Acute Care Service Question and Answers

Question & Answers Related to Solicitation VA241-11-RP-0485

All Questions must be presented by September 8, 2012.

1.) Do you anticipate that the award period will begin April 1, 2013?



We anticipate an award within two months of the closing of the solicitation. However we are under contract with our current provider until 03/31/2013. This will allow time for a transition plan if the contract is awarded to a new service provider. This will ensure that our Patients needs are being met during this period.



2.) Are you aware that the Standard CMS rate for Medicare services (DRGs) and Possibly CPT schedules are different for different geographic area, i.e., Rockingham County versus Hillsboro County, Versus Merrimack County? Proposed Rates for contracts from the various counties should be equalized for comparison purposes. Using the same offered discounts off of CMS approved rate could yield differing answers for the same DRG or Procedure



The award will be made on best value and by using the Medicare A & B allowable reimbursement rates. The CMS Centers for Medicare and Medicaid Services rates are published Rates and this is used as benchmark and is industry standardization for medical procedures. By using the benchmark rates it allows for competition.



The DRG payments are further adjusted to take into consideration four factors which are considered to reflect more accurately the costs of services provided by hospitals:

1. Application of a Wage Index Salaries generally represent the largest component of hospital costs. Prevailing salary levels vary substantially among different areas of the country. Use of a single national or regional DRG payment for all hospitals, without any consideration of prevailing wages, would severely penalize hospitals located in high-wage areas and unfairly benefit hospitals located in low-wage areas. The CMS adjusts Federal DRG rates to reflect prevailing wages in the local area which is defined as either large urban, or other. The CMS publishes annually an index of prevailing relative wages for each area. As a result, DRG payments in high-wage areas are greater than DRG payments in low-wage areas.35



2. Indirect Medical Education Costs Teaching institutions are assumed to have higher costs than other institutions due to extra tests and procedures performed for teaching purposes and the treatment of more serious cases. Accordingly, the DRG payments for these hospitals are increased by a percentage based on the ratio of interns and residents to hospital beds.36

3. Cost Outliers Medicare makes additional payments for cases with extremely high overall costs, commonly referred to as "cost outliers." The CMS annually establishes the limits that must be met to qualify for "cost outlier" payments. If the cost of a particular case exceeds the limits, the hospital may qualify for a cost outlier payment. Cost outlier payments are not automatic; a hospital must make a specific request and must identify the actual costs associated with each outlier case.37

4. Disproportionate Share Payments Disproportionate share hospitals are hospitals that treat a large percentage of low income patients, including Medicaid and Medicare beneficiaries. The CMS makes additional payments to hospitals that qualify to account for the cost of treating this population.38



Other Special Payment Factors

In addition to the four factors discussed above, there are other factors considered in calculating DRG payments depending on whether the hospital is considered a sole community hospital, a Medicare dependent rural hospital, or a regional referral hospital. In each instance, there are special payment rules. A hospital may be designated as a sole community hospital if, among other things, it is (1) located more than 35 miles from another hospital, (2) the sole source of inpatient hospital services in a geographic area, or (3) designated by the Secretary as a "critical access hospital."39 A Medicare dependent rural hospital is one that depends on Medicare for at least 60 percent of its patient days or discharges. A regional referral hospital is one that serves as a referral center for other hospitals in its area.40 These hospitals are reimbursed according to the payment rate for large urban areas.

3.) Who does the actual contracting for the subcontracted services? (Meaning the services the hospital does not provide).



The Contracted Hospital would provide all care to our patients and only list services that they currently provide or will be able to provide with the use of subcontracted means. Some Contracted Hospitals subcontract certain aspects of the care they currently provide to other practice groups. We are looking for a single provider to provide as many of the services we have outlined in our solicitation.



4.) Do you want us to bill the VA like we bill all other payors'-we send a bill for our charges, and we get paid the contracted rate-or do you want us to bill the actual contracted rate.

The contracted rate would be the rate we would expect the Contracted Hospital to bill.

5.) If our organization has multiple entities would the VA expect only one invoice?



Yes we would like the Contracted Health Care Organization to pay any invoices and submit billing for any subcontractors or entities in one consolidated invoice to reduce duplicate invoicing. Or present a method or procedure to ensure that duplicate invoicing will not be an issue.