September 2012 Archives

September 28, 2012

HHS Office of Civil Rights Secures $1.5 million HIPAA Settlement

The U.S. Department of Health and Human Services (HHS) recently agreed to a $1.5 million settlement with the Massachusetts Eye and Ear Infirmary for violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule.

The HIPAA Security Rule protects electronic health information by requiring HIPAA-covered entities to use various safeguards to ensure that electronic protected health information remains private and secure. The Privacy Rule, by contrast, grants individuals rights over protected health information, and sets rules for who may view that information.

MEEI submitted a HIPAA breach report, as required by HIPAA's Breach Notification Rule, following the theft of an unencrypted personal laptop. The laptop contained electronic protected health information (ePHI), including patient prescriptions and clinical information.

The HHS Office for Civil Rights (OCR) , which enforces HIPAA Privacy and Security Rules, determined that the provider failed to take necessary steps to comply with the Security rule, including:

  • Conducting a thorough analysis of the risk to the confidentiality of ePHI maintained on portable devices;
  • Implementing security measures sufficient to ensure the confidentiality of ePHI that MEEI created, maintained and transmitted using portable devices;
  • Adopting and implementing policies and procedures to restrict access to ePHI to authorized users of portable devices; and
  • Adopting and implementing policies and procedures to address security incident identification, reporting, and response.
The OCR investigation found that these failures existed over an extended period of time, demonstrating organizational disregard for the requirements of the Security Rule. Accordingly, MEEI must also follow a corrective action plan to revise and maintain policies to ensure compliance. The corrective action plan includes an independent monitor to assess MEEI's compliance with the settlement and render reports to HHS for 3-years.

HIPAA Privacy and Security Rules, together with the HIPAA Breach Notification Rule, require health care providers and suppliers to proactively manage the security of their protected health information. MEEI's settlement highlights the importance of compliance programs to avoid, and promptly report, potential HIPAA violations.

If you have questions about HIPAA compliance, or need help creating and implementing a compliance plan, please contact an experienced healthcare attorney at Wachler & Associates, at 248-544-0888.

September 25, 2012

OMB Issues Report to Congress Warning of $11.1 Billion Medicare Cut

On September 14, 2012 the Office of Management and Budget (OMB) issued a report to Congress pursuant to the Sequestration Transparency Act of 2012 (STA). The report indicates that under the Budget Control Act of 2011 (BCA), Medicare spending could be cut by almost $11.1 billion in fiscal year 2013 if a plan is not enacted to reduce the national deficit by $1.2 trillion.

The BCA requires that the Joint Select Committee on Deficit Reduction propose a plan to reduce the deficit by $1.2 trillion, and that Congress enact that plan. If a plan is not enacted by January 2, 2013, automatic spending cuts, known as sequestration, will occur on that date. Medicare direct spending is budgeted at almost $554.3 billion. The BCA limits the amount by which Medicare non-administrative spending can be cut to 2%. This would equal roughly $11.1 billion in fiscal year 2013. Because the sequestration would apply to non-administrative spending, providers would likely see a majority of the effects of the sequestration. Medicaid is exempt from sequestration.

It appears that efforts will continue to be made to enact a deficit reduction plan before Congress adjourns at the end of 2012.

September 24, 2012

CMS to Conduct Special Open Door Forum on Medicare's Prior Authorization for Power Mobility Devices Demonstration

On Wednesday, the Centers for Medicare & Medicaid Services (CMS) will host a Special Open Door Forum (ODF) to provide healthcare suppliers and providers an opportunity to learn more and ask questions about Medicare's Prior Authorization for Power Mobility Devices Demonstration Program. CMS' new demonstration program, which applies to orders written on or after September 1st, creates a prior authorization process for specified medical equipment provided to Medicare beneficiaries in California, Florida, Illinois, Michigan, New York, North Carolina, and Texas. CMS identified these states as containing the highest populations of fraud- and error-prone providers, and the new program seeks to ensure that CMS pays appropriately for medical equipment.

The demonstration will examine whether a beneficiary's medical condition warrants the medical equipment under existing coverage guidelines. CMS also notes that the program will preserve Medicare beneficiaries' ability to receive quality products from accredited suppliers.

In order to participate, dial (800) 837-1935 and use the conference ID: 34258271. Following the ODF, a transcript and recording will be available on CMS' website.

If you have any questions regarding the CMS' Open Door Forum or new Prior Authorization for Power Mobility Devices Demonstration Program, please contact a Wachler & Associates healthcare attorney at 248-544-0888.

September 20, 2012

Ninth Circuit Decides RAC Reopening is Not Subject to Appeal

On September 11, 2012 the United States Court of Appeals for the Ninth Circuit held that a Recovery Audit Contractor's (RAC's) initial decision to reopen a claim is not subject to judicial review. The case, Palomar Medical Center v. Sebelius, involved Palomar Medical Center arguing that a RAC has to establish good cause for an initial reopening decision. The Court of Appeals affirmed the ruling of the United States District Court for the Southern District of California, which held that the issue of good cause for reopening a claim cannot be raised after the audit's conclusion and the revision of a paid claim.

Palomar v Sebelius.pdf

In 2007, the RAC notified Palomar that a claim from 2005 totaling $7,992.92 was under review and that records were requested to support medical necessity. Subsequently, after it submitted the requested documentation, Palomar was notified that an overpayment had been identified and the overpayment must be repaid. The overpayment was affirmed at the redetermination and reconsideration levels. Palomar then requested a hearing with an Administrative Law Judge (ALJ).

The ALJ affirmed that the services were not medically necessary, but found that the RAC did not make a showing of good cause for the late reopening. Finally, the Medicare Appeals Council (MAC) decided that:

1. Neither the ALJ nor the MAC had jurisdiction to assess whether good cause existed for reopening because the RAC's decision to reopen was not subject to the administrative appeals process, and

2. The services were not medically reasonable and necessary.

Palomar appealed to the District Court and then the Court of Appeals on the issue of reviewability of the reopening, but not on the issue of medical necessity of the services.

The Court of Appeals for the Ninth Circuit held that because Congress established the RAC program, and expressly stated that reopenings were allowed under regulations promulgated by the Secretary, the regulations would control. Since the regulations explicitly state that there may be no appeal of a reopening decision because reopening decisions are final, the question of good cause to reopen a claim cannot be litigated after a RAC has revised a claim determination.

Although the court determined that the issue of good cause for reopening is not appealable, the court conceded that it was not an easy question to answer because of two competing principles: (1) Congress wanted an effective recovery audit program to reduce Medicare payments with resulting benefits for Medicare beneficiaries and taxpayers, under procedures set by the Secretary and (2) the provider has a legitimate interest in finality of determinations on its revenue for medical services. Despite the competing principles, the court ultimately concluded that to allow a provider to challenge the good cause for reopening during the appeals process could lead to the waste of resources and administrative inefficiency if the good cause was later rejected during the appeals process.

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September 20, 2012

OIG Report Finds Overpayments to Inpatient Rehab Facilities

On September 4, 2012 the Department of Health and Human Services Office of Inspector General (OIG) issued a report in which it found that during calendar years 2009 and 2010 Medicare made overpayments to Inpatient Rehabilitation Facilities (IRFs) totaling an estimated $8.4 million.

The Centers for Medicare and Medicaid Services (CMS) establish a prospective payment rate for specific case-mix groups to which each beneficiary is assigned based on their expected clinical resource needs. IRF patient data is transmitted through Patient Assessment Instruments (PAIs) which contain the data on each beneficiary that is necessary to assign each to a case-mix group. IRF claims are processed and paid through Medicare Administrative Contractors (MACs). The IRF must submit the PAI data to the MAC within 27 days from the beneficiary's discharge date. If PAI data is submitted after the 27 day window, a 25% late assessment penalty is applied to the case-mix group.

In the report, the OIG published the results of an audit conducted over calendar years 2009 and 2010 which examined whether IRFs received the reduced case-mix group payments for claims with PAIs that were submitted after the 27 day window. During the audit timeframe, 2,414 claims were transmitted after the 27 day window which totaled $41.6 million. The audit examined a 108 claim sample, of which 88 did not receive the 25% case-mix reduction. From this sample the OIG estimated that $8.4 million in overpayments were made to IRFs.

The OIG made recommendations to CMS which included the following:


1. Adjust the 88 sampled claims for overpayments of $696,371 to the extent allowed under the law.
2. Work with the OIG to resolve the remaining 2,306 nonsampled claims with potential overpayments estimated at $7.7 million and recover overpayments.
3. Continue to provide specific education to IRFs on the importance of reporting the correct PAI transmission dates on their claims.
4. Support the MACs' and RACs' efforts to conduct periodic postpayment reviews of IRF claims.

In response to the report, CMS concurred with the findings of the OIG and outlined implementation possibilities for the recommendations.

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September 18, 2012

Name Change for Region A RAC

On August 15, 2012 the Recovery Audit Contractor (RAC) for Region A changed its name from Diversified Collection Services (DCS) to Performant Recovery, Inc.

According to the website, processes, people, and contact information will remain the same.

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September 14, 2012

CMS Releases Follow-Up Comparative Billing Reports for Podiatry Services


On September 12, 2012, the Centers for Medicare and Medicaid Services (CMS) released a national provider Comparative Billing Report (CBR) targeting podiatry services. The CBRs will be released to a maximum of 5,000 podiatry service providers. This is the second time in which podiatry services have been the focal point of a CBR.

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 assist providers in reviewing their coding and billing practices and utilization patterns, and take proactive compliance measures by conducting self-audits through meaningful comparisons to other podiatry providers billing similar codes. 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. CMS suggests that providers should view CBRs as an educational tool, rather than a warning, to help aid them in properly complying with Medicare billing rules. However, based upon our experience, it is clearly an indication that individuals receiving CBRs are prospective audit targets because their utilization of these codes exceeds their peers.

The recently released podiatry services CBRs are to serve as a follow up to the CBRs previously received by providers in April 2011. This repeat study is intended to serve the same educational and compliance goals as the prior study; however the newly issued CBRs provide more recent billing data--billed Medicare Part B claims data with service dates from May 1, 2011 through April 30, 2012 that were processed by July 27, 2012. Furthermore, the POS and CPT codes addressed in the recently released CBRs are identical to the codes utilized in the prior study; which include POS codes 11 (office) and 31 (skilled nursing facility), and the following CPT codes:

  • 11720--Debridement of nail(s), one to five
  • 11721--Debridement of nails, six or more
  • 99212--Office or other outpatient visit for the evaluation and management of an established patient, which requires at least 2 of these 3 key components: a problem focused interval history; a problem focused examination; and straightforward medical decision making
  • 99213--Office or other outpatient visit for the evaluation and management of an established patient, which requires at least 2 of these 3 key components: an expanded problem focused history; an expanded problem focused examination; and medical decision making of low complexity
  • 99214--Office or other outpatient visit for the evaluation and management of an established patient, which requires at least 2 of these 3 key components: a detailed history; a detailed problem focused examination; and medical decision making of moderate complexity
  • 99215--Office or other outpatient visit for the evaluation and management of an established patient, which requires at least 2 of these 3 key components: a comprehensive history; a comprehensive examination; and medical decision making of high complexity
  • 99307--Subsequent nursing facility care, per day, for the evaluation and management of a patient, which requires at least 2 of these 3 key components: a problem focused interval history; a problem focused examination; and straightforward medical decision making
  • 99308--Subsequent nursing facility care, per day, for the evaluation and management of a patient, which requires at least 2 of these 3 key components: an expanded problem focused interval history; an expanded problem focused examination; and medical decision making of low complexity
  • 99309--Subsequent nursing facility care, per day, for the evaluation and management of a patient, which requires at least 2 of these 3 key components: a detailed interval history; a detailed problem focused examination; and medical decision making of moderate complexity
  • 99310--Subsequent nursing facility care, per day, for the evaluation and management of a patient, which requires at least 2 of these 3 key components: a comprehensive interval history; a comprehensive examination; and medical decision making of high complexity

The initial podiatry service CBRs were produced due to on-going compliance issues with Medicare reimbursement regulations. A report released by the Office of Inspector General (OIG) in June 2002 found that while Medicare reimbursed podiatrists for several hundred different services, nail debridement accounted for an overwhelming percentage of the total reimbursement amount for podiatry services in Calendar Year 2000 ($233 million of $1 billion, nearly 25 percent). Furthermore, of the $233 million debridement payments, the OIG estimated that nearly 25 percent ($51.2 million) were inappropriately paid by Medicare. In addition, the study estimated that nearly 60 percent of the inappropriate nail debridement payments contained claims for related podiatry services. In light of this figure, the OIG went on to emphasize that it is inappropriate for podiatrists to seek payment for these related services when it has been determined that payment for the nail debridement itself was inappropriate.

As CMS has iterated, CBRs are intended to be an effective way to identify potential audit weaknesses and take corrective action to comply with Medicare billing rules. Red flags should rise for providers whose statistical comparisons significantly exceed their state and nationwide peers. It is important to have a qualified professional review the data, respond to CMS, and determine whether any corrective actions or compliance activities may reduce your audit risks. We feel it is imperative that providers have their CBRs analyzed, as well as submit a response to CMS challenging any statistical anomalies and addressing, where appropriate, the justifications for the services provided. At Wachler & Associates, we have assisted numerous providers with CBR analyses and the implementation of effective compliance measures for providers who have received CBRs.

If you are a recipient of a CBR for podiatry services, or are among the other provider types that have been identified to receive CBRs, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888 to discuss evaluating the CBR analysis and developing appropriate compliance measures that will reduce audit risks.

September 14, 2012

OIG Issues Unfavorable Advisory Opinion Regarding an Ambulance Supplier's Proposal to Waive Cost-Sharing Amounts for Part-Time Emergency Medical Services

On September 4, 2011, the Office of Inspector General ("OIG") issued an unfavorable advisory opinion (Advisory Opinion No. 12-11), which addressed an ambulance supplier's proposed agreement with a municipality to waive cost-sharing amounts for emergency medical services ("EMS"). The requestor of the opinion, a for-profit provider of basic life support ambulance services ("BLS Supplier"), proposed to provide part-time EMS services for a municipality that currently enlists volunteer first aid squads as its majority provider of ambulance services. These volunteer providers generally do not charge residents cost-sharing amounts for the services rendered. In instances where volunteer squads are incapable of responding to emergency calls, other ambulance suppliers, such as BLS Supplier, may provide the services. Some of these instances are attributable to a volunteer squad's inability to respond to a particular call, while other situations are due to volunteer squads dispatching in that they are unavailable to cover a service area during certain blocks of time.

The proposed arrangement in question involves BLS Supplier entering into agreements with municipalities to provide EMS on a part-time basis for the aforementioned situations. BLS Supplier would use insurance-only billing, in which it would bill Medicare and other third-party payors, but would agree to allow the municipality to waive all cost-sharing amounts.

In issuing its opinion, the OIG determined that the proposed agreement could potentially violate the anti-kickback statute because such waivers of Medicare cost-sharing amounts may constitute prohibited remuneration to induce referrals. The OIG went on to state that municipalities must pay the owed amounts to an independent ambulance supplier if municipalities seek to assume the cost-sharing obligations. The anti-kickback statute is implicated in the proposed arrangement if the municipalities either fail to make the payments to BLS Supplier or fail to permit BLS Supplier to directly bill the residents for the services provided. The OIG emphasized that this is especially true when a municipality enters into an agreement with an independent ambulance provider, such as BLS Supplier, to be its primary supplier of emergency ambulance services during designated time slots, even when only provided part-time. This opinion was distinguished with a prior OIG opinion (Advisory Opinion 99-1) where an independent ambulance supplier merely provided services during isolated and unanticipated circumstances in which the volunteer squad was currently preoccupied with another emergency response.

For more information on compliance with the anti-kickback statute and other regulations impacting ambulance suppliers and other health care providers, please contact an experienced health law attorney at Wachler & Associates attorney at 248-544-0888.

September 13, 2012

Comparative Billing Reports Sent to Skilled Nursing Facilities

The Centers for Medicare and Medicaid Services (CMS) recently released Comparative Billing Reports (CBRs) to Skilled Nursing Facility (SNF) providers. The CBRs are released to a maximum of 5,000 providers. CBRs can be an effective way to identify potential audit weaknesses and take corrective action before an audit.

SNFs that receive CBRs will see their rehabilitation plus extensive services category RUG code billings broken down by therapy level grouping and compared to regional and national averages. The CBRs are a response to increases in ultra high therapy RUG billings nationwide. Providers with higher than average ultra high therapy RUG billings are encouraged to examine their procedures and compliance plans to determine that therapy level RUG codes are billed appropriately.

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 to aid them evaluating their practices to ensure that they are properly complying with Medicare billing rules. Furthermore, providers should carefully analyze the data in CBRs to evaluate whether the CBR adequately reflects the provider's billing practices. 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.

In addition to skilled nursing facilities, provider types that have been identified to receive, or have already received, CBRs include: podiatry services, home oxygen services, evaluation and pain management services, cardiology services, advanced diagnostic imaging, electrodiagnostic studies, sleep study, hospice, ambulance services, chiropractic services, physical therapy, and durable medical equipment.

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September 6, 2012

AHA Survey Shows RAC Denials Up in 2nd Quarter

On August 22, 2012 the American Hospital Association (AHA) published the results of a survey which indicates that Recovery Audit Contractor (RAC) claim denials were up in the second quarter of 2012 from the first quarter. The results of the survey include data collected from more than 2,000 hospitals nationwide.

The survey reveals that hospitals saw an increase in RAC denials in the second quarter of 2012 of 24%. Additionally, medical record requests rose 22% and the dollar value of claims denied increased 21%. Hospitals reported Short Stay Medically Unnecessary as the most common reason for denial. According to the survey 70% of denials were listed as Short Stay Medically Unnecessary, which is a rise of 1% from the first quarter of 2012.

Hospitals are spending an increasing amount on RAC issues. In the second quarter of 2012, 55% of the hospitals in the survey indicated they spent more than $10,000 on RAC issues. Hospitals also spent an average of $24,064 on external legal counsel in the same quarter.

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September 4, 2012

DOJ Contacts Hospitals About Improperly Billed Heart Implants

The Department of Justice (DOJ) reportedly set an email to hospitals nationwide on August 30, 2012 instructing them to examine implantable defibrillator surgeries covered by Medicare to determine if they were improperly billed to Medicare. The email, as reported by modernhealthcare.com, included a "resolution model" with instructions for hospitals to self-audit, and estimate monetary penalties under the False Claims Act.

The DOJ has been conducting an investigation into improperly billed implantable defibrillator surgeries for more than two years, and the resolution model sent to hospitals is the first attempt by the DOJ to come to a settlement resolution for these instances.

The investigation centers around a National Coverage Determination (NCD) set by the Centers for Medicare and Medicaid Services (CMS) which establishes the instances in which an implantable defibrillator is covered by Medicare.

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