November 2011 Archives

November 30, 2011

Open Door Forum for Part A to Part B Rebilling Demonstration Program

This afternoon, CMS conducted the first special Open Door Forum (ODF) on the Part A to Part B Rebilling Demonstration Program. The ODF involved a brief overview of the Demonstration Program followed by many questions by the ODF participants. Although the ODF provided some clarification on the Demonstration Program, CMS' answers also gave rise to many concerns regarding the fairness of the Demonstration Program.

One of the most serious concerns is a Demonstration Program participant's right to appeal a denial of an inpatient claim. According to CMS' answers from callers' questions, participation in the Demonstration Program is "all-or-nothing". This means that if a participant's claim is denied for lack of medical necessity for services provided in the inpatient setting, the participant's only option is to resubmit the claim for outpatient reimbursement. Even if the participant disagrees with the contractor's denial of the inpatient claim, the participant will not be allowed to appeal the inpatient denial. Clearly this limitation has very serious consequences for hospitals because it requires participants to waive all of their due process rights for these claims. First, between the RAC Demonstration Program and Permanent Program we have had success in overturning 90% of short-stay inpatient claims denied for services provided in the wrong setting. Accordingly, requiring a hospital to waive the right to challenge these denials appears to be a high price to pay to participate in the AB Demonstration Program. The limitation highlights the inequity of a system where a provider must choose between either appealing the denial of an inpatient claim, but being unable to rebill the claim for outpatient reimbursement or rebilling the claim for 90% reimbursement of the outpatient claim, but waiving all due process rights.

In a program where RACs are paid through a contingency fee based upon the dollar amount of claims they deny, it is concerning that RACs now have an incentive and unbridled discretion to deny inpatient claims where there will be no right to appeal. During the ODF, CMS insisted that the RACs will not be informed of the hospitals participating in the demonstration program and thus, will not have an incentive to deny more inpatient claims. However, RACs will likely be able to deduce the participants because the participants will not appeal any inpatient claim denials and RACs contingency fee for participants will be different from non-participants. Specifically the contingency fees that RACs will receive as a result of denials from participants will not be the contingency fee of the full inpatient claim or the outpatient claim, but of the difference between the full inpatient claim and outpatient claim. This differential will be unique to program participants. Therefore, it is likely that RACs will know the participants of the Demonstration Program and could target them because of the participants' inability to appeal denied inpatient claims.

In the initial RAC Demonstration Program for six states, hospitals were allowed to rebill at any time during the appeals process. At a minimum, we urge hospitals to request that CMS allow an AB Demonstration Program participant to make a determination on a claim-by-claim basis on whether to rebill a claim for outpatient services or to appeal the denied inpatient claim.

For more information on the Demonstration Program, or to discuss the audit appeals process with a Wachler & Associates attorney, please visit www.racattorneys.com or call 248-544-0888.

November 30, 2011

CMS Releases Last Quarter's Data on Medicare RAC Collections

The Centers for Medicare and Medicaid Services (CMS) has recently released the Medicare RAC collections data for the last quarter of 2011 fiscal year. Recovery auditors identified $277.1 million in overpayments and $76.6 million in underpayments, for a total claims' correction of $353.7 million, which was 22 percent higher than the total corrected claims identified in the previous quarter.

CMS also released a supplemental report for the entire 2011 fiscal year. The total identified claim corrections for the fiscal year was $939.4 million in collected overpayments and $141.9 million in returned underpayments. These amounts greatly outnumber the corrected claims identified from 2010 fiscal year.

Currently, CMS' quarterly reports fail to mention the success rates of appeals, which would decrease the identified claim correction amounts. However, CMS has stated that it will begin to make official appeal rates available in its annual Report to Congress.

If you need assistance defending against RAC audits or implementing a compliance program that will help identify and correct potential risk areas related to RAC audits, please contact a Wachler & Associates attorney at 248-544-0888.

November 29, 2011

CMS Releases Part A to B Rebilling Demonstration Program Enrollment Application

This week CMS released more information regarding the Part A to Part B Rebilling Demonstration Program. Now available on CMS' website is the enrollment application for hospitals to complete to seek to participate in the program. The enrollment application includes language which reiterates that participation in the Demonstration Program is based on a first-come first-served process and applications will be classified based on facility size. According to the application, 80 large facilities (300+ Beds), 120 moderate facilities (100-299 Beds), and 180 small facilities (fewer than 100 Beds) will be allowed to participate.

In addition to the enrollment application, CMS published a 14-page document which outlines some of the Demonstration Program's details. The document, which may have been released in anticipation of the upcoming Open Door Forums, includes four requirements that participating providers must follow: (1) Not file an appeal; (2) Not bill the beneficiary more than any Part A inpatient deductible already collected from the beneficiary; (3) Refund to the beneficiary the difference between any Part A deductible/coinsurance and Part B deductible/coinsurance; (4) Not bill observation services (G0378). The requirement that participants do not file an appeal still evokes questions, specifically whether the bar on filing an appeal prevents participants from appealing a medical necessity determination for inpatient services if they volunteer for the demonstration program.

For more information on the AB Demonstration Program or assistance with determining a hospital's eligibility to participate in the program, please contact a Wachler & Associates attorney at 248-544-0888.

November 22, 2011

OIG Releases Report Highlighting ZPIC Oversight Issues

Recently, the Department of Health and Human Service's Office of Inspector General released a report which found that the workload data used by the Centers for Medicare and Medicaid Services (CMS) to oversee its Zone Program Integrity Contractors (ZPICs) were inaccurate and lacked uniformity.

The study was conducted by collecting and reviewing ZPICs' workload data related to investigations, case referrals, requests for information, and administrative actions between February 1, 2009 and October 31, 2009. The OIG only reviewed the information of the ZPICs for Zones 4 and 7 because they were the only ZPICs who had completed a full contract year at the time the study was conducted.

According to the OIG, one of the study's major objectives was to describe the extent of ZPICs' program integrity activities during the first year of operation. However, this objective went unachieved due to the inaccuracies and lack of uniformity which stemmed from system issues in CMS's Analysis, Reporting, and Tracking System (CMS ARTS), ZPIC reporting errors, ZPICs' interpretations of workload definitions, and inconsistencies in requests for information reports. The OIG also identified a number of issues inhibiting CMS from successfully overseeing ZPIC activities. The OIG has stressed that it is important that these issues are corrected so that CMS can properly analyze the ZPICs effectiveness and compare the ZPICs to their predecessors (Program Safeguard Contractors). The OIG has made a number of recommendations to CMS, which include that CMS:

  • Clarify the workload definition in CMS ARTS to ensure that ZPICs' workload statistics are accurate and that ZPICs report their data uniformly;
  • Improve oversight of ZPICs' by performing a timely review of data in CMS ARTS for each ZPIC and across ZPICs to detect any anomalies in workload reporting;
  • Utilize and report ZPIC workload statistics in ZPIC evaluations; and
  • Ensure that ZPICs have access to all data necessary to carry out their program integrity activities.

CMS has claimed that it has already complied with the OIG's first recommendation. Also, CMS concurred with the first part of the second recommendation, but it failed to concur with the second part of the second recommendation and stated that "anomalies cannot be detected across ZPICs because of the difference in fraud landscapes between ZPICs." In addition, CMS partially concurred with the OIG's third recommendation and fully concurred with the fourth.

If you have any questions relating to ZPIC audits, or need assistance in implementing an effective compliance program to protect against future ZPIC audits, please contact a Wachler & Associates attorney at 248-544-0888.

November 22, 2011

CMS to Release Comparative Billing Reports for Nerve Conduction Studies

The Centers for Medicare and Medicaid Services (CMS) recently announced it will release a national provider Comparative Billing Report (CBR) addressing Nerve Conduction Studies on December 6, 2011.

The CBRs are produced by Safeguard Services under contract with CMS and will provide comparative data to help show how these individual providers compare to other providers within the same field. These comparative studies are designed to help providers review their coding and billing practices and utilization patterns, and take proactive compliance measures. Providers should view CBRs as a tool, rather than a warning, as a way to aid them in properly complying with Medicare billing rules. It is also important to understand that CBRs do not contain patient or case-specific data, but rather only summary billing information as a method of ensuring privacy.

If you are a recipient of a CBR for Nerve Conduction Studies, or are among the other provider types that have been identified to receive CBRs (i.e. physical therapists, chiropractors, ambulance, hospice, podiatry, ordering DME and sleep studies), please contact a Wachler & Associates attorney at 248-544-0888 to discuss evaluating the CBR analysis and development of an appropriate compliance plan that will reduce audit risks.

November 21, 2011

CMS Announces Special Open Door Forum for Part A to Part B Rebilling Demonstration Program

On Friday, November 18, CMS released a Q&A about the Part A to Part B Rebilling Demonstration Program. Although the Q&A does not answer many of the questions that arose from the Fact Sheet released on November 15, it does give insight into when those answers could be provided. CMS will hold two special Open Door Forums, one on November 30, 2011 and another on December 8, 2011. Both will be conducted at 2pm EST.

In addition, the Q&A announced that enrollment for the Demonstration Program will begin on December 12, 2011 at 2pm EST and some hospital facilities will be ineligible to participate in the program. For instance, facilities that receive periodic interim payments from CMS and do not participate in Medicare, will not be able to participate. In addition, psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System, Inpatient Rehabilitation Facilities, Long-Term Care Hospitals, cancer hospitals, Critical Access Hospitals, and children's hospitals all are ineligible to participate.

Finally, the Q&A provided an email for additional questions regarding the Demonstration Program to be sent to CMS. This email is ABRebillingDemo@cms.hhs.gov.

Wachler & Associates will continue to monitor the developments of the Demonstration Program. Please contact a Wachler & Associates attorney if you have any questions regarding the Demonstration Program, including participation in the enrollment process or questions regarding the RAC appeals process.

November 17, 2011

HHS' OCR Set to Begin HIPAA Audit Pilot Program

The Department of Health and Human Services (HHS) is required by the American Recovery and Reinvestment Act of 2009 to provide periodic audits to ensure covered entities are in compliance with the privacy and security rules of HIPAA. To satisfy the requirements under the Act, HHS' Office for Civil Rights (OCR) initiated its pilot program to perform HIPAA audits of covered entities. OCR has awarded KPMG with the contract to conduct the audits. The audits under the pilot program are scheduled to begin this month and continue until the end of 2012. HHS believes that these audits "present a new opportunity to examine mechanisms for compliance, identify best practices and discover risks and vulnerabilities that may not have come to light through OCR's ongoing complaint investigations and compliance reviews"

The first round of the pilot program will consist of 20 audits targeting covered entities of various sizes and specialties throughout the healthcare industry. The selected entities will be notified, in writing, by OCR that they have been selected for an audit. The written notification will explain the audit process and will also ask the entity to provide OCR with documentation of their privacy and security compliance efforts. The time allotted for the selected entities to satisfy the initial documentation request is 10 days. After OCR receives the requested documentation, entities will be notified that an onsite visit will be conducted. The onsite visit will likely take place between 30 and 90 days after the entity has been notified of the visit. Upon completion of the visit, the entity will be provided with a draft final report. Once received, the entity is given the opportunity to provide the auditor with written comments. After reviewing the entity's comments, the auditor will submit a final audit report to OCR.

OCR plans to use the findings in the audit report to determine what types of technical assistance should be developed, and which types of corrective actions are most effective. By the end of 2012, OCR plans to conduct as many as 150 audits. The pilot program will be used by OCR to determine the most successful methods for conducting HIPAA audits in the future.

If you have any questions regarding HIPAA audits, or have concerns pertaining to your current compliance methods, please contact a Wachler & Associates attorney at 248-544-0888.

November 17, 2011

CMS Announces RAC Pre-Payment Review Demonstration Program

The Centers for Medicare & Medicaid Services announced a Recovery Audit Contractor ("RAC") Pre-Payment Review Demonstration Program on November 15, 2011. The announcement of this program is a major shift in the RAC program because previously RACs were only allowed to conduct post-payment reviews of providers. Although the program is a demonstration and will only affect providers in 11 states, it confirms that CMS policy has shifted from the "pay and chase" model to a more aggressive, proactive and preventative model.

The Pre-Payment Review Demonstration Program ("Demonstration Program") will be conducted for three years from January 1, 2012 to December 31, 2014. It will be implemented in 11 states. Seven of the states were chosen because of "a high level of fraudulent claims and providers" (MI, FL, CA, TX, NY, LA and IL) and the remaining four states were chosen because of high claims volumes of short inpatient hospital stays (PA, OH, NC and MO). The Demonstration Program will build on the RACs' existing infrastructure to review claims and will initially focus on inpatient hospital claims, specifically short stays. CMS will choose more specific claim types of reviews as the Demonstration Program continues and RACs will review the claims selected.

The Pre-Payment Review RAC Demonstration Program reflects the ongoing difficulty to balance Medicare program integrity and the detrimental effect a pre-payment review has on Medicare providers. Pre-payment review is an aggressive method for contractors to audit providers and proactively prevent improper payments. However, pre-payment review threatens providers because it significantly impacts cash flow and there are no substantive criteria or procedures in place to determine placement on or removal from pre-payment review. With the harsh impacts of pre-payment review on providers, we also have concerns about RAC auditors being financially incentivized through a contingency fee to place providers on pre-payment review.

For more information on pre-payment review, the RAC Demonstration Program for pre-payment review or RAC audits, please contact a Wachler & Associates attorney at 248-544-0888.

November 16, 2011

CMS Announces Part A to Part B Rebilling Demonstration Program

Yesterday, the Centers for Medicare & Medicaid Services ("CMS") announced the Part A to Part B Rebilling Demonstration Program ("Demonstration Program"). The Demonstration Program will allow a select number of hospitals to receive 90 percent reimbursement of the Part B payment for Part A inpatient short stay claims that are denied on the basis that an inpatient claim was not medically necessary and reasonable because the services were not provided in the appropriate care setting.

Wachler & Associates, P.C. has been instrumental in the effort to obtain Part B reimbursement for hospitals with Part A claims denied as not medically necessary and reasonable. Along with the American Hospital Association ("AHA") and other industry leaders, Wachler & Associates has met with CMS three times since 2009 to realize Part B reimbursement for hospitals. From the CMS announcement on November 15, it appears that the persistence has resulted in a Demonstration Program that achieves some, but not all, of the industry's goals.

The Demonstration Program will be conducted for 3 years, beginning on January 1, 2012 and ending on December 31, 2014. Up to 380 hospitals will be chosen to participate in the Demonstration Program and will be accepted on a first-come, first-served basis. In addition, there will be a maximum amount for small, medium and large facilities.

The announcement by CMS of the Demonstration Program was followed by a fact sheet that outlines the program. However, some of the language in the fact sheet creates more questions than answers about the Demonstration Program. It appears from the fact sheet that participating hospitals will receive 90 percent of Part B reimbursement for Part A claims that are denied. It is clear that the participants will be required to waive appeal rights to those Part A claims resubmitted for Part B payment. One of the many questions is when a participating hospital will be required to waive the appeals rights. For example, will a hospital in the Demonstration Program be required to waive appeal rights immediately upon a Part A denial without any right to appeal that claim? Or, after a denial, will the hospital be required to choose whether it wants to appeal or resubmit for Part B payment? Or, may a hospital in the Demonstration Program appeal and at any time during the appeals process waive future appeal rights in order to resubmit for Part B payment? These uncertainties have serious implications for hospitals and may affect a hospital's decision to participate in the program.

Those hospitals that do not participate in the Demonstration Program must decide whether to pursue the appeals process. According to the Demonstration Program, if a hospital is not a part of the program, it will be required to proceed through the appeals process to receive Part B payment. Wachler & Associates has extensive experience with defending providers during appeals and emphasizes the importance of legal counsel during the appeals process, particularly at the Administrative Law Judge (ALJ) hearing where we have had success obtaining orders for Part B payment.

Wachler & Associates will continue to monitor the developments of the Demonstration Program. Please contact Andrew Wachler if you have any questions regarding the Demonstration Program, including submitting applications for the program, or questions regarding the RAC appeals process.

November 10, 2011

Recent RAC Activity

DCS Healthcare, RAC for Region A, recently added four new issues for providers in Maryland and 16 new issues for providers in all Region A states to its CMS-approved issues list. Listed below are 6 examples of approved issues. Please visit DCS Healthcare's website to view the remaining issues.

  • Musculoskeletal disorders MS-DRGs: 542-566. Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. MS-DRG: 542-566 (Maryland)
  • Infections MS-DRG: 094-096;177-179;488-489;539-41;602-603;689-690;856-858;862-9;871-872;977. Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. (Maryland)
  • Renal and urinary tract disorders. Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. (Maryland)
  • Surgical cardiovascular procedures MS-DRGs: 246-254, 263-265. Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. (Maryland)
  • MS-DRG 081 nontraumatic stupor and coma without MCC. Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. (All region A)
  • MS-DRG 184 major chest trauma with CC. Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary. (All region A)

Connolly Healthcare, RAC for Region C, recently added six new issues to its CMS-approved issues list.

  • Inappropriate billing of spring powered device (A4258). More than one spring powered device (A4258) per six months is not considered medically necessary.
  • Outpatient claims billed within a PPS inpatient admission. The reimbursement of outpatient services within a PPS hospital stay is considered a duplicate payment in the Medicare Claims Processing Manual. This reimbursement would be an overpayment for services that were previously processed and paid.
  • Inappropriate screening/diagnostic mammography payments. Local Coverage Determination policy has indicated specific conditions or diagnoses that are covered for screening (77057, G0202) and diagnostic (77051, 77055, 77056, G0204, G0206) mammography services. Outpatient claims have been identified where the first-listed and/or other diagnosis codes do not match to the covered diagnosis codes in the LCD policies.
  • Multi-dose vial waste: Trastuzumab (Herceptin), J9355 outpatient hospital. Per its package label, Trastuzumab/Herceptin (J9355: INJECTION, TRASTUZUMAB, 10 MG) is supplied from the manufacturer in a 440mg multi-dose vial. Providers should only be billing units of J9355 associated with the amount of the drug administered to the patient. Drug waste is not paid and should not be billed for drugs supplied in multi-dose vials.
  • Bevacizumab - non-covered Dx. Local Coverage Determination policy has indicated specific conditions or diagnoses that are covered for Bevacizumab injections. Bevacizumab outpatient claims have been identified where the first-listed and/or other diagnosis codes do not match to the covered diagnosis codes in the LCD policies.
  • Ambulance/transport services provided during an inpatient hospitalization. Ambulance transports provided by hospital-based ambulance suppliers to beneficiaries who are in an inpatient stay are the responsibility of the inpatient hospital provider with the exception of transports on the day of admission, day of discharge and during a leave of absence from the inpatient facility.

HealthDataInsights, RAC for Region D, recently added 25 new issues to its CMS-approved issues list. Listed below are three examples of approved issues. Please visit HealthDataInsight's website to view the remaining issues.

  • Complications of treatment with CC (DRG 920). Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.
  • Poisoning and toxic effects of drugs with MCC (DRG 917). Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.
  • Traumatic injury with MCC (DRG 913). Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

If you need assistance defending against RAC audits or implementing a compliance program that will help identify and correct potential risk areas related to RAC audits, please contact a Wachler & Associates attorney at 248-544-0888.

November 8, 2011

Physician Payment Sunshine Act Rules Delayed

HHS this week announced that it would again delay publishing rules implementing the Physician Payments Sunshine Act ("PPSA"), established in last year's Patient Protection and Affordable Care Act ("PPACA" or "health reform"). PPSA requires drug and medical device manufacturers to publicly report gifts and payments made to physicians and teaching hospitals. While the law requires public disclosure on an annual basis, it does not limit financial relationships between drug and device manufacturers and physicians.

The penalties for non-compliance with this law are fines up to $10,000 per occurrence, not to exceed $150,000 per year, and for each knowing failure to report, the fines are increased to up to $100,000 per occurrence and $1 million aggregate per year.

Beginning January 1, 2012 all drug and device manufacturers must record all gifts and payments to physicians and teaching hospitals. Manufactures must report this information to HHS by March 31, 2013, for HHS publication beginning September 30, 2013.

If you are a drug or medical device manufacturer required to report or a physician or teaching hospital concerned with possible reporting, and have questions about these new requirements, please contact a Wachler and Associates attorney at 248-544-0888.