October 2012 Archives

October 31, 2012

Proposed Settlement Agreement Filed in Federal Court Which Could Change SNF and Home Health Coverage

A proposed settlement agreement was filed in the federal District Court of Vermont on October 16, 2012 which, if approved, would clarify Medicare coverage for beneficiaries of skilled nursing facilities (SNFs), home health services (HH), and outpatient therapy services (OPT).

Jimmo v Sebelius.pdf

The settlement proposal is the result of Jimmo v. Sebelius, a class action lawsuit brought by a class of Medicare beneficiaries that challenges Medicare contractors' consistent denials of home health services provided to Medicare beneficiaries because a beneficiary's condition failed to improve or did not have the possibility for improvement. The home health provider community and Medicare beneficiary supporters have consistently advocated that Medicare contractors' denial of home health services based on the alleged "improvement standard" was inconsistent with Medicare policy and regulations. The class action lawsuit challenged the "improvement standard" arguing that medically necessary home health services may be provided to Medicare beneficiaries with chronic conditions because although their conditions may not "improve," the home health services will prevent the beneficiaries from deteriorating further. The proposed settlement, filed in October, includes provisions that would require the Centers for Medicare & Medicaid Services (CMS) to not only revise portions of the Medicare Manuals to clarify that an "improvement" requirement does not exist for medically necessary home health services, but to also educate Medicare contractors and other reviewers on the appropriate standards to apply when reviewing home health services.

Among the provisions of the settlement proposal are revisions to the Medicare Benefit Policy Manual. Revisions would be made to chapters 7, 8, and 15 of the manual, and would clarify coverage standards for SNF, HH, and OPT care to cover patients that have no improvement potential, but still need maintenance care in their current state of health. The clarified standards would allow for coverage of skilled SNF, HH, and OPT services for maintenance of a patient's condition even if there is no restoration or improvement potential. Currently, most Medicare contractors consistently deny coverage for home health services that are provided to beneficiaries with no restoration or improvement potential. In addition to the revisions to the Medicare manuals, the proposed settlement would include two review periods for the plaintiffs to review changes to the Medicare Benefit Policy Manual before any of the terms are implemented as rules in the Medicare manuals. During the two review periods, 21 and 14 days respectively, Plaintiffs would be allowed to provide comments and suggestions which the Centers for Medicare and Medicaid Services (CMS) must make a good faith effort to utilize.

CMS would also be required under the settlement agreement to engage in an educational campaign about the revisions for providers, suppliers, and contractors. The campaign would include written materials communicated via MLN Matters articles and program transmittals, as well as changes to CMS call center customer service scripts.

In addition to the educational materials, the settlement would also require CMS to hold an open door forum on the manual revisions, as well as hold two national calls. The two national calls, one for providers & suppliers and one for contractors & adjudicators, would communicate the policy clarifications related to the revisions.

The proposed settlement, if approved, would have a major impact on home health providers and Medicare beneficiaries. Consistently during the Medicare appeals process, on behalf of our clients we have advocated against Medicare contractors' improper denial of home health services because the beneficiary did not "improve" during the certification period. Although we have experienced some success on behalf of our clients, particularly at the Administrative Law Judge hearing stage of appeal, the inconsistent standards applied by lower level Medicare contractors meant that our clients were forced to spend their time and resources appealing improper claim denials. If approved, the proposed settlement could eliminate inconsistent decisions and help facilitate home health care providers' reimbursement for medically necessary services.

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October 30, 2012

AHA Sends Letter to OIG Urging Contractor Reform

The American Hospital Association (AHA) sent a letter to the Department of Health and Human Services Inspector General Daniel Levinson on October 24, 2012, urging the Office of Inspector General (OIG) to focus on inappropriate claim denials by Recovery Audit Contractors (RACs). The letter stresses that RAC effectiveness needs to be evaluated and integrity programs need to be streamlined.

According to the AHA's RACTrac survey data, seventy-five percent of appealed RAC denials are reversed. The AHA asserts that because the RACs are paid on a contingency fee basis, there is a strong financial incentive to deny more claims and increase contingency payments. The implication is that RACs are not monitored effectively and are thus allowed to inappropriately deny claims to increase contingency payments. The letter explicitly states that, "[d]enying payment for an entire inpatient stay is far more lucrative for the contractors than identifying an incorrect payment amount or an unnecessary medical service."

The AHA further urges that more provider education is needed to improve the rates of payment errors. According to the RACTrac survey, more than half of the respondents indicated that they have received no education from the Centers for Medicare and Medicaid Services (CMS) on avoiding payment errors. The letter stresses that program integrity could be strengthened with provider education.

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October 25, 2012

Medicare Audit Improvement Act of 2012 Proposes to More Heavily Regulate Audit Contractors

Representatives Sam Graves (R-MO), Todd Akin (R-MO), Billy Long (R-MO), and Adam Schiff (D-CA) introduced a bill to Congress on October 16, 2012 which proposes to reduce the Medicare contractor audit burden on hospitals. The bill, called the Medicare Audit Improvement Act of 2012 (Act), proposes changes to the ways contractors may conduct audits and imposes additional requirements on contractors.

Medicare Audit Improvement Act of 2012.pdf

Among the requirements introduced in the Act are limits to the amount of additional documentation a Medicare contractor may request for complex pre-payment audits and complex post-payment audits. The Act would limit the additional documentation requests for hospitals' Part A claims to the lesser of 2 percent of those claims for the year, or 500 additional documentation requests during any 45 day period.

The Act also proposes penalties for contractors that fail to maintain compliance with Medicare program requirements. Specifically, the Act calls for financial penalties when a contractor fails to complete an audit determination within the applicable timeframes, and when a contractor fails to provide communication in a timely manner regarding claim denials and appeals. Further, the Act proposes to impose financial penalties for appeals which are overturned. When a party successfully appeals a claim denial, the Act would require the contractor to pay a monetary penalty to the party that prevailed in the appeal. This aspect of the Act is notable given the number of claim denials, particularly in the area of short-stay inpatient admissions, that are overturned at the ALJ level of appeal.

Medical necessity audits are also addressed by the Act. Under the Act, pre-payment and post-payment medical necessity audits would only be allowed if it addresses a widespread payment error rate. A widespread payment error rate is defined in the Act as a 40 percent payment error rate as determined by a significant sampling of claims submitted, adjusted to take into account claim denials overturned on appeal. Also, the Act calls for a restoration of due process rights under the AB Rebilling Demonstration Program. This mean that the Centers for Medicare and Medicaid Services (CMS) could not require providers in the demonstration project to waive their right to the appeals process for inpatient claim denials which, under the demonstration, could then be re-billed under Medicare Part B for 90 percent of the Part B payment.

Contractors would also be required to publish performance data under the Act. Contractors would be required to publish data each year on:

• the aggregate number of audits conducted,

• the aggregate number of denials for each audit type,

• denial rates,

• the aggregate number of appeals filed by providers,

• the aggregate rate of appeals, and

• the appeal outcomes at each stage of appeal.

Additionally, publication of performance evaluations of contractors performed by independent entities, including error rates, would be required.

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October 17, 2012

HDI Posts First Pre-Payment Review Issue

The Region D Recovery Audit Contractor (RAC), HealthDataInsights (HDI), has posted a new issue which states that it will begin pre-payment review of medical necessity for MS-DRG 312 (syncope and collapse). The issue is part of the pre-payment review demonstration program, and is the first approved issue posted as part of the program.

HDI posted the issue for all Region D states, but the pre-payment review program has only been approved by the Centers for Medicare and Medicaid Services (CMS) for 11 states: California, Florida, Illinois, Louisiana, Michigan, Missouri, New York, North Carolina, Ohio, Pennsylvania, and Texas.

CMS intends the pre-payment review demonstration program to prevent improper payments and lower the payment error rate. The program will focus on claims with high improper payment rates. The program will be concurrent with MAC pre-payment review programs, but CMS has advised that the contractors will make efforts to coordinate in order to prevent duplicate review of the same claims.

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October 15, 2012

OIG Work Plan Looks at Physician-Owned Distributorships

Each year, the Department of Health and Human Services Office of Inspector General (OIG) releases a Work Plan for the upcoming fiscal year. The Work Plan outlines reviews and activities that the OIG plans to conduct in the upcoming fiscal year, and shows the current OIG areas of focus. On October 3, 2012, the OIG released its Work Plan for fiscal year 2013.

According to the 2013 OIG Work Plan, the OIG will continue to look into physician-owned distributorships (PODs). The Work Plan states that the OIG will review the high utilization of orthopedic spinal implants, and to what extent physician-owned distributors provide the implants to hospitals associated with high utilization. The review will also address potential conflicts of interest and patient safety concerns posed by the physician-owned distributors.

This continued focus on PODs is consistent with the OIG's response to the Senate Finance Committee's Letter setting forth its concerns regarding the risk of Medicare program abuse associated with PODs, which we previously blogged about here.

In light of this increased scrutiny, PODs should carefully review the legality of their structure, as well as the impact on utilization by physicians associated with the POD, with the understanding that a high utilization will cause the POD to undergo increased scrutiny by the OIG.

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October 11, 2012

OIG 2013 Work Plan Includes Reviews of DME Suppliers

Editor's Note: This is part of a week long series exploring the impact of the OIG 2013 Work Plan on different types of providers and organizations.

On October 3, 2012 the Department of Health and Human Services Office of Inspector General (OIG) released its Work Plan for fiscal year 2013. Among the new issues the Work Plan outlines are issues that will affect Durable Medical Equipment (DME) suppliers. The Work Plan states that the OIG will examine:

Quality Standards--Accreditation of Medical Equipment Suppliers: The OIG will review accreditation organizations' procedures for the accreditation of medical equipment suppliers. Medicare has a series of quality standards to which medical equipment suppliers must comply. Accreditation organization procedures must ensure that all medical equipment suppliers they accredit meet the Medicare quality standards. The OIG review will also examine CMS validation surveys which are intended to monitor accreditation organization procedures.

Lower Limb Prostheses--Supplier Compliance with Payment Requirements:
The OIG will examine Medicare payments to medical equipment suppliers for lower limb prosthetics to ensure that Medicare requirements were met. Providers must furnish, upon request, information to determine amounts due. This can include documentation showing that the order was reasonable and necessary. In past reviews, the OIG has found claims submitted by suppliers with deficiencies in documentation, including claims for beneficiaries with no orders from a referring physician.

DME suppliers should also be aware of other issues that appear in the Work Plan. These include:

• Power Mobility Devices--Supplier Compliance With Payment Requirements
• Vacuum Erection Systems--Reasonableness of Medicare's Fee Schedule Amounts
Compared to Amounts Paid by Other Payers
• Continuous Positive Airway Pressure Supplies--Reasonableness of Medicare's
Replacement of Supplies Compared to That of Other Federal Programs
• Diabetes Testing Supplies--Improper Supplier Billing for Test Strips in Competitive Bidding
Areas
• Diabetes Testing Supplies--Supplier Compliance With Requirements for Non-Mail-Order
Claims
• Medical Equipment and Supplies--Potential Savings From the Competitive Bidding
Program
• Medical Equipment and Supplies--Opportunities To Reduce Medicaid Payment Rates for
Selected Items

DME suppliers should be prepared that the identification and review of these issues may lead to additional focus by CMS and its contractors. Compliance plans can be effective measures to help DME suppliers to proactively prepare for increased scrutiny from CMS contractors.

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October 10, 2012

OIG Work Plan Includes Review of Hospitals

Editor's Note: This is part of a week long series exploring the impact of the OIG 2013 Work Plan on different types of providers and organizations.

Each year, the Department of Health and Human Services Office of Inspector General (OIG) releases a Work Plan for the upcoming fiscal year. The Work Plan outlines reviews and activities that the OIG plans to conduct in the upcoming fiscal year, and shows the current OIG areas of focus. On October 3, 2012 the OIG released its Work Plan for fiscal year 2013, which included some new issues that did not appear on the FY 2012 Work Plan.

Among the new issues the Work Plan outlines are some that will affect hospitals. The Work Plan states that the OIG will examine:

Diagnosis Related Group Window: The OIG will examine claims data for bundled outpatient services prior to an inpatient hospital admission. Medicare currently bundles outpatient services delivered by the admitting hospital three days prior to inpatient admission into the same diagnosis related group (DRG). This three day span is known as the DRG window. The OIG will review the possibility of expanding the DRG window to outpatient services delivered 14 days prior to inpatient admission, and how much that would reduce Medicare payments.

Compliance with Medicare's Transfer Policy: The OIG will review Medicare payments made to hospitals that were coded as discharges, but should have been coded as transfers. The review will examine whether the payments were appropriate and the effectiveness of transfer claims processing edits. The DRG amount paid for a discharge could be greater than the DRG payment for a transfer.

Hospitals should also be aware of other issues that appear in the Work Plan. These include:


  • Inpatient Billing for Medicare Beneficiaries

  • Non-Hospital-Owned Physician Practices Using Provider-Based Status

  • Payments for Discharges to Swing Beds in Other Hospitals

  • Payments for Canceled Surgical Procedures

  • Payments for Mechanical Ventilation

  • Quality Improvement Organizations' Work With Hospitals

  • Acquisitions of Ambulatory Surgical Centers: Impact on Medicare Spending

  • Critical Access Hospitals--Payments for Swing-Bed Services

Hospitals can expect OIG review of these issues to lead to additional focus by CMS and its contractors. It is important that providers implement compliance plans to help prevent recoupment of funds or even legal action.

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October 9, 2012

OIG 2013 Work Plan Includes Reviews of Long-Term Care Providers

Editor's Note: This is part of a week long series exploring the impact of the OIG 2013 Work Plan on different types of providers and organizations.

Recently, the Department of Health and Human Services Office of Inspector General (OIG) released the OIG's annual Work Plan. The Work Plan includes the reviews and activities that the OIG plans to conduct during fiscal year 2013. The OIG's 2013 Work Plan will likely affect long term care providers because some of the issues, as described below, target long term care providers.

HHAs--Home Health Face-to-Face Requirement: The OIG will examine the frequency with which home health agencies are complying with face-to-face requirements. Physicians, or permissible allied health practitioners, are required to have face-to-face encounters with beneficiaries receiving home health care within statutorily mandated time frames. Past OIG reviews have indicated that compliance with face-to-face requirements has been low.

Long -TermCare Hospitals--Payments for Interrupted Stays:
The OIG will determine if inappropriate payments were made by Medicare for interrupted stays in long-term care hospitals, and attempt to identify patterns of readmission directly following interrupted stays. When a patient is discharged from a long-term care hospital to receive services that are not available at the long-term care hospital, and then readmitted, Medicare payment amounts can be affected. Past OIG reviews have identified weaknesses in the ability to detect these inappropriate payments.

Home Health Services--Duplicate Payments by Medicare and Medicaid:
The OIG will determine the frequency with which both Medicare and Medicaid have paid for the same Medicare-covered home health services.

Long term care providers should also be aware of other issues that appear in the 2013 Work Plan. These include:

• Nursing Homes--State Agency Verification of Deficiency Corrections
• Nursing Homes--Use of Atypical Antipsychotic Drugs
• Nursing Homes--Oversight of the Minimum Data Set Submitted by Long-Term-Care Facilities
• HHAs--Employment of Home Health Aides With Criminal Convictions

Long term care providers should anticipate that OIG review of these issues may to lead to additional focus by CMS and its contractors. Long-term care providers should review current compliance programs or implement a compliance program if they do not already have one to prepare for CMS' increased attention.

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October 8, 2012

OIG 2013 Work Plan Includes Review of Ambulance Suppliers

Editor's Note: This is part of a week long series exploring the impact of the OIG 2013 Work Plan on different types of providers and organizations.

The Department of Health and Human Services Office of Inspector General (OIG) announced in its recently released 2013 Workplan that it intends to continue to focus on several issues impacting ambulance suppliers. Specifically, the OIG stated that it intends to examine levels of transport, including Advanced Life Support ("ALS") and Specialty Care Transport ("SCT"), to determine whether these levels were reasonable and necessary.

The OIG also indicated that it would examine relationships between ambulance companies and other providers, presumably related to the anti-kickback statute.

Ambulance suppliers can expect to see continued focus on these issues, which have been the focus of Medicare audits and OIG scrutiny for some time. Effective compliance programs can help ambulance providers to assess their risk related to these and other areas of scrutiny.

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October 2, 2012

OIG Report Finds Medicare Paid $24.6 Million for Illegal Prescription Refills

On September 26, 2012 The Department of Health and Human Services Office of Inspector General (OIG) issued a report on Schedule II drugs inappropriately billed to Medicare Part D. The report found that Medicare Part D inappropriately paid for $24.6 million in Schedule II drugs billed as refills, despite federal law prohibiting refills of Schedule II drugs.

OIG Report on Schedule II Drug Refills.pdf

Schedule II drugs are the second most controlled drugs under the Controlled Substances Act. They are classified as drugs which have a medical use, but have a high potential for abuse and may lead to severe psychological or physical dependence. Schedule II drugs with the highest number of refills billed to Medicare in 2009 include fentanyl, oxycodone-acetaminophen, morphine sulphate, and methadone HCI.

According to the report, 12,356 pharmacies billed for refills of Schedule II drugs, of which six percent were long-term-care pharmacies. Despite consisting of only six percent of the pharmacies that billed for refills of Schedule II drugs, long-term-care pharmacies were responsible for seventy-five percent of the refills. The report raises the possibility that some of these pharmacies actually incorrectly billed partial fills as refills. Partial fills are permitted for Schedule II drugs because of prohibitions on the amount a pharmacy can keep on hand at any one time. As a result, pharmacies will do partial fills of a prescription over a period of time, rather than filling the whole thing at once. In the CMS response to the report, CMS urged that it was likely that a majority of the refills were actually partial fills that were incorrectly billed. In turn, the OIG responded that even if that were the case it is still illegal to bill a refill of a Schedule II drug, regardless of the circumstances.

The OIG report further found that more than 25,000 refills of Schedule II drugs that were billed had invalid prescriber information. Prescriptions for Schedule II drugs require the name, address, and signature of the prescriber. Refills without proper prescriber information accounted for $1.4 million paid by Medicare Part D in 2009.

In 2009, the report concluded, 75% of all Medicare Part D sponsors paid for Schedule II drugs billed as refills, which indicates there are not appropriate safeguards in place to stop refills. The OIG made the following recommendations to CMS:


1. Issue guidance to sponsors to prevent billing of Schedule II refills and to ensure accurate billing of partial refills.

2. Exclude Schedule II refills when calculating payments to sponsors.

3. Monitor sponsors to ensure that they validate prescriber numbers for Schedule II drugs.

4. Follow up on sponsors and pharmacies with high numbers of refills of Schedule II drugs.

In response to these recommendations, CMS indicated that it will not work with sponsors and pharmacies to determine why there are not controls in place to prevent Schedule II refills. CMS will instead explore the use of PDE edits to prevent billing. CMS also did not agree to exclude Schedule II drugs billed as refills from payments to sponsors, and indicated that it will instead examine PDE edits to alert sponsors to inappropriate refills.

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October 1, 2012

Federal Government Warns Hospitals on Fraudulent EHR Use

The Obama administration, through a strongly worded letter signed by Attorney General Eric H. Holder Jr. and Secretary of Health and Human Services Kathleen Sebelius, warned healthcare providers of "troubling indications" that hospitals are using electronic health records to game the Medicare and Medicaid reimbursement system. The letter was sent to five major hospital trade associations, and follows a New York Times report that the use of electronic records might be contributing to a rise in Medicare billing, particularly in hospital emergency rooms. The administration claims that the use of electronic records, which were introduced to reduce costs and improve care, have lead to false documentation and inappropriate coding.

Throughout the letter, the government vowed to vigorously prosecute doctors and hospitals that are implicated in fraud. Regulators will examine the significant increase in billing for the most expensive evaluation services. The federal government obtained $2.4 billion from health care fraud settlements and judgments last year, and prosecutions against fraud are up 75% since 2008.

Specifically, the letter claims that hospitals are "cloning" electronic medical records, where information of one patient is repeated in other records, and also using electronic records to "facilitate upcoding of the intensity of care or severity of a patient's condition as a means to profit with no commensurate improvement in the quality of care." As evidence, the letter cites that hospitals received $1 billion more in Medicare reimbursements in 2010 compared to 2005, and attributes that increase to billing codes that classify more patients as sicker and needing more care.

Conversely, healthcare providers contend that "the new systems allow them to more accurately record information about their patients, leading to higher payments for the services they provide." The hospital trade associations agree that the alleged practices are unacceptable and cannot be tolerated. However, experts criticize the government for not providing more guidance to both healthcare providers and the software companies developing the electronic records.

The concerns of Regulators, including the Office of Inspector General for Health and Human Services, demonstrate the government's intention to "ensure payment accuracy and to prevent and prosecute healthcare fraud" and a continuing trend by the government to carefully scrutinize services billed by hospitals and physicians.

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