Fall 1997
The Balanced Budget Act of 1997 (BBA), P.L. 105-33, contains significant changes to the Medicare program that were driven by the desire to reduce spending. Billed as a short-term solution to the Medicare crisis, the BBA provides for Medicare savings of approximately $115 billion through FY 2002. These savings are largely achieved by slowing the rate of growth in payments to hospitals, physicians, and other providers and by establishing new methodologies for payments to skilled nursing facilities and home health agencies.
The final version of the BBA rejected the Senate-passed provisions that would have raised the age of Medicare eligibility from 65 to 67 years of age, introduced means testing to the Part B program, and imposed a $5 beneficiary copayment for home health services. Nonetheless, the structural changes made to Medicare through the BBA are profound and appear to begin a process of changing Medicare from a defined benefit program to a defined contribution program. Additionally, the new choices made available to beneficiaries through the BBA’s Medicare+Choice provisions increase the role of private insurance companies in developing insurance products for beneficiaries, expose Medicare beneficiaries to increased financial risk, and may lead to a segmentation of the risk pool in Medicare’s traditional fee-for-service program.
Several of these changes will directly affect professional social workers who provide Medicare services. The changes range from a fairly straightforward requirement for providing discharge planning in hospitals to a complicated prospective payment system for skilled nursing facilities (SNFs), which will also capture payment for clinical social worker services under Part B in a new consolidated billing arrangement to the SNF. Still other provisions, like those that provide for a new private fee-for-service option and allow providers to privately contract with beneficiaries, are likely to generate a more complicated response from professional social workers. Social workers who view the changes from the perspective of advocates for the elderly and the continuation of the current Medicare program are likely to be very troubled by the social policy implications of the new provisions. Whereas clinical social workers, who have been subjected to low payment rates through Medicare Part B, may very well view the Medicare+Choice provisions as welcomed opportunities.
The BBA is an enormous bill that had minimal opportunity for review and input during its legislative development. Neither the public nor congressional offices were aware of all of the changes or the implications of the changes that were ultimately enacted. Many changes and their
implications are only now becoming known as advocates have the opportunity to review the final provisions of the law. Following are a number of the BBA changes to Medicare that will have a direct impact on professional social workers who provide Medicare services.
NEW PROSPECTIVE PAYMENT SYSTEM & CONSOLIDATED BILLING FOR MEDICARE PART B SERVICES PROVIDED TO RESIDENTS OF SKILLED NURSING FACILITIES (SECTION 4432)
The new Medicare payment provisions for services provided to residents of skilled nursing facilities represent the biggest threat in the BBA for clinical social work practice in Medicare. Despite the sometimes confusion of Medicare carriers regarding the reimbursement of clinical social worker (CSW) services provided to residents of a skilled nursing facility (SNF), CSWs may currently bill Medicare Part B for services provided to SNF residents. (CSW services are defined in section 1861 (hh) (2) of the Medicare statute as services provided by clinical social workers for the diagnosis and treatment of mental illnesses. The qualifications for CSWs are specified in section 1861 (hh)(1)). The CSW independently bills Medicare for the service and is directly reimbursed by the Medicare carrier.
Section 4432 of the BBA establishes a new prospective payment system for skilled nursing facilities (SNFs) that is similar to and based on the hospitals' prospective payment system that reimburses according to diagnostic related groups (the DRG system). In addition to the new prospective payment system for SNFS under Part A, the new legislation also creates a billing system in which Part B payments for services provided to residents of SNFs are consolidated through the facility.
Unless this provision can be altered through a change in the law or through regulations, the consolidated billing provision will go into effect on July 1, 1998. The significance for CSWs is that they will no longer be able to bill Part B directly for mental health services provided to residents of SNFs. They can still provide the service -- however, the payment goes to the SNF. Although the SNF may in turn reimburse the CSW, this is an added administrative step for the SNF that may result in a lower reimbursement for the CSW.
The new consolidated billing arrangement for Part B services is based on the current DRG system for hospitals. CSW services are targeted to be part of this consolidated billing arrangement for no other reason than because the Part A reimbursement system now "bundles" social work services into the hospitals' reimbursement rate. Psychologists and psychiatrists are not part of this new system because their services are not bundled into the hospital rate. Ironically, the new system will make it easier for psychiatrists and psychologists, the more expensive providers of mental health services, to bill Medicare for services provided to residents of a SNF. According to a memo released by the California Association of Health Facilities (representing nursing homes in the state), CSWs may still provide services as an "incident to" those services of M.D.s or psychologists. This latter practice could result in higher costs for CSW services to the Medicare program than the current reimbursement system.
NASW’s goal is to change this provision before it goes into effect in July 1998. NASW members are also urged to work with their congressional delegations and the Clinton Administration to create a statutory or regulatory exemption for CSW services through the consolidated billing arrangement prior to the July 1 implementation date. (Please refer to the 11/21/97 NASW Government Relations Alert on the Medicare Part B Consolidated Billing Issue for guidance in directing your advocacy efforts.)
DISCHARGE PLANNING REQUIREMENT FOR HOSPITALS (SECTION 4321)
The BBA contains a new requirement for social workers and others who provide discharge planning in hospitals. Intended to promote nondiscrimination in post-hospital referral to home health agencies, section 4321 requires hospital discharge plans to include all available home health providers in the area in which the patient lives and who ask to be listed. The plan may not specify or otherwise limit the qualified provider that may provide post-hospital home health services. Additionally, the hospital must maintain and disclose information on referrals to post-acute services entities in which the hospital has any ownership or controlling interest. The law directs the Secretary of the Department of Health and Human Services to develop guidelines for hospitals to maintain and disclose information on referrals to entities in which the hospital has a financial interest. However, prior to the promulgation of regulations, social workers who need more guidance on the new requirement may wish to contact the website bulletin board posting of the Society for Social Work Administrators in Health Care at www.sswahc.org.
USE OF PRIVATE CONTRACTS BY MEDICARE BENEFICIARIES (SECTION 4507)
Starting January 1, 1998, section 4507 of the BBA permits health care providers and Medicare beneficiaries to enter into private contractual arrangements that do not conform to current Medicare billing requirements. Clinical social workers are advised to carefully review the law and any regulations implementing the new provision prior to initiating the private contracts.
Currently, clinical social workers who provide Medicare Part B mental health services must do so on an assignment basis. That is, the clinical social worker (CSW) must apply to be a Medicare provider, provide services according to the Medicare program rules, and bill through the Medicare system. Additionally, the CSW may not charge the beneficiary more than the reimbursement rate that is established through the Medicare program, regardless of the beneficiary’s financial resources. Although the Health Care Financing Administration (HCFA) has demonstrated a recent flexibility regarding beneficiaries who do not wish to bill Medicare for psychotherapy because of a concern for privacy, Medicare has traditionally been very rigid regarding assignment. Until very recently, CSWs and other Medicare providers were informed by HCFA that the only way to avoid Medicare assignment is to refuse to see Medicare beneficiaries. Additionally, HCFA’s policy was that it would not acknowledge the validity of contracts between beneficiaries and providers that arrange for payment of services outside of the Medicare program.
Section 4507 explicitly allows providers who do not participate in Medicare to enter into written private contracts with Medicare beneficiaries to provide services without submitting claims to Medicare and without abiding by Medicare’s payment limitations. According to the new law, the contract must inform beneficiaries that they may not bill Medicare or their medigap policy for the service(s) provided, that Medicare’s limits on charges do not apply, and that beneficiaries have the right to have the service(s) provided by a provider who would bill Medicare for the payment. The contract must be signed by the beneficiary prior to the receipt of services, and the contract may not be signed at a time when the beneficiary is facing an emergency or urgent health care situation. The provider must sign an affidavit promising not to submit any claims to Medicare for a two-year period.
The two-year moratorium on Medicare participation by providers who enter into the private contracts is thought by most advocates of the elderly to be an important safeguard against selective use of the private contracts with beneficiaries who appear to have greater financial assets. Nonetheless, legislation sponsored by the American Medical Association and many other medical specialty groups that would eliminate the two-year restriction is already building momentum in the House and Senate.
STATES’ ABILITY TO USE MEDICAID PAYMENT RATES IN DETERMINING THEIR CONTRIBUTIONS FOR "DUAL ELIGIBLES"
The Medicaid section of the BBA (section 4714) contains a payment provision that will allow states to refuse to pay deductible and coinsurance amounts for certain low-income Medicare beneficiaries if the payment to the provider through Medicare exceeds the Medicaid payment rate for the service. (Currently, the states’ share of the deductible and coinsurance is based on Medicare reimbursement rates.) The provision affects Medicare beneficiaries whose incomes are low enough that they receive Medicaid assistance in paying for Medicare premiums and coinsurance, as well as beneficiaries whose incomes are so low that they also qualify for full Medicaid benefits, such as prescription drug coverage and long-term care in nursing homes. The implications of the change are very significant for low-income Medicare beneficiaries, as well as Medicare providers who currently serve this population and are reimbursed at Medicare rates.
The Congressional Budget Office’s (CBO’s) estimate on this provision included $5 billion in federal Medicaid savings over 5 years and $12.6 billion over 10 years. The CBO estimate assumes that a large number of states will no longer pay the deductibles and coinsurance for low-income Medicare beneficiaries, resulting in substantial cost savings to the federal budget. The CBO estimate also assumes that $5.3 billion of these savings over the 10-year period will result from "behavioral responses" by providers -- i.e., Medicare providers will no longer choose to serve the population.
This provision is likely to create tremendous problems in access to care for the approximately 6 million poor, elderly, and disabled people who depend on Medicare and Medicaid for coverage of their health and long-term care services. The new provision will also create considerable pressures for professional social workers in their roles as advocates for the elderly population, case managers for the dually eligible population, and mental health care providers serving persons with dual eligibility.
NONDISCRIMINATION IN SELECTION OF NETWORK HEALTH PROFESSIONALS (SECTION 4001)
Section 4001 of the BBA prohibits the new Medicare+Choice plans from discriminating against health care professionals with respect to "participation, reimbursement, or indemnification," based solely on the basis of their license or certification. The language responds to concerns of health care professionals who feel that managed care organizations arbitrarily exclude their participation in provider networks or panels, based solely on their license. The language is written in such a way that it addresses any licensed or certified health professional, including clinical social workers. Although plans would still have the ability to select individual providers that would make up their provider panels, this provision would presumably preclude plans from deciding that a category of heath professional who is licensed or certified in the state to provide a covered service could be excluded from participation. For example, this provision would appear to prohibit any future Medicare+Choice plan from denying network participation to a clinical social worker, solely on the basis that he or she is licensed as a clinical social worker. As with many of the new provisions in the BBA, additional clarity should be provided through the implementing regulations.
MEDICARE+CHOICE OPTIONS (SECTION 4001, PART C)
The Balanced Budget Act allows Medicare beneficiaries to continue to participate in the program’s traditional fee-for-service program. However, the new Medicare Part C of the BBA offers non-traditional service delivery choices to beneficiaries, which include participation in managed care plans, medical savings accounts, and provider sponsored organizations, as well as the ability to opt-out of Medicare altogether through a private fee-for-service plan. The new Part C program expands the role of private insurance in developing products for Medicare beneficiaries, increases the financial risk of beneficiaries, and raises questions regarding its effect on the Medicare risk pool that has traditionally offset the costs of beneficiaries who are higher users more costly care.
To enroll in a Medicare+Choice plan, a beneficiary must participate in both Part A and Part B of the Medicare program. Individuals with end stage renal disease are ineligible to participate in the new Part C choices. The Health Care Financing Administration (HCFA) must publish regulations on the new program by June 1, 1998, although the rules may be in the form of interim regulations with notice and opportunity for comment. Additionally, HCFA must conduct a special campaign in November 1998 to educate beneficiaries about the new Medicare+Choice options and the new election procedures. Beneficiaries who fail to make an election will remain in the traditional Medicare fee-for-service program.
All Medicare+Choice plans, with the exception of medical savings accounts, must provide the same services and benefits (except for hospice care) as are covered under Parts A and B of Medicare. Accordingly, the plans would be required to offer clinical social worker services. Additionally, as providers, clinical social workers could presumably participate in the formation of a provider sponsored organization (PSO) and compete with HMOs and other risk-contracting entities. (It’s expected that hospitals are likely to form the nexus of the majority of the new PSOs providing Medicare services.) In general, a PSO must be licensed by each State in which it operates as a risk-bearing entity that is eligible to offer health insurance or health benefits coverage. However, the PSO is granted some flexibility in seeking a federal 3-year waiver of state law. By April 1, 1998, HCFA is required to publish final federal standards for PSO solvency. However, the PSO must still comply with state consumer protection and quality standards.
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For additional information on P.L. 105-33, please refer to the August 1997 Government Relations Update, Balanced Budget Act of 1997 (P.L. 105-33): Significant Changes Made in Children’s Health, Welfare, Medicaid and Medicare.
Questions on this document and/or the implications of P.L. 105-33 for social workers who provide services through the Medicare program, may be directed to:
Madeleine Golde, Government Relations Associate, National Association of
Social Workers
mgolde@naswdc.org (e-mail). (202) 336-8261 or
(800) 638-8799, ext. 237 (telephone), (202) 336-8311 (fax)