December 2011 Archives

December 30, 2011

CMS Announces Delay of Power Mobility Device Demonstration Program

On December 29, the Centers for Medicare and Medicaid Services (CMS) announced that it would delay the start of the Prepayment Review and Prior Authorization of Power Mobility Devices (PMDs) Demonstration Program. CMS originally announced the demonstration program on November 15 and followed the announcement with special Open Door Forums explaining the program's implications for providers and suppliers. During the Open Door Forums suppliers expressed their concerns that the program would have dire consequences for suppliers of power mobility devices. Some suppliers also questioned CMS' failure to consult with industry leaders prior to announcing the demonstration program.

The industry's pressure was effective. CMS' decision to delay the start of the program was a result of "intensive collaboration" between CMS and AAHomecare. Industry leaders also obtained support from a number of members of Congress who wrote a letter to Marilyn Tavenner, the Acting Administrator of CMS, to delay the implementation of the program and work with industry leaders. In a press release, AAHomecare's Vice President of Government Affairs, Walt Gorski stated, "we are pleased that CMS has taken a deep breath to understand the power mobility sector and the impact that any widespread prepayment review would have on Medicare beneficiaries and homecare providers."

It is unclear at this time how long the start of the program will be delayed. CMS stated that it will review the comments and suggestions provided by industry stakeholders and will provide at least 30 days' notice prior to the demonstration program implementation date.

For more information on the demonstration programs announced on November 15 or assistance with a Medicare audit, please visit or contact a Wachler & Associates attorney at 248-544-0888. 

December 29, 2011

CMS Implements 3-day Payment Window Policy for Wholly Owned or Wholly Operated Physician Practices

Recently, the Centers for Medicare and Medicaid Services (CMS) released Change Request 7502 relating to the 3-day payment window policy. For services on or after January 1, 2012, the 3-day payment window will apply when a patient is seen in a physician practice that is wholly owned or wholly operated by a hospital and is admitted as an inpatient within 3-days (or, in the case of non-IPPS hospitals, one day). The window will apply to diagnostic and nondiagnostic services that are clinically related to the reason for the patient's inpatient admission, regardless of whether the inpatient diagnosis is the same as the outpatient diagnosis.

For claims with dates of service on or after January 1, 2012, a new modifier PD is available and must be appended to the entity's preadmission diagnostic services, as well as nondiagnostic services related to the admission. When a related inpatient admission has occurred, the wholly owned or wholly operated entity will need to manage their billing processes to ensure that they bill for their physician services appropriately. The hospital is responsible for notifying the wholly owned or wholly operated entity that a patient has been admitted as an inpatient when the entity provided services to the patient within the 3-day window.

When the modifier is present on claims for services, CMS shall pay:

  • Only the Professional Component (PC) for CPT/HCPCS codes with a Technical Component (TC)/PC split that are provided in the 3-calendar day (or, 1-calendar day for non-IPPS) payment window, and
  • The facility rate for codes without a TC/PC split.

In order to ensure proper compliance with the 3-day payment window policy, entities and their hospitals should begin to coordinate their billing practices and claims processing procedures. If you have any compliance questions relating to the 3-day payment window policy, or any other compliance questions, please contact a Wachler & Associates attorney at 248-544-0888.

December 23, 2011

Ten Highlights from the Proposed Physician Payment Sunshine Act Rule

In the December 19, 2011 Federal Register, CMS published a Proposed Rule to implement the "Physician Payment Sunshine Act" portion of Patient Protection and Affordable Care Act (PPACA), or health care reform, which requires drug, medical device, biological and medical supply manufacturers to track and report payments made to physicians and teaching hospitals. The Proposed Rule clarifies several components of the Physician Payment Sunshine Act, including the following:

1. Applicable manufacturers must report the required information to CMS in an electronic format by March 31, 2013 and on the 90th day of each calendar year thereafter.

2. The Physician Payment Sunshine Act will apply to any manufacturer whose products are sold or distributed in the United States regardless of where they are manufactured.

3. Payment includes any "transfer of value" including, without limitation: consulting fees, compensation for services other than consultation, honoraria, gifts, entertainment, food, travel, education, research, charitable contributions, royalties or licenses, current or prospective ownership or investment interests, speaker fees, faculty fees, and grants.

4. When reporting "transfers of value" to physicians, the payments must be broken down into specific categories.

5. Over the counter (OTC) drugs/biologicals are excluded from the Physician Payment Sunshine Act's reporting requirements, as are devices that do not require premarket approval by or notification to the FDA.

6. Payments through a physician group practice must be reported individually under the individual physicians' names.

7. For purposes of the Physician Payment Sunshine Act, physician owned distributorships (PODs) are considered a Group Purchasing Organization and must comply with the reporting requirements with regard to physician investment/ownership interests and other "transfers of value."

8. Ownership/investment interests will be defined in a manner similar to the manner in which they are defined in the Stark laws and will include investments/ownership interests of immediate family members (using the same definition as the Stark regulations, i.e., spouse, child, parent, sibling, or grandparent - including "step" and adoptive relationships).

9. A recipient physician will be given 45 days to review reported information prior to it being made available to the public.

10. Civil Monetary Penalties (CMPs) will be imposed for failure to report.

If you have questions about the Physician Payment Sunshine Act, health care reform (PPACA), Stark law, or any other fraud and abuse issues, please contact a Wachler and Associates, P.C. attorney by email or by phone at 248-544-0888.

December 22, 2011

CMS' Special Open Door Forum on Recovery Auditor Pre-Payment Review Demonstration Program

On December 21, the Centers for Medicare & Medicaid Services ("CMS") held a special Open Door Forum ("ODF") for the Recovery Auditor Pre-Payment Review Demonstration Program announced on November 15 along with two other demonstration programs, all of which will become effective on January 1, 2012.

The ODF, in which 1600 callers participated, addressed the purposes and the operational aspects of the program. CMS explained that they developed the program in an effort to reduce the error rate for improper payments, prevent improper payments before they are made and to focus on claims with high improper payment rates.

The demonstration program will begin with the pre-payment review of short-stay inpatient hospital claims (two days or less) for hospitals located in the eleven states affected by the demonstration program. Specifically, one MS-DRG, 312 Syncope & Collapse, will be reviewed beginning January 1. In March and then again in May CMS will add two more MS-DRGs and in July CMS will add three more. Thus, by July there will be eight DRGs subject to pre-payment review under the demonstration program:

MS-DRGs for Review:

January 1: MS-DRG 312 Syncope & Collapse

March 1: MS-DRG 069 Transient Ischemia and MS-DRG 377 G.I. Hemorrhage W MCC

May 1: MS-DRG 378 G.I. Hemorrhage W CC and MS-DRG 379 G.I. Hemorrhage W/O CC/MCC

July 1: MS-DRG 637 Diabetes W MCC, MS-DRG 638 Diabetes W CC and MS-DRG 639 Diabetes W/O CC/MCC

Many of the questions asked by the callers revolved around the operational aspects of the program. CMS stated that even though the claims identified for pre-payment review are subject to pre-payment review, there will not be a 100% review of all of those claims. CMS would not, however, state what the percentage of claims reviewed would be. In addition, CMS explained that claims subject to pre-payment review will be suspended and then the provider will receive an Additional Documentation Request (ADR). Providers will receive the ADRs electronically and the ADR will state whether the provider should send the documentation to their MAC or to their RAC. Providers will have 30 days to submit documentation and will receive an automatic denial if they do not send the documentation within 45 days.

Another interesting development from the ODF arose from the relationship between the AB Rebilling Demonstration Program and the Recovery Auditor Pre-Payment Review Demonstration Program. In response to one caller's question, CMS confirmed that if a participant of the AB Rebilling Demonstration Program is also located in a state subject to the Pre-Payment Review Demonstration Program, then that provider will be unable to appeal short-stay inpatient claims denied on pre-payment review, but they will be able to rebill for Part B reimbursement.

The most severe consequence of the pre-payment review demonstration program is the effect it will have on providers' cash flow. As more claims and services are added to the list for pre-payment review, providers will be forced to absorb more costs from services that are denied. If a provider decides to appeal the denials, it could take over a year for them to reach the Administrative Law Judge hearing stage. Clearly, waiting a year for payment will have very serious implications on hospitals' ability to provide services.

For assistance with a Medicare appeal or for more information on the demonstration programs announced by CMS, please contact a Wachler & Associates attorney at 248-544-0888.

December 20, 2011

CMS to Reopen Home Health Claims Denied Based on Face-to-Face Requirements

CMS has announced that it is requiring Medicare to reopen claims that contractors denied because Home Health Agencies ("HHA") allegedly did not comply with "Face-to-Face" encounter requirements put in place by the Patient Protection and Affordable Care Act ("ACA"), or Health Reform legislation.

The Face-to-Face encounter rules require that the physician certifying the patient's need for home health care must have seen the patient "face-to-face" in order for Medicare to pay for a home healthcare episode. This encounter must take place either 90 days before the home health episode, or within 30 days of the beginning of home health care.

Providers brought to CMS' attention that contractors were inappropriately denying claims based on the face-to-face requirement in two situations following an acute or post-acute stay:

•- When the HHA used a single form for the plan of care and the certification using a single signature by a "community physician" who assumed the oversight of care for an HHA patient, and

•- When the physician who cared for the patient in the acute or post-acute setting is the certifying physician and has signed the face-to-face encounter attestation.

Typically the forms HHAs submit to Medicare have only one signature line for, potentially, two physicians-often the certifying physician will be different than the community physician overseeing a patient's care in an HHA. The physician who cared for a patient in an acute or post-acute setting may certify the patient's eligibility for home health services, provide face-to-face encounter documentation, and initiate a plan of care, while a community physician will assume responsibility of the patient's ongoing home health care and make changes and updates to the plan of care as needed.

Often, the HHA will have one physician sign the plan of care for a patient as well as the no-longer-required CMS-485 form, while another physician provides face-to-face encounter documentation in the form of an addendum to the CMS-485 form. In this case, CMS has determined that the physician who signed the plan of care is the physician responsible for oversight of the patient's home health care.

CMS has also identified situations in which the physician who signs the face-to-face documentation does not name the community physician taking oversight of the home care. CMS does not require that the face-to-face-signing physician provide specific documentation to the contractor regarding the transition to a different physician for home health oversight.

As a result, CMS is requiring all contractors reopen any claims denied for not having met face-to-face requirement, upon request of providers. Contractors are then required to assess whether the claims meet the face-to-face requirements. Even if a contractor determines that a certain claim meets these requirements, the contractor must subsequently perform a complete and full review of all Medicare requirements in order to determine that the claim is payable. If you are a home health agency or provider and believe that you have been subject to inappropriately denied claims that should be payable because the claims met the face-to-face encounter requirements, please contact a Wachler and Associates, P.C. attorney by email or by phone at 248-544-0888.

December 19, 2011

CMS Announces Special Open Door Forum for the Recovery Auditor Pre-Payment Review Demonstration Program

On Wednesday, December 21, the Centers for Medicare and Medicaid Services (CMS) will hold a Special Open Door Forum on the Recovery Auditor Pre-Payment Review Demonstration Program. The Demonstration Program is a mandatory program for providers in 11 states, including: CA, FL, IL, LA, MI, MO, NC, NY, OH, PA and TX. The program will involve Recovery Auditors' (RACs') pre-payment review of certain claims, beginning with hospital short-stay inpatient claims. After the November 15 announcement of the program, CMS has released very little details about the program. We encourage all Medicare providers in the 11 states, especially hospitals, to participate in the Open Door Forum. The details of the forum and call-in information are listed below.

For more information on CMS' recent demonstration projects or for assistance with appealing a Recovery Auditor's determination, please contact a Wachler & Associates attorney at 248-544-0888 or visit

Date: Wednesday, December 21, 2011

Time: 2:00-3:30 PM ET

Dial: 1-866-778-8325

Reference Conference ID#: 36846735

Materials for the conference will be available at:

December 5, 2011

CMS AB Demonstration Program: Hospitals' Participation in December 8 Open Door Forum

As discussed in earlier posts, hospitals that participate in CMS' upcoming Part A to Part B Rebilling Demonstration Program will be required to waive their right to appeal claims denied for lack of medical necessity for services provided in the inpatient setting. CMS' rationale for this "all or nothing" approach is the concern that a participating hospital could appeal the denial of the Part A inpatient claim and at the same time resubmit the claim for Part B reimbursement. As any participating provider that intentionally engages in that type of billing practice would expose themselves to liability for double-billing, it is unrealistic for CMS to anticipate that participation in the demonstration program would encourage this behavior. During the RAC demonstration programs, in which hospitals were afforded the flexibility denied to them for the AB demonstration program, there was no evidence that hospitals tried to "game" the system.

Further, despite CMS' overreaching concerns that hospitals will take advantage of a more flexible demonstration program that allowed case-by-case appeals, the agency's concerns do not extend to the likelihood that RACs will take advantage of the demonstration program's structure. CMS claims that the RACs will not know the hospitals that participate in the demonstration program, and therefore will not have an incentive to deny more claims from those hospitals knowing that they are immune from appeals. However, RACs will very likely know the participants because those hospitals will not submit appeals for the denied inpatient claims and the RACs will receive smaller contingency fees for those denied claims.

We strongly urge hospitals to participate in the CMS' December 8 special Open Door Forum (details below). During the Open Door Forum, hospitals should express their dismay with the current structure of the demonstration program, specifically the waiver of any appeal rights for denied inpatient claims. In addition, hospitals must incorporate into their RAC appeals process the effort to obtain Part B payment for inpatient services denied as not medically necessary. Only through a concerted effort by the hospital industry will we convince CMS to modify the current rebilling system.

For assistance with the appeals process, please visit or contact a Wachler & Associates attorney at 248-544-0888.

CMS Special Open Door Forum for the Part A to Part B Rebilling Demonstration Program:  December 8, 2011 at 2pm-3:30pm ET. Dial: 1-866-501-5502 Reference Conference ID#: 28779067 (Please dial in at least 15 minutes prior to call start time)