Articles Posted in Medicare

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After a hiatus during the height of the COVID-19 pandemic, Medicare audits have resumed in full force. Providers and suppliers should be prepared to respond to audits that were paused during the pandemic, the initiation of new audits, and audits relating to the various pandemic relief programs.

In early 2020, the Centers for Medicare and Medicaid Services (CMS) directed its contractors to pause audit activities as auditors were unable to work in the office and healthcare providers were reeling from the multiple impacts of the pandemic. CMS both paused in-progress audits and temporarily halted the initiation of new audits.

In late 2020, CMS authorized Medicare Administrative Contractors (MACs) to resume post-payment audits. Over the last year, CMS has authorized the resumption of nearly every type of audit and the initiation of new audits. As Medicare contractors process these directives and restart their audit activities, Medicare provides are seeing a wave of documentation requests, audit determinations, overpayment demands, and appeal decisions. Audits and claims appeals that have been dormant for a year or longer are suddenly active. New audits are being initiated for the first time in over year. And, in addition to audits by Medicare and other payors, providers must face compliance challenges and potential audits from pandemic relief programs, such as the Provider Relief Fund.

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The Centers for Medicare & Medicaid Services (CMS) recently issued the CY 2022 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System Final Rule, which finalized Medicare payment rates for hospital outpatient and ASC services. In addition to updating the payment rates, the 2022 Final Rule includes updates to the Inpatient Only and ASC code list, as well as policies aimed at addressing the healthy equity gap, fighting the COVID-19 Public Health Emergency (PHE), encouraging transparency in the health system, and promoting safe, effective, and patient-centered care. The provisions of the final rule take effect January 1, 2022.

When setting the OPPS and ASC rates, CMS typically uses recent available claims data so that the payment rates can accurately reflect estimates of the costs associated with furnishing outpatient services. The recent claims data CMS uses usually reflects the two years prior to the calendar year that is the subject of rulemaking. However, due to the unprecedented impact of COVID-19 PHE-related factors on CY 2020 claims data, CMS has concluded that CY 2019 data is the most recent complete calendar year of data that will generally provide a better approximation of expected costs for CY 2022 hospital outpatient services for rate-setting purposes. As a result, CMS is generally using CY 2019 claims data to set the CY 2022 OPPS and ASC payment system rates.

Since the OPPS was originally established, CMS has maintained the Inpatient Only (IPO) list, which is a list of services that Medicare will only pay for when performed in the inpatient setting, in large part due to their medical complexity. In the CY 2021 OPPS/ASC final rule, CMS finalized a policy to eliminate the IPO list over a three-year period and removed 298 services from the IPO list in the first elimination phase. Following the issuance of the 2021 final rule, CMS reported that it received significant public comments against the IPO elimination policy primarily due to patient safety concerns. In response, CMS is halting the elimination of the IPO list and adding back to the IPO list the 298 services removed in 2021, except for CPT codes 22630 (Lumbar spine fusion), 23472 (Reconstruct shoulder joint), 27702 (Reconstruct ankle joint), and their corresponding anesthesia codes.

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On November 8, 2021, the Department of Health & Human Services (HHS) Office of Inspector General (OIG) released a revised and renamed Provider Self-Disclosure Protocol. The OIG “Health Care Fraud Self-Disclosure Protocol” (SDP) is the first revision to the SDP since 2013. The Self-Disclosure Protocol is available only for matters that involve potential violations of federal criminal, civil, or administrative law for which civil monetary penalties (CMPs) are authorized. The OIG’s updated website provides that “Self-disclosure gives persons the opportunity to avoid the costs and disruptions associated with a Government-directed investigation and civil or administrative litigation.” The SDP expects that “the disclosing party should ensure that the conduct has ended or, at least, in the case of an improper kickback arrangement, that corrective action will be taken and the improper arrangement will be terminated within 90 days of submission to the SDP.” The Protocol also expects providers to complete all other necessary corrective action by the time of disclosure.

The following are several key takeaways from the revised SDP and highlight information that providers should be aware of before beginning the self-disclosure process:

  • Minimum Settlement Amounts Doubled. The revised SDP doubles the minimum settlement amounts required to resolve matters accepted into the SDP. When the matter is related to kickbacks, the minimum settlement amount has been increased from $50,000 to $100,000. For all other matters, the minimum settlement amount has been increased from $10,000 to $20,000. These increases follow the increased CMP maximum imposed by the Bipartisan Budget Act of 2018.
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Recent allegations by the Department of Justice (DOJ) against Kaiser Permanente (Kaiser) highlight some of the tensions in proper medical coding and in internal documentation review. DOJ recently intervened in a series of whistleblower lawsuits that alleged that internal chart reviews and amendment of medical records by Kaiser constituted improper upcoding of claims for Medicare Advantage beneficiaries. DOJ accused Kaiser of coercing its employees to retroactively change or add codes in order to increase reimbursement rates. Ultimately, DOJ claimed that the alleged upcoding resulted in an estimated 75% error rate.

DOJ alleged that Kaiser physicians changed medical records often months after care was provided in order to increase Medicare Advantage reimbursement. A whistleblower claimed that more than 50% of Kaiser physicians said that they were coerced to add diagnoses that they never considered, let alone evaluated or treated. Specifically, the lawsuit alleges that Kaiser targeted codes for atherosclerosis of the aorta as having a “high rate of reimbursement.” The whistleblower claimed that Kaiser told its facilities that 40% of their bonuses would be based on how often they coded atherosclerosis of the aorta, pointing to an email between executives that identified this upcoding as a “$40M opportunity.”

The lawsuit focuses on retroactive additions and changes to patients’ medical records. These retroactive changes are usually done during retrospective chart reviews, which are typically used promote proper coding and reimbursement for services performed. Although the practice of internally reviewing charts to identify and address documentation or coding issues is common and generally permissible, the changes should be supported by proper documentation and some documentation elements must be documented at the time of service. In this case, DOJ alleged that Kaiser’s changes were not supported by documentation and that Kaiser only performed retroactive chart reviews on patients that could receive risk-adjustment payments.

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When a Medicare provider or supplier’s Medicare billing privileges are revoked, commonly called a Medicare revocation, the provider or supplier must ask the following questions: Why? When? Will there be collateral consequences? What are the appeal rights?

Why? Federal regulations provide 22 distinct reasons that the Centers for Medicare & Medicaid Services (CMS) may use to revoke a healthcare provider’s or supplier’s Medicare billing privileges. Some of the most common revocation reasons are noncompliance with Medicare enrollment requirements, felony convictions, and failures to respond to requests for medical records. A particularly severe revocation reason is an abuse of billing privileges because it means that CMS has found that the provider or supplier has engaged in a “pattern or practice of submitting claims that fail to meet Medicare requirements.” The reason for the revocation can affect both the appeal process and the effective dates of the revocation.

When? Two dates are most important: the effective date and the length of the reenrollment bar. The effective date is the date that the revocation begins. For some revocations, the effective date will be 30 days after the letter informing the provider or supplier of the revocation. However, revocations can also be retroactive. For example, in 2021 CMS may revoke a provider for a felony conviction from 2017 and back-date the revocation to begin in 2017. This may mean that all claims for the provider’s services from 2017 to the present will be denied and overpayments sought. The reenrollment bar is the length of time that a revoked provider or supplier must wait before they can reenroll in Medicare. In general, CMS may set a reenrollment of between 1 and 10 years, depending on the severity of the denial reason. However, reenrollment bars are very often initially set at the maximum of 10 years.

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Two recent settlements illustrate some of the compliance challenges facing clinical laboratories that perform urine drug testing (UDT). Both settlements involve a clinical laboratory resolving allegations that the lab violated the False Claims Act (FCA).

In the first case, the Department of Justice (DOJ) alleged that the lab performed and then billed federal health care programs for both presumptive testing and confirmatory testing. DOJ alleged that the lab was performing both tests at approximately the same time and providing both results to providers simultaneously. DOJ alleged that this rendered one test or the other medically unnecessary: either there was no result to confirm because the presumptive test came back negative, or the presumptive test was unnecessary because the provider already had the confirmatory test in hand. The lab agreed to pay $16 million to resolve these allegations.

In the second case, a physician practice referred UDTs to its in-house clinical laboratory. DOJ alleged that the physicians ordered excessive and unnecessary UDTs for patients without any individualized assessment of clinical need and caused these claims to be submitted to federal healthcare programs. The physicians agreed to pay $3.9 million to resolve these allegations.

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The Department of Health and Human Services (HHS) recently proposed to repeal two rules implemented under the Trump Administration to moderate the power of the agency. The rules HHS seeks to repeal are the Good Guidance Rule and the Civil Enforcement Rule. Public comments on the proposal are due by November 19, 2021.

The Good Guidance Rule was implemented to make guidance documents easier for the public to access and provide input on, and created extra screening steps before HHS may implement guidance. The major provisions of the Good Guidance Rule are: (1) a requirement that each guidance document issued by HHS generally include certain information, including a statement that the guidance does not have the force and effect of law and is not binding unless specifically incorporated into a contract; (2) additional procedures for ‘‘significant guidance documents’’ (defined as those with an estimated impact of greater than $100 million), including a period of notice and comment, a requirement that the Secretary of HHS personally approve new guidance, and a requirement for submission to the Office of Information and Regulatory Affairs (OIRA) for review; (3) creation of a repository for all guidance documents along with a provision stating that guidance documents not in the repository are not effective and would be considered rescinded; and (4) procedures for the public to petition the Department to withdraw or modify any particular guidance document.

The Civil Enforcement Rule was implemented to provide greater notice to providers subject to civil enforcement actions and greater transparency of HHS’s civil enforcement actions. Under the Civil Enforcement Rule, before taking civil enforcement actions, HHS must provide the targeted party with an initial notice of the agency’s legal and factual determinations, an opportunity to object or respond, and the Department’s written response to the affected party’s objections.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) included several new items in its work plan update in October 2021. The OIG work plan outlines the projects that OIG plans to implement over the foreseeable future. Such projects typically include OIG audits and evaluations. Below are the highlights from the work plan update that providers and suppliers should take notice of.

First, OIG plans to compare the average sales price (ASP) for certain drugs with their corresponding average manufacturer price (AMP) to assess Medicare Part B drug reimbursement. Since Congress established the ASP as the basis for Medicare Part B drug reimbursement, OIG is empowered to monitor market prices to limit excessive Medicare payment amounts. In fact, the Social Security Act requires that OIG compares the ASPs with AMPs, and if the ASP for a drug exceeds the AMP by 5% in the two previous quarters or three previous four quarters, HHS may substitute the reimbursement amount with a lower calculate rate. The memo produced from this investigation will report the number of drugs OIG identified that meet the criteria for substitution of a lower reimbursement amount. Ultimately, providers and suppliers should be aware of the findings in this memo, as they could lead to reduced Medicare Part B reimbursements.

Second, OIG announced their plans for additional oversight of the 50 state Medicaid Fraud Control Units (MFCUs). MFCUs are state agencies that investigate and prosecute Medicaid provider fraud and complaints of patient abuse or neglect in Medicaid-funded facilities, although approximately 75% of MFCU funding comes from the federal government. OIG will conduct on-site reviews of a sample of MFCUs. OIG did not specify which or how many MFCUs they would review. Additionally, OIG will provide guidance regarding Federal regulations, policy and performance through data collection and analysis. Finally, the OIG will provide technical assistance and training to improve MFCU management and operations.

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Your practice, agency, or business has been audited by Medicare and now Medicare has stopped paying your claims or is claiming that you owe significant funds that must be repaid to Medicaid. These difficult circumstances can lead to many questions. Who performed the audit? Why are they denying claims or demanding an overpayment? How can you respond?

There are several entities that perform Medicare audits. The federal agency that oversees Medicare, the Centers for Medicare & Medicaid Services (CMS), performs few audits itself, but outsources these duties to a series of independent contractors, such as Medicare Administrative Contractors (MACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SRMC). The vast majority of audits are performed by these contractors, although they will often use CMS’s name or logo in their correspondence and may answer phone calls by saying that they are “with Medicare.”

A healthcare provider’s options in responding to a Medicare audit are available from the very beginning. Sometimes providers receive Additional Document Requests (ADRs) from the contractor demanding information or documentation on a claim or claims. These requests should be reviewed carefully; however, they often contain boilerplate or generic language and it may be difficult to determine which specific documentation the contractor is requesting. Once the contractor reviews any additional documentation that the provider supplies, the contractor will issue its audit findings and determine to pay or to deny certain claims. Other times, the contractor will audit claims dates or other information and issue audit findings without requesting additional information from the provider.

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In a recent court filing, the Department of Health and Human Services (HHS) reported that it has cleared approximately 79% of the Medicare appeals backlog. HHS is currently under court order to clear a backlog of hundreds of thousands of Medicare claims appeals pending before the Office of Medicare Hearings and Appeals (OMHA).

Generally, a Medicare claim denial or overpayment demand may be appealed through five successive levels of appeals. First, Redetermination by a Medicare Administrative Contractor (MAC), often the same MAC that denied the claims initially. Second, Reconsideration by a Qualified Independent Contractor (QIC). Third, appeal to an Administrative Law Judge (ALJ) employed by the Office of Medicare Hearings and Appeals (OMHA), a subdivision of HHS, where the provider may be entitled to a hearing. Fourth, review by the Medicare Appeals Counsel, also within HHS. Fifth and finally, appeal to a federal district court.

The entire appeals process can take years and create difficulties for healthcare providers or suppliers. The least efficient part of the process has long been the wait, sometimes for three to five years, for an available ALJ to hear the appeal, at which point in the appeals process the only review of a contractor’s decisions has been by other contractors. This left providers in the difficult position of having significant overpayment demands based on incorrect decisions by contractors but having to wait years for independent review of their cases. This long wait also violated the regulations that govern the appeals process, which generally entitle a provider to an ALJ hearing within 90 days of the provider’s request for a hearing. At the height of the backlog, over 400,000 cases were pending at OMHA.

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