Articles Posted in Medicare

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Healthcare providers have long struggled under the administrative burden of prior authorization requirements imposed by Medicare Advantage (MA, also known as Medicare Part C) plans, as well as arbitrary prior authorization denials, utilization controls, and coverage denials by MA plans. The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently took note of some of the issues providers are having with MA plans and may present a new avenue for providers dealing with these issues.

A recent OIG review of MA prior authorization requirements revealed that an estimated 13% percent of prior authorization requests which were denied by MA plans in fact met Medicare coverage rules and likely would have been approved under fee-for-service Medicare. OIG also determined that about 18% of MA claim denials in fact met Medicare coverage and Medicare Advantage billing rules. Further, OIG found that, on appeal, MA plans only reverse about 3% of prior authorization denials and about 6% of claim denials within three months. According to OIG’s analysis, advanced imaging services such as MRIs and CT scans, post-acute care following hospital stays, and pain relief injections were the most commonly affected services.

MA plans are generally required to follow Medicare coverage rules and their standards can’t be more restrictive than Medicare’s traditional national or local coverage determinations. However, MA plans often deny claims for arbitrary reasons, impose coverage criteria that do not exist under Medicare, or attempt to force provider to alter their utilization of medically necessary services to meet the MA plan’s arbitrary expectations. Moreover, the appeals processes offered by MA plans are often poorly defined and inconsistently administered.

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Following a temporary suspension in pre-payment reviews under the Targeted Probe and Educate (TPE) audit program in response to the COVID-19 pandemic, the Centers for Medicare & Medicaid Services (CMS) announced in August 2021 that it would be resuming TPE reviews. Review under the TPE program is intended to be different than other audit reviews because the main goal is intended to be claim accuracy improvement through the use of several rounds of one-on-one education. However, a TPE audit can also have severe consequences for the provider. 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.

The TPE process is generally initiated when a provider receives an initial Notice of Review letter from their Medicare Administrative Contractor (MAC) which notifies the provider that they have been selected for a TPE review. This initial letter typically does not include any specific records requests, but indicates that the MAC will request records at a later date. The letter may briefly describe the TPE process as involving three rounds of claims review with education after each round. This letter will likely warn that, if a provider/supplier fails to improve the accuracy of its claims after three rounds, the MAC will refer the provider/supplier to CMS for additional action, such as prepayment review, extrapolation of overpayments, referral to a RAC, or other disciplinary action, up to and including revocation of Medicare billing privileges.

After the Notice of Review, the MAC will send Additional Documentation Requests (ADR) for 20-40 claims. These ADRs may be indistinguishable from any other document requests, likely with no indication that they are pursuant to a TPE audit. The ADRs must be responded to within 45 days. After the provider submits the documentation, the MAC is required to provide direct one-one-one education to the provider. The MAC will then issue a letter that outlines its findings. If a high number of claims are denied, the MAC will proceed to a second round of claims review and education. If a high number of claims are again denied, the MAC will proceed to a third round.

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The Department of Health and Human Services (HHS) has again delayed implementation of a rule that would cause it to review many of its regulations and would eliminate regulations that HHS fails to review. The rule had the potential to remove many non-statutory restrictions that HHS has placed on the healthcare industry. This delay likely presages the ultimate repeal of the rule.

The SUNSET Rule, which was finalized in the closing days of the Trump Administration, requires HHS to assess its current rules. First, HHS would determine whether a rule has a significant economic impact on a large number of small entities. If it does, then HHS would consider the complaints against the rule, the original asserted need for the rule, the complexity of the rule, and whether the rule is duplicative of or in conflict with any other rules. HHS would ultimately determine whether the rule is still needed, should be reworked, or should be withdrawn. Any rule that is not reviewed by HHS every ten years would expire. Any rule that was more than ten years old at the time the SUNSET Rule came into effect would expire unless it was reviewed within five years.

Under the Biden Administration, HHS first delayed the implementation of the SUNSET.  Then, in late 2021, HHS proposed to repeal the SUNSET Rule in its entirety. HHS’ rational for the proposed repeal was that it did not have sufficient resources to review all of its regulations within the required timeframes and this would cause some regulations to expire before HHS could complete reviews. While this position may indicate that HHS has engaged in excessive rule-making, HHS’ most recent proposal evinces a likely intent to repeal the SUNSET Rule in its entirety. In March 2022, HHS again delayed the implementation of the SUNSET Rule, including that it was still considering public comments to its proposal to repeal the Rule.

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When a Medicare contractor denies a claim, whether as part of a pre-pay, post-pay, Targeted Probe and Educate, statistically extrapolated, or other type of review or audit, the provider generally has a right to a lengthy appeal process. The process is complex and often relies on strictly enforced deadlines and requirements. In some circumstances claims can take years to fully progress through the appeals process. However, some limited cases may be eligible for settlement.

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 and other information that the provider supplies, the contractor will issue its audit findings and determine whether to deny certain claims. Other times, the contractor will audit claims data or other information and issue audit findings without requesting additional information from the provider.

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The Centers for Medicare & Medicaid Services (CMS) contracts with a Supplemental Medical Review Contractor (SMRC), which performs a variety of Medicare and Medicaid audit and medical review tasks. Noridian Healthcare Solutions, which is also a Medicare Administrative Contractor (MAC), was selected as the SMRC in 2018. The SMRC conducts nationwide medical reviews of Medicare Parts A and B, DMEPOS, and Medicaid claims for compliance with coverage, coding, payment, and billing requirements. The focus of the medical reviews may include areas identified by CMS data analysis, the Comprehensive Error Rate Testing (CERT) program, professional organizations, and federal oversight agencies. At the request of CMS, the SMRC may also carry out other special projects.

SMRC audits are referred to as projects and there are three categories of SMRC project reviews:

  • Healthcare Fraud Prevention Partnership (HFPP) Review: Based on fraud, waste, and abuse trends identified by the HFPP.
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A phenomenon in Medicare audits that is gaining increased visibility is Medicare contractors “double-dipping” from providers by using overlapping audits. Once viewed as isolated aberrations, it is becoming increasingly common for Medicare contractors to audit and deny the same claims twice in different audits. This practice generally leads to overpayment demands for the same claims, meaning contractors are demanding that providers and suppliers repay the same claims twice. Though profoundly unfair and very likely unlawful, providers may face difficulty challenging such an overlap in the complex and lengthy Medicare appeals process.

The Centers for Medicare & Medicaid Services (CMS) authorizes several types of contractors to conduct audits, such as Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SRMC). Some contractors are paid a percentage of the amounts they collect from the providers they audit, incentivizing them to over-deny claims and over-collect payments. In some instances, one contractor may not communicate with another, leading both to target the same claims. Alternatively, a contractor may fail to communicate internally or document its own audits properly, leading the same contractor to deny and attempt to collect on the same claims multiple times. As the number of Medicare audits has exploded over the last several years, such missteps have become increasingly common.

Any Medicare provider or supplier who has received more than one Medicare audit or overpayment demand should verify whether any of the claims overlap. Overlaps are found most often in statistically extrapolated audits, although they can occur in any type of audit. Where an overlap is found, a provider may raise the issue in the five levels of the Medicare claims appeal process: Redetermination by the MAC, Reconsideration by a Qualified Independent Contractor (QIC), review by an Administrative Law Judge (ALJ) employed by Department of Health and Human Services (HHS), review by the Medicare Appeals Council, also within HHS, and review by a judge in a federal court.

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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 January 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 will perform a nationwide audit to determine whether hospitals that received Provider Relief Fund (PRF) payments and attested to the associated terms and conditions complied with the balance billing requirement for COVID – 19 inpatients. Under the PRF terms and conditions, hospitals are eligible for PRF distribution payments if they attest to specific requirements, including a requirement that providers, such as hospitals, must not pursue the collection of out-of-pocket payments from presumptive or actual COVID – 19 patients in excess of what the patients otherwise would have been required to pay if the care had been provided by in-network providers. OIG plans to assess how bills were calculated for out-of-network patients admitted for COVID-19 treatment, review supporting documentation for compliance, and assess procedural controls and monitoring to ensure compliance with the balance billing requirement.

Second, OIG will perform a nationwide review of Medicare beneficiary hospice eligibility. OIG indicated that a number of recent compliance audits have identified findings related to beneficiary eligibility. In its review, OIG plans to focus on those hospice beneficiaries that haven’t had an inpatient hospital stay or an emergency room visit in certain periods prior to their start of hospice care.

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Medicare audits often include a statistical extrapolation to estimate the full extent of an alleged overpayment. Medicare contractors are authorized to review the merits of only a small “sample” of submitted claims and extrapolate the results of that review to a large “universe” of claims to estimate the overpayment amount. This practice can lead contractors to allege overpayments of hundreds of thousands or millions of dollars despite only reviewing and denying a small handful of claims. Medicare contractors generally have broad authority to use a wide array of statistical methods when extrapolating the overpayment amount, which can lead to grossly overestimated overpayment determinations.

When conducting the statistical sampling and extrapolation, the contractor will select the period for review and establish the universe and sample frame. The sample frame is the large group of claims from which the sample is randomly selected, and the universe is the group of claims over which the results of the review are projected. The sample frame and universe may or may not be identical. The universe and sample frame may be defined by specific codes, dates of services, beneficiaries, or some combination thereof. From here, the contractor will select a random sample from the sample frame,  review the claims within the designated sample, and extrapolate the results of the review of the sample to all claims in the established universe.

A statistical extrapolation is subject to appeal, similar to any Medicare overpayment determination. However, there are several issues unique to appealing a statistically extrapolated overpayment. First, it adds increased importance to appealing the denial of each claim in the sample. While an individual claim may not represent significant monetary value on its own, it may represent tens of thousands of dollars after it has been statistically projected over a large universe. Second, there are special procedural rules for appealing an extrapolation. For example, providers are generally prevented from arguing before an Administrative Law Judge (ALJ) that the extrapolation was flawed unless they included specific language in their request for ALJ review.

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Late last year, the Centers for Medicare & Medicaid Services (CMS) released new guidance for hospital co-location. Co-location occurs when two Medicare certified hospitals or a Medicare certified hospital and another healthcare entity are located on the same campus or in the same building and share space, staff, or services. Hospitals, especially in rural areas, may co-locate to achieve greater efficiencies and improve patient care.

All co-located hospitals must demonstrate independent compliance with the hospital Conditions of Participation. Specifically, each hospital’s space, contracted services, staffing and emergency services must independently comply with the hospital Conditions of Participation. Where hospitals share space, patient record confidentiality and infection prevention and control are particular areas of concern. Where hospitals contract for services, it is important to note that these services are provided under the oversight of the hospital’s governing body and would be treated as any other service provided directly by the hospital. Where hospitals share staff, each must independently meet the Conditions of Participation, including adequate staff training, education, and oversight. Lastly, a co-locating entity that does not provide emergency services may generally transfer emergency patients to the entity with which it co-locates, such as a rehab hospital that co-locates with an acute care hospital. However, in this scenario, the non-emergency provider must have policies and procedures in place to address potential emergency scenarios typical of the patient population for which it routinely cares and ensure staffing that would enable it to provide safe and adequate initial treatment of an emergency prior to transfer.

CMS also provided new guidance for survey procedures for co-located hospitals. In general, survey procedures for co-located hospitals are the same as for any other hospital, as each must independently comply with the Conditions of Participation. However, where a survey of one co-located entity identifies an alleged deficiency, it may be imputed to the other co-located entity and may lead to a survey of or complaint against the other co-located entity. For example, where two hospitals share a storage room and a leaky pipe drips water onto and damages the supplies of one hospital, CMS indicated that this may lead to a complaint against the other hospital because the deficiency was found in the shared space.

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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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