Wachler & Associates Health Law Blog

Published on: December 14, 2016

Settlement Opportunity Available for Eligible Hospitals with Medicare Patient Status Denials

The Centers for Medicare and Medicaid Services (CMS) released the details of its Medicare hospital patient-status appeals settlement (“the 2016 Settlement”), following CMS’ initial announcement of the reopening on September 28th.

The 2016 Settlement comes as the successor of CMS’ 2014 68% settlement (the 68% Settlement), where eligible hospitals were able to settle their Medicare inpatient-status appeals for 68% of the net payable amount. The 68% Settlement successfully settled 346,000 claims with 2,022 hospitals. Since then, providers and other industry advocates (including Andrew Wachler of Wachler & Associates) have been pressuring CMS to offer another comparable settlement, and CMS responded positively with the 2016 Settlement.

The 2016 Settlement has comparable terms to the 68% Settlement, but there is one major difference: the 2016 Settlement only reimburses hospitals for 66% of the net payable amount on pending eligible claims. 2% is no minor adjustment on such a large scale, and will lead to millions of dollars less being paid out to providers. To scale, if the 68% Settlement had been for only 66%, the payout would have been roughly $1.42 billion rather than $1.47 billion. Still, with the Medicare appeals backlog as substantial as ever, many hospitals welcome the opportunity for an expedient and largely favorable resolution to their pending patient-status appeals. This is especially true considering the uncertainty of whether there will be other settlements offered in the future.

Published on: October 3, 2016

CMS Reopens Hospital Appeals Settlement

by Wachler & Associates, P.C.

On September 28, 2016, the Centers for Medicare & Medicaid Services (“CMS”) announced that it intends to reopen the hospital inpatient status settlement that was initially released in 2014. CMS’ announcement means that eligible providers will be able to to settle their inpatient status claims currently pending appeal. While specific details of the settlement have yet to be released, if the upcoming program has terms similar to CMS’ 2014 68% settlement, it may provide a viable opportunity for eligible providers to resolve their pending appeals without enduring the delay for an administrative law judge (ALJ) hearing due to the appeals backlog.

CMS’ decision to reopen the settlement is the result of the efforts from several actors including the Office of Medicare Hearings and Appeals (OMHA), American Hospital Association, RAC Monitor, Steven Greenspan of Optum Executive Health Resources, and Wachler & Associates, P.C. Specifically, OMHA participated in communications with CMS and supported the proposal for CMS to reopen the 68% settlement. In addition, the American Hospital Association’s (“AHA”) lawsuit challenging the excessive appeals backlog that has resulted in delays of over two years past the statutory requirement is likely an important factor in CMS’ decision to reopen the appeals backlog.

Furthermore, the combined efforts of RAC Monitor, Steven Greenspan, and Andrew Wachler of Wachler & Associates, P.C. also likely aided in the reopening. RAC Monitor provided a platform for Steven Greenspan and Andrew Wachler to present the concept of reopening the appeals settlement to RAC Monitor listeners and RAC Monitor listeners responded in full force. Through these combined efforts, it is hoped that the reopened appeals settlement will help to clear the appeals backlog of the approximately 200,000 inpatient site of service pending of appeals. Although this solution will not completely eliminate the backlog, it can assist hospitals that chose not to participate in the original settlement and hopefully help other non-eligible providers move through the appeals process at a slightly more efficient rate.

Published on: September 28, 2016

Mounting Pressure on HHS to Remedy Backlogged Medicare Appeals

by Wachler & Associates, P.C.

September 19^th saw the Washington D.C. District Court (the Court) pass down a decidedly pro-Medicare provider decision, ultimately holding that the Department for Health and Human Services (HHS) would not be granted a stay of proceedings as they had yet to make significant progress in reducing the Medicare appeals backlog. The case is American Hospital Association (AHA) v. Burwell (acting in her official capacity as HHS Secretary), and it was before the Court for the second time following an Order of Remand by the D.C. Circuit in February of 2016.

The Court’s September 19^th decision came as a response to Secretary Burwell (the “Secretary”)’s motion to stay proceedings on remand. The motion was based on the Secretary’s claim that significant progress had been made toward reducing the Medicare appeals backlog. A decision in the Secretary’s favor would have suspended the case until the last day of September, 2017. However, the Court rejected the purported progress by HHS, finding that more extreme measures had to be taken, ultimately concluding the stay in proceedings was not warranted.

The Secretary’s motion for a stay was heavily supplemented with examples of the efforts the government has been taking to reduce the appeals backlog. The Secretary cited administrative actions such as efforts to promote settlements, changes to the administrative appeals process, front-end limitations on provider activity and changes to the Recovery Audit Contractor (“RAC”) Program. Two specific programs mentioned were CMS’ 68% settlement, which resolved 260,000 inpatient hospital claims; and the settlement conference facilitation program, which is projected to reduce the number of appeals pending by 27,000 by the end of the 2020 fiscal year.

Published on: September 21, 2016

Noridian Announces CMS Approved “Cross Recoveries” for Related Claims

by Wachler & Associates, P.C.

On July 12, 2016, Noridian Healthcare Solutions announced a new policy on denial of related claims, termed “Cross Recovery.” Noridian purports that this policy will help it to fulfill its obligations to the Centers for Medicare and Medicaid Services (CMS) by assuring that all Medicare claims are for medically necessary and reasonable services. Whatever the motivation behind Cross Recovery is, it reawakens the specter of related claim denials for Medicare providers, and is a development which should be watched closely in the coming months.

Noridian’s new program comes in the wake of several previously released CMS transmittals regarding the denial of related claims. Though later rescinded, CMS originally introduced a policy which broadly allowed MACs to deny related claims when issuing an adverse determination of an original claim. After receiving feedback from the provider community regarding concerns about the policy, CMS narrowed the scope of “related claims” power to only Part B surgery claims via Transmittal 541. Transmittal 541 allowed for such Part B surgeon services to be recouped following a denial of a Part A inpatient surgical claim as not reasonable and necessary. However, since the issuing of Transmittal 541, MACs have only very rarely invoked their discretion to deny such Part B surgical claims on Transmittal 541 grounds. Noridian’s new Cross Recovery policy may change this trend, and it is yet to be seen whether other MACs will take the opportunity to expand their own related claim denials.

Noridian’s statement (as linked above) was very brief, but significant. The statement cites section 3.2.3(A.) of CMS’ Internet Only Manual 100-008 Chapter 3, which states in relevant part that “MAC[s] and ZPIC[s] have the discretion to deny other “related” claims submitted before or after the claim in question, subject to CMS approval [.]” Noridian announced that it has received such CMS approval to “Cross Recover” professional claims related to denied institutional facet injection services (CPT codes: 64493— 64495; 64635—64636).

Published on: August 5, 2016

SAMHSA Final Rule Increases Patient Limits for Physicians Prescribing Buprenorphine

by Wachler & Associates, P.C.

On July 6, 2016, the Substance Abuse and Mental Health Services Administration (SAMHSA), an agency within the Department of Health and Human Services (HHS), published a final rule implementing changes to the Controlled Substances Act (CSA), as amended by the Drug Addiction Treatment Act of 2000 (DATA 2000). The final rule will go into effect August 8, with perhaps the most significant modification being the increase in the number of patients that a physician can treat with buprenorphine, a medication which is prescribed as part of medication-assisted treatment (MAT) for opioid addiction.

Under the CSA buprenorphine is a Schedule III drug, which is defined by the Drug Enforcement Administration (DEA) as a drug with “a moderate to low potential for physical and psychological dependence.” DATA 2000 allows for qualified physicians to obtain a waiver to prescribe buprenorphine without needing to register as an opioid treatment center. Prior to the passage of the final rule, a physician whose waiver request was approved could initially prescribe buprenorphine to only 30 patients at a time, with this cap rising to 100 after the physician has complied with the program for one year and filed a request for the patient increase. This final rule will significantly raise the maximum number of patients allowed, from 100 to 275.

For a practitioner to be qualified to treat any patients with buprenorphine, they must: be a physician; possess a valid license to practice medicine; be registered with the DEA; have the ability to refer patients to addiction counseling and other ancillary services; and have completed a required training regime. In order to be eligible to treat 275 patients with buprenorphine, a physician needs to be currently authorized to treat 100 patients, and must hold “additional credentialing.” Additional credentialing is defined within the final rule as “board certification in addiction medicine or addiction psychiatry by the American Board of Addiction Medicine or the American Board of Medical Specialties or certification by the American Osteopathic Academy of Addiction Medicine, the American Board of Addiction Medicine, or the American Society of Addiction Medicine.”

Published on: August 3, 2016

OIG Releases Fraud, Waste, and Abuse Alert Concerning HHAs and Home-Visiting Physicians

by Wachler & Associates, P.C.

Recently, the Office of Inspector General (OIG) published an alert spotlighting recent fraud, waste, and abuse in the home healthcare setting. Specifically, the alert focused on various types of violations and improper conduct alleged against home health agencies (HHAs), individual physicians, and heads of home-visiting physician groups.

The OIG alleges that HHAs have been entering into improper referral and/or compensation arrangements with physicians in violation of the federal Anti-Kickback Statute (AKS). These AKS violations involve HHAs paying money to physicians in return for referrals of the physicians’ Medicare patients to the HHAs for home health services. The converse also occurs, with physicians soliciting referrals to the HHAs in return for monetary compensation. Not all compensation arrangements between HHAs and physicians are prohibited, as is noted by the OIG, but an arrangement may implicate the AKS if even a single purpose of the arrangement is to remunerate physicians for referring (including past and future referrals) Medicare or Medicaid patients to the HHA. Additionally, even in the absence of patient referrals, any compensation arrangement between HHAs and physicians is required to be commercially reasonable and based on the fair market value of the services rendered.

In addition to the alleged AKS violations, other federal laws were said to have been violated by HHAs and physicians pursuant to these compensation schemes. Examples outlined in the OIG alert include: HHAs billing for nursing home services rendered to Medicare patients who were not actually confined to the home; physicians falsely certifying patients as homebound; physicians billing for up-coded levels of home visit evaluation and management (E/M) services; and physicians billing for care plan oversight (CPO) services that were not actually provided.

Published on: June 30, 2016

CMS’ Holds Second Open Door Forum on its Upcoming Pre-Claim Review Demonstration

by Wachler & Associates, P.C.

On June 28, 2016, CMS held its second special open-door forum (ODF) regarding the Pre-Claim Review Demonstration for home health services (the “Demonstration”). The Demonstration will take place in six states (Illinois, Florida, Texas, Michigan and Massachusetts), all initiating by January 1, 2017, with the earliest start being August 1, 2016 in Illinois. However, as the initial implementation date approaches, home health agencies (HHAs) continue to express concerns regarding the Demonstration. CMS maintains that this Demonstration will benefit HHAs in the long run, but no matter whether or not they agree, HHAs across the country, particularly those located within the six Demonstration states, are paying close attention to the new developments.

The interest in the Demonstration was made evident by CMS’ statement that there had been 2,600 participants in the first open door forum on the Demonstration, which took place on June 14, 2016. CMS also gave repeated notice regarding its Demonstration FAQ page, which had been updated as recently as four days prior to the second ODF, and may be updated again before the Demonstration begins. Following these preliminary remarks during the second ODF, as well as a rehashing of the Demonstration’s basic tenets, CMS went right to the question and answer period. The moderators were uncertain about some issues, such as to whether an electronic referral order would fulfill the plan of care requirement—but on other questions CMS was very sure and adamant in their answers.

The main focus of the ODF, due to the continued interest of HHAs, was the plan of care requirement. During the second ODF, CMS clarified that in order for a pre-claim review request (PCRR) to be approved, HHAs must submit a physician signed and dated plan of care. Several callers commented that this would impose an undue hardship onto HHAs because of the difficulty already associated with physicians signing plans of care. The HHAs explained that requiring signed plans of care prior to submitting their PCRR would be substantially burdensome and had the potential to lead to delayed or unfiled PCRRs. The HHAs also opined that despite CMS’ insistence that the Demonstration would not alter documentation requirements, demanding signed plans of care so early in the certification period appears to heighten the requirements as set out in the current regulations. Relevantly, Chapter 7, Section 30.2.4 of the Medicare Benefit Policy Manual states the following: “The plan of care must be signed and dated by a physician […] before the claim […] is submitted for the final percentage payment.” Despite this, CMS held firm to its stance that the Demonstration did nothing to limit coverage and imposed no new requirements, citing that beneficiaries had always needed to be under a physician’s care. And while technically true, there is undoubtedly a new encumbrance upon HHAs’ Medicare reimbursement, as the Demonstration would require that the plan of care is submitted not only prior to the final claim, but also prior to the PCRR.

Published on: June 17, 2016

CMS Holds Open-Door Forum on its Upcoming HHA Pre-Claim Review Demonstration

by Wachler & Associates, P.C.

On June 14, 2016 between 2 and 3pm EST, CMS had a special open-door forum (ODF) regarding its pre-claim review demonstration for home health services (the “Demonstration”) which will take place in Illinois, Florida, Texas, Michigan and Massachusetts (listed chronologically by implementation date; see our prior blog post on the Demonstration for more information regarding the details of CMS’ pre-claim review process). During the ODF, home health agencies (HHAs) had the opportunity to learn more about the Demonstration and to ask CMS questions regarding pre-claim reviews. In addition to the questions, some HHAs took the opportunity to raise concerns they had regarding the Demonstration.

CMS started by addressing the basics of the program, specifically that HHAs will be required to submit a pre-claim review request prior to submitting the final bill for payment. CMS then restated that the Demonstration’s goal is to assure that HHA services are medically necessary and reasonable; to determine this, the Medicare Administrative Contractors (MACs) reviewing the pre-claim review requests will evaluate the submitted documentation to assure that the beneficiary: 1) is confined to home at time of service; 2) is under a physician’s care; 3) receives care pursuant to a plan of care approved by the physician; 4) is in need of skilled services; and 5) has had a face-to-face encounter with his or her certifying physician and the physician’s observations support the certification for home health services.

The statements from the ODF’s participants varied from logistical questions to expressions of concern over the impending Demonstration. On the logistical side, after CMS stated that a unique tracking number (UTN) would be provided once a pre-claim review was approved, participants requested guidance on where to place the UTN on the final bill. CMS explained that an operational guide for the Demonstration would be released within “the next few weeks.” The guide is to include information on what fields to put certain information (including UTNs) into, along with other procedural and administrative guidance for the Demonstration’s roll-out. CMS also answered a question on whether there would be specific forms provided for HHAs to fill out when filing the pre-claim review request: CMS stated that while no document was available yet, one would be made available in the future, and that the forms themselves would generally be furnished by the individual MACs in each region, rather than CMS itself.

Published on: June 16, 2016

Government Accountability Office Releases Critique of Medicare Appeals Process

by Wachler & Associates, P.C.

On June 9, 2016, the Government Accountability Office (GAO) publicly released its report on the Medicare system, highlighting the deficiencies within the Medicare audit and appeals process; a bill currently in the Senate would address many of these problems by reforming CMS’ procedures.

The GAO report, titled “Opportunities Remain to Improve Appeals Process,” focuses on the rising amount of Medicare appeals in recent years and the strain it has put on the system. The increase has been almost unprecedented—between the fiscal years (FYs) 2010 and 2014, the number of ALJ hearings ballooned from 41,733 to 432,534, or a 936% increase. Further, while the statutory time frame for an ALJ hearing to be completed is 90-days, GAO found that in FY 2014 96% of ALJ appeals were not completed within the 90-day limit.

GAO also reported on the insufficiency of data collected by CMS during the Medicare appeals process. The data currently being collected does not report on the reasoning for the appeals, or the amount of money over which the appeals are being made. GAO found this to interfere with the observation and documentation of trends within the appeals system, leading to inconsistencies with Federal regulations. The lack of data has also led to repetitive appeals, with CMS arguing the same issues over and over, with nearly identical appeals remaining separate all the way to the 3^rd and 4^th levels of appeals.

Published on: June 10, 2016

CMS Implements HHA Pre-Claim Review Demonstration

by Wachler & Associates, P.C.

On June 8, 2016, CMS finalized its plan for the implementation of a 3-year “demonstration” of Medicare pre-claim review for home health services. The trial will be carried out in 5 states: Florida, Illinois, Massachusetts, Michigan and Texas—all of which CMS terms as having “high incidences of fraud and improper payments” with regard to home health services. When CMS released the plan proposal in February, it was met with negative feedback from providers and Congress during the comment period, but CMS decided to go forward regardless, and it is important for home health agencies (HHAs) to adapt to the new requirements or else risk penalties or denial of payments.

According to the Department of Health and Human Services, 59% of home health service payments in 2015 were improper, up 41.7% from 2013’s improper payment rate of 17.3%. CMS hopes that pre-claim reviews will cut down on incorrect payments, not only caused by fraud, but also due to more prevalent causes such as insufficient documentation to support the medical necessity of the services, which is cited by CMS as the largest cause of erroneous funding.

The demonstration will require HHAs to submit pre-claim review requests to Medicare Administrative Contractors (MACs). These requests will include the same documentation normally provided to prove that the billed services meet the standards of Medicare reasonability and medical necessity, only submitted prior to the filing of the final claim. The HHA should begin treatment of the patient while awaiting a determination on the pre-claim filing. The HHA should submit the pre-claim review request after the Request for Anticipated Payment (RAP) is processed and within thirty (30) days of the first treatment provided to the patient, and the request should be submitted before the final claim is submitted for payment. According to CMS, MACs “will make every effort” to issue a decision on a pre-claim review request within ten (10) business days for an initial request and twenty (20) business days for a resubmitted request following a non-affirmative decision. When a pre-claim request is approved, the HHA will be given a unique pre-claim tracking number which the HHA must submit with the claim itself to assure full and proper reimbursement.