ROHO In The Know : A Government Perspective
J. David McCausland
Senior Vice President of Planning and Government Affairs – The ROHO Group
By – Kim Brummett
“PECOS” has been talked about for many years in the U.S. Healthcare Industry. It’s a very serious issue for any health care provider in the U.S., but I am sure many have no idea what it means or how it applies to them, their businesses or referral sources and prescribers.
PECOS, CMS’ “Provider Enrollment, Chain and Ownership System”, has been talked about a lot in the U.S. Healthcare industry since its initial introduction in 2003, and the introduction of its internet-based version in 2009. It’s a very serious issue for any health care provider in the U.S., but I’ve learned many providers have no idea what it means or how it applies to them, their businesses or referral sources and prescribers. Even though CMS has delayed the May 1 registration deadline, it’s vital that all Durable Medical Equipment (DME) providers become educated on PECOS. DME’s who fail to follow the proper course may, as in stretches of the Pecos River in New Mexico and Texas, find themselves navigating troubled waters.
Some basics: The intent for PECOS was for CMS to create one gigantic database where information on ALL Medicare providers exists. According to the CMS.gov website, “Internet-based PECOS will allow physicians, non-physician practitioners and provider and supplier organizations to enroll, make a change in their Medicare enrollment, view their Medicare enrollment information on file with Medicare, or check on status of a Medicare enrollment application via the Internet.”
Historically Medicare provider enrollment has been handled haphazardly. For DME providers, there has always been one entity that handled the process (the National Supplier Clearinghouse, NSC), albeit we have questioned the quality and accuracy of the NCS process – especially when you consider the numerous provider (PTAN) numbers that have been issued over the years to “questionable” providers– it was a better system than previous approaches because there was one entity responsible for maintaining all DME provider enrollments.
In terms of other providers – and think of the volumes of types: hospitals, doctors, labs, home health agencies, etc. – the process was much more fragmented. For many, the carrier in a state that processed the claims for that entity also enrolled and maintained the providers. For example, in North Carolina, CIGNA was the physician Part B payer and therefore handled that enrollment process and Palmetto GBA (BCBSSC) handled the hospitals. Similarly, for a home health agency in Alaska, the carrier is Noridian Administrative Services. As a result, there are numerous databases of Medicare providers based both on the type of service they provide and their geographic location. For example, if you had a doctor that was part of a medical group that had offices in two adjacent states, the doctor could end up with multiple provider numbers as an individual physician, as part of the medical group, in each state, etc.
OK, so who cares?
Well, CMS decided there needed to be one repository of ALL Medicare providers, regardless of the type of service they provide or their location, and PECOS was created. As of this moment in time, the process for enrollment hasn’t really changed. Essentially all entities still enroll with local carriers and the National Supplier Clearinghouse (NSC) exists for DME providers. What it does mean is that all of the carriers and the NSC upload data to a central database called PECOS.
The PECOS database is intended to be the source of all Medicare providers, everywhere. Once it is completely created it will probably be used to track activity across the spectrum of healthcare so that Medicare can really know who is providing what types of services and where.
So now you might ask, why should I care?
One of the goals of PECOS was to make sure only enrolled Medicare providers could refer patients for Medicare services. Quite frankly, it makes sense. How can an MD order a wheelchair for a patient if they are not even a Medicare enrolled physician? So now you can see how PECOS can quickly have an impact on the providers of durable medical equipment and the end users that need such equipment.
So now that you understand the potential benefits of PECOS, what are the potential “troubled waters?”
Here is the deal: Sometime after May 1, 2013 or the delayed deadline that CMS announces, Medicare will start denying claims for DME if the prescribers NPI (National Provider Identifier) that is referenced on the claim is not found in the PECOS database.
Many prescribers have numerous NPI numbers, for each location where they treat patients, for the group practice itself, etc. and they (or their staffs) are comfortable using different NPI numbers based upon these geographic or group variations. Once PECOS takes effect, however, a DME provider must reference the individual prescriber’s NPI on the claim, not the group AND the name configuration must exactly match the PECOS record. In other words ‘Bob’ Baker may need to be Robert Baker. Based upon early reports of enrollment patterns, the physician community seems to be the most under-informed of the importance of enrollment, and lags other segments significantly. Unfortunately for our industry, DME may end up paying the price for their “casual” attitude. For example: There may be physicians out there who are considered hospitalists (employed hospital staff members) that never bill directly for their services. These physicians had no reason to enroll in PECOS and even though they participate in ordering DME for hospital discharges, the DME company cannot get paid based on their order as of the new deadline established by CMS.
The theory is that the majority of current mismatches in the claims approval process now are due to this, wrong NPI #s, wrong names, and unregistered referrals… but who knows for sure.
What we do know is that claims will start being denied after the new deadline for DME suppliers.
Many suppliers have been tracking their error rate as remark codes have been reflected on claims for many months to let the provider know that the referenced ordering prescriber is not in PECOS. In other words, leading up to the new deadline, currently Medicare has been paying claims, but they put a comment code of N264 or N265 that indicates “missing/incomplete/invalid ordering physician provider name” or “missing/incomplete/invalid ordering physician primary identifier”. This translates into “Doctor is NOT enrolled in PECOS”. As you can imagine, most providers are so busy responding to audits and real denials that few have had much time to pay particular attention to this notice.
At this point it is difficult to tell what percentage of claims providers have that they will deny. I have heard numbers as low as 2% and as high as 9%. While this seems low, even 5% of claims can mean hundred of denials a month; AND that is on top of all other denials.
Impact to the industry?
Initially more denials! All of those remark codes that were or were not looked at will now be denial after the new deadline, at which time providers must pay attention OR not get paid. Not only is this an issue for new referrals, but also for all of a provider’s existing patients where this remark code has been indicated on claims! Claims for a capped rental that has been paid in the past could still be denied as of the new deadline.
What HME Providers Need To Do.
1. For existing patients, providers need to ensure the NPI numbers referenced in their databases and the prescriber names are exactly correct! If they aren’t correct, providers need to get them corrected and their systems updated prior to filing claims in May.
2. For new referrals, providers need to establish a process at intake to verify that the ordering prescriber is indeed enrolled in PECOS. There are many websites (HIPAASpace.com as an example) that provide this service, and most software applications have a program to check. If the prescriber is not enrolled, providers need to establish a process to seek another physician or to decline to service the patient.
3. Providers also need to establish a process for denied claims. At this point CMS has not issued direction on how the claims will be denied.
Can providers bill patients? Unknown…
Can providers use an ABN and hold a patient accountable? Unknown…
Can providers rebill once a prescriber enrolls? Unknown…
Clearly, CMS needs to issue direction to the DME MACs on what and how they will handle these claims. In the interim since we really don’t know what the options are and how the carriers will handle PECOS-related issues, providers need to be super-diligent in getting ready for whatever final guidelines CMS publishes. Until this direction is issued, providers need to clean up databases, develop procedures to avoid PECOS-related denials on new orders being placed after the new deadline, and develop a strategy to handle the volumes of denials they will be faced with after this critical date. For up to date information on the new PECOS deadline, visit www.aahomecare.org.
The publicized mantra for Medicare Part B’s competitive bidding program has been to reduce expenditures while maintaining quality and ensuring beneficiary access to the goods and services that they need. One of the frequently raised questions regarding this is:
How will CMS ensure that beneficiaries will have access to the goods they need; and, how will CMS ensure that the goods provided are of equivalent quality to what beneficiaries from outside of the competitive bidding areas, or covered by other payers, are receiving?
As a means to address these concerns CMS created a “Form C Quarterly Report” through which winning bidders must report the manufacturer, make and model of goods provided to beneficiaries in the bid areas. CMS’ contractor, the CBIC (Competitive Bidding Implementation Carrier), has a considerable amount of information on its website regarding Form C. On the CBIC website it states that the “Form C Quarterly Report” is to “provide CMS with information to monitor the program to ensure beneficiaries have access to and are receiving quality items.” Further, instructions included on the CBIC site stress that bid winners are “responsible for providing the model, manufacturer and model number for the top 80 percent Healthcare Common Procedure Coding System (HCPCS) codes in the product category.”
The CBIC website provides a tool to identify the codes which must be reported by the Competitive Bid Area (CBA) and competitive bidding product category: (http://www.dmecompetitivebid.com/palmetto/cbic.nsf/FormC?OpenForm).
When using this tool for the competitive bidding product category of “standard power wheelchairs and accessories” it indicates that winning bidders must provide manufacturer, make and model information for three HCPCS codes, K0822, K0823 and K0825.
However, the competitive bidding product category for standard power wheelchairs and accessories contains 106 HCPCS codes! These three codes only represent 2.8% of the total codes in the product category. How does this correlate with the requirement that the bid winners must report for the top 80% of codes within the category? The only explanation that appears to resolve this apparent conflict is that these three codes represent over 80% of the total expenditure within the category.
This really seems to reinforce, rather than address, the initial concern. Consider the following:
- If only three codes represent so much of the total expenditure then why is it necessary, or even appropriate, to include the other 103 codes in competitive bidding?
- Even if all the other items in the standard power wheelchair product category represent a small portion of the total expenditure, it is still critically important the beneficiaries have access to the goods they need and that the products they are provided are of an acceptable quality.
- This product category contains:
- Products intended to protect the beneficiary’s skin from breakdown.
- Products designed to address the positioning and stability needs of the beneficiary.
- A myriad of products that may need to be make and model specific in order to fit on the specific power wheelchair.
How will Form C ensure that beneficiaries have access to quality products in these critical areas?
Does this illustrate the need for competitive bidding rules to be modified to focus only on those items that have the greatest expenditures and the greatest opportunity for savings? Why should beneficiaries’ access to the quality goods that they need be placed at risk, especially when the potential opportunity for savings is very small?
Years ago I started my professional career as a history teacher. This passion for history certainly has a significant impact on how I view things. I’m experiencing one of those moments right now regarding competitive bidding… and my mind is being drawn to Paul Revere and the beginning of the Revolutionary War.
In early 1775 everyone knew that hostilities was not an “if” statement, it was a “when” statement. In order to be prepared and to respond quickly and effectively a large network was created to keep watch on the movements of the British military. We all know how the story goes from there… on April 18th, 1775 Paul Revere, and the lesser know William Dawes, were informed that attack was eminent and the ride announcing that “the British are coming” became a famous part of American history and folklore.
I see a lot of similarities between December of 2010 and April of 1775. We all know that competitive bidding is eminent, we even know when it’s going to start, and we all believe that it’s going to produce casualties. What we don’t know is when and where the first casualties will occur and how we’ll spread the news to rally our forces.
What would have happened if Revere and Dawes hadn’t sounded the alarm? Well, in my opinion, it’s quite possible that John Hancock and John Adams would have been captured by the British. Hancock went on to become the President of the Continental Congress and Adams was a powerful, influential member. Both were among the most ardent supporter of us declaring independence from England and Adams was a member of the committee that drafted the Declaration of Independence. If these two figures had been captured they would have never assumed those positions within the Continental Congress. Would we have declared independence without them? If we had, would it have come too late? Could the British have already entrenched their military and squelched resistance? Bottom line, I’d argue that without Paul Revere and William Dawes and their historic ride our history and our country may be quite different today.
OK, so I’ve given everyone a history lesson, what does this have to do with Medicare competitive bidding? Well, the way that I tie these events together is that we are once again faced with an urgent need to keep close watch on what is going on and we must be ready, willing and able to sound the alarm on a moment’s notice.
Many of us have argued loud and long that competitive bidding is going to have a significant, detrimental impact on beneficiary access to quality goods and services. Yet, as sure as we are that this will happen… we don’t have any proof. Our proof will only materialize after competitive bidding goes into effect in the first nine metropolitan areas in January of 2011. Yet, what happens if we aren’t ready, willing and able to find the proof and sound the alarm as quickly as we possibly can? This is my greatest fear! I am very concerned that beneficiaries will be slow to recognize the decline in quality and access produced by competitive bidding. Existing beneficiaries may not need replacement or additional equipment for some time; or, they might be covered under the grandfathering provisions. Either way they won’t notice any changes for some time. New beneficiaries that have never obtained DME via Medicare before have no basis for comparison regarding how their access to, and quality of, good and services has been changed by competitive bidding.
Once 2011 starts the clock also starts ticking on the implementation of round 2 of competitive bidding, and this time it will be in 91 metropolitan areas! I really believe that the product categories and codes will be announced in the first half of 2011 and the actual bidding period will close before the end of 2011. Will we get the proof in time to have any effect on any of these events? Will the alarm be sounded from round 1 soon enough to do anything to defend us from round 2?
I believe that our only chance of getting enough evidence in time to make any compelling arguments to influence round 2 will require a concerted effort by all of the provider and manufacturer stakeholders of the DME industry. To get this evidence we will need to do all of the following:
- We’re going to have to educate referral sources on what to watch for and solicit their support to keep us informed on any issues they encounter or concerns they have. This will be the group most capable of identifying problems in the early days of round 1.
- We need to develop a beneficiary “Bill of Rights” defining what they should expect as far as goods, services, response times, etc. We need to educate them on what competitive bidding is “supposed to do”. According to CMS a primary goal of competitive bidding is to reduce beneficiary out of pocket costs while maintaining, if not enhancing, access to quality goods and services. We need to solicit these beneficiaries to keep us informed as well.
- Finally, we need to educate beneficiary advocacy groups and gain their commitment to keep us informed as well.
- We need to pull together as an industry to face this challenge together, rather than only focusing on the needs of one product or geographic sector.
If we do this we will have created a network like our forefathers had back in 1775. All that will be left is for us, the provider and manufacturer stakeholders, to take on the roles of Revere and Dawes and sound the alarm. The American Association for Homecare has already set up methods on their website to report problems: http://www.aahomecare.org and I’m sure that other trade groups will as well. It’s up to us to make sure and get the news to them.
I already told you what I believe could have happened if Revere and Dawes ride had not occurred. I don’t want to imagine what will happen if we fail to sound the alarm on competitive bidding issues.
I’m not sure whether our cry will ever be remembered like “the British are coming” but it is certainly no less important to our industry, our companies, our employees, our clinical partners, and, most importantly, the individuals that depend upon us for the goods and services they need.
You know, I think that I’ve figured out the most effective way to stimulate the economy (short of going to war). All you need to do is schedule a national election and create some initial interest and controversy with sound bites like:
- This election may produce a major shift in power! Or,
- A new, extremist group is gaining momentum that will threaten (or save… depending on your persuasion) our way of life!
Then, add to it a list of candidates that “apparently” include liars, thieves, witches, people that would kick a dog and those that would steal candy from babies.
Combining all of the ingredients appears to create the perfect recipe for a great economic stimulus program. To support my point, ask yourself what you got in yesterday’s mail, what sort of billboards are in your neighborhood and along your drive, and what commercials you have seen or heard over the last several weeks. Here’s what it has been like for me:
- My mail has been littered with political flyers for (or most often against) a particular candidate or election referendum. Yesterday I got twelve pieces of mail and ten were from political candidates or interest groups.
- I can’t count the number of signs in my neighborhood and along my drive (by the way I’d really like to know what benefit is derived from having twelve signs for the same candidate all lined up in a row spread over a distance of less than twenty yards).
- As for political commercials all I can say is “Thank God for my DVR and my fast forward button!”
Just think of the wonders that this is doing for our economy! Printers, production companies, actors, television stations, television networks, news programs, radio stations, mail men, post offices, paper mills, photographers, newspapers, garbage men, landfills, video rentals, and private investigators (to name a few) all must be doing a booming business right now digging up dirt, publicizing dirt, delivering dirt or providing an alternative to weary voters desperate to escape the dirt! Just think of the enormous influx of cash going into our economy?! Bottom line, I think that we need to postpone next week’s election to insure this stimulation of our economy continues. We cannot afford for the election season to end!!!
All kidding aside, I must admit that I’m very concerned by the amount of money that has been wasted on this election. Heck, if the money that has been spent on the election had been applied to the debt we may have actually been able to cover a few of the interest payments to China. In addition, in watching the campaigns that are going on around the United States I wish there was an option to vote “none of the above, find someone else”.
Sadly, our situation does not appear to be unique to present day. I’m reminded that the ancient Greek philosopher Diogenes who use to wander about in full daylight with a lantern… searching for an honest man.
What has your experience been during this election season?
Well, it’s certainly been a while since I was able to sit down with my keyboard and share my errant musings with all of you (sorry I’m trying to expand my vocabulary). However, something came to light this week that I just had to share. Since the inception of competitive bidding CMS has used an ongoing mantra to describe the competitive bidding program for DME:
Reduce costs for beneficiaries and the Medicare system while insuring that beneficiaries and continued access to quality goods and services.
Many folks from the industry have argued that this goal is not possible within the framework of the competitive program that CMS has designed. Unfortunately, since these comments were coming from the industry they have been discounted as being self-serving. However, this week 167 experts signed on to a letter (including multiple Nobel prize winners) expressing significant concerns regarding the design of the DME competitive bidding program and forecasting an outcome that is far from CMS’ stated goal. In the letter these identified four main areas of concern:
- Bids submitted under Medicare’s competitive bidding program are not binding commitments. “This undermines the credibility of the bids, and encourages low-ball bids in which the supplier acquires at no cost the option to sign a supply contract” (or refuse to sign a contract).
- Using the median winning bid as the winning bid rate. This results in 50% of the winners being offered a contract below what they bid. In addition, it encourages low-ball bides, since a low bid guarantees winning but the bid has a negligible effect on the winning bid rate.
- The use of “composite bids” to select winners “provides strong incentives to distort bids… bidders bid low on products where the government overestimated demand and high on products where the government underestimated demand.”
- The Medicare competitive bidding program lacks transparency. “Both quality standards and performance obligations are unclear. This lack of transparency is unacceptable in a government auction and is in sharp contrast to well-run government actions such as the Federal Communications Commission spectrum auctions.”
They summarized their concerns as follows: “This collection of problems suggests that the program over time may degenerate into a ‘race to the bottom’ in which suppliers become increasingly unreliable, product and service quality deteriorates, and supply shortages become common. Contract enforcement would become increasingly difficult and fraud and abuse would grow.”
These experts do see auctions and competitive bidding as a viable option for DME… but not under the existing design.
Hopefully the concerns expressed by these experts will not be ignored and we can still bring some common sense to this program before round one is implemented (currently schedule to go into effect on January 1, 2011). If you believe that the DME competitive bidding program needs to be fixed (or scrapped) now is the time for you to share this belief with your elected officials. In about a month every seat in the U.S. House of Representatives is up for grabs along with one-third of the Senate. The month of October will see all of the members of Congress will be back in their respective states / districts, along with their opponents, trying to convince you to vote for them. There is no better time to get them to hear your opinions.
I’ve attached a copy of the expert’s letter and the following is a link to an article from the N.Y. Times:
All the best and please let me know what you think!