January 2012 Archives

January 30, 2012

CMS' Q4 Audit Program Activity: $353.7 Million in Improper Payments, Increased Focus on Medical Necessity Claims

The Centers for Medicare and Medicaid Services (CMS) publishes quarterly reports identifying improper payment figures and the top audit issues by region. The most recent "Q4" report, covering July 1, 2011 to September 30, 2011, demonstrates a 22% increase in the total correction amount from the previous quarter.

During this period, CMS identified $277.1 million in overpayments and $76.6 million in underpayments, for a total correction amount of $353.7 million. This figure represents a dramatic increase from the two previous quarterly improper payment totals of $208.9 million (Q2) and $289.3 million (Q3). The boost, which is consistent across all regions, indicates that individual recovery auditors nationwide are increasing their efforts to identify incorrect payments, and further supports the industry-wide belief that audits are expanding.

The Q4 recovery audit program update also demonstrates that auditors are increasingly targeting "medical necessity" claims, with a focus on supporting documentation and the setting in which these services are provided. The Q4 update highlighted the following "top issues per region" of the recovery audit program:

Region A - Renal and Urinary Tract Disorders: (Medical Necessity) Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with renal and urinary tract disorders needs to be complete and support all services provided.

Region B - Surgical Cardiovascular Procedures: (Medical Necessity) Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with surgical cardiovascular procedures needs to be complete and support all services provided.

Region C - Acute Inpatient Admission Neurological Disorders: (Medical Necessity) Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients admitted with neurological disorders needs to be complete and support all services provided.

Region D - Minor Surgery and other treatment billed as Inpatient: (Medical Necessity) When beneficiaries with known diagnoses enter a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for less than 24 hours, they are considered outpatient for coverage purposes regardless of the hour they presented to the hospital, whether a bed was used, and whether they remained in the hospital after midnight.

Continue reading "CMS' Q4 Audit Program Activity: $353.7 Million in Improper Payments, Increased Focus on Medical Necessity Claims" »

January 27, 2012

CMS Clarifies Procedure for MAC Claims Against DMEPOS Suppliers' Surety Bonds

All Medicare suppliers of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) must obtain and maintain a surety bond of at least $50,000 to participate in the Medicare program. A Centers for Medicare and Medicaid Services (CMS) recent transmittal, effective February 21, clarifies this requirement and describes the procedures that DME Medicare Administrative Contractors (MACs) must follow when making claims against a provider's surety bond.

Under 42 CFR § 424.57(d)(5)(i), a surety is liable to CMS for 1) the amount of any unpaid claim, plus accrued interest, for which the supplier of DMEPOS is responsible, and 2) the amount of any unpaid claim, civil monetary penalty (CMP) or assessment imposed by CMS or the Office of Inspector General (OIG) on the DMEPOS supplier, plus interest.

First, the DME MACs will notify the surety that payment of a claim must be made to CMS within 30 days. The letter must 1) identify the specific amount to be paid, 2) be accompanied by "sufficient evidence" of the unpaid claim, 3) state that payment shall be made via check or money order and that the Payee shall be the DME MAC, and 4) identify the address to which payment shall be sent. The DME MAC will notify the supplier when payment has been made.

DMEPOS suppliers must then obtain an additional surety bond within 30 calendar days of that letter, and submit to the National Supplier Clearinghouse (NSC) additional coverage of an amount that equals or, in the case of a final adverse action, exceeds $50,000. Suppliers must be aware that failure to submit such additional surety bond coverage within 30 days may result in the NSC revoking the supplier's Medicare billing privileges.

If the DMEPOS supplier successfully appeals, CMS will notify the surety via letter and repay the surety within 30 days. Although a supplier may want to avoid the necessity of securing an additional surety bond, the DMEPOS appeals process may take longer than 30 days and prudent DMEPOS suppliers should obtain additional coverage to ensure continued Medicare billing privileges.

Continue reading "CMS Clarifies Procedure for MAC Claims Against DMEPOS Suppliers' Surety Bonds" »

January 25, 2012

CMS Publishes Important Reminder to Providers and Suppliers Regarding Referred or Ordered Services and Items

The Centers for Medicare and Medicaid Services (CMS) recently published an important reminder for all providers and suppliers who provide services and items ordered or referred by other providers and suppliers. The reminder states that Medicare will only pay for items or services for Medicare beneficiaries that have been ordered by a physician or eligible profession enrolled in the Medicare program, and that the individual National Provider Identifier (NPI) of the referring provider or supplier must be included in any claim to Medicare. 

CMS also emphasizes that providers and suppliers must ensure that any items or services submitted in Medicare claims were referred by Medicare-enrolled providers of a specialty type authorized to order or refer such services. Further, Medicare will only reimburse for specific items or services ordered or referred by providers or suppliers that are authorized by statute and regulation. Specifically, CMS highlighted that:

  • Chiropractors are not eligible to order or refer supplies or services of Medicare beneficiaries. Consequently, all services ordered or referred by a chiropractor will be denied.
  • Home Health Agency (HHA) services may only be ordered or referred by a Doctor of Medicine (M.D.), Doctor of Osteopathy (D.O.) or Doctor of Podiatric Medicine (DPM). Thus, claims for HHA services ordered by any other practitioner specialty will be denied.
  • Portable X-Ray services may only be ordered by a Doctor of Medicine or Doctor of Osteopathy. Portable X-Ray services ordered by any other practitioners will be denied.

Through this "important reminder," CMS emphasizes the necessary standards and documentation for healthcare providers and suppliers to successfully bill for providing referred services or items. The reminder demonstrates CMS' continued focus on ensuring proper referral arrangements and supporting documentation.

Continue reading "CMS Publishes Important Reminder to Providers and Suppliers Regarding Referred or Ordered Services and Items" »

January 23, 2012

RACs Target Skilled Nursing Facilities with High Therapy Resource Utilization Groups

Recent Recovery Audit Contractor (RAC) activity demonstrates that the Centers for Medicare and Medicaid Services (CMS) may soon allow RACs to target skilled nursing facilities (SNFs) with certain levels of Ultra High Therapy Resource Utilization Groups (RUGs). 

Although Ultra High Therapy Resource Utilization Groups are not currently a CMS-approved audit topic, RACs are permitted to audit "test claims" and suggest new audit activity based on the results. In a recent demand letter, the RAC stated that the Office of Inspector General (OIG) of the U.S. Department of Health & Human Services has found an "overwhelming majority of error in assignments by providers under the RUGs categorization system to Ultra High Therapy RUGs, resulting in overpayments to SNFs."

These claims arose out of a 2010 OIG report which alleged that 1) SNFs are increasingly billing higher-paying RUGs, 2) for-profit SNFs are more likely than nonprofit SNFs to bill for higher-paying RUGs, and 3) in general, many SNFs maintain questionable billing for therapy services.

Specifically, the RAC claims that the OIG identified as "...errors in the sample could be traced to the providers' therapy minutes recorded on the Minimum Data Set not matching the minutes recorded in the medical record and the patient's care and resource needs." Further, it seems that SNFs with 10-15% of residents in the Ultra High Therapy RUGs category may be subject to RAC audits.

If the issue is approved by CMS, RACs will begin burdensome document requests and therapy audits nationwide. Providers of Ultra High Therapy RUGs should consider self-auditing internal records in order to ensure that the minutes of therapy and other medical records support the therapy provided.

If you need assistance with an internal audit, or implementing compliance program to identify and correct potential risk areas related to RAC audits, please contact a Wachler & Associates attorney at 248-544-0888. 

January 19, 2012

CMS Clarification of 3-Day Payment Window when Inpatient Admission is Denied

In a recent revision of its billing instructions, CMS clarified that when an inpatient stay is determined not to be covered by Part A (e.g. determined not medically necessary or otherwise denied by a Medicare audit or internal audit), there is no inpatient stay, and therefore the outpatient services provided on the date of admission or the preceding 3 calendar days are not required to be bundled. See Medicare Claims Processing Manual, Chapter 4, Section 10.12 and Chapter 1, Section 50.3.2 for the updated billing guidelines. MLN Matters article MM7672 clarifies that if the Part A stay is determined to be non-covered, the Part B services provided prior to the admission (i.e., prior to the admission order), which would otherwise be bundled into the inpatient claim, may be billed separately as if the admission did not take place.

Generally, the 3-day payment window policy requires that all diagnostic outpatient services and non-diagnostic outpatient services related to the inpatient admission provided to a Medicare beneficiary by a hospital (or an entity wholly owned or wholly operated by the hospital) on the date of the beneficiary's inpatient admission or during the 3 calendar immediately preceding the date of admission are to be included on the bill for the inpatient stay. However, outpatient diagnostic services that are unrelated to the inpatient admission, and are covered by Part B, may be billed separately to Part B.

The limit on this positive development is that the audit denial would need to occur within one year of the date of service in order to meet the timely filing limitations. For instance, if a RAC auditor determines that the inpatient stay is not covered by Part A and that finding occurs after the one year filing limitation, the hospital would likely be unable to bill the services to Part B for reimbursement.

In order to ensure proper compliance with the 3-day payment window policy, hospitals and their entities should work to coordinate their billing practices and claims processing procedures. In addition, hospitals should take additional compliance measures to review inpatient claim denials and determine if diagnostic and non-diagnostic outpatient procedures can be billed under Part B. If you have compliance questions regarding the clarification of the 3-day payment window policy, or any other compliance questions, please contact a Wachler & Associates attorney at 248-544-0888.

January 17, 2012

Recent RAC Activity

DCS Healthcare, RAC for Region A, recently added 40 new issues to its CMS-approved issues list for providers in Pennsylvania, Delaware, Connecticut, New Jersey, New York, New Hampshire, Massachusetts, Maine, Vermont and D.C. A sampling of the newly approved issues is included below. Please visit DCS Healthcare's website to view the remaining issues.

  • Medical Necessity Review (MNR) for MS-DRG 922 Other Injury, Poisoning and Toxic Effect Diagnosis with 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. This review will be of MS-DRG 922 Other Injury, Poisoning and Toxic Effect Diagnosis with MCC.
  • Medical Necessity Review (MNR) for MS-DRG 464 Wound Debridement and Skin Graft Except Hand, for Musculo-Connective Tissue Disorders 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. This review will be of MS-DRG 464 Wound Debridement and Skin Graft Except Hand, for Musculo-Connective Tissue Disorders with CC.
  • Medical Necessity Review (MNR) for MS-DRG 617 Amputation of Lower Limb for Endocrine, Nutritional, and Metabolic Disorders with CC Disorders 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. This review will be of MS-DRG 617 Amputation of Lower Limb for Endocrine, Nutritional, and Metabolic Disorders with CC.
  • Medical Necessity Review (MNR) for MS-DRG 215 Other Heart Assist System Implant. 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. This review will be of MS-DRG 215 Other Heart Assist System Implant.
  • Medical Necessity Review (MNR) for MS-DRG 734 Pelvic Evisceration, Radical Hysterectomy and Radical Vulvectomy with CC-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. This review will be of MS-DRG 734 Pelvic Evisceration, Radical Hysterectomy and Radical Vulvectomy with CC-MCC.
  • Medical Necessity Review (MNR) for MS-DRG 836 Acute Leukemia without Major O.R. Procedure 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. This review will be of MS-DRG 836 Acute Leukemia without Major O.R. Procedure with CC.
  • Medical Necessity Review (MNR) for MS-DRG 340 Appendectomy with Complicated Principal Diagnosis without CC-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. This review will be of MS-DRG 340 Appendectomy with Complicated Principal Diagnosis without CC-MCC.

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

  • Incorrect payments for Maintenance and Servicing of capped rental DME. Payment for maintenance and servicing of capped rental DME equipment is included in the rental payments, and should not be reimbursed separately.
  • Incorrect modifiers billed with bilateral indicator 2 - OP. Certain modifiers cannot be billed with Bilateral Surgery Indicator 2 because the Relative Value Units (RVUs) are already based on the procedure being performed as a bilateral procedure.

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.

January 13, 2012

CNN Quotes Managing Partner Andrew Wachler on ABIM Allegations

Last year, the American Board of Internal Medicine (ABIM) suspended 139 doctors following an investigation into the practices of the Arora Board Review test-prep company. ABIM claimed that the doctors violated ethical and conduct standards by providing test questions to the company.

Wachler & Associates represented over 40 doctors that were suspended without regard to their individual behavior and circumstances. The story, however, has gained national traction and appeared today on the front page of CNN's website.

CNN traveled to our offices in Royal Oak, MI to interview Andrew Wachler, managing partner of Wachler and Associates. The following is an excerpt from the article:

Most of the cases against the suspended doctors have been resolved. Drew Wachler, an attorney who handled many of those cases, told CNN, "The cases were really resolved through settlement agreements with ABIM."

"We articulated the impact on these physicians," Wachler said. "We tried to present their body of work throughout their entire careers, looking at the extraordinary references they received, their conduct throughout medical school, residencies. It was resolved in that fashion."

Mr. Wachler's comments demonstrate the due process and individual consideration we fought to ensure each doctor received during the appeal process. For all healthcare providers, ethical and integrity matters are exacerbated by related issues such as licensing, participation in managed care organizations, and staff privileges. This issue highlights the collateral consequences that may be impacted by board certification, thus requiring doctors to always defend claims to ensure their continued ability to practice medicine.

A short version of this story will air on January 13th at 8:00 p.m. ET on CNN's "AC360," and the full version will air on "CNN Presents," January 14th and 15th at 8:00 p.m. and 11:00 p.m. ET.

If you have any questions or concerns regarding the ABIM suspensions or appeal process, or if you are facing board certification, licensure, managed care participation, or staff privilege issues, please contact a Wachler & Associates attorney at 248-544-0888.

January 5, 2012

CMS Announces Interim Final Rule Creating New Standards for EFTs

Today, the Centers for Medicare and Medicaid Services (CMS) announced an interim final rule with comment period which creates new standards for electronic funds transfers (EFT) and remittance advice transaction (RA) under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). According to the U.S. Department of Health and Human Services (HHS), the new standards will save physician practices and hospitals between $3 and $4.5 billion over the next ten years, as well as result in an estimated savings of 800,000 pounds of paper due to the elimination of paper checks.

HHS will require health plans to comply with two standards when transmitting EFT payments to providers: (1) a standard format for when a health plan orders, authorizes, or initiates an EFT with its financial institution, and (2) specification of the data content to be contained within the EFT. Currently, when a provider submits a claim for payment electronically, the RA is often sent separately from the EFT payment, making it difficult for the provider to match the bill with the corresponding payment. The new rule seeks to eliminate these errors by requiring the use of a trace number that automatically connects the RA to the EFT.

Today's regulation is the second in the series of regulations that CMS is required to design by Section 1104 of the Patient Protection and Affordable Care Act of 2010. The first regulation was announced last July. It implemented operating rules for two electronic health care transactions that give providers a simpler method to determine whether a patient is eligible for coverage and the status of a health claim submitted.

The effective date of the announced regulation was January 1, 2012, and entities covered under HIPAA must be in compliance with the newly created standards by January 1, 2014.

If you have any questions regarding electronic funds transfers, or any other compliance issues, please contact a Wachler & Associates attorney at 248-544-0888.

January 3, 2012

CMS has Delayed the Recovery Auditor Pre-Payment Review Demonstration Program

Last week, CMS announced its decision to delay the Recovery Auditor Pre-Payment Review Demonstration Program until further notice. On its website CMS indicated that the delay was due to comments/suggestions received regarding the program and CMS' commitment to consider the comments carefully. Although it is unclear at this time whether CMS will eventually implement the demonstration program as it was initially announced or make significant changes to the program, CMS confirmed that it will provide at least 30 days notice before the demonstration program begins.

For more information on pre-payment review and strategies to utilize if on pre-payment review, please contact Wachler & Associates attorney at 248-544-0888 or visit www.racattorneys.com.