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April 18, 2016

CMS Releases Final Rule on Reporting and Returning Medicare Overpayments

On February 12, 2016, the Centers for Medicare and Medicaid Services (CMS) released its long-awaited Final Rule regarding the reporting and returning of Medicare overpayments. The Final Rule requires providers and suppliers receiving funds under the Medicare program to report and return overpayments by the later of (1) 60 days after the date on which the overpayment was "identified" or (2) the date any corresponding cost report is due, if applicable.

The first major provision contained in the Final Rule concerns the definition of "identified" for purposes of starting the 60-day clock for reporting and returning the overpayment. As set forth in the Final Rule, a person has identified an overpayment when the person has or should have, through reasonable diligence, determined that the person has received an overpayment and quantified overpayment amount. According to CMS, the 60-day time period to report and return begins whether either the reasonable diligence is completed, or on the day the person received creditable information of a potential overpayment if the person failed to conduct reasonable diligence and the person in fact received an overpayment. Furthermore, absent extraordinary circumstances, CMS chose a six-month period as the benchmark for completing timely investigations, which would give providers a total of eight month to resolve its overpayment issues (six months for timely investigation and two months for reporting and returning).

The second major provision contained in the Final Rule is in regards to the applicable lookback period for reporting and returning identified overpayments. In its 2012 proposed rule, CMS proposed a 10-year lookback period, which many in the provider community found to be overly burdensome. However, CMS reduced its proposed 10-year look back period in the Final Rule to a 6-year lookback period. The 6-year lookback is measured from the date the person identifies the overpayment.

Additional requirements and comments provided by CMS in its final rule include:

  • The Final Rule applies only to overpayments under Medicare Parts A and B. However, CMS notes that section 1128J(d) of the Social Security Act requires providers that identify overpayments received from Medicare or Medicaid to report and return those overpayments to the appropriate payor.
  • CMS will allow providers to utilize additional methods for reporting and returning overpayments beyond the voluntary refund process, which may include the use of claims adjustments, credit balances, requesting a voluntary offset, or another appropriate process.
  • CMS declined to adopt a minimum monetary threshold in its Final Rule.
  • CMS declined commenters' proposal that providers should be allowed to offset identified overpayments with any identified underpayments when determining the repayment amount. CMS stated underpayments are outside the scope of the Final Rule and that providers can seek to address underpayments under existing reopening policies.

It is important for providers to understand the requirements set forth in the Final Rule and incorporate the necessary policies into their compliance plans regarding the reporting and returning of identified overpayments. Failure to report and return any identified overpayment within 60 days could expose providers to liability under the federal False Claims Act. If you or your entity have any questions regarding the Final Rule, or have any other questions related to Medicare overpayments, please contact an experienced healthcare attorney at (248) 544-0888, or via email at wapc@wachler.com. You may also subscribe to our health law blog by adding your email at the top right of this page.

February 29, 2016

CMS Releases Proposed Rule Changing Benchmarking Methodology for ACOs

Under the Medicare Shared Savings Program, providers and suppliers paid under Medicare Parts A and B who participate in an ACO may be eligible to receive "shared savings payments" if the ACO meets certain cost savings and quality benchmarks. On February 3, 2016, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule that in addition to other changes to the Medicare Shared Savings Program, would modify the savings and quality benchmarking methodology through which ACOs' benchmarks are updated and reset at the end of each three year ACO agreement period.

Specifically, CMS proposes the incorporation of regional expenditures when updating and resetting ACO benchmarks. CMS believes that incorporating regional fee for service (FFS) expenditures will more accurately reflect FFS spending in an ACO's region and thereby make benchmark goals more independent of historical benchmarks and encourage greater participation in the ACO program. Additionally, CMS proposes to account for the health status of an ACO's assigned population in relation to FFS beneficiaries in the ACO's region when calculating risk adjustment. Also, CMS seeks to include changes in ACO participant composition as a factor when adjusting ACO benchmarks.

In addition to revising the benchmarking methodology, the proposed rule modifies other key provisions of the Shared Savings Program, such as defining circumstances under which CMS could reopen payment determinations and adding a participation agreement renewal option. There are currently over four hundred ACOs participating in the Shared Savings Program. However, as Wachler & Associates previously posted, less than fifty percent of participating ACOs qualified for shared savings payments in calendar year 2014. The proposed changes are expected to increase overall participation in ACOs and save approximately $120 million for the Shared Savings Program in calendar years 2017 through 2019. The public comment period for this proposed rule will close on March 28, 2016.

Wachler & Associates continues to stay up to date on all developments under Medicare's ACO program. If you or your health care entity have any questions regarding Medicare's ACO program, the proposed rule, other healthcare regulations pertaining to Medicare or Medicaid, or general healthcare regulatory compliance, please contact an experienced healthcare attorney at (248) 544-0888, or via email at wapc@wachler.com. You may also subscribe to our health law blog by adding your email at the top right of this page.

February 25, 2016

OMHA Expands the Settlement Conference Facilitation Pilot to Part A Claim Appeals

The Office of Medicare Hearings and Appeals (OMHA) recently announced its Phase III expansion of the Settlement Conference Facilitation (SCF) pilot program. The SCF pilot was originally launched in July 2014 to provide an alternative dispute resolution process for eligible Medicare providers to settle appealed Medicare claim denials pending at the Administrative Law Judge (ALJ) level of the Medicare appeals process. Under the SCF pilot, Medicare providers have the opportunity to enter into open settlement discussions with the Centers for Medicare & Medicaid Service (CMS) with the goal of coming to a mutually agreed upon resolution for the pending ALJ claims. Initially, the program was limited to Part B claims that met specific eligibility criteria. In October 2015, OMHA implemented Phase II of the SCF pilot, which expanded the eligibility requirements for Part B claims. Recently, OMHA announced that it will open Phase III of the SCF pilot, expanding the program to Part A claim appeals. Much like the previous phases, OMHA has provided eligibility requirements for participating in the SCF pilot, which include:

  • The appellant must be a Medicare provider (for the purposes of this pilot, "appellant" is defined as a Medicare provider that has been assigned a National Provider Identifier (NPI) number);
  • A request for hearing must appeal a Medicare Part A Qualified Independent Contractor (QIC) reconsideration decision;
  • The beneficiary must not have been found liable after the initial determination or participated in the QIC reconsideration;
  • All jurisdictional requirements for a hearing before an ALJ must be met for the request for hearing on all appealed claims;
  • The request for hearing must not be scheduled for an ALJ hearing;
  • The request for hearing must have been filed on or before December 31, 2015;
  • The amount of each individual claim must be $100,000 or less (for the purposes of an extrapolated statistical sample, the overpayment amount extrapolated from the universe of claims must be $100,000 or less);
  • At least 50 claims must be at issue and at least $20,000 must be in controversy;
  • The request must include all of the appellant's pending appeals for the same item or service at issue that meet the SCF criteria. For example, if an appellant has 50 hospice appeals pending that meet the requirements above, the appellant must submit a request for SCF for all 50 hospice appeals.
  • The appellant has not filed for bankruptcy and/or does not expect to file for bankruptcy in the future; and
  • The appellant has received an Office of Medicare Hearings and Appeals Settlement Conference Facilitation Preliminary Notification stating that the appellant may request SCF for the claims identified in the SCF spreadsheet. An appellant may not formally request a settlement conference until receiving this notice, but an appellant can initiate the process by filing its expression of interest.

More information on the SCF pilot can be found on OMHA's website. In addition, OMHA is hosting a Medicare Appellant Forum to provide the appellant community with the current status, program updates, and initiatives regarding appeals at the ALJ level of the Medicare appeals process. The OMHA Appellant Forum will also be providing information pertaining to the SCF Phase III rollout. The OMHA Medicare Appellant Forum will take place on February 25, 2016, at 1:00pm-4:00pm EST. Interested attendees can still register for the event.

Wachler & Associates has already participated in multiple settlement negotiations on behalf of health care providers under the SCF pilot program. We will also be attending the OMHA Medicare Appellant Forum to ensure our experienced attorneys are up-to-date on all matters related to the SCF program and ALJ appeals. If you or your health care entity needs assistance in pursuing the SCF program or appealing Medicare claim denials, or if you have any questions relating to the SCF program, please contact an experienced healthcare attorney at (248) 544-0888, or via email at wapc@wachler.com.

February 23, 2016

OIG Advisory Opinion Examines Radiology Arrangement Regarding Transcription Fees Paid to Third Party

The Department of Health and Human Services' Office of Inspector General ("OIG") recently released OIG Advisory Opinion No. 15-15, in which the OIG determined that an arrangement involving an acute care hospital ("Hospital"), radiology practice and family medicine clinic ("Clinic") would not generate prohibited remuneration under section 1129B(b) of the Social Security Act, the Federal anti-kickback statute ("AKS").

Under the arrangement, the Clinic refers patients and certain diagnostic tests to the Hospital, and thus the Clinic's physicians are referral sources for the Hospital. The radiology practice contracts with the Hospital to supervise radiology services and provide professional interpretations of all radiologic imaging taken at the Hospital, and members of the radiology practice can influence referrals to the Hospital. The Clinic includes technologists who provide radiologic imaging services for the Clinic's patients, and the Clinic transmits the resulting images to the radiology practice to interpret the images and is thus a referral source for the radiology practice. The radiology practice's radiologists interpret the images and dictate reports, but send the dictated reports to the Hospital and the Hospital's employees transcribe the reports on behalf of the radiologists, who send the final reports back to the Clinic. The radiology practice pays the Hospital a "flat rate per line of transcription" fee that is fair market value for the service, and the Clinic pays no portion of any transcription cost. The Clinic bills third-party payors, including Medicare and Medicaid, for the technical component, and the radiology practice bills these payors for the professional component of the radiology services. The OIG also noted that the Hospital is located in a sparsely populated region, the Clinic is in a rural community in that region, and that the radiology practice is the only radiology practice within a 100-mile radius of the Clinic or Hospital.

Crucial to the OIG's finding, the Centers for Medicare & Medicaid Services' ("CMS") Medicare Claims Processing Manual provides that with regards to the professional component of a radiology service, the interpretation of the diagnostic procedure includes a written report. Further, CMS advised the OIG that transcription costs are considered indirect expenses under the methodology establishing resource-based practice expense relative value units (RVUs), meaning that such costs are not separately identified but are included in both the professional and technical components for each service. As such, CMS' position is that when the technical component and professional component are provided and billed by different entities, the two providers may determine who will pay for transcription costs.

The OIG highlighted that both the Clinic and radiology practice are referral sources for the Hospital, and the Clinic is a referral source for the radiology practice. Under the AKS, when a party in a position to benefit from referrals provides remuneration to a referral source, including the relief of administrative expenses, there is risk that such remuneration is to influence referrals.

First, the OIG determined that no remuneration passed from the Hospital to the Clinic, as the Hospital billed the radiology practice for transcription services, the Hospital is entitled to reimbursement for such services, and it is logical that the Hospital would bill the radiology practice for these services.

Second, since the Clinic would not pay for transcription costs, the OIG determined whether the radiology practice's payment for such costs constituted remuneration from the radiology practice to the Clinic. The OIG stated that if the transcription costs were reimbursed solely under the technical component, the risk of prohibited remuneration under the AKS would be substantial. However, given CMS' position that Medicare's payment for both the technical component and professional component includes reimbursement for indirect expenses, and to the extent these expenses include transcription costs, the parties both receive reimbursement for the same expense and thus the risk of prohibited remuneration between the parties arises when one party bears the costs instead of the other. Despite this risk, the OIG determined that prohibited remuneration would not pass between the radiology practice and Clinic. The OIG's decision was based on the fact that Medicare's Payment Conditions for Radiology Services state with regard to the professional component, "[t]he interpretation of a diagnostic procedure includes a written report." Thus, since the written report is part of the professional component, the radiology practice's payment for transcription of its own reports would not constitute remuneration to the Clinic.

Wachler & Associates represents healthcare providers, suppliers and other individuals nationwide in substantially all areas of health law, including compliance with the AKS, the federal Stark law, and other federal and state laws related to healthcare fraud and abuse. Our firm regularly structures arrangements to comply these laws and other regulatory guidance. If you or your health care entity has any questions related to the AKS, Stark law, or any other authorities governing relationships between healthcare providers and referral sources, or healthcare regulatory compliance in general, please contact an experienced health law attorney at (248) 544-0888 or via email at wapc@wachler.com. You may also subscribe to our health law blog by adding your email at the top right of this page.

December 7, 2015

CMS Proposes Rule Implementing Discharge Planning Requirements

The Centers for Medicare & Medicaid Services ("CMS") recently announced a proposed rule primarily aimed at discharge planning requirements for hospitals and other service providers, including home health agencies (HHAs).

As part of the Improving Medicare Post-Acute Care Transformation Act of 2014 (IMPACT), hospitals, other inpatient facilities, and HHAs are required to develop an individual discharge plan for each patient based on a variety of factors, including individual patient needs. The proposed CMS rule would require these facilities and providers to develop discharge plans for patients within 24 hours of either admission or registration, as well as require that those plans be completed before the patient is discharged or transferred to another facility. In addition, providers and facilities would be required to provide discharge instructions to patients, enact a medication reconciliation process, and provide medical records to another facility if the patient is transferred.

As it specifically relates to HHAs, the proposed rule intends to impose several requirements that will affect HHA's processes for discharging or transferring patients. CMS explained that its purpose for the rule is to "...better prepare patients and caregivers to be active participants in self-care" and to "...focus on person-centered care to increase patient-participation in post-discharge care decision making." Examples of the proposals that CMS believes will help them reach these goals include, requiring the physician responsible for the home health plan of care to be involved in the ongoing establishment of the discharge plan, require that the discharge plan address the patient's goals and treatment preferences, require that the evaluation be included in the clinical record and all relevant patient information available to or generated by the HHA to be incorporated into the discharge plan to facilitate its implementation. HHAs and other entities affected by the proposed rule must submit their comments on the proposals by January 4, 2016.

Wachler & Associates will continue to monitor CMS' proposed rule and other developments regarding the IMPACT Act and discharge planning. If you or your health care entity has any questions regarding compliance with the IMPACT ACT or this proposed rule, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. Subscribe to our health law blog to stay updated on the latest CMS news.

October 1, 2015

OMHA to Expand the Settlement Conference Facilitation Pilot

On October 15, 2015, the Office of Medicare Hearings and Appeals (OMHA) will be hosting an open door teleconference to discuss the expansion of its Settlement Conference Facilitation (SCF) Pilot. The pilot program was originally launched in July 2014 to provide an alternative dispute resolution process for eligible Medicare providers to settle appealed Medicare claim denials pending at the Administrative Law Judge (ALJ) level of the Medicare appeals process. Under the SCF pilot program, Medicare providers had the opportunity to enter into open settlement discussions with the Centers for Medicare & Medicaid Service (CMS) with the goal of coming to a mutually agreed upon resolution for the pending ALJ claims. Since the SCF pilot program's inception, the program was limited to providers that met specific eligibility criteria (e.g., the ALJ hearing must have been filed in 2013). However, OMHA appears set to expand the SCF program, which will be discussed in greater detail during the open door teleconference scheduled for October 15th at 1:00pm-2:00pm EST. Any parties interested in participating in the call should fill out the registration form and submit it no later than 5:00pm on October 14, 2015.

Wachler & Associates has already participated in multiple settlement negotiations on behalf of health care providers under the SCF pilot program. We will also be attending the open door teleconference to ensure our experienced attorneys are up-to-date on all matters related to the SCF program. If you or your health care entity needs assistance in pursuing the SCF program or appealing Medicare claim denials, or if you have any questions relating to the SCF program, please contact an experienced healthcare attorney at (248) 544-0888, or via email at wapc@wachler.com.

September 18, 2015

CMS Releases 2014 ACO Performance Results

Recently, the Centers for Medicare & Medicaid Services (CMS) released its 2014 quality and financial performance results for Medicare Accountable Care Organizations (ACO). According to CMS, overall, 353 ACOs - 20 Pioneer ACOs and 333 Medicare Shared Savings ACOs - generated a net savings of more than $411 million in 2014. In addition, 97 ACOs met their quality standards and savings threshold, qualifying them for shared savings payments of more than $422 million. According to CMS Acting Administrator Andy Slavitt, "These results show that ac countable care organizations as a group are on the path towards transforming how care is provided. . . . Many of these ACOs are demonstrating that they can deliver a higher level of coordinated care that leads to healthier people and smarter spending." According to CMS, some of the quality and financial performance results included:

  • Of the 20 Pioneer ACOs participating in 2014, 15 ACOs generated savings and 5 ACOs generated losses. Of the 15 ACOs that generated savings, 11 ACOs qualified for shared payments of $82 million due to them generating savings outside a minimum savings rate. Of the 5 ACOs that generated losses, 3 ACOs are paying $9 million in shared losses to CMS for generating losses outside a minimum loss rate.
  • Pioneer ACOs generated a total savings of $120 million, which equates to a 24% increase in performance from the $96 million of total savings in 2013. Further, the total model savings per ACO increased from $4.2 million per ACO in 2013 to $6 million per ACO in 2014.
  • Of the 333 Medicare Shared Savings ACOs, 92 ACOs held spending below their targets, qualifying them for their share in the $341 million in program savings as performance payments. An additional 89 ACOs reduced health care costs in comparison to their benchmark, but did not meet the minimum savings threshold necessary to qualify for shared savings.
  • ACOs that entered the Medicare Shared Savings Program in 2012 generated more shared savings than the ACOs that entered the program in 2013 and 2014 - 37% (2012) compared to 27% (2013) and 19% (2014).

Wachler & Associates will continue to stay up to date on all developments under Medicare's ACO programs. If you or your health care entity has any questions regarding Medicare's ACO programs, or any other health law questions, please contact an experienced healthcare attorney at (248) 544-0888, or via email at wapc@wachler.com. You may also subscribe to our health law blog by adding your email at the top right of this page.

July 16, 2015

U.S. Court of Appeals for the Fourth Circuit Upholds $237 Million Judgment Against Toumey Healthcare System

On July 2, 2015, the U.S. Court of Appeals for the Fourth Circuit upheld a $237 million verdict against Toumey Healthcare System ("Toumey) for violations of the federal Stark law ("Stark") and, consequently, the federal False Claims Act. The verdict marks the latest decision in the government's longstanding legal battle against Toumey, a community hospital in South Carolina, and serves as a reminder to healthcare providers of the significant liability that can result from compensation arrangements that fail to comply with Stark's safe harbor requirements.

In this case, the lower court determined that Toumey entered into part-time employment agreements with physicians that violated Stark. The agreements violated Stark's limitations on physician compensation arrangements by varying with, or taking into account, the volume or value of the physicians' referrals to the hospital. Under the False Claims Act, claims submitted for payment arising out of referrals prohibited by Stark constitute false claims, and subject providers to treble damages. In this case, the jury found that Toumey knowingly submitted 21,730 false claims, which amounted to $39.3 million in Medicare payments. The court awarded treble damages as well as other penalties.

The Fourth Circuit's decision analyzed Toumey's argument that since Toumey relied upon the advice of lawyers in determining that the compensation arrangements were permissible under Stark, Toumey could not have knowingly violated the False Claims Act. In rejecting this argument, the Fourth Circuit highlighted the fact that Toumey consulted with multiple attorneys, one of which raised serious concerns about the compensation arrangements, and that Toumey effectively lawyer-shopped for legal opinions that approved the employment contracts. Accordingly, the case should provide notice to providers to proceed with caution if they are contemplating obtaining multiple legal opinions in order to determine that an arrangement is compliant with health care fraud and abuse laws because of how the opinions may be scrutinized in hindsight.

The Court also upheld the lower court's award of damages and other penalties. The Court determined that the damages properly took into account all referrals by the physicians to the hospital, not just those referrals addressed by the impermissible compensation arrangements, and also that the $237 million verdict did not violate the Excessive Fines Clause of the Eight Amendment or the Due Process Clause of the Fifth Amendment. Further, in a technical discussion of how the compensation arrangements violated Stark, the Court cited testimony that compensation arrangements that pay a physician an amount greater than the physician's collections demonstrates that the arrangements are not fair market value and instead evidences that the hospital intends to reward the physician for the physician's referrals to the hospital. Toumey argued that the compensation arrangement did not, on its face, vary with the volume or value of referrals. The Court, however, agreed with the government, finding that under Stark, aggregate compensation cannot vary with the volume or value of referrals, or otherwise take into account the volume or value of referrals. In addition to the payments being above fair market value, the physician's referrals for personally performed services included a facility fee payable to the hospital and, as such, the productivity bonus in the compensation arrangement varied based on the amount of referrals to the hospital.

In general, the Toumey case highlights the complexity in analyzing physician compensation arrangement under Stark, and demonstrates the amount of liability that can attach to impermissible financial arrangements between physicians and health care entities to which the physicians' refer patients. Wachler & Associates continues to stay up to date on all legal developments under Stark, as well as state laws governing physician referrals. Our attorneys regularly analyze physician compensation arrangements and other contracts under Stark and other healthcare fraud and abuse laws. If you or your health care entity have any questions regarding Stark, physician compensation arrangements, or other healthcare laws governing the relationships between healthcare providers, please contact an experienced healthcare attorney at (248) 544-0888 or via email at wapc@wachler.com. You may also subscribe to our health law blog to stay up to date on all developments in healthcare regulatory compliance by adding your email at the top right of this page.

July 9, 2015

Proposed Rule Shifts Medicaid Managed Care Enrollment Function to States

On June 1, 2015, the Centers for Medicare and Medicaid Services (CMS) released a proposed rule revising the Medicaid managed care regulations. One of the key components of the proposed rule is the revision to the states' responsibilities relating to the screening and enrollment of network providers of managed care organizations (MCOs), prepaid inpatient health plans (PIHPs) and prepaid ambulatory health plans (PAHPs).

Specifically, the proposed rule provides that the state must enroll all network providers of MCOs, PIHPs and PAHPS (collectively, managed care entities (MCEs)) that are not already enrolled with the state to provide services to Medicaid fee-for-service (FFS) beneficiaries. The provisions would apply to all providers that order, refer or render health services in the context of Medicaid managed care to ensure these providers are appropriately screened and enrolled. As stated by CMS, the requirements contained in the proposed rule are to "ensure that there are no 'safe havens' for providers who, though unable to enroll in Medicaid FFS programs, shift participation from managed care plan to manage care plan to avoid detection."

While the screening and enrollment of network providers is currently a role performed by the MCE, CMS believes transferring this function to the state will eliminate the need for each MCE to perform duplicative screening activities. However, the proposed rule would not prevent the MCEs from carrying out their own provider screening beyond those performed by the state. In addition, the proposed system would enable states to apply the risk classification protocols to all providers that furnish services to managed care or Medicaid FFS beneficiaries, in which screened providers would be categorized as "limited," "moderate" or "high" risk, permitting site visits for moderate and high risk providers.

Even though the proposed rule would shift the screening and enrollment of network providers to the state, the rule would not require the network provider to also render services to Medicaid FFS beneficiaries. Finally, the proposed rule leaves unchanged the MCEs' duty to not discriminate against those providers that serve high-risk populations or specialize in conditions that require costly treatment.

Wachler & Associates will continue to monitor CMS' proposed rule and other developments in Medicaid managed care. If you or your health care entity have any questions regarding the Medicare, Medicaid, or managed care plan enrollment process, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. Subscribe to our health law blog to stay updated on the latest CMS news.

May 19, 2015

Senate Finance Committee Examines Medicare Appeals Backlog

On April 28, 2015, the U.S. Senate Finance Committee held a hearing to address the rising Medicare appeals claims backlog. At the hearing, Nancy Griswold, Chief Administrative Law Judge (ALJ) at the Office of Medicare Hearings and Appeals (OMHA), blamed the backlog on a lack of funding and an unprecedented amount of appeals. ALJ Griswold stated that the average processing time for each claim has soared to 550 days, more than quadrupling over the past five years. There are currently over 500,000 Medicare appeals pending review.

While appeals continue to stack up, OMHA's budget was increased from $69 million to $82.3 million over the past fiscal year (FY). Additionally, OMHA's staff has expanded from 492 employees to 514 employees for the same FY. However, ALJ Griswold claimed that this boost in resources is still not enough. In FY 2013, OMHA received 700,000 claims, which represents an astonishing increase from the 60,000 claims received just two years prior. Despite the staggering amount of claims, only 60 officers are assigned to handle cases.

Although Senate Finance Committee Chairman Orrin Hatch acknowledged the importance of preventing improper Medicare payments, he emphasized the seriousness of the backlog is due to the "insurmountable increase in appeals." Senator Hatch also noted that 60 percent of appeals are found in favor of defendants, and questioned how initial decisions are being made and whether providers are facing undue burdens.

At the hearing, ALJ Griswold urged senators to support President Obama's proposed budget, which would increase OMHA's budget by approximately $300 million. OMHA reported that the funding would be allocated towards doubling the office's capacity to process cases. In the alternative, ALJ Griswold suggested a refundable filing fee to prevent providers from filing claims just to "game the system." In support of ALJ Griswold, Sandy Coston, CEO of Medicare administrative contractor Diversified Service Options, suggested that CMS could reform the initial level of appeals in order to streamline access to subsequent appeals levels. Although Senator Hatch did not offer any endorsements, he continued to express the seriousness of the backlog in appeals and its detrimental effect on the Medicare system.

Wachler & Associates continues to monitor the OMHA appeal backlog, and our attorneys have attended two OMHA Medicare Appellant Forums hosted by OMHA and CMS in Washington D.C. Although we support the various initiatives and pilot programs presented by OMHA, we agree with ALJ Griswold that a significant increase in OMHA resources is needed to address the appeal backlog.

Despite the appeal backlog and processing time, Medicare providers and suppliers must continue to appeal Medicare contractors' overpayment determinations and preserve their appeal rights. Wachler & Associates represents healthcare providers and suppliers in a variety of healthcare matters, including appeals of Medicare overpayment determinations at all levels of review. If you or your healthcare entity have any questions regarding the Senate hearing, or seek help in defending an overpayment demand by a recovery audit contractor (RAC), please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To remain up-to-date on healthcare regulatory developments, please subscribe to our blog by adding your email address in the window on the top right of this page.

April 3, 2015

CMS Offers Clarification to HHA Contradictory Guidance

On March 18, 2015, Wachler & Associates attorneys, Andrew Wachler and Jessica Forster, highlighted contradictory guidance released by the Centers for Medicare and Medicaid Services ("CMS") relating to home health agencies ("HHAs") face-to-face encounter documentation. When the calendar year ("CY") 2015 Home Health Final Rule ("Final Rule") went into effect on January 1, 2015, new rules for HHAs face-to-face encounter documentation were implemented. Most prominently, the revised Final Rule eliminated the brief narrative requirement in almost all cases for home health face-to-face encounter documentation. Although the brief narrative requirement was removed, CMS mandated that the certifying physician's medical record include all required elements for the physician certification. Additionally, CMS stated in the Final Rule that a HHA may communicate with and provide information to the certifying physician about the patient's homebound status and need for skilled care and the certifying physician could incorporate the information into his or her medical record for the patient.

In two separate CMS conference calls, representatives provided contradictory information with regards to physician documentation responsibilities. The first conference call held by CMS properly reinforced the Final Rule's statement that HHAs could provide information to the certifying physician that the physician could incorporate into his or her medical record (a) if the physician signed/dated the documentation and (b) if the physician's own entries corroborated the information from the HHA. The Final Rule and the first conference call both said that this information from the HHA would be considered by medical reviewers to determine if the certification requirements were met. It was only during the second conference call, on March 11, that CMS contradicted prior guidance by stating that the physician's own documentation must meet the certification requirements and that medical reviewers were advised of this instruction. The CMS representative reiterated that even if a certifying physician signs and dates a HHA's documentation that does not mean that the documentation becomes part of the physician's medical record. Wachler & Associates reached out to CMS for clarification.

On March 23, 2015, CMS clarified the contradiction. In its reply, CMS stated that the patient's medical record must support the certification of eligibility and documentation in the patient's medical record shall be used as a basis for certification of home health eligibility. Importantly, CMS also noted that reviewers will consider HHA documentation if it is incorporated into the patient's medical record and signed off by the certifying physician.

Wachler & Associates will continue to monitor and provide timely updates on important HHA developments. Interested parties should listen to the next CMS Special Open Door Forum, which is scheduled for April 28, 2015 at 1:30pm ET. If you have any questions regarding the Final Rule, or HHAs in general, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com.

March 2, 2015

CMS to Audit All Home Health Agencies

In response to a report issued by the U.S. Department of Health and Human Services Office of Inspector General ("OIG") titled Limited Compliance with Medicare's Home Health Face-to-Face Documentation Requirements, the Centers for Medicare and Medicaid Services ("CMS") has decided to audit all home health agencies ("HHAs") in the country. In its report, OIG detailed its findings stemming from a review of 644 home health face-to-face encounter documents that were analyzed to determine if they confirmed encounters and contained the required elements. OIG reported that 32 percent of home health claims that required face-to-face encounters did not meet Medicare requirements. OIG estimated that this resulted in $2 billion in inappropriate payments. After reviewing the study's results, OIG recommended that CMS:

  • Consider requiring a standardized form to ensure that physicians include all elements required for the face-to-face documentation;
  • Develop a specific strategy to communicate directly with physicians about the face-to-face requirement; and
  • Develop other oversight mechanisms for the face-to-face requirement.
At the end of the OIG report, CMS concurred with these three recommendations. In response, CMS reported that it is implementing an oversight plan of HHAs through the Supplemental Medical Review Contractor ("SMRC"), one of CMS's newest tools meant to ensure program integrity. CMS stated that "the SMRC will perform approximately five document-only reviews for every HHA in the country to validate that the most recent/valid face-to-face encounter is in the medical record." CMS reported that this will be a one-year, service-wide review of every HHA and CMS will provide further recommendations after reviewing the results.

Additionally, CMS has published proposed electronic and paper versions of its clinical documentation template to assist physicians in documenting their home health face-to-face encounters. Because it is the first time CMS has provided the healthcare industry templates for a progress note, it is soliciting comments on the templates. Those interested in the home health face-to-face proposed templates may participate in Special Open Door Forums occurring in March, April and May 2015. Should the templates be adopted, their use will be voluntary. CMS's proposal for the templates comes at a time when HHAs are revising their policies and protocols for face-to-face encounter documentation in light of the elimination of the physician brief narrative requirement in most cases effective January 1, 2015.

HHAs should be aware of the imminent nationwide SMRC audit. It is important that HHAs develop an effective compliance program that provides proactive measures to educate staff and certifying physicians on documentation requirements and prepare for an audit. If you have any questions regarding CMS's impending audit or need assistance in creating a compliance plan to meet the home health face-to-face encounter documentation requirements, please contact an experienced healthcare attorney via email at wapc@wachler.com or 248-544-0888.

February 20, 2015

CMS Considers Shortening the Meaningful Use Reporting Period

On January 29, 2015, the Centers for Medicare and Medicaid Services ("CMS") announced that it will consider shortening the meaningful use reporting period for electronic health record ("EHR") systems. Specifically, CMS stated that it intends to reduce the 2015 reporting period from 12 months to 90 days. Under the meaningful use incentive program, providers have faced the risk of a Medicare penalty if they failed to satisfy the program's requirements. A shortened reporting period of 90 days may increase compliance with Stage 2 of the program and reduce the reporting burden on providers. Additionally, providers can schedule their reporting period for the second half of 2015, providing additional time for providers to implement the EHR systems at Stage 2.

In a statement following CMS's announcement, the President of the American Medical Association ("AMA"), Steven J. Stack, MD, expressed the organization's support of the proposed shortening of the reporting period. However, Stack criticized the incentive program, stating that "EHRs are intended to help physicians improve care for their patients, but unfortunately, today's EHR certification standards and the stringent requirements of the meaningful-use program do not support that goal and decrease efficiency."

In its announcement, CMS also stated its intent to align the meaningful use reporting periods to the calendar year in an effort to give hospitals more time to integrate the 2014 Edition software and better coordinate with CMS quality programs. Although the proposed changes to the reporting period will not delay CMS's rollout of the forthcoming Stage 3 proposed rule, expected in March, CMS plans to limit the scope of the Stage 3 proposed rule to the criteria and requirements for meaningful use in 2017 and subsequent years.

Wachler & Associates will continue to monitor CMS rule making and guidance related to EHR meaningful use criteria, as well as other breaking healthcare news. If you need help understanding the meaningful use requirements or assistance with negotiating EHR contracts, please contact an experienced healthcare attorney at 248-544-0888 or email at wapc@wachler.com.

February 17, 2015

CMS Modifies Manual Medical Review Process for Outpatient Therapy Claims Above Cap

The Protecting Access to Medicare Act of 2014 extended the process for exceptions to Medicare's outpatient therapy caps through March 2015. Exceptions to Medicare's outpatient therapy caps are allowed for medically necessary and reasonably therapy services. However, claims above $3,700 for physical therapy and speech language pathology services combined, and above $3,700 for occupational therapy services, are subject to manual medical review by recovery audit contractors (RACs). The caps are calculated per beneficiary, per year. While manual medical reviews of outpatient therapy claims above the cap were put on hold last year, existing RACs received approval on January 16, 2015 to resume sending additional documentation requests (ADRs) to Part B providers.

However, CMS recently introduced a new post-payment review system that requires RACs to review outpatient therapy claims using a new manual medical review process. RACs will now be required to review claims using a tiered approach to ADRs. The process allows for 100% review of provider claims above the $3,700 therapy caps ("eligible claims"), but prevents the RACs from requesting large and potentially unmanageable amounts of records at one time.

Beginning in January 2015, the new manual medical review process permits RACs to review 100% of a provider's eligible claims using a 5-step approach to ADRs. A RAC's first ADR may only review one claim, but additional ADRs may request records for an increasing percentage of claims. The second ADR may review up to 10% of eligible claims, the third ADR may review up to 25% of eligible claims, and the fourth ADR may review up to 50% of eligible claims. Finally, a RAC's fifth ADR to a particular provider may review 100% of the provider's total eligible claims. Please note that the new tiered approach retains the RAC's cycle of 45 days between ADRs.

The new manual review process meets the congressional mandate of a 100% review rate for outpatient therapy claims above the outpatient therapy cap. However, CMS believes the new manual review process will meet the congressional mandate in a more equitable manner. For now, the review process is limited to claims reviewed by existing RACs for claims made from March 1, 2014 to December 31, 2014. CMS has not yet finalized the process for claims made in 2015. The manual medical review process is also limited to claims made by Part B outpatient therapy providers, including but not limited to therapists' private offices, offices of physicians, Part B skilled nursing facilities (SNFs), home health agencies (HHAs), and hospital outpatient departments.

Wachler & Associates represents all types of therapy providers in a variety of matters, including responding to ADRs and appealing Medicare overpayment demands. If you or your healthcare entity has any questions regarding Medicare's new manual medical review process for therapy claims above the outpatient therapy cap, or seek help in defending an overpayment demand by a RAC, please contact an experienced healthcare attorney at 248-544-0888 or via email at wapc@wachler.com. To stay up to date on healthcare regulatory developments, subscribe to our blog by adding your email address in the window on the top right of this page.

January 29, 2015

HHS Sets Timelines for Focus of Reimbursement to Shift from Quantity to Quality

On January 26, 2015, the U.S. Department of Health and Human Services ("HHS"), for the first time ever, announced a timeline and corresponding goals to shift the basis of Medicare reimbursement away from the quantity of care provided towards the quality furnished to beneficiaries. With the passage of the Patient Protection and Affordable Care Act ("ACA") in 2010, Congress created several new payment models, including Accountable Care Organizations ("ACOs"), primary care medical homes, and new models of payment bundling for care. These models all share the commonality that they incentivize physicians to coordinate care for their beneficiaries, maintain quality, and control costs. With the proliferation of these models that focus on quality over quantity, HHS was compelled to reform the Medicare reimbursement process.

Specifically, HHS announced its goal of tying 30 percent of fee-for-service Medicare payments to quality output through alternative payment models, like ACOs or bundled payment arrangements, by the end of 2016. Furthermore, HHS plans on increasing that amount to 50 percent by the end of 2018. If this goal is met, half of all payments to physicians and hospitals will be made through alternative payment models by 2018. Additionally, HHS set a timeline for tying 85 percent of fee-for-service, or traditional, Medicare payments to quality output by 2016 through the Hospital Value Based Purchasing and Hospital Readmissions Reduction Programs. This number is also set to increase to 90% by 2018.

To accomplish this, HHS has created the Health Care Payment Learning and Action Network ("the Network"). The Network is an organization made up of health care stakeholders including private payers, consumers, providers, employers, and state Medicaid programs. The Network, which will hold its first meeting in March 2015, plans to expand alternative payment models nationwide into all areas of health care. HHS hopes that the intensity exhibited by the Network will even surpass its initial goals for program expansion.

In a separate announcement, the President of the American Medical Association, Robert Wah, MD, stated that the HHS timeline "aligns with the [AMA's] commitment to work toward innovative care delivery reform."

In 2011, Medicare essentially made zero payments to providers through alternative payment models. However, today the use of alternative payment models has increased to about 20 percent of all Medicare payments. HHS has already noted significant savings from the use of alternative payment models--reporting a $417 million savings to Medicare as a result of ACO programs. Moreover hospital readmissions have been reduced by eight percent, which is 150,000 fewer readmissions from January 2012 to December 2013.

If you or your healthcare entity have any questions regarding the implementation of new alternative payment models, please contact an experienced healthcare attorney by phone at 248-544-0888 or via email at wapc@wachler.com. Wachler & Associates will continue to keep you updated on HHS and Medicare news. If you are interested, please subscribe to Wachler & Associates' health law blog by adding your email address and clicking "Subscribe" in the window on the top right of this page.