Wachler & Associates Health Law Blog

On May 13, 2013, the Department of Justice (DOJ) announced that C.R. Bard Inc. agreed to pay the United States $48.26 million to resolve allegations that Bard knowingly caused false claims to be submitted to Medicare in violation of the False Claims Act (FCA). Bard is a corporation based out of New Jersey which develops, manufactures, and markets medical products. The claims that purportedly violated the FCA were for brachytherapy seeds used to treat prostate cancer.

The government alleged that from 1998 to 2006, Bard delivered illegal remuneration in the form of grants, rebates, fees, marketing assistance, and/or free medical equipment to customers and physicians to induce them to purchase Bard's brachytherapy seeds, in violation of the Anti-Kickback Statute. The government argued that the hospital bills submitted to Medicare for these seeds were rendered false due to Bard's illegal kickback activity. The government alleged that Bard was liable for causing the submission of those false claims.

This settlement also resolves a lawsuit filed by Julie Darity, a former manager at Bard. Darity brought her claim under the whistleblower provisions of the False Claims Act, which allows private citizens to bring suits for false claims on behalf of the United States and share in the recovery obtained by the government. The former manager will receive $10,134,600 as her share of the civil settlement.

Furthermore, Bard has agreed to pay an additional $2.2 million and to take several remedial steps to enhance its corporate compliance program to prevent similar illegal actions in the future. For example, Bard has agreed to refine its Code of Conduct and other written policies to further promote Bard's commitment to full compliance with all Federal health care program requirements.

Wachler & Associates healthcare attorneys regularly counsel providers in proactively addressing potential kickback violations and defending providers against government allegations. If you or your healthcare entity need assistance in developing an effective compliance plan, or assistance in Medicare, Medicaid or third party payor audit defense, please contact our experienced healthcare attorneys at 248-544-0888.

On May 8, 2013, in a retrial of a 2010 case, a federal jury found that Tuomey Healthcare System (Tuomey) in Sumter, SC violated both the Stark Law and the False Claims Act (FCA). The jury found that Tuomey violated the FCA by submitting 21,730 claims to the Medicare program that were tainted by illegal compensation arrangements which induced physicians to refer patients to the hospital in violation of the Stark Law.

The underlying employment arrangements were made for 19 surgeons who each received base pay, significant benefits, and potentially two bonuses. The jury agreed with the government's contentions that the pay was not consistent with fair market value and was not commercially reasonable. The government argued that the excess compensation was evidence that the employment agreements took into account the volume or value of the physicians' referrals to Tuomey.

The jury assessed damages against Tuomey in the amount of $39,313,065, which is the full amount of the Medicare claims at issue. In addition, under the FCA, the government may seek up to three times the amount of damages plus $11,000 per claim, meaning Tuomey could potentially face up to $357 million in liabilities under the FCA. However, since Tuomey is a community hospital, they are likely to receive a penalty less than that amount. Each side will now submit motions interpreting what they think are the appropriate amount of damages, with a final damage amount coming sometime in the future.

This case should encourage providers to further evaluate potential business arrangements, or reevaluate current business arrangements, to ensure the arrangement does not run afoul of the Stark Law, Anti-Kickback Statute, False Claims Act or other fraud and abuse laws. Although the majority of penalties assessed for violating the FCA are reached through settlements, the jury's findings in Tuomey may result in a greater number of these cases reaching a jury verdict, which would likely result in substantially larger penalties. If you have any questions relating to the Anti-Kickback Statute, Stark Law or other federal or state fraud and abuse regulations, please contact an experienced Wachler & Associates healthcare attorney at 248-544-0888.

Hospice providers must always obtain written certification that a patient meets Medicare's hospice coverage criteria. Written certification of terminal illness needs to be obtained no later than 2 days after hospice care is initiated, and must be on file in the hospice patient's record prior to the submission of a claim to the Medicare contractor. Certification must be made by the medical director of the hospice and, if applicable, the patient's attending physician. Payment for hospice care will begin the date certification is obtained.

This initial certification satisfies the hospice certification requirement for the first 90-day period of coverage. Additional periods require recertification, which can be obtained 15 days prior to the next benefit period, but no later than 2 days after that period begins.

Per the Medicare Benefit Policy Manual, the written certification must include:

1. A statement that the patient's medical prognosis is that their life expectancy is 6 months or less if the terminal illness runs its normal course;
2. Specific clinical findings and other documentation supporting a life expectancy of 6 months or less;
3. Signature(s) of physician(s), the date signed, and the benefit period that the certification or recertification covers; and
4. The physician's brief narrative explanation of the clinical findings that supports a life expectancy of 6 months or less as part of the certification and recertification forms, or as an addendum to the forms.

Additionally, if a hospice patient requires a third benefit period, hospice physicians or hospice nurse practitioners must complete and document a face-to-face encounter with the patient prior to that period. The face-to-face encounter must take place no more than 30 days prior to the benefit period, and must be documented by a properly executed attestation form signed by the performing hospice physician or nurse practitioner.

Due to the burdensome nature of this requirement, hospice recertification requirements have increasingly become an area of focus for Recovery Auditors. The Recovery Audit Contractor (RAC) for Region D, HDI, recently added "Face-to-Face Evaluation for Recertification of Hospice Care" as an approved audit issue.

Failure to meet the face-to-face requirement results in the hospice's failure to recertify the patient's terminal illness eligibility, and the patient is then ineligible to receive the benefit. Hospice providers thus must have systems in place to ensure compliance with Medicare's hospice patient recertification requirements. The timing and proper execution of hospice recertification forms will continue to be a changing and essential aspect in obtaining full Medicare reimbursement.

Our firm assists hospice providers in the implementation of hospice compliance plans. We regularly represents hospice providers nationwide in then defense of RAC, Medicare, ZPIC and other audits. If you or your hospice entity have any questions regarding Medicare's face-to-face recertification requirements, or otherwise need assistance, please contact a Wachler & Associates attorney at 248-544-0888.

On May 8, 2013 the Office of Inspector General ("OIG") for the Department of Health and Human Services issued an Updated Special Advisory Bulletin on the Effect of Exclusion from Participation in Federal Health Care Programs ("the Updated Bulletin") to replace and supersede a bulletin issued in 1999.

The Updated Bulletin reiterates, clarifies and/or provides guidance on many points, including the following with regard to the effect of exclusion on participation in Federal health care programs:

• Payment cannot be made from a Federal health care program for items or services furnished by an excluded person or at the medical direction or on the prescription of an excluded person.
• Exclusions and payment prohibitions continue to apply to an excluded person even if he or she switches professions during the exclusion period (e.g., an individual excluded as a pharmacist cannot go on to obtain a medical degree and furnish services to patients covered by federal health care programs).
• An excluded provider may refer a patient to a non-excluded provider if the excluded provider does not furnish, order, or prescribe any services for the referred patient, and the non-excluded provider provides all treatment and submits all bills to the Federal health care programs.
• Exclusions and payment prohibitions extend beyond direct patient care. For example, an excluded person could not prepare surgical trays, review treatment plans, input prescription information for pharmacy billing or be involved in any way in filling prescriptions for drugs that are billed to a Federal health care program, or provide transportation services paid for by a Federal health care program, such as working as an ambulance driver or dispatcher.
• Excluded providers are prohibited from providing administrative or management services that are payable by a Federal health care program, even if the services are not separately billable. Some examples of management and administrative roles that an excluded provider could not perform include: chief executive officer, chief financial officer, general counsel, director of health information management, director of human resources, physician practice office manager, health information technology services and support, strategic planning, billing and accounting, staff training and human resources unless wholly unrelated to federal health care programs.
• The payment prohibition extends to volunteer positions. For example, an excluded health professional could not volunteer at a hospital or hospice where services are payable by a Federal health care program.
• A provider may employ or contract with excluded providers for items or services that are solely furnished to non-Federal healthcare program beneficiaries. In such a situation, the excluded providers do not have to be paid out of a separate account. However, there can be no claim submitted or payment received from a Federal health care program for services or items provided directly or indirectly by the excluded provider.
• Providers should confirm at the point of service that the ordering or prescribing physician is not excluded. The OIG further cautions that some excluded providers may still have a Drug Enforcement Agency (DEA) license. The OIG also cautions against relying on Medicare Part D plans and/or state agencies to have edits in place to identify excluded providers since reliance on a third party does not relieve the provider of responsibility with regard to any overpayments or civil monetary penalties related to services ordered or prescribed by an excluded provider.
• From a practical standpoint, an excluded provider cannot retain greater than 5% ownership interest in a provider entity, nor can an excluded provider hold an administrative or management position.
• OIG urges providers to screen potential employees or contractors by using the OIG List of Excluded Individuals/Entities (LEIE). Although there is no statutory or regulatory requirement to check the LEIE at any specific intervals, the OIG suggests monthly screening to best minimize potential overpayment and CMP liability. The OIG further suggests that providers maintain documentation of all name searches performed and additional searches conducted.
• In determining who to screen, a provider is expected to look at each job category and contractual relationship and determine whether the item or service is payable directly or indirectly, in whole or in part by a Federal health care program. If the answer to this question is yes, then all persons in that job category or with a similar contractual relationship should be screened to best minimize CMP liability.
• The OIG cautions providers who rely on third parties to conduct screening that the provider will retain liability for CMP. Where health care workers are contracted through another entity, such as a staffing agency, the OIG states that a provider may reduce or eliminate CMP liability if it can demonstrate that it reasonably relied upon the staffing agency's agreement by contract to perform LEIE screening. The OIG further cautions that any such delegation should be documented in the agreement between the parties and the provider should exercise due diligence in ensuring that the agency is meeting the contractual obligation.
• The LEIE is the primary database that should be used for the purposes of exclusion screening (as opposed to the NPDB or SAM).
• Providers who identify potential CMP liability for contracting with or employing an excluded provider could use the OIG's Provider Self-Disclosure Protocol (SDP) to disclose and resolve potential CMP liability.

For further information regarding the effect of exclusion on a provider's ability to contract with or be employed with a health care entity that bills federal health care programs, please contact an experienced Wachler & Associates' health law attorney.

On May 3, 2013, the Office of Inspector General (OIG) released a memorandum describing hospice general inpatient care (GIP) provided to Medicare patients in 2011, for which Medicare paid $1.1 billion. According to the memorandum, the OIG will be conducting an in-depth medical record review to evaluate the appropriateness of GIP provided by hospices. The study will be focused on the accuracy of reimbursement for GIP and the proportion of GIP provided in different settings, specifically Medicare-certified hospice inpatient units, hospitals, and skilled nursing facilities.

This ongoing study is a continuation of prior studies released by the OIG, which show that the amount of GIP services provided differs significantly depending on the setting. For example, hospices that have their own inpatient units provided GIP to 35% of their Medicare patients. In contrast, hospices that have to outsource GIP care sent only 12% of their Medicare beneficiaries to receive that care. Furthermore, hospices that provided GIP in their own inpatient units recorded 50% longer patient stays and three times the proportion of Medicare payments for GIP services than did hospices that have to outsource GIP care.

The memorandum states that the OIG will begin a new study which will use actual beneficiary medical records to determine the accuracy of reimbursement. In addition to its own investigations, the OIG advised CMS to ensure that the hospices not currently providing GIP are still providing beneficiaries with appropriate access to the types and amount of care needed at the end of their lives. These studies are part of OIG's continuing investigations related to Medicare hospice care. In 2011, Medicare paid $13.7 billion for hospice services on behalf of 1.2 million beneficiaries, and both of those numbers are expected to increase with the aging of the baby boomer generation.

Despite this report not containing recommendations to CMS, as OIG reports typically include, the OIG intends to provide CMS with recommendations in a follow-up report after the OIG completes its medical record review. Once the OIG makes its recommendations to CMS, hospice providers can anticipate increased audit scrutiny surrounding hospice GIP, including the over-utilization of inpatient hospice stays for hospice providers that have their own inpatient units. The way hospice providers should respond to this increased scrutiny is to increase their compliance activities in this area.

Wachler & Associates healthcare attorneys regularly counsel providers, including hospice providers, in proactively addressing potential audit risk areas and defending providers against Medicare audits. If you or your healthcare entity need assistance in developing an effective compliance plan, or assistance in Medicare, Medicaid or third party payor audit defense, please contact our experienced healthcare attorneys at 248-544-0888.

As mandated by the American Taxpayer Relief Act of 2012, Medicare Part B outpatient therapy providers now face manual medical review of claims at or above a $3700 statutory cap. Due to some confusion in the provider community, the Centers for Medicare and Medicaid Services (CMS) published a Frequently Asked Questions to clarify the new therapy manual medical review process.

In the FAQ, CMS explains that the manual medical review process is triggered when a beneficiary's services for that year exceed one of two threshold caps dictated in Section 603 of the Act. The cap for Occupational Therapy (OT) services is $3700 per year, per beneficiary. Separately, the combined cap for Physical Therapy (PT) and Speech Language Pathology (SLP) is $3700 per year, per beneficiary. CMS also points out that although physical therapy and speech language pathology services are combined to trigger the cap, the medical review of those claims will be conducted separately.

The FAQ states that the cap and manual medical review process applies to all Part B Outpatient Therapy settings and providers, including private practices, Part B skilled nursing facilities (SNFs), home health agencies (HHAs), outpatient rehabilitation facilities, rehabilitation agencies and hospital outpatient departments.

Therapy providers will continue to submit claims to their Medicare Administrative Contractor (MAC) but the manual medical review process will be completed by CMS' Recovery Auditors, who began processing manual medical review of PT claims on April 1st, 2013.

A distinction in the manual medical review process exists, however, depending on whether the provider is in a Recovery Auditor Prepayment Review Demonstration state or not. Therapy providers in the demonstration states - Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri - will receive their Additional Documentation Request (ADR) from the MAC but will send that additional documentation to the Recovery Auditor. The prepayment review then must, by law, be completed by the Recovery Auditor within 10 days of receiving the additional documentation. Providers in other states will face "immediate post-payment review." Their MAC will pay the claim once received and any ADR will come directly from the Recovery Auditor, who will again complete the manual medical review and notify the MAC of the payment decision within 10 days.

The CMS FAQ also acknowledged the existing $1900 therapy cap and made clear that "no Recovery Auditor is approved for therapy review between $1900 and $3700." CMS noted that such a review could occur in the future but that it is currently outside this mandate.

The outpatient therapy manual medical reviews and ADRs will be per claim. The Recovery Auditors will be paid a contingency fee and operate under existing policy guidelines. Of note, they are required to use Registered Nurses and/or therapists when conducting medical necessity and coverage decisions, and certified coders in coding determinations. Importantly, in CMS FAQ answer 19, CMS states that additional documentation limits will not apply to therapy pre and post payment reviews.

Therapy providers may appeal their adverse manual medical review determinations through their MAC, and the Medicare administrative appeals process remains unchanged. Providers must prepare for inevitable documentation requests and account for manual medical reviews in their Medicare audit compliance systems.

Wachler & Associates' healthcare attorneys regularly counsel therapy providers in a variety of matters. If you or your healthcare entity has any questions regarding CMS' new outpatient therapy manual medical review process, or otherwise need assistance with a Medicare audit or RAC compliance plan, please contact our healthcare attorneys at 248-544-0888.

Intermountain Healthcare, the largest health system in Utah, has agreed to pay $25.5 million to resolve claims that it violated the federal Stark law and False Claims Act by engaging in inappropriate financial relationships with referring physicians.

In 2009, Intermountain disclosed to federal officials that the system may have illegally paid bonuses to 37 doctors based on their patient referrals. If true, Intermountain would have been in violation of the Stark law. In addition, Intermountain disclosed that it compensated more than 170 doctors in the absence of written agreements, including via rentals of office space in several cities without written lease agreements. In total 209 physicians were involved in the violations, which spanned over a 10 year period.

Intermountain discovered the violations through its regular review process, and reported them to the government in 2009. Intermountain cites the complexities of the Stark law's regulations as one cause of its noncompliance. According to Intermountain's Chief Medical Officer Dr. Wallace, Intermountain should have more closely monitored the situation and although Intermountain's management realized that penalties could be significant, they chose to self-disclose the issues.

Intermountain's self-disclosures ultimately led to a $25.5 million settlement agreement, which is one of the largest recent healthcare settlements with the Department of Justice. Freeman Health System of Joplin, Missouri entered into a similar settlement agreement with the Department of Justice last November for $9.3 million. Notably, Intermountain has not admitted to any wrongdoing in the settlement agreement nor has there been determination of liability on the part of Intermountain or the physicians involved.

The partnership between the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative and the Department of Justice has led to intensive efforts to prevent and reduce Medicare and Medicaid fraud. As illustrated by these recent settlements, the False Claims Act has proven to be a very effective tool for the government, and has resulted in recoveries in excess of $14.2 billion since the partnership began in 2009.

If you need assistance determining how the Stark law and False Claims Act may affect your practice or how to set up a regular review process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

On January 31, 2013, the Senate Finance Committee released a report aimed at combating waste, fraud and abuse in Medicare and Medicaid. In May of 2012, the Senate Finance Committee invited interested stakeholders to submit white papers offering recommendations and innovative solutions to improve program integrity efforts, strengthen payment reforms, and enhance fraud and abuse enforcement efforts. In response, a variety of healthcare industry experts, including Wachler & Associates, submitted nearly 2,000 pages of input and recommendations. Wachler & Associates submitted instances of egregious contractor errors, including improper recoupment of alleged overpayments, contractors sending appeals correspondence to the wrong addresses and improper referral of alleged overpayments to the Department of Treasury. Based on the Finance Committee's review, the white papers discussed five broad themes: improper payments, beneficiary protection, audit burden, data management, and enforcement.

Improper payment issues were discussed by 44 percent of health insurers and providers who submitted white papers. Solutions regarding improper payment issues included allowing reimbursement at the outpatient service level if inpatient status is denied or for certain types of complex cases; and clarifying the guidance on or abolishing outpatient observation status. Beneficiary protection was discussed by 57 percent of insurers and providers, many of whom discussed the use of outpatient observation status by hospitals to avoid recovery audit contractor's (RAC) scrutiny of claims, as well as provider and patient frustration with payer documentation requirements, which may lead them to forfeit certain courses of treatment or care. Furthermore, 60 percent of providers and insurers discussed audit burden issues, and were specifically concerned with the number of audit entities involved, the volume and complexity of payment rules and regulations, whether payment rules are applied consistently and whether audit entities are inappropriately overturning medical necessity decisions, audit entities interactions with providers during the audit process, difficulty communicating with audit entities during the audit process, and financial burden of payment suspensions and the impact on business.

Ninety-four percent of white papers included recommendations to combat waste, fraud, and abuse. Some of the recommendations included were:

• Clarifying the circumstances in which use of care and the setting for care is appropriate such as when it is appropriate to use inpatient care versus outpatient
• Making numerous process changes to how the various CMS audit contractors operate to ensure they are doing so efficiently and effectively
• Balancing the incentives for Medicare contractors to identifying overpayments with penalties for contractors whose findings are overturned on appeal through the CMS administrative process; and
• Creating an advisory panel to provide clinical input as a component of contractor oversight.

In light of the increased attention to support initiatives to detect fraud and abuse, now is the time for health care providers to analyze their current compliance programs and policies. If you need assistance in developing an effective compliance plan or appealing an adverse Medicare audit determination, please contact an experienced health care attorney at Wachler & Associates attorney at 248-554-0888.

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.

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.

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.

Continue reading "Proposed Settlement Agreement Filed in Federal Court Which Could Change SNF and Home Health Coverage" »

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.

Continue reading "AHA Sends Letter to OIG Urging Contractor Reform" »

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.

Continue reading "Medicare Audit Improvement Act of 2012 Proposes to More Heavily Regulate Audit Contractors" »

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.

Continue reading "HDI Posts First Pre-Payment Review Issue" »

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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