November 2012 Archives

November 26, 2012

CMS Releases Final Rule for New Survey and Sanction Options for Home Health Agencies

On November 8, 2012, the Centers for Medicare and Medicaid Services (CMS) released its final rule updating the home health prospective payment system for calendar year 2013. In particular, the final rule provides CMS with new options for surveying and sanctioning home health agencies (HHAs). According to the final rule, HHAs will be subject to a standard survey at least once every 36 months, which will be unannounced and performed by the state agency or an accrediting organization. The standard survey's objective is to review the HHA's compliance with a select number of conditions of participation (CoP). In addition to the standard survey, HHAs will be subject to a variety of other surveys, which include:

  • Abbreviated standard survey: similar to the standard survey, but concentrates on a smaller number of CoPs determined to be an area of concern; conducted within two months of a specific concern, receipt of complaints, or change in ownership.
  • Extended survey: used to ensure compliance with additional CoPs that were not surveyed in the standard survey, or to review certain policies and procedures in which the surveyors determined the HHA provided substandard care.
  • Partially extended survey: conducted to determine deficiencies and/or deficient practices exist that were not fully examined during the standard survey.
  • Complaint survey: conducted when a complaint against the HHA is received

The final rule also provides that an HHA can be cited for two different levels of deficiency: standard-level and condition-level. An HHA will be cited with a standard-level deficiency when the requirements of CoP have not been met. A condition-level deficiency will be cited when a survey reveals one or more deficiencies that result in actual or potential harm to the patient.

The finding of a condition-level deficiency may lead to the implementation of the alternative sanction options presented in the final rule. Moreover, the final rule states that even though standard-level deficiencies do not typically give rise to alternative sanctions, such sanction may still be imposed if the deficiency is so serious as to constitute a condition-level deficiency. If found to be in noncompliance with the CoP, the following sanctions may be imposed: (1) appointment of a temporary manager; (2) directed-plans of correction; (3) directed in-service training; (4) civil money penalties; or (5) termination from participation.

HHAs should be aware of the new survey and sanction options provided in the final rule. After a deficiency is cited, but before any sanction is imposed, HHAs will have to submit a plan of correction (POC) detailing the ways in which the HHA will correct each deficiency and the methods used to ensure the deficiency does not take place in the future. Therefore, it is important that HHAs develop an effective compliance program that provides proactive measures to identify potential deficiencies, as well as reactive measures for when a deficiency is identified. If you need assistance in creating a comprehensive compliance plan, or producing and/or implementing a plan of correction, please contact and experienced health care attorney at Wachler & Associates at (248) 544-0888.

November 26, 2012

CMS Reminds Providers to Prepare and Maintain Legible Medical Records

Recently, the Centers for Medicare and Medicaid Services (CMS) released an MLN Matters article stressing the importance of providers preparing and maintaining legible medical record documentation. CMS contractors are required to deny a provider's claim for repayment if the item or service is not reasonable and medically necessary. Submitting legible medical documentation is critical because CMS review contractors are required to rely on the submitted documentation when determining the medical necessity of the billed item or service.

When submitting medical record documentation to support a claim for payment, providers should ensure that the medical records are complete and legible. In addition, the medical records should include the legible identity of the provider and the date of service. In connection with submitting documents that contain amendments, corrections or delayed entries, CMS specified that providers must comply with the following principles: (1) any amendments, corrections or addenda must be clearly and permanently identified; (2) the author and date must be clearly indicated; and (3) all original content must be clearly identified.

Medicare also requires that providers properly authenticate any service ordered or provided. Such authentication is achieved by including the author's signature, which can be handwritten or electronic. Contractors will disregard any order in which a signature is missing and will continue their review of the medical record as if the order was never received. When reviewing medical documentation that is not an order, the contractor will consider evidence in a signature log or attestation statement to determine the author's identity when the original documentation is missing or illegible. However, contractors will not take into consideration a signature attestation for orders.

Claim denials for illegible, missing or unsigned medical documentation can cause frustration for providers whose claims would otherwise be found to be reasonable and medically necessary. Providers should implement into their compliance programs and audit defense strategies a standard process for complying with these medical documentation requirements. If your claims have been denied due to illegible, missing or unsigned medical documentation, or you need assistance in successfully defending an audit for such claims, please contact an experienced health care attorney at Wachler & Associates at (248) 544-0888.

November 16, 2012

OIG Releases Report Addressing Improvements Needed at the ALJ Appeal Level

Recently, the Office of Inspector General (OIG) released a report focusing on various areas of concerns pertaining to Medicare appeals at the Administrative Law Judge (ALJ) level. In 2005, the responsibility for conducting ALJ appeals was transferred from the Social Security Administration to the Department of Health and Human Services (HHS). Upon this transfer, HHS established the Office of Medicare Hearings and Appeals (OMHA) which formed a group of ALJs committed to deciding Medicare appeals. In addition, ALJs were required to follow new regulations that addressed the application of Medicare policies, acceptance of new evidence, and the participation of the Centers for Medicare and Medicaid Services (CMS) in the appeals. In its report, the OIG assessed the impact of these changes on ALJ appeals by gathering and analyzing appeals data from fiscal year (FY) 2010.

The report contains several findings in which the OIG determined to be significant. For instance, the OIG found that 85 percent of all appeals decided by ALJs in FY 2010 were filed by providers, compared to 11 percent filed by beneficiaries and 3 percent filed by State Medicaid agencies. Moreover, the OIG found that a small subset of these providers were frequent filers, accounting for nearly one-third of all appeals.

The OIG also found that ALJs reversed prior-level appeals and granted fully favorable decisions to appellants 56 percent of the time. Meanwhile, Qualified Independent Contractors (QICs) decided fully in favor of appellants in only 20 percent of appeals. The OIG determined that these differences in fully favorable decisions were due to a number of key factors. One factor was the tendency of ALJs to interpret Medicare policies less strictly than QICs, finding that ALJs often granted fully favorable decisions when the intent of a Medicare policy was met, rather than the strict letter of the policy, whereas QICs strived to follow Medicare policies more strictly. Another reason stated in the OIG's report for the favorable outcome disparity was due to the difference in the degree of specialization in Medicare program areas between ALJs and QICs. Each of the QICs specialize in a particular Medicare program area (e.g. Part A, Part B and DMEOPS appeals), while ALJs receive randomly assigned appeals that involve all Medicare program areas.

The report also contains findings by the OIG relating to ALJ appeal participation by the Centers for Medicare and Medicaid Services (CMS). According to the OIG, CMS participated in only 10 percent of ALJ appeals. Furthermore, it was found that ALJs were less likely to find fully in favor of appellants when CMS participated.

Additional findings by the OIG included concerns by ALJ and CMS staff about the acceptance of new evidence and the organization of case files. ALJs may only accept new evidence if they determine that appellants had "good cause" for waiting to submit the evidence until the ALJ level. However, in its interviews with ALJ staff, the OIG found that ALJs typically accepted new evidence when submitted by appellants. The OIG also found that, at the ALJ level, case files differed in content, organization, and format compared to the QIC-level case files. According to ALJ staff, these organization differences created inefficiencies in the appeals process, such as having to spend additional time requesting information, reorganizing the files, or remanding appeals to the QICs.

Finally, the OIG found inconsistencies in the way ALJs handled suspicions of fraud. Despite nearly all ALJ staff having suspected appellants of Medicare fraud, the extent to which they referred suspected fraud to their supervisors or law enforcement varied across ALJs. For instance, the report claims that while many ALJs made at least one fraud referral, several other ALJs did not make a single referral, regardless of their fraud suspicions. Furthermore, the OIG found that ALJs differed in their pursuit of additional information when fraud was suspected. According to the OIG, these differences in the way ALJs handle suspected fraud may be due to the fact that the agency does not have written policies about how ALJs should handle such suspicions.

Based on its findings, the OIG made several recommendations to OMHA and CMS to improve the Medicare appeals system, which include:

  • Develop and provide coordinated training on Medicare policies to ALJs and QICs in order to ensure consistent knowledge of the policies at the different level of appeals.
  • Identify and clarify Medicare policies that are unclear and interpreted differently, focusing on policies with vague definitions and on program areas with significantly high favorable rates.
  • Standardize case files to promote consistency across the different levels of appeals, and accelerate OMHA's Electronic Records Initiative.
  • Revise regulations to provide more guidance to ALJs regarding the acceptance of new evidence, such as revising these regulations to provide additional examples and factors to consider in the ALJs' determination of "good cause".
  • Determine whether specialization among ALJs would improve efficiency in the appeals process.
  • Continue to increase CMS participation in ALJ appeals.
  • Seek statutory authority to establish a filing fee, the goal of which should be to limit the number of frequent filers, or at the very least, encourage frequent filers to more carefully assess their appeals prior to filing.
  • Develop policies and training initiatives to ensure that the ALJs handle suspicions of fraud appropriately and consistently.

The OIG report could have a significant impact on future ALJ appeals. Based on its recommendations, an inference can be drawn that the OIG believes that the number of fully favorable ALJ decisions is too high at the ALJ level. In particular, increasing CMS participation, clarifying Medicare policies for program areas with high favorable rates, and revising regulations pertaining to the acceptance of new evidence could lead to a decrease in fully favorable decisions for providers. Therefore, it is more important than ever for providers reassess their appeal strategies to align themselves with the future changes in the appeals process at the ALJ level.

The attorneys at Wachler & Associates are very experienced representing providers during the Medicare appeals process, including during ALJ hearings. For assistance on preparing for an ALJ hearing or more information on the Medicare appeals process, please contact one of our experienced health care attorneys at 248-544-0888.

November 13, 2012

CMS Releases DME Face-to-Face Encounter Final Rule

On November 1, 2012, the Centers for Medicare and Medicaid Services (CMS) published its final rule detailing the durable medical equipment (DME) face-to-face encounter requirements. In response to the various comments submitted, CMS made several key revisions to the proposed rule that was released on July 6, 2012.

The DME face-to-face encounter final rule requires that a physician, physician assistant, nurse practitioner or clinical nurse specialist perform a face-to-face encounter as a condition of payment for certain DME items. Even though the face-to-face encounter may be performed by any of these practitioners, the encounter must be documented by the physician in order for the supplier to receive payment.

In its final rule, CMS states that the requirements contained in the final rule will only apply to new orders written on or after the effective date (i.e. the rule will not be applied retroactively to orders already written). The effective date for this provision is July 1, 2013, which CMS believes will give suppliers sufficient time to implement the new policy.
In addition, the final rule also made changes to the face-to-face timing requirements, which include: (1) the face-to-face encounter must occur within the 6 months preceding the written order, which is an expansion from the original requirement of 3 months; and (2) the option to perform the face-to-face encounter 30 days after the written order has been removed from the rule. Furthermore, Medicare beneficiaries discharged from a hospital do not need to receive a separate face-to-face encounter, so long as the physician or treating practitioner issues the DME order within 6 months after the date in which beneficiary was discharged from the hospital.

The final rule also states that for DME items that do not require written orders before delivery, verbal orders are sufficient for the supplier to dispense DME; however, the supplier must obtain written orders prior to submitting a claim for payment. In contrast, for DME items that do require written orders before delivery, the supplier must have the written order, including the face-to-face documentation, prior to delivery when submitting a claim for payment.

Finally, CMS removed the proposed requirement that DME orders include "necessary and proper usage instructions" and the diagnosis. However, CMS still expects to see related diagnoses included in the beneficiary's medical records and expects suppliers to continue to provide instructions to the beneficiary or care giver for proper usage of the DME item.

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November 2, 2012

AHA Files Lawsuit Against HHS Regarding Full Part B Reimbursement

On November 1, 2012, the American Hospital Association (AHA), along with four hospitals, filed a lawsuit against the U.S. Department of Health and Human Services (HHS) in the U.S. District Court for the District of Columbia. The lawsuit, which names as the defendant Kathleen Sebelius in her official capacity as the Secretary of HHS, alleges that the Medicare program has engaged in an unlawful government practice in its refusal to reimburse hospitals for full Part B reimbursement where an Part A inpatient admission is denied by a Recovery Audit Contractor because the inpatient services were provided in the wrong setting, i.e. the services should have been provided in an outpatient setting.

Since the Recovery Audit Contractor Demonstration Program, Wachler & Associates has worked with the AHA to play an active role in the efforts to obtain full Part B reimbursement for hospitals with Part A inpatient admissions denied as not medically necessary by Recovery Audit Contractors (RACs). From our own experience, we have obtained success on behalf of our hospital clients through the administrative law judge hearing stage of appeal. Many administrative law judges have recognized that hospitals are entitled to full Part B reimbursement where inpatient admissions are denied as not medically necessary. As such, administrative law judges specifically order full Part B reimbursement for hospitals. The roadblock following ALJs orders, however, was that Medicare Administrative Contractors (MACs) would refuse to effectuate payment. In an almost ironic turn of events, in a July 13, 2012 memorandum that our firm obtained from a MAC, the Centers for Medicare & Medicaid Services (CMS), while professing that it still believed that hospitals were not entitled to full Part B reimbursement in these situations, directed all MACs and other fiscal intermediary contractors to effectuate ALJ orders for full Part B reimbursement. Although CMS's July 13 memorandum was promising for hospitals with ALJ orders for full Part B reimbursement, the fact remains that to obtain an ALJ order for full Part B reimbursement a hospital must proceed through the arduous Medicare appeals process. Therefore, the lawsuit recently filed by the AHA is an important step towards challenging the core of CMS's policy that hospitals are not entitled to full Part B reimbursement where an impatient admission is denied because the services were provided in the wrong setting.

The lawsuit filed by the AHA alleges that CMS's policy against full Part B reimbursement, or as coined in the complaint CMS's "Payment Denial Policy", violates requirements of the Federal Administrative Procedures Act as well as the requirement in the Medicare Act to pay for medically necessary hospital services. The complaint, released today by the AHA, articulately outlines CMS's refusal to provide hospitals with full Part B reimbursement and the effect CMS' refusal has on hospitals and patient care. The complaint states, "CMS simply refuses to pay hospitals for services that it acknowledges are covered under Medicare Part B and that it acknowledges were reasonable and necessary in the particular case." The complaint continues, "[b]oth the uncertainty and the actual loss of Medicare funds ultimately may adversely affect patient care." Furthermore, AHA's complaint also accurately explains the uncertainty of CMS's exact justification for its "Payment Denial Policy." The complaint states that CMS has made no effort to articulate a statutory justification or any justification for its policy.

The aggressiveness of RAC audits, the uncertainty of appropriate reimbursement, CMS's failure to articulate a justification for its policy, and the effect on patient care when hospitals do not receive accurate payment, all underscore the importance of the concentrated efforts to obtain full Part B reimbursement for hospitals. AHA's complaint is an important step towards highlighting the broad implications of CMS "Payment Denial Policy" and, hopefully, obtaining a long-term solution for hospitals and Medicare beneficiaries.

For more information on the effort to obtain full Part B reimbursement for hospitals, or assistance with a RAC audit, please contact a Wachler & Associates attorney at 248-544-0888.