Recently in Recovery Audit Contractors (RACs) Category

April 17, 2014

AHA Files Lawsuit Contesting the Two-Midnight Rule

With the "doc-fix" bill extending the enforcement delay of the two-midnight rule to March 31, 2015, the American Hospital Association (AHA) has decided to use that time challenging the new inpatient admission rules. Earlier this week, AHA filed a lawsuit in the United States District Court for the District of Columbia challenging the "arbitrary standards and documentations requirements" of the new inpatient admission rules which "deprive hospitals of Medicare reimbursement to which they are entitled."

Specifically, AHA is challenging the definition of "inpatient" under the two-midnight rule, alleging that CMS's "inpatient" definition requiring a patient to spend two nights in the hospital is arbitrary and capricious because it bears no resemblance to the actual definition of "inpatient" and CMS has made no attempt to explain is reasoning for adopting such a meaning. Additionally, AHA is challenging the Final Rule's application of the one year time limit to file a Part B claim when a Part A inpatient claim is denied as not being medically necessary and reasonable. Recovery audit contractors (RACs) typically conduct post-payment reviews of inpatient hospital admissions with dates of admission in which the one year rebilling deadline has already elapsed. Finally, AHA asserts that CMS's new requirement that all short-stay inpatient admissions include a physician order for admission as a condition of Part A payment is unlawful. Through its lawsuit, AHA seeks for the court to vacate and set aside the two-midnight rule, the one year time limit, and the physician order policy.

Wachler & Associates will continue to monitor the current AHAL lawsuit, as well as any further developments regarding CMS's new inpatient admission policies. If you have any questions pertaining to the two-midnight rule or the physician certification and order requirements, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at

April 14, 2014

OIG Finds Limited Compliance with Face-to-Face Home Health Requirements

In a report released on Thursday, April 10, the Office of the Inspector General ("OIG") found that, thus far, there has been limited compliance with the face-to-face documentation requirement for home health providers. As a result, the OIG determined that Medicare paid $2 billion to home health providers that should not have been paid. In an effort to increase compliance with the face-to-face requirement, the OIG has outlined specific recommendations that CMS could implement which would impact home health providers. The OIG's findings and recommendations should serve as an alert to home health providers to carefully review their compliance with face-to-face encounter documentation requirements.

The Patient Protection and Affordable Care Act ("ACA") included language that established the face-to-face encounter requirement. Although initially scheduled to be effective January 1, 2011, the Centers for Medicare and Medicaid Services (CMS) delayed implementation until April 1, 2011.

The face-to-face encounter documentation requirement provides that for initial certification periods only, a home health agency must obtain documentation from the certifying physician that the physician had a face-to-face encounter with the patient. The face-to-face documentation must be signed and dated by the physician. It must include the date the encounter occurred, and include a brief narrative that describes why the patient is homebound and why the skilled services are medically necessary to treat the patient's illness or injury. A home health agency's reimbursement for the home health services for an initial certification period is dependent upon the certifying physician's proper documentation of the face-to-face encounter.

The study conducted by the OIG examined Part A home health claims from January 1, 2011 through December 31, 2012 in an effort to determine the extent to which certifying physicians documented face-to-face encounters with beneficiaries. Based on the study, the OIG concluded that compliance with the face-to-face requirement has been limited and inconsistent. Specifically, the OIG concluded that mandated documentation did not meet Medicare requirements for 32% of home health claims that required face-to-face encounters which, according to the OIG, resulted in $2 billion in payments that should not have been made. The OIG further noted that face-to-face documentation was missing in 10% of claims, which totaled $605 million in payments that should not have been made. Lastly, the OIG found that of the face-to-face documents that were submitted, 25% of the documents were missing one of the required elements, usually the signature of the certifying physician.

The OIG also noted that physicians inconsistently completed the narrative content portion of the face-to-face documentation and that CMS oversight over the face-to-face documentation requirement was minimal because CMS does not have a specific program to oversee compliance with the requirement.

In an effort to increase compliance with the face-to-face documentation requirement, the OIG recommended the following policies be implemented:

  • CMS should consider requiring the use of a standardized form that includes all elements required for face-to-face documentation to serve as a default. The OIG notes that this should not be an onerous mandate.
  • CMS should develop a strategy that encompasses formal training and outreach to providers about the importance of compliance with face-to-face documentation.
  • Lastly, the OIG recommends that CMS work with the payment contractors to develop new review procedures to ensure compliance with the requirement of face-to-face documentation. The OIG notes that this is especially important given CMS's plans to implement the face-to-face requirement for durable medical equipment.

The OIG's report and recommendations reaffirm our experience that Medicare contractors are focusing more intently on home health agencies' compliance with the face-to-face encounter documentation requirements. Although compliance is dependent upon the certifying physician's documentation, it is vital that home health agencies review records for initial certification periods for face-to-face encounter documentation that meets the requirements. Specifically, home health agencies should review the narrative portion of the face-to-face encounter documentation to confirm that it sufficiently describes the beneficiary's homebound status and the reasons supporting the medical necessity of the skilled services. The brief narrative section of the face-to-face encounter documentation is the most subjective component to the documentation requirement and, therefore, many contractors deny payment for entire episodes of care based on the fact that the brief narratives are insufficient. In order to try to prevent these initial denials and/or have success challenging the denials during the Medicare appeals process, it is very important that the face-to-face encounter's brief narrative meets the stated objectives.

Wachler & Associates will continue to monitor any further developments regarding the face-to-face documentation requirement. If you have any compliance questions pertaining to the face-to-face encounter or other home health audit risk areas, or need assistance in defending claim denials during any stage of the Medicare appeals process, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at

April 8, 2014

Moody's Report: Two-Midnight Rule to Weaken Hospital Profitability

On Wednesday, March 12, Moody's Investor Services released a report predicting that Medicare's new inpatient admissions policy, the "Two-Midnight rule", will negatively affect hospitals' bottom lines. The Two-Midnight rule instructs physicians and hospitals to use a two-midnight benchmark and order admission for patients expected to require hospital care crossing at least two midnights.

The Moody's report stated that "on average, the [Two-Midnight] rule could cause revenue reduction averaging $3,000 to $4,000 per case." The report suggests that these reduced reimbursement rates will be especially devastating since the cost of treating patients will remain the same. The report also suggests that the Two-Midnight rule will expedite the already increasing trend of more outpatient observation stays, which will put more pressure on hospital revenues. The impetus for this increasing trend of outpatient care observation stays has been the frequent challenges by RACs to the medical necessity requirement of short-stay admissions.

The report also concludes that under the Two-Midnight rule, hospitals with shorter lengths of stay will be most affected. The hospitals that are expected to be most affected are classified as 'low acuity' community hospitals. While these types of hospitals tend to have a larger number of cases resulting in shorter hospital stays, these stays typically still consume a large of amount of resources, such as diagnostic testing.

The report also concludes that smaller hospitals with less integrated medical staffs and less resources can expect to struggle in adapting to the new rule. The decision to hospitalize a beneficiary is a complex medical decision made by the physician in consideration of various risk factors, including the beneficiary's age, disease processes, comorbidities, and the potential impact of sending the beneficiary home. It is up to the physician to make the complex medical decision of whether length of stay for medically necessary hospitalization is expected to surpass two-midnights and the physician should explain in detail in a beneficiary's medical records why the expectation of the need for care spanning at least two-midnights was appropriate in the context of that beneficiary's acute condition. Patients that are expected to be in the hospital for more than two-midnights, but are subsequently discharged early will qualify for inpatient reimbursement so long as the admitting physician properly documents that the admission was initially warranted. Smaller hospitals that are already stretched thin on physicians and support staff may find it much more difficult to satisfy these documentation requirements.

CMS, however, does not agree with the conclusions of the Moody's report. In its 2014 Hospital Inpatient Prospective Payment System (IPPS) Final Rule, CMS estimated that there will be about $220 million in additional expenditures from the net increase in hospital inpatient encounters.

Wachler & Associates will continue to monitor any further developments regarding CMS's new inpatient admission rule. If you have any questions pertaining to the two-midnight rule or certification and order requirements, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at

April 4, 2014

Two-Midnight Rule Enforcement Delay Extended to March 31, 2015

On April 1, 2014, President Barack Obama signed into law a bill (H.R. 4302) extending the enforcement delay of the two-midnight rule. Under the newly adopted law, Recovery Audit Contractors (RACs) will not conduct patient status reviews of inpatient hospital admissions on a post-payment basis until March 31, 2015. The two-midnight rule, which took effect October 1, 2013, provides that inpatient hospital admissions are generally appropriate when the physician expects the beneficiary will require medically necessary hospital services for 2 or more midnights. Since taking effect, hospitals' inpatient admission claims under the two-midnight rule have been free from review by the RACs.

Prior to the extended enforcement delay to March 31, 2015, the enforcement of the two-midnight rule was previously delayed by CMS to March 31, 2014, and again to September 30, 2014. Also extended to March 31, 2015 under the new law is the Medicare Administrative Contactors' (MACs) ability to conduct "Probe and Educate" reviews of a limited set - 10-25 claims depending on the size of the hospital - of inpatient admission claims for each hospital, which are conducted on a prepayment basis. When conducting "Probe and Educate" reviews, CMS has instructed the MACs to review hospital's compliance with the admission order requirements, the certification requirements, and the two-midnight benchmark.

Until March 31, 2015, hospital inpatient admissions under the two-midnight rule will be subjected only to a limited number of prepayment claim reviews by the MACs. Thus, for inpatient claims with dates of admission October 1, 2013 through March 31, 2015, the RACs will not conduct prepayment reviews, and both the RACs and the MACs will not conduct post-payment reviews.

The delay in the two-midnight enforcement does not mean hospitals should delay in implementing their revised admission policies to comply with the new inpatient admission rules. Failure to comply with the two-midnight rule, as well as the inpatient certification and order requirements, could result in the MACs conducting further "Probe and Educate" prepayment reviews with an increased claim volume (100-250 claims depending on the size of the hospital). Furthermore, the extended enforcement delay will not shield hospitals from CMS contractors where there is evidence of systematic gaming, fraud, abuse, or delays in the provision of care in an attempt to qualify for the two-midnight presumption.

Wachler & Associates will continue to monitor any further developments regarding CMS's new inpatient admission rule. If you have any questions pertaining to the two-midnight rule or the inpatient certification and order requirements, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at

March 11, 2014

Legislation Unveiled to Clarify Two-Midnight Rule

On Thursday, in a bipartisan effort, two senators unveiled a proposed bill that attempts to clarify the infamous two-midnight rule. Senator Robert Menendez, a Democrat from New Jersey and Senator Deb Fischer, a Republican from Nebraska are co-sponsors of the bill. Titled as Two-Midnight Rule Coordination and Improvement Act of 2014, the bill mirrors a similar one currently working its way through the House of Representatives and has the support of numerous hospital and doctor associations.

Most notably, the bill would require the Secretary of the Department of Health and Human Services to consult with interested stakeholders - such as hospitals, physicians, Medicare administrative contractors, recovery audit contractors, and other parties determined appropriate by the Secretary - to determine the criteria for short inpatient stays. Additionally, the bill would require CMS to develop a payment methodology for the shorter inpatient stays. Although, in developing the payment methodology, the bill does not require consultation with the same stakeholders used in developing the criteria for shorter inpatient stays, the bill strongly encourages CMS to consider the criteria that the stakeholders developed.

Equally important in the bill are the timing provisions relating to the implementation of the criteria for shorter inpatient stays. Most importantly, the proposed bill keeps the current enforcement delay in place. The bill would also provide an additional year long delay in the enforcement of the two-midnight rule if the criteria for shorter inpatient stays are not implemented during the IPPS annual notice and comment rulemaking process for fiscal year 2015. If the criteria are in place during the fiscal year 2015 rulemaking process (i.e., regulations are finalized in 2014), the bill authorizes RACs to begin their work at the time of implementation, but not prior to October, 1, 2014. This measure ensures that hospitals are not subject to audits until the criteria are made final.

The proposed bill should come as welcome news to hospitals and other affected providers who have been perplexed by the complexities of the ill-devised two-midnight rule. These complexities have resulted in delays of the rule's enforcement on several occasions. Menendez and Fischer hope that the bill provides doctors with the flexibility and ability to provide patients with the care their medical conditions require. Both Senators noted that in its current form the two-midnight rule fails to recognize that a hospital stay for less than two nights is medically necessary and the most prudent approach.

Wachler & Associates will continue to monitor any further developments regarding CMS's new inpatient admission rule. If you have any questions pertaining to the two-midnight rule or certification and order requirements, please contact an experienced health care attorney at Wachler & Associates via phone at 248-544-0888 or via email at

February 26, 2014

Medicare Therapy Cap Exception Extended

On December 18, 2013, Congress enacted legislation extending the Medicare therapy cap until March 31, 2014. The 2014 outpatient therapy cap limits are $1,920 for physical therapy and speech-language pathology services combined, and $1,920 for occupational therapy services. In order to qualify for an exception to the therapy cap limits and continue to receive Medicare reimbursement, therapists must first document the need for medically reasonable and necessary services in the beneficiary's medical record and, separately, the therapist must indicate on the Medicare claim for services that the outpatient therapy services above the therapy cap are medically reasonable and necessary. Further, starting January 1, 2014, the Medicare outpatient therapy cap limits will also apply to therapy services performed in critical access hospitals.

Providers that meet or exceed the $3,700 threshold in therapy expenditures will be subject to a manual review. The manual review process for 2013 is not expected to change in 2014. Under the manual medical review process, Recovery Audit Contractors (RACs) will conduct either prepayment or postpayment review for claims exceeding $3,700 depending on the state. Currently, only Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri are subject to prepayment review, while the rest of the nation is subject to postpayment review.

A bill that is currently working its way through Congress seeks to permanently repeal the therapy caps. The Medicare Access to Rehabilitation Act has bipartisan support and its sponsors argue that an arbitrary cap on outpatient services without regard to clinical need discriminates against some of the most vulnerable and needy Medicare recipients.

Wachler & Associates will continue to monitor the situation and provide guidance on developments in Medicare therapy cap policy. If you or your health care entity need help developing compliance plans or reviewing and refining existing audit defense strategies, please contact an experienced healthcare attorney at 248-544-0888 or at If you would like to subscribe to the Wachler & Associates Health Law Blog, please add your email address and click subscribe in the window on the top right of this page.

February 20, 2014

RACs to Stop Requesting Medical Records from Providers

Recently, the Centers for Medicare and Medicaid Services (CMS) announced that, effective February 22, Recovery Audit Contractors (RACs) may no longer send additional documentation requests (ADRs) to providers for post-payment audits. In addition, February 28 is the last day a Medicare Administrative Contractor (MAC) may send prepayment ADRs for the RAC Prepayment Review Demonstration. According to CMS, this pause in ADRs is being implemented to allow the RACs to complete all outstanding claim reviews by the end of their current contracts. Furthermore, CMS stated that this pause will also allow CMS to continue to refine and improve the RAC program. This announcement was published less than a week after the Office of Medicare Hearings and Appeals (OMHA) Medicare Appellant Forum, which was held to address the current backlog of cases pending at the ALJ level of appeal.

It appears that, as a result of provider input as well as recent legislative participation, CMS is recognizing the challenges to providers of intense RAC scrutiny and withholding of payment without the corresponding appeal rights afforded under the statute. From this notice, we are hopeful that the ADRs will cease virtually immediately from the RACs and that, as of June 1, the MAC will not be able to effectuate offset for initial denials by the RACs. Hopefully, this will provide some needed relief to Medicare providers and give OMHA a chance to reduce its backlog so that, in the future, providers may receive due process in the timely manner that they are entitled to.

Wachler & Associates will continue to keep you updated on CMS's changes to the RAC program and appeals process. If you need assistance in your defense of a Medicare audit, or have questions pertaining to best practices for appealing to the ALJ, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888 or

February 12, 2014

Andrew Wachler on Pre-coverage of the February 12, 2014 OMHA Medicare Appellant Forum

This morning, Andrew Wachler, managing partner of Wachler & Associates, appeared on RACmonitor's special coverage of the ALJ Appellant Forum taking place today in Washington. Mr. Wachler provided some context for the occasioning of this forum. "When you really look at the event," Andrew Wachler said, "it starts back in 2005." This was when the appeal system was changed to align Part A and Part B appeals. The change in legislation provided specialized administrative law judges, in an attempt to curb excessive wait times in the appeals process. The legislation imposed a statutory requirement to issue a response within 90 days of appeal filing. However, Mr. Wachler says, "the brunt of hearing requests have not been acted upon." In a conversation with Judge Nancy J. Griswold, Chief Administrative Law Judge, Office of Medicare Hearings and Appeals (OMHA), Mr. Wachler had previously suggested the establishment of a committee of stakeholders to meet and discuss inefficiencies in the process. Judge Griswold suggested such a forum would occur, and today's event appears to be just that.

The main question today is whether the forum represents a meaningful attempt at reform and addressing the backlog, or whether it is merely meant to placate the providers. Mr. Wachler remains skeptically optimistic. However, while the forum today will provide some practical tips on navigating the ALJ appeals process, Mr. Wachler does not expect it to solve what he believes is a significant problem - "the holding of provider's money while we have these delays is unconscionable....people are being put out of business while they wait."

Mr. Wachler will be appearing again this afternoon on RACmonitor. Information on their special coverage of the ALJ Appellant Forum can be found here. If you have any questions regarding the information provided at the forum, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or

February 3, 2014

CMS to Further Extend "Probe and Educate" Reviews to September 30, 2014

Recently, the Centers for Medicare and Medicaid Services (CMS) announced that it has decided to extend the Inpatient Hospital Prepayment "Probe and Educate" reviews. The probe reviews, which were previously extended to March 31, 2014, have now been extended for dates of admission through September 30, 2014. During the probe reviews, Medicare Administrative Contractors (MACs) will continue to review and deny claims found not to be in compliance with the 2-midnight rule. These reviews will continue to be conducted on a prepayment basis, and the MACs will continue to provide education to hospitals throughout the "probe and educate" review process. During the probe review process, other Medicare contractors, including Recovery Audit Contractors (RACs), will not conduct post-payment patient status reviews of inpatient hospital claims with dates of admission between October 1, 2013 and October 1, 2014.

In an effort to provide updated information and additional clarification, CMS will host a follow-up Special Open Door Forum (ODF) on February 4, 2014 from 1:00 p.m. - 2:00 p.m. Much like the previous ODFs, interested parties will have an opportunity to ask questions regarding inpatient hospital admission, medical review criteria, physician orders and physician certification. You can participate in the ODF via conference call: Participant Dial-In Number: 877-251-0301; Conference ID: 47736519.

If you have any questions regarding the "probe and educate" reviews, physician orders and certification requirements, the 2-midnight rule, or medical review criteria, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888 or

January 14, 2014

OIG Releases Report Regarding Clinicians Associated with High Cumulative Part B Payments

The Office of the Inspector General (OIG) recently released a study detailing problems associated with overpayments to clinicians who provide Medicare Part B services. The study specifically focused on what the OIG referred to as "high cumulative payment" clinicians, who are clinicians receiving total annual payments of more than $3 million for Part B services during CY 2009. The OIG recognizes that this subset of providers poses a greater risk for improper payment or fraud in the Medicare system and will seek to implement new programs and policies to detect those problems.

The study found that from 2008 to 2011, both the number of Medicare Part B clinicians generating high cumulative payments, as well as the total amount of those payments, increased almost 78%. Most importantly, the study identified 303 clinicians who supplied more than $3 million in Part B services in 2009. Medicare administrative contractors (MACs) and Zone Program Integrity Contractors (ZPICs) further identified 104 specific individuals of the 303 (34%) for improper payments reviews. By the end of 2011, MACs and ZPICs reviewed 80 of the 104 clinicians and identified $34 million in over payments. Repercussions for these clinicians included suspended licenses and mandatory prepayment reviews, and even two indictments. The OIG recommends that CMS establish a cumulative payment threshold above which a clinician's claims would be selected for review as well as implementing a procedure for timely identification and review of clinicians' claims that exceed the cumulative payment threshold.

The OIG views the results of this investigation into high cumulative payment clinicians as a more useful method of identifying potentially improper payments. As a result of this study, clinicians who are reimbursed through Medicare Part B should ensure that their billing practices are in compliance with Medicare documentation and reimbursement rules, as well as determine whether their utilization rates differ significantly from their peers.

If you need assistance determining how this study 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 or at

January 13, 2014

OMHA Announces Appellant Forum for February 12 to Discuss Increasing Efficiency in the ALJ Hearing Program

On Wednesday, February 12, at 10:00 am EST, the U.S. Department of Health & Human Services, Office of Medicare Hearings and Appeals (OMHA) will hold a Medicare Appellant Forum in the Cohen Auditorium of the Wilbur J. Cohen building at 330 Independence Ave. SW, Washington DC, 20024. The purpose of the forum will be to:

  • Inform OMHA appellants on the status of OMHA operations;
  • Discuss a number of initiatives designed to mitigate the growing backlog of OMHA-level appeals; and
  • Suggest measures that appellants can take to make the administrative appeals process work more efficiently.

OMHA administers the nationwide Administrative Law Judge (ALJ) hearing program for Medicare claim and entitlement appeals under the Social Security Act. From 2010 to 2013, OMHA's claims and entitlement workload has drastically increased to 184% of previous years. Despite this increase, the resources to adjudicate the new slew of appeals have remained relatively constant, and were recently reduced during budgetary sequestration. The OMHA reports that their backlog of pending appeals has grown from 92,000 claims for services and entitlement to 460,000 claims in just under two years, and that the rate of new appeals is increasing. While the OMHA's Central Operations Division averaged around 1,250 claims per week in January 2012, the OMHA recently reported a rate of receipt of over 15,000 claims per week.

The OMHA has responded to this increase by taking measures to mitigate its workload increase and by pursuing additional opportunities to increase its efficiency. On July 15, 2013, OMHA temporarily suspended the assignment of most new requests for an ALJ hearing in order to adjudicate nearly 357,000 claims for Medicare services and entitlements already assigned to 65 Administrative Law Judges.

The February 12 Appellant Forum will address such efficiency measures, and solicit input and suggestions from the appellant community on reducing the existing appeals backlog and improving the OMHA's processes.

Attendees must register online by 5:00 pm EST on Tuesday, January 28, and capacity will be limited to the first 400 registrants. OMHA is exploring the possibility of broadcasting the forum online as a webinar. Instructions for registering for the forum and additional event announcements can be found on OMHA's website.

Andrew Wachler, managing partner of Wachler & Associates PC, will be among the attendees of the February 12th forum. If you have any questions regarding the information provided at the forum, or if you have a question you would like addressed, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or

November 18, 2013

"Probe and Educate" Hospital Inpatient Audits Extended an Additional 3 Months

On November 12, 2013, CMS held a third open door forum (ODF) discussing the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Final Rule (CMS-1599-F). As of November 4, 2013, the patient status probe review period that was previously applicable through December 31, 2013 has been extended through March 31, 2014. CMS has issued helpful guidance on questions and answers relating to patient status reviews, selecting hospital claims for patient status reviews, and reviewing hospital claims for patient status.

These "probe and educate" reviews will be conducted on a prepayment basis to assess whether hospitals are in compliance with the admission order requirements and 2-midnight benchmark. Because these reviews will be conducted on a prepayment basis, the MACs will deny any claims not meeting these three requirements. The initial sample probe reviews will consist of 10-25 claims per hospital with dates of admission from October 1 through December 31, 2013.

MAC review of the inpatient hospital claims will provide outreach and education about the inpatient rule and will help ensure that hospitals understand and comply with the Medicare requirements. Upon completion of the 10-25 claim reviews, if the MACs do not find any issues with the particular hospital's claim documentation then further probes will not be conducted for that hospital (unless there are significant changes in billing patterns for admissions).

If issues are found for a claim, the MAC will send a detailed denial letter to the provider explaining why the claim was denied. If there are moderate to significant concerns with a claim, the letter will include an offer for the MAC to call the individual provider to discuss the reasons for why the non-compliant claim was denied, to answer questions, and to provide providers with education and reference materials.

If the MACs identify an individual provider as having "moderate/significant" or "major" concerns during the initial review, then they will do a second probe review of 10-25 claims with dates of admission between January 1 and March 31, 2014. At the end of this six month period, if hospitals continue to have major issues then the MACs may select an additional 100-250 claims for review.

If you have any questions regarding the "probe and educate" reviews or compliance with the Final Rule, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or

November 11, 2013

Open Door Forum on Final IPPS Rule Tomorrow at 1:00

Tomorrow from 1:00-2:00 pm Eastern Time, the Centers for Medicare & Medicaid Services (CMS) will hold a third open door forum (ODF) to discuss the Fiscal Year (FY) 2014 Inpatient Prospective Payment System (IPPS)/Long-Term Care Hospital (LTCH) Final Rule (CMS-1599-F).

On August 2, 2013, CMS issued the FY 2014 IPPS/LTCH Final Rule (final rule) which finalized proposals related to patient status during short-stay hospital cases, including the new standards for inpatient admission and the medical review criteria for payment of hospital short-stay inpatient services under Medicare Part A. On September 5, 2013, CMS issued sub-regulatory guidance regarding the final rule's requirements for hospital inpatient admission order and certification, which are conditions of payment under Medicare Part A. This sub-regulatory guidance was issued in part as a result of the significant confusion surrounding CMS's requirements for inpatient admission orders and physician certifications of inpatient services. CMS also posted subregulatory instructions and frequently asked questions, relating to the claim selection process and preliminary review guidelines, for conducting patient status reviews of claims with dates of admission beginning in October 2013.

Questions on the two midnight provision for admission and medical review may be sent to CMS before the ODF begins via email to Questions on Part B inpatient billing and clarifications regarding physician order and certification can be sent to

To access the ODF, the participant dial-in number is 1-866-501-5502, and the conference ID number is 98515298. For more information, please visit the ODF website. If you have any questions regarding the final rule or questions about the Medicare appeals process, please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 or

October 21, 2013

OIG Report on "Questionable" Billing for Polysomnography Services May Lead to Closer Scrutiny of Sleep Laboratories

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently issued a report addressing increased Medicare spending on polysomnography services. The OIG initiated this study in response to growing concerns of Medicare prescriber fraud.

A polysomnography is a type of sleep study that diagnoses sleep disorders such as sleep apnea. The claims submitted by sleep centers that conduct these studies have been under serious scrutiny by fraud investigators in recent years. In January 2013, American Sleep Medicine LLC, a sleep testing center operator based in Florida, agreed to pay $15.3 million to resolve allegations of false polysomnography claims submitted to Medicare, TRICARE, and the Railroad Retirement Medicare Program in violation of the False Claims Act (FCA).

According to the OIG's report, Medicare spending for polysomnography services rose 39 percent between the years 2005 and 2011. The OIG analyzed Medicare claims from hospital outpatient departments, as well as non-hospital providers such as independent diagnostic testing facilities and physician-owned sleep laboratories, starting in 2011. The OIG found that almost $17 million in Medicare claims for polysomnography services were inappropriate, meaning the claims did not meet one or more of three requirements for Medicare reimbursement, including claims that had inappropriate diagnosis codes, were same-day duplicate claims or were submitted with an invalid NPI. In addition, the report stated that out of 6,339 providers of polysomnography services, 180 providers exhibited patterns of questionable billing. "Questionable billing" patterns included providers that billed an unusually high percentage of: (1) same-day duplicate claims, beneficiaries who had polysomnography claims from one or more other providers in 2011, (3) diagnostic polysomnography claims with a titration claim for the same beneficiary on the following day, or (4) claims in which there was no visit note from the ordering provider in the preceding year.

The OIG made four recommendations to the Centers for Medicare & Medicaid Services (CMS):

  1. Implement claims processing edits or improve existing edits to prevent inappropriate payments;
  2. Recover payments for claims that did not meet Medicare requirements;
  3. Consider using measures of questionable billing from this study to identify providers for further investigations; and
  4. Take appropriate action regarding providers that exhibit patterns of questionable billing.

According to the report, CMS concurred with each of the four recommendations. As a result of CMS' concurrence, sleep study providers should expect greater scrutiny of polysomnography service claims in near future (e.g., increased CMS audit activity). As such, sleep study providers should review their current billing practices and compliance policies to ensure such practices and policies are in accordance with Medicare requirements. If you need assistance in implementing an effective compliance plan, or defending against an Medicare, Medicaid or third party payor audit, please contact an experienced healthcare attorney at 248-544-0888 or

September 30, 2013

CMS Releases Comparative Billing Reports for Spinal Orthotics and Ordering Providers

The Centers for Medicare and Medicaid Services (CMS) recently released a national provider Comparative Billing Report (CBR) focused on spinal orthotics and ordering providers. This CBR was conducted in response to an Office of Inspector General (OIG) report on inappropriate Medicare payments for orthotics. The Medicare Durable Medical Equipment (DME) data obtained for this report span from dates of service beginning January 1, 2012 through December 31, 2012. The final data was retrieved on August 15, 2013 from the Integrated Data Repository (IDR).

Under contract by CMS, Safeguard Services LLC is the authorized producer of all CBRs. Safeguard sends CBRs to about 5,000 ordering providers to help providers prevent improper billings. This CBR provides comparative data to orthotic providers across the nation to compare orthotics providers in terms of coding and billing practice, as well as utilization patterns. The sample spinal orthotics CBR may be useful to review if your entity did not receive one from Safeguard.

The following Healthcare Common Procedure Coding System (HCPCS) codes were analyzed in this CBR:

• L0630: Sagittal control with posterior panel
• L0631: Sagittal control with anterior and posterior panels
• L0633: Sagittal-coronal control with posterior and lateral panels
• L0637: Sagittal-coronal control with anterior, posterior, and lateral panels

According to a FAQ page on the Safeguard website, the code L0631 was chosen because data analysis shows that Medicare claims and total allowances for L0631 have more than doubled from 2008 to 2011. L0630 is a comparable device to L0631, but is less costly, as well as less complex. Although Safeguard advises that CBRs are "not intended to be punitive or sent as an indication of fraud," based upon our experience, providers receiving CBRs may be prospective audit targets since their utilization of codes may exceed their peers. This report indicates that CMS is interested in encouraging providers to order devices that are consistent with a patient's medical needs, rather than overly complex or costly devices.

If you are a recipient of a spinal orthotics CBR, or are among the other provider types that have been identified to receive CBRs, Wachler & Associates can help you in evaluating your CBR analysis and in developing an appropriate compliance plan. Please contact an experienced health care attorney via phone at 248-544-0888 or via email at