs may choose to have suppliers continue to bill Medicare directly for these services.

2. Fee Schedules

   The BBA requires that Part B services furnished to SNF Part B residents and outpatients (i.e., non-residents receiving care at the facility) be reimbursed according to the otherwise applicable fee schedule (or actual charge if it is less than the applicable fee amount). According to PM A-00-88, HCFA will implement this requirement beginning with services provided on and after April 1, 2001.

   1. Covered Services
      

      The following services will be reimbursed according to the fee schedule amount:

      • Therapy;
      • Lab;
      • Radiology and other diagnostic tests;
      • Prosthetic and orthotic devices; and
      • Surgical dressings.

      HCFA also lists specific codes for which fee schedules have not yet been developed, and which will be reimbursed on a reasonable cost basis (unless special payment rules apply). These codes fall into the following categories: medical supplies, dialysis supplies and equipment, therapeutic shoes, parenteral and enteral nutrients ("PEN"), blood products, transfusion medicine, and drugs. (Refer to the PM for the complete listing of codes that are exempt from the fee schedule requirement.)

   2. Special Payment Rules Related to SNF Fee Schedules
      

      PM A-00-88 notes that the SNF Part B fee schedule will differ from current fee schedules in several respects. Specifically:

      • SNFs bill only the technical or facility component for most services, except where they furnish the complete service or obtain the complete service under arrangements;
      • Some services cannot be paid directly to SNFs; and
      • Some services for SNF Part A inpatients for which Part A benefits are payable cannot be paid to anyone else.

      In general, the Part A PPS rate includes all services rendered to a SNF inpatient except excluded services listed below. Services excluded from the SNF PPS rate may not be billed by the SNF under Part B except for preventive and screening services (i.e., pneumococcal pneumonia, influenza virus and hepatitis B vaccines, screening mammography). Where Part A PPS payment is not applicable to a resident, payment may be made for certain services under Part B, and the fee schedule amounts apply.

      In the program memo, HCFA discusses certain special payment rules relating to SNF fee schedules, including payment for services provided directly or under arrangement that are billed by the SNF for patients with coverage under Part B.(The PM notes that SNFs may not obtain physician services under arrangements except for services from physician therapists providing physical, occupational, or speech-language therapy services, which are required under consolidated billing and are billed to the intermediary. Services of physician employees of the SNF are not considered arranged for services, and related current Medicare Intermediary Manual and SNF Manual provisions about billing for provider-based physician services continue to apply. ) While the discussion is quite detailed, special payment rules apply to the following services:

      • Set Up Services in SNFs for Portable X-Ray Equipment—Diagnostic portable x-ray services are covered under Part B when provided in participating SNFs and hospitals, under circumstances in which they cannot be covered under Part A. The portable x-ray benefit covers: skeletal films involving arms and legs, pelvis, vertebral column, and skull; chest films which do not involve the use of contrast media (except routine screening procedures and tests in connection with routine physical examinations); and abdominal films which do not involve the use of contrast media. While set up costs for portable x-ray equipment in the SNF can be billed, set up costs are not applicable for lab or EKG services.
      • Specimen Collection—Specimen collection is allowed for SNF residents in circumstances such as drawing blood through venipuncture or collecting a urine sample by catheter. A separate specimen collection is not paid for throat cultures, routine capillary puncture for clotting or bleeding time, and stool specimens. Costs for related supplies and items such as gloves and slides also are not separately billed. Payment for specimen collection under the lab fee schedule is paid to the SNF if it draws the blood.
      • Travel Allowance—Travel allowance may be payable to the SNF in connection with lab and radiology services provided under arrangement with a supplier. Current HCFA rules for carriers regarding determining payment for travel/transportation will be used (these rules are detailed in the PM).
        
   3. Co-Insurance Amounts
      According to PM A-00-88, when payment is made under a fee schedule, any applicable beneficiary deductible and coinsurance are based on the approved amount (including situations where fee amounts for specific services are not included in the fee schedule but are determined on an individual basis). Where payment is made on a reasonable cost basis, deductible and coinsurance continue to be based on SNF charges for the service.
      
      Neither deductible nor coinsurance apply to clinical diagnostic lab services; pneumococcal pneumonia vaccine, influenza virus vaccines, or to the administration of either; or screening mammography services.
      
3. Services Excluded From the PPS
   

   PM A-00-88 also reviews services that are excluded from the SNF PPS. Services rendered by the following types of providers are not included in the PPS rate and are billed separately by the provider furnishing the service:

   • Physician’s services other than physical, occupational, and speech-language therapy services and audiologic tests furnished to SNF residents;
   • Physician assistant services not employed by the SNF, working under a physician’s supervision;
   • Nurse practitioner and clinical nurse specialist services not employed by the SNF, working in collaboration with a physician;
   • Certified mid-wife services;
   • Qualified psychologist services; and
   • Certified registered nurse anesthetist services.

   In addition, the following services and supplies are exempt from the Part A PPS, and are billed separately under Part B by the rendering provider:

   • Certain dialysis-related services and supplies, including covered ambulance transportation to obtain the dialysis services;
   • Erythropoietin ("EPO") for certain dialysis patients;
   • Hospice care related to a terminal condition; and
   • Ambulance trips that convey a beneficiary to the SNF for initial admission or from the SNF following final discharge. In addition, reasonable and necessary ambulance trips offsite during the SNF stay (including the return trip to the SNF) are excluded when (1) related to dialysis services; and (2) used to convey a beneficiary to a hospital or critical access hospital ("CAH") to receive any of the following excluded services: cardiac catheterization services; computerized axial tomography ("CT scans"); magnetic resonance imaging ("MRIs"); radiation therapy; ambulatory surgery involving the use of a hospital operating room; emergency services; angiography services; and lymphatic and venous procedures.  (The PM includes a detailed discussion of specific outpatient serive codes that are excluded from the SNF PPS when furnished in a Medicare-participating hospital or CAH.)

   Finally, HCFA lists services that are excluded from the SNF PPS when provided by any licensed Medicare provider, including codes for the following types of services:

   • Chemotherapy;
   • Chemotherapy administration;
   • Radioisotope services;
   • Certain customized prosthetic devices;
   • Transportation costs of eletrocardiogram equipment; and
   • All services provided to risk-based managed care organization beneficiaries.