Articles Posted in Medicare

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On September 10, 2021, the U.S. Department of Health and Human Services (HHS) announced that it would make $25.5 billion in new funding available for healthcare providers affected by the COVID-19 pandemic. This funding includes allocations of $8.5 billion in funding from the American Rescue Plan (ARP) for providers who provide services to rural Medicaid, Children’s Health Insurance Program (CHIP), or Medicare patients, as well as an additional $17 billion in Provider Relief Fund (PRF) Phase 4 funding for a broad range of providers who can document expenses and lost revenue associated with the COVID-19 pandemic.

PRF Phase 4 payments are based on providers’ lost revenue and expenditures between July 1, 2020 and March 31, 2021, in conformity with the requirements of the Coronavirus Response and Relief Supplemental Appropriations Act of 2020 (CRRSAA). PRF Phase 4 is intended to reimburse smaller providers for their lost revenues and pandemic-related expenses at a higher rate compared to larger providers. This characteristic stems from the Biden Administration’s ongoing commitment to social equity, as smaller providers tend to operate on thinner margins and often serve vulnerable or isolated communities when compared to larger providers. Because Medicaid, CHIP, and Medicare patients tend to be lower income and have greater and more complex medical needs, PRF Phase 4 will also include bonus payments for providers who serve these individuals. HRSA will price these bonus payments at the generally higher Medicare rates to ensure equity amongst providers serving low-income children, pregnant women, people with disabilities, and seniors. In parallel, HRSA will make ARP payments to providers based on the amount of Medicaid, CHIP, and/or Medicare services they provide to patients who live in rural areas as defined by the HHS Federal Office of Rural Health Policy. For both programs, HRSA will use existing Medicaid, CHIP, and Medicare claims data to calculate payments.

In order to streamline the application process, providers will apply for both the PRF and ARP programs in a single application. To help ensure that provider relief funds are used for patient care, PRF recipients will be required to notify the HHS Secretary of any merger with, or acquisition of, another healthcare provider during the period in which they can use the payments. Providers who report a merger or acquisition may be more likely to be audited to confirm their funds were used for pandemic-related expenses. The application portal will open on September 29, 2021. Moreover, HHS is also releasing detailed information about the methodology utilized to calculate PRF Phase 3 payments in order to promote transparency in the PRF program. Providers who believe their PRF Phase 3 payment was not calculated correctly according to this methodology will now have an opportunity to request a reconsideration. Specific details on the PRF Phase 3 reconsideration process have yet to be announced.

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As part of the 2022 Medicare Physician Fee Schedule Proposed Rule, the Centers for Medicare & Medicaid Services (CMS) has proposed to significantly expand its authority to deny or revoke a provider’s or supplier’s Medicare billing privileges.

First, CMS proposed to modify the conditions that it considers when determining whether to revoke a provider for an “abuse of billing privileges.” CMS currently has the authority to revoke a provider’s or supplier’s enrollment for an “abuse of billing privileges,” defined as a pattern or practice of submitting claims that do not meet Medicare requirements. CMS has previously asserted that as few as three non-compliance claims can constitute such a pattern, However, in the current proposal, CMS expressed concern that the existing factors it uses to make such a determination may prevent it from acting against providers or suppliers who enroll in Medicare and engage in short-term periods of high-volume, non-compliant billing. CMS proposed to revise one factor, the percentage of submitted claims that were denied, to instead focus on the percentage of claim denials out of claim submissions during a limited period, such as a single month. CMS also proposed to remove three factors the agency deems largely irrelevant to determining the existence of a pattern or practice of improper billing. Specifically, the agency proposed to remove factors that focus on the reason for the claim denial, the length of time over which the pattern has continued, and the length of time a provider or supplier has been enrolled in Medicare. CMS proposed one new factor that considers the type of improper billing along with any aggravating or mitigating conditions in each case.

CMS also proposed to expand its authority to deny or revoke a provider’s or supplier’s enrollment if any healthcare, administrative, or management services personnel furnishing services payable by any federal health care program is excluded by the OIG, such as a billing specialist, accountant, or human resources specialist. CMS asserted that this proposal would align its authority with a 2013 OIG Special Advisory Bulletin prohibiting a provider or supplier from employing excluded individuals to furnish management or administrative services payable by any federal health care program.

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Significant changes could be coming to dentistry if dental benefits are added to Medicare. A proposal, currently before Congress as part of a large budget bill, would do just that. If this proposal becomes law and Medicare begins to cover dental benefits, it would likely have major implications on the practice of dentistry, both administratively and financially.

While some Medicare Part C (Medicare Advantage) plans cover dental benefits, original Medicare, which is administered in a very different manner, does not. While Medicare Part C plans are administered by private insurers, original Medicare is administered by a myriad of federal contractors that are overseen by the Centers for Medicare & Medicaid Services (CMS). For dental providers accustomed to dealing with private insurers and Part C plans, interacting with Medicare may present new challenges. An experienced healthcare attorney can be key to navigating the regulatory and business challenges of Medicare compliance.

First, dental practices would likely come under the purview of the Medicare contractors. These contractors handle Medicare enrollments, claims processing, data analysis, audit and claims review, program integrity, and a myriad of other functions. Some decisions regarding Medicare-enrolled providers are made by contractors and some by CMS, although it is not always clear. Most decisions, including enrollment decisions and claims denials, are subject to a multi-level appeal process. Dental practices familiar with the business motivations of private insurers may be surprised by the sometimes-uncompromising nature of decisions made by CMS and its contractors. For example, unlike an overpayment demand by a private insurer, a Medicare overpayment demand can rarely be negotiated.

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The Biden Administration is planning to rescind the “Most Favored Nation” rule, which would have employed a model that required Medicare to pay no more for certain drugs than the price paid for those drugs by other developed nations. On September 13, 2020, former President Trump signed an executive order directing HHS to test payment models for Medicare Parts B and D in which Medicare would pay for certain drugs up to the “most favored nation” price, defined as “the lowest price, after adjusting for volume and differences in national gross domestic product, for a pharmaceutical product that the drug manufacturer sells in a member country of the Organization for Economic Co-operation and Development (OECD) that has a comparable per-capita gross domestic product.” On November 20, 2020, CMS issued an interim final rule to implement the executive order. However, on December 23, 2020, a federal court temporarily blocked the policy from taking effect on January 1, 2021 because the rule did not adhere to the notice and comment procedures required by the federal Administrative Procedure Act (APA).

In comments to the interim final rule, many hospitals and providers expressed opposition to the Most Favored Nation rule, claiming that the rule would impose unjustified expenses and place the entire burden of lowering drug prices on hospitals and providers rather than drug manufacturers or Medicare. Since the rule relies on price controls to lower drug spending, the rule was also opposed by drug manufacturers and fiscal conservatives who argued it would stifle innovation and access to new cures. If finalized, the rule would have created the CMS Innovation Center’s first nationwide mandatory experiment, which would represent a significant departure from the agency’s historical preference of testing new payment models among smaller subsets of healthcare organizations. Hospitals argued CMS does not have the power to execute such a large experiment, claiming the model “is not a test at all” and amounts to “the adoption of a nationwide policy for the highest expenditure drugs,” according to the Federation of American Hospitals (FAH). FAH also noted that the 50 drugs included in the model make up about 80% of the Medicare spending for Part B drugs. CMS left open the possibility for a future rule similar to the most favored rule, explaining that its decision to not move forward with the rule does not preclude the agency from pursuing a similar policy at a later date.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or

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The August 12, 2021 issue of the Medical Learning Network (MLN) Connects newsletter indicates that CMS is planning to resume the Targeted Probe and Educate (TPE) audit program. CMS temporarily suspended pre-payment reviews under the TPE program in response to the Covid-19 public health emergency (PHE) in March 2020. While CMS authorized Medicare Administrative Contractors (MACs) to resume post-payment audits in August 2020, TPE pre-payment reviews generally remained suspended.

The MLN Newsletter does not offer specific information as to when CMS will officially resume TPE audits. The Newsletter also does not indicate whether CMS will focus on new TPE audits or whether the agency intends to resume existing TPE reviews that were suspended at the beginning of the PHE. In a June 2021 Q&A by Palmetto GBA, one of the MACs, Palmetto stated that they “do not have an expected date for TPE to return.” Other MACs have yet to update their websites to reflect CMS’s announcement. However, it appears CMS has given the MACs the go-ahead to resume paused TPE reviews and initiate new reviews.

A TPE review consists of up to three rounds of claims review, with education to the provider after each round. A provider or supplier navigating a TPE review should take care to comply with the program’s requirements and timelines and should be aware of the potential consequences of a review. A TPE review can take months or years to resolve and can have devastating impacts on a provider’s business, up to and including revocation of Medicare billing privileges and placement on the CMS Preclusion List. Closely monitoring the process of the TPE review can be critical to a successful resolution. For more information about TPE reviews, please see our previous blog on Responding to a Targeted Probe and Educate Review.

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The Centers for Medicare and Medicaid Services’ (CMS) FY 2022 Budget Justification request to Congress indicates a greater focus on audit activities, including a doubling of CMS’ medical review budget, and an effort to decrease the number of claim denials overturned through the Medicare appeals process. While still in the proposal phase, the budget justification provides a glimpse into CMS’ priorities for the coming fiscal year. Specifically, CMS requests $96.7 million to be used as discretionary funding for medical review activities, which represents an increase of $50.5 million above the FY 2021 Enacted level. Medical review activities can be conducted pre-payment or post-payment and concentrate on areas identified through a variety of means, including targeted data analysis, Comprehensive Error Rate Testing (CERT) results, and oversight agency findings that indicate allegedly questionable billing patterns.

CMS contracts with Medicare Administrative Contractors (MACs) to perform analysis of claims data to identify atypical billing patterns and perform claims review, including medical reviews. The FY 2022 request supports ongoing medical review operations, including Targeted Probe and Educate (TPE) reviews, which CMS temporarily suspended for a portion of 2020 in response to the Public Health Emergency (PHE). CMS recently announced in June 2021 that MACs are authorized to begin conducting post-payment medical reviews for dates of service during and after March 2020. CMS states that the FY 2022 Budget Justification “proposes to significantly increase funding to allow MACs to conduct additional review in FY 2022.” MAC medical reviews were previously limited to dates of service prior to March 2020, which means we can expect to see MACs begin audits of claims submitted during the PHE.

The FY 2022 Budget Justification also would allocate $19 million to the Supplemental Medical Review Contactor (SMRC) to conduct SMRC audits, which provide support for a variety of tasks meant to lower the improper payment rates and increase efficiencies of the medical review function of Medicare. SMRC audits were similarly paused for a period of time during 2020 in response to the PHE. In FY 2020, the SMRC reviewed approximately 80,197 claims, whereas CMS expects the SMRC to review 792,800 claims in FY 2022. So, providers may also anticipate increased SMRC medical reviews.

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During the COVID-19 public health emergency, the Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) waived many of the restrictions that limited Medicare coverage for healthcare services for telemedicine and allowed for much greater use of these services. Among these was the introduction of Medicare coverage for several audio-only services, whereas Medicare coverage had previously only extended to telemedicine services provided by interactive two-way audio/video communication. However, these actions were only temporary and will end when the declaration of a public health emergency ends.

Due to the tremendous value that audio-only telemedicine has provided to the healthcare system, providers, and Medicare beneficiaries, there have been calls for the temporary expansion of telemedicine to be made permanent. While CMS has asserted that large-scale changes to the Medicare program must come from Congress, CMS recently released the proposed 2022 Physician Fee Schedule which, among many other proposals, would retain Medicare coverage for some audio-only services.

Specifically, CMS would permit the use of audio-only communications technology for mental health telehealth services under certain conditions when the services are provided to beneficiaries located in their home. Under the CMS proposal, coverage would be limited to the diagnosis, evaluation, or treatment of mental health disorders in established patients where the originating site is the patient’s home. CMS would retain the requirement that an in-person item or service must be furnished within six months of such a mental health telehealth service. Further, CMS would require that the provider has the technical capability at the time of the service to use an interactive telecommunications system that includes video, but conducts the visit via audio-only because the beneficiary is unable to use, does not wish to use, or does not have access to two-way, audio/video technology. CMS states its goal is to allow audio-only services only where no service would otherwise occur.

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Important deadlines for hospitals to report cardiac medical device-related overpayments are fast approaching. Based on an audit by the Office of Inspector General (OIG), the Centers for Medicare & Medicaid Services (CMS), required hospitals to investigate and report any overpayments from the last six years related to manufacturing credits for replaced cardiac medical device implants. CMS’s deadlines to file these reports begin in August 2021.

Generally, where the manufacturer of a cardiac medical device implant, such as a pacemaker or defibrillator, replaces a recalls or defective device that is still under warranty, it will provide a replacement to the hospital without charge or issue a full or credit to the hospital for the cost of the device. Where the service involves a Medicare beneficiary and a hospital receives a discount or credit that is 50% or more of the cost, Medicare regulations generally require the hospital to report the credit to Medicare and accept reduced payment.

In November 2020, OIG issued a report regarding a review it conducted of 6,558 Medicare claims dated between January 1, 2015 and June 30, 2017. In its review, OIG obtained data on reportable warranty credits from the top three cardiac device manufacturers and compared this data to Medicare billing records to see whether the hospital had reported the credit to Medicare. As a result of its review, OIG alleged that over 900 hospitals had not properly reported manufacturing credits for recalled or defective cardiac medical device implants. OIG alleged that these hospitals had received approximately $33 million in Medicare overpayments and recommended that CMS recover these overpayments.

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Many of the Medicare requirements surrounding telemedicine have been greatly relaxed or waived entirely during the COVID-19 public health emergency. Providers and patients wondered if these changes would end or if some might become permanent. In May 2021, Congress introduced H.R.3447, a bill to amend the Social Security Act to expand accessibility to certain telehealth services under the Medicare program, which was an encouraging sign that at least some of the telemedicine waivers may become permanent. Now, the Centers for Medicaid and Medicare Services (CMS) seeks to preserve telehealth access with the proposed 2022 Medicare Physician Fee Schedule (MPFS). If finalized, the rule would codify some of the recent flexibilities CMS has granted regarding telehealth use for the diagnosis, evaluation, and treatment of mental health disorders.

CMS plans to allow Medicare providers to continue offering certain telehealth services until the end of 2023 while the agency decides whether to add those services to the telehealth list permanently. CMS will permit all Medicare patients to access telehealth services from their homes, as called for in the Consolidated Appropriations Act Congress passed in December 2020. Additionally, the agency seeks to enable Medicare to pay for mental health visits via telehealth services provided through community health centers. CMS plans to allow providers to deliver audio-only behavioral and mental health services, including opioid addiction treatment. The proposed rule would also pay physicians for mental health visits, via interactive telecommunications technology, furnished to rural and vulnerable populations in rural health clinics and federal qualified health centers.

The rule also proposes notable changes to the Quality Payment Program (QPP), including the Merit-based Incentive Payment System (MIPS). Specifically, the agency seeks to make it more difficult for clinicians to earn bonuses under its QPP by raising the eligibility threshold. Furthermore, CMS unveiled its first seven MIPS Value Pathways, including: rheumatology; stroke care and prevention; heart disease; chronic disease management; emergency medicine; anesthesia; and lower-extremity joint repairs. CMS, as part of these initiatives, would evaluate clinicians using measures that are meaningful to their practices and their specialties or are relevant to public health priorities. The proposed fee schedule is open for public comment until September 13, 2021.

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The U.S. Supreme Court recently declined to hear an appeal challenging the Department of Health and Human Services’ (HHS) site-neutral payment policy, allowing the regulation to move forward. Hospitals originally sued to prevent the rule from taking effect, but were ultimately unsuccessful when the U.S. Court of Appeals for the District of Columbia ruled against them in favor of the rule’s legality.

The site-neutral pay rule, specifically Section 603 of the Bipartisan Budget Act of 2015, brings significant changes to Medicare hospital payment policy. The rule extends the concept of site-neutral payment policy by requiring that newly created off-campus hospital outpatient departments no longer be paid under the Outpatient Prospective Payment System (OPPS). Rather, such departments will be paid under an alternative, less remunerative payment system – the Medicare Physician Fee Schedule (MPFS). The goal of the rule is to reduce a perceived disparity in Medicare payments where hospital-affiliated clinics get paid more than physician offices for the same services.

Specifically, the rule amends Section 1833(t) of the Social Security Act, which governs Medicare payments for hospital outpatient department services, by adding a new clause that prospectively excludes from the definition of covered services most items and services furnished by an “off-campus outpatient department of a provider,” which the statute defines as a department of a provider that is not located on the provider’s campus or within a 250-yard radius from a remote location of a hospital. While CMS guidance on the rule is still unfolding, it has provided some insight into its interpretation of the 250-yard measurement. CMS explains that a hospital may measure 250 yards from “any point of the physical facility that serves as the site of services of the remote location to any point in the PBD.”

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