National Government Services, Inc. Medicare Monthly Review Part A and B
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Limitation on Charges for Services Furnished by Medicare Participating Hospitals to Individuals Eligible for Care through Indian Health Service (IHS) Programs  

Provider Types Affected
Medicare participating hospitals and skilled nursing facilities servicing individuals eligible for care through IHS health programs

What You Need to Know
This article was developed from the Federal Register, Volume 72, No. 106, Monday, June 4, 2007, and provides you information about a new regulation that may impacts your payments for providing services through Indian health programs.

Effective July 5, 2007, all Medicare-participating hospitals that furnish inpatient services authorized by IHS, Tribal, and urban Indian organization entities, must accept no more than the rates of payment, discussed below, plus the usual Medicare coinsurance amount, as payment in full.

Background
Section 506 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), requires hospitals that furnish any Medicare-payable inpatient hospital medical care services, to participate in both:

• The contract health services (CHS) program of the Indian Health Service (IHS) operated by the IHS, Tribes, and Tribal organizations; and
• IHS-funded programs operated by urban Indian organizations. All of these programs are collectively referred to as I/T/Us, for any care that these programs purchase.

For purposes of this program, a hospital is defined as all hospitals that participate in Medicare, including any hospital clinics located off-site and Critical Access Hospitals, to include:

• Acute care hospitals,
• Distinct parts of inpatient hospitals (rehabilitation facilities, psychiatric facilities),
• Hospital-based clinics,
• Psychiatric hospitals,
• Rehabilitation hospitals,
• Long Term care hospitals,
• Critical Access Hospitals (including rehabilitation and psychiatric units paid under a prospective payment system (PPS) located within),
• Children’s hospitals,
• Cancer hospitals, and
• Skilled Nursing Facilities (SNFs) & Swing Beds.

Section 506 also requires such participation to be in accordance with the admission practices, payment methodology, and payment rates set forth in Department of Health and Human Services (DHHS) regulations, including accepting these payment rates as payment in full. Specifically, effective July 5, 2007, all Medicare-participating hospitals that furnish inpatient services must accept no more than the rates of payment under the calculation, described below, as payment in full for all items and services authorized by IHS, Tribal, and urban Indian organization entities.

Further, this payment methodology applies to all levels of care, furnished by a Medicare-participating hospital, that is authorized by a contract health service (CHS) program of the Indian Health Service (IHS); or authorized by a Tribe or Tribal organization carrying out a CHS program of the IHS under the Indian Self-Determination and Education Assistance Act, or that an urban Indian program authorizes for purchase. This includes care provided as inpatient, outpatient, or skilled nursing facility care; as well as other services of a department, subunit, distinct part, or other hospital component (including services the hospital furnishes directly or under arrangements).

Basic Payment Determination/Methodology

1. Prospective Payment System (PPS)

Under this new rule, the basic payment determination for hospital services that Medicare would pay for under a PPS is based on that particular PPS. For example, inpatient hospital services of acute care hospitals, psychiatric hospitals, rehabilitation hospitals, and long-term care hospitals will be paid based on the same PPS systems Medicare uses to pay for similar hospital services under 42 CFR, Part 412.

Similarly, outpatient hospital services and SNF care will be paid based on the PPS systems that Medicare uses to pay for those services under 42 CFR Part 419 and 42 CFR Part 413, respectively.  

2. Reasonable Costs

Medicare participating hospitals that furnish inpatient services but are exempt from inpatient PPS and receive reimbursement based on reasonable costs (for example, critical access hospitals (CAHs), children’s hospitals, cancer hospitals, and certain other hospitals reimbursed by Medicare under special arrangements) will be paid per discharge based on the reasonable cost methods established under 42 CFR Part 413 (except that the interim payment rate under 42 CFR Part 413, Subpart E constitutes payment in full for authorized charges).  

3. Coinsurance

CHS programs will continue to pay the equivalent of Medicare coinsurance.

The I/T/Us’ payment calculations will be based on these determinations consistent with the Centers for Medicare & Medicaid Services (CMS) instructions to FIs/MACs at the time the claim is processed. For inpatient services, I/T/Us will pay a providing hospital the full PPS based rate (or the interim reasonable cost rate) without reduction for any co-payments, coinsurance, and deductibles that the Medicare program requires patients to contribute. Similarly, for outpatient, or Part B services, IHS/CHS will pay both the Medicare and beneficiary’s portion of the payment, so that, in either instance, the hospital will get 100 percent of whatever the Medicare rate is for the service provided.

Note that if the I/T/U has negotiated a payment amount with a hospital or its agent, the I/T/U will pay the lesser of the negotiated amount, or the amount determined from Basic Determination (above) (including, but not limited to, capitated contracts or contracts per Federal law requirements).

You should be aware that in addition to the amount payable for authorized inpatient services (described above), payments will also include an amount to cover (to the extent such costs would be payable if the services had been covered by Medicare):

• The organ acquisition costs that hospitals with approved transplantation centers incur;
• Direct medical education costs;
• Units of blood clotting factor furnished to an eligible hemophiliac patient; and
• The costs of qualified nonphysician anesthetists.

These payments will be made on a per discharge basis and will be based on standard payments that CMS or its FIs/MACs establish.

There are other specific details about this program that you should know about, i.e.:

• If an I/T/U has authorized payment for items and services provided to an individual who is eligible for benefits under Medicare, Medicaid, or another third-party payer, the I/T/U: 1) Will be the payer of last resort; 2) Will pay the amount that the patient is responsible for (after the provider of services has coordinated benefits and all other alternative resources have been considered and paid), including applicable copayments, deductibles, and coinsurance that the patient owes; 3) Will pay only that portion of the payment amount not covered by any other payer; 4) Payment will not exceed the rate calculated in the Payment Methodology section (above), or the contracted amount (plus applicable cost sharing), whichever is less; and 5) Will make no additional payment to that made by Medicaid, (except for applicable cost sharing), as Medicaid payment is considered payment in full.

Note: Payments made for these services are considered payment in full, and a hospital or its agent may not impose any additional charge on the patient for any I/T/U authorized items and services, or for information that the I/T/U, its agent, or the FI/MAC request to determine payment or for quality assurance use.

• If it is determined that a hospital has submitted inaccurate information for payment (such as admission, discharge, or billing data), an I/T/U may (as appropriate): 1) Deny payment for these services (in whole or in part), and; (2) Disallow costs previously paid. Further, if for cost-based payments previously issued, it is determined that actual costs fall significantly below the computed rate actually paid, the computed rate may be retrospectively adjusted. The recovery of overpayments made as a result of the adjusted rate, or of payments made in error, may be accomplished by any method authorized by law.
• For a hospital (or its agent) to be eligible for payment from Indian health programs, it must submit the claim for authorized services: 1) On a UB-04 paper claim form or the HIPAA 837 electronic claim format ANSI X12N,version 4010A1 and include the hospital’s Medicare OSCAR number/National Provider Identifier; 2) To the I/T/U, agent, or fiscal intermediary the I/T/U identifies in the agreement with the hospital or in the authorization for services I/T/U provides; and 3) Within a time period equivalent to the timely filing period for Medicare claims under 42 CFR 424.44 and provisions of the Medicare Claims Processing Manual applicable to the type of item or service provided.
• Participating Hospitals and CAHs must accept the payment methodology and no more than the rates of payment (explained above), as payment in full for the following programs: 1) A CHS program of the IHS; 2) A CHS program carried out by an Indian Tribe or Tribal organization under the Indian Self-Determination and Education Assistance Act.; and 3) A program funded through a grant or contract by the IHS and operated by an urban Indian organization, under which items and services are purchased for an eligible urban Indian.

Hospitals and CAHs may not refuse service to an individual on the basis that the payment for such service is authorized under such CHS and IHS funded urban Indian programs.

The following facilities or services are not covered by this regulation.

• Free standing ambulatory surgery centers (ASC);
• Surgical centers;
• Physician services;
• Services of Independent Practitioners (Nurse Practitioners, Physician Assistants, Clinical Nurse Specialists, etc);
• Independent laboratories;
• Any service or supply not covered by the Medicare program;
• Services of a Renal Dialysis Facility
• Home health services; and
• Hospice services

Remember:

• Inpatient PPS hospitals are paid based on discharge date. Therefore, if a patient were discharged on July 5, 2007, the entire stay would be paid under the applicable PPS.
• CAHs’ and Tax Equity & Fiscal Responsibility Act of 1982 (TEFRA) Hospitals’ inpatient services will be paid based on whether the actual date of service falls on or after July 5, 2007. Line item dates of service can apply to OPPS and other Part B outpatient claims.
• Payment for outpatient services is based on the date of service.

Treating Patients with Serious Health Issues
IHS payment under this rule will reflect serious health issues faced by its patient population, as patients who are more seriously ill tend to require a higher level of hospital resources than patients who are less seriously ill, even though they may be admitted to the hospital for the same reason. Recognizing this, Medicare payments can be higher for patients in certain diagnostic-related groups (DRGs) based on a secondary diagnosis that could indicate specific complications or co-morbidities.

While these rates are generally not available to non-Indians who are members of an eligible Indian’s household, if the individual meets the requirements at 42 CFR Part 136 for CHS coverage (e.g., non-Indian woman pregnant with eligible Indian’s child, public health emergency), and payment is authorized by the CHS program (or by an Urban program), then the Medicare-like rates (MLR) do apply.  

Additional Information
You can find more information about the limitation on charges for services furnished by Medicare participating inpatient hospitals to individuals eligible for care through Indian Health Programs by reading the Federal Register at http://www.nrepp.samhsa.gov/pdfs/FRN060407.pdf on the CMS Web site.

If you have any questions, please contact your CMS Regional Office. Contact information for those offices is available at http://www.cms.hhs.gov/RegionalOffices/ on the CMS Web site.

Disclaimer
This article was prepared as a service to the public and is not intended to grant rights or impose obligations. This article may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations and other interpretive materials for a full and accurate statement of their contents.

MLN Matters Number: SE0734
Related Change Request (CR) #: N/A
Related CR Release Date: N/A
Effective Date: N/A
Related CR Transmittal #: N/A
Implementation Date: N/A  

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