Medicare proposes flat facility fee for all ED visits

Would eliminating the fee scale prevent upcoding?

Topics: Reimbursement, Finance, Access to Care, Quality, Performance Improvement, Appropriateness, Accounting, Budgeting, Revenue Cycle, Safety

September 9, 2013

CMS may do away with its sliding scale for ED overhead and staffing costs and instead pay hospitals a flat "facility" fee for all Medicare visits, regardless of treatment intensity, Fred Schulte writes in Modern Healthcare.

Details of the proposed rule

Currently, CMS has five escalating price codes for facility fees, which are intended to cover ED overhead and staffing costs. Those codes range from $51.82 for a Level 1 visit to $344.71 for a Level 5 visit. Hospitals argue they need the fees to defray the costs of expensive medical technologies.

In a proposed rule released this summer and revised last week, CMS suggested one flat "facility" rate of $212.90 for ED visits. The move is intended to prevent upcoding and redirect billions that Medicare spends annually on outpatient care, according to Modern Healthcare.

To determine the 2014 rate, CMS used claims that Medicare paid during 2012, and officials say they plan to reevaluate and recalculate the rate annually. Physician fees would not be affected.

The draft rule also recommends a flat facility fee for hospital clinic visits. Currently, Medicare pays between $56.77 and $128.48 in fees per visit; the proposal would set a flat rate at $88.31.

The agency will accept stakeholder comments on the proposal through Sept. 16 and decide on the final rule by Nov. 1. If finalized, the new rate is set to take effect Jan. 1.

A 'quick fix' to upcoding issues?

According to Modern Healthcare, the proposed rule is partly a response to growing concern over Medicare upcoding.

Last year, a Center for Public Integrity investigation found that health care facilities and professionals had added $11 billion or more to their fees by billing for more complex care between 2001 and 2009.

EDs saw some of the biggest increases, billing more than $1 billion in increasing facility fees in the last decade, according to the investigation. From 2001 to 2008, the use of Level 4 and Level 5 facility fee codes nearly doubled, although many of the patients coded at that level were treated for minor injuries and sent home without being admitted to the hospital.

In response to the investigation, Attorney General Eric Holder and HHS Secretary Kathleen Sebelius said that physicians and hospitals caught upcoding would face criminal prosecution and gave CMS the authority to "address inappropriate increases in coding intensity in its payment rules."



However, critics say that the agency is just looking for a "quick fix" to eliminate any suspicion of upcoding, and the rule could hurt hospitals that consistently treat beneficiaries with complex, serious needs.

Hospitals in the past have requested guidelines for appropriate coding of ED facility fees. But in 2007, CMS said, creating guidelines "was proving more challenging than we initially thought." In the newly proposed rule, the agency said that national guidelines were "not feasible" (Schulte, Modern Healthcare, 9/7 [subscription required]).

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