Wachler & Associates Health Law Blog

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.

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.

On April 24, 2013, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule that increases CMS' ability prevent fraudulent Medicare providers from enrolling, or remaining enrolled in the Medicare program. The provisions that CMS proposes to implement include:

• Allowing CMS to deny the enrollment of any provider, supplier or owner affiliated with an entity that has unpaid Medicare debt in order to prevent entities with such debt to avoid repayment by leaving the Medicare program and re-enrolling as a new business.
• Denying enrollment or revoking a provider or supplier's Medicare billing privileges if a managing employee has been convicted of certain felony offenses.
• Revoking the Medicare billing privileges of providers and suppliers that are found to have a pattern of billing for items or services in a manner not accordance with Medicare billing requirements.
• Making the effective date of Medicare billing privileges (typically, the date in which the enrollment application was filed) consistent across certain provider/supplier types.

In addition to the proposed changes to the Medicare enrollment provisions, CMS also proposes to increase the potential reward amount to people that provide tips of Medicare fraud and abuse. The proposed changes would increase the reward percentage for recovered Medicare funds from 10% to 15%, and would substantially increase the reward cap from $1,000 to $9.9 million.

If you have any questions regarding these recent developments, or have any questions relating to the Anti-Kickback Statute, Stark Law or other federal or state fraud and abuse regulations, please contact an experienced health care attorney at Wachler & Associates 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 April 2, 2013, the Centers for Medicare & Medicaid Services (CMS) held an Open Door Forum to discuss CMS's Administrator's Ruling (CMS-1455-R) and Proposed Rule (CMS-1455-P) that provide for significant changes to Medicare's Part B payment policy when a Part A hospital inpatient claim is denied as not medically necessary because the care was not provided in the appropriate setting.

During this Forum, CMS Representatives advised that hospitals do not have to wait until CMS's Change Request 8185 implementation date of July 1, 2013 to rebill Part B for Part A inpatient claims denied as not reasonable and necessary pursuant to the interim ruling. CMS Representatives stated that additional instructions for rebilling Part B claims will be released shortly and should be similar to those found in the now defunct Part A to Part B Rebilling Demonstration Program. CMS representatives also confirmed that the interim ruling does not apply to Medicare Advantage.

For those unable to attend the Open Door Forum, a recording of the Forum is available by phone beginning at 5:00 pm on April 2, 2013. To access the recording, dial 1-855-859-2056 and reference conference ID: 78861443. The recording expires after two business days. If you have questions regarding these recent developments or questions about the Medicare appeals process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

On Tuesday, April 2, 2013 (2:00-3:00 pm EST), the Centers for Medicare & Medicaid Services (CMS) will be holding an Open Door Forum for stakeholders in the healthcare community to call in and discuss the recent changes to the Medicare Part B payment policy in light of recently issued CMS Ruling. The CMS Ruling allows for hospitals to submit a Part B claim when a Part A inpatient claim is denied as not reasonable and necessary.

Tuesday's Open Door Forum will be conference call only. To participate by phone, dial 1-800-837-1935 and reference conference ID: 78861443. Persons participating by phone do not need to RSVP. TTY Communications Relay Services are available for the Hearing Impaired. For TTY services dial 7-1-1 or 1-800-855-2880. A Relay Communications Assistant will help. Encore is an audio recording of this call that can be accessed by dialing 1-855-859-2056 and entering the Conference ID beginning 2 hours after the call has ended. The recording expires after 2 business days. The number for Encore is 1-855-859-2056; Conference ID: 78861443.

On March 22, 2013, the Centers for Medicare and Medicaid Services (CMS) released Change Request 8185 to implement CMS Ruling (CMS-1455-R) and provide Medicare contractors with additional guidance for accepting claims rebilled from Part A to Part B. The CMS Ruling, which was released on March 13, 2013, permits hospital providers to rebill under Part B for Part A inpatient claims denied as not reasonable and necessary.

The Change Request reiterates the numerous revisions to the Part B payment policy when a Part A claim is denied as not reasonable and necessary. While the CMS Ruling remains in effect, the Change Requests instructs hospitals to submit Part B inpatient claims with the condition code "W2." By attaching the "W2" condition code, the hospital is acknowledging that the Part B claim is a duplicate of the Part A claim that was previously denied, no payment shall be made for items or services included on the Part A claim, and the beneficiary will be refunded for any amounts collected from the beneficiary with respect to the Part A claim. Furthermore, by including the "W2" condition code, the hospital attests that no appeals are pending with respect to the previously submitted Part A claim and that any previous appeal of the Part A claim has become final, binding or dismissed, and no further appeal will be filed on the Part A claim. Any Part B inpatient claim submitted under the CMS Ruling that does not include condition code "W2" will be rejected by the contractor. The effective date of the Change Request mirrors that of the CMS Ruling, which took immediate effect on March 13, 2013. However, the implementation date of the Change request is July 1, 2013. Despite the delayed implementation date of the Change Request, hospitals may submit their Part B claims prior to the implementation date, according to CMS.

Wachler & Associates will continue to monitor the developments of CMS's revised policy on Part B billing following the denial of a Part A inpatient hospital claim. If you have any questions regarding these developments or questions regarding the Medicare appeals process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

The Office of Medicare Hearings and Appeals (OMHA) has released its instructions and recommended request form for withdrawing a Part A appeal pursuant to the Center for Medicare & Medicaid Services (CMS) Ruling 1455-R. On March 13, 2013, CMS issued Ruling 1455-R, which allows hospitals to bill for certain services under Part B when a Part A inpatient claim was denied as not reasonable and necessary. The Ruling remains in effect until the proposed rule becomes finalized. Under the Ruling, a hospital must withdraw its Part A appeal in order to submit claims for Part B reimbursement.

Wachler & Associates will continue to monitor the developments of CMS's revised policy on Part B billing following the denial of a Part A inpatient hospital claim. If you have any questions regarding these developments or questions regarding the RAC appeals process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

Medicare administrative contractors (MACs) are expected to begin recouping money for annual wellness visits (AWV) erroneously paid to both facilities and physicians for the same visit.

For the past two years, CMS has erroneously allowed an AWV on a professional and institutional claim for the same patient on the same day. In some cases, this resulted in double billing to CMS. The erroneous collecting began with dates of service processed on or after April 4, 2011, and could continue through March 31, 2013 because the new policy will not take effect until April 1, 2013. CMS will recoup the double payments made from January 1, 2011 through March 31, 2013 from whoever billed the second claim. The new policy, Change Request 8107, will only allow payment for the professional service, regardless of whether it is paid on a professional or institutional claim.

If you need assistance determining how this new policy may affect your practice, or if you have any other health care law questions, 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.

The Health and Human Services Department (HHS) and the Department of Justice (DOJ) recovered a record $4.2 billion from healthcare fraud investigations last year, according to their jointly issued Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2012. DOJ and HHS reported that it deposited the $4.2 billion to U.S. Department of Treasury and Centers for Medicare & Medicaid Services (CMS) accounts. On average over the last three years, the federal government has recovered $7.90 for every dollar it spends investigating healthcare fraud and abuse. This is the highest three-year average return on investment in the 16-year history of the Health Care Fraud and Abuse (HCFAC) Program.

The bulk of these recoveries, it appears, are from pharmaceutical and device manufacturers and wholesalers. In July 2012, GlaxoSmithKline paid over $3 billion in a settlement deal to resolve its criminal and civil liability arising from the company's failure to report certain safety data, its alleged false price reporting practices, and its unlawful promotion of certain prescription drugs. In November 2011, Merck Sharp & Dohme paid $950 million to resolve its criminal and civil liabilities related to its promotion and marketing of the painkiller Vioxx. In April 2012, McKesson Corporation paid $190 million to resolve claims that it violated the FCA by reporting inflated pricing information for a large number of prescription drugs, causing Medicaid to overpay for those drugs.

The DOJ also reported the number of its enforcement actions. In 2012, the DOJ opened 1,131 new criminal and 885 new civil healthcare fraud investigations. The DOJ also reported that 826 criminal defendants were convicted of healthcare fraud-related crimes during the FY 2012. Furthermore, the Office of Inspector General (OIG) excluded 3,131 individuals and entities based on criminal convictions for crimes related to Medicare and Medicaid, patient abuse or neglect, and as a result of licensure revocations.

HHS and the DOJ claim that the record recoveries stem from the new anti-fraud programs, including the anti-fraud task force implemented in 2009, the Health Care Enforcement Team initiatives and Strike Forces, and the CMS Command Center. The HCFAC report noted the success of Health Care Enforcement Team initiatives, including the Strike Forces of investigators and prosecutors in nine cities: Miami, FL; Los Angeles, CA; Detroit, MI; Houston, TX; Brooklyn, NY; Baton Rouge, LA; Tampa, FL; Chicago, IL; and Dallas, TX. According to the DOJ, these Strike Forces filed 117 criminal charges against 278 defendants; obtained 251 guilty pleas; litigated 13 jury trials (with guilty verdicts against 29 defendants); and sentenced 201 defendants to prison terms averaging more than 48 months of incarceration. Furthermore, CMS also established the Command Center to improve health care-related fraud detection and investigation, drive innovation, and help reduce fraud and improper payments in Medicare and Medicaid. From May 2011 through the end of 2012, more than 400,000 providers were subject to the new screening requirements and nearly 150,000 lost the ability to bill the Medicare program due to the Affordable Care Act requirements and other proactive initiatives.

In light of the record number in recovery amounts and the increased funding to support initiatives to detect fraud and abuse, now is a better time than ever for health care providers to analyze their current compliance plans and policies. If you need assistance in developing an effective compliance plan to detect and prevent fraud and abuse, or have any other health care law questions, please contact an experienced health care attorney at Wachler & Associates attorney at 248-544-0888.

Senators Charles Schumer (D- NY) and Sherrod Brown (D - OH) are co-sponsors of the "Improving Access to Medicare Coverage Act of 2013 bill that would count observation stays toward the three-day minimum required for Medicare to cover the costs of follow up care after a serious hospitalization.

In recent years, the Centers for Medicare & Medicaid Services (CMS) has expanded its auditing programs in order to control the cost of Medicare and to prevent fraud and abuse. The auditing program scrutinizes claims for care that was not medically necessary and reasonable. If a Medicare contractor concludes that a beneficiary was allegedly improperly admitted as an inpatient, the contractor will request that the hospital return the identified overpayment. Although hospitals may appeal to challenge a Medicare contractor's conclusion that an inpatient admission was not medically necessary and reasonable, it is evident that the audits have affected hospitals' inpatient admission rates. Specifically, the unfortunate consequence of Medicare audit contractors' aggressiveness is some hospitals may be motivated to place patients in observation status to avoid auditors' scrutiny and potential financial penalties. An indication that this consequence is being realized is that the number and length of observation stays have skyrocketed. A study by Brown University reports a 34% increase in observation stays from 2007-2009. Currently, in order to receive rehabilitation or in home nursing care after a hospital stay, a Medicare patient must have a three-day inpatient hospital stay. However, hundreds of thousands of seniors are being denied Medicare coverage for therapy each year because they are admitted to the hospital under observation status instead of inpatient status.

Senator Schumer claims that correcting this "observation stay loophole" will save seniors money and will allow hospitals to provide better care for patients. CMS would have to cover the additional cost of follow up services for patients who have had a three-day stay in observation status. In the midst of the national budget debate, it will be interesting to see if the Improving Access to Medicare Coverage Act of 2013 will get any traction in Congress. In 2011 a similar act was introduced in both houses of Congress, but did not go anywhere.

If you need assistance in preparing for, or defending against RAC audits, or implementing a compliance program geared toward identifying and correcting potential risk areas related to RAC audits, please contact an experienced health care attorney at Wachler & Associates attorney at 248-544-0888.

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.

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" »