Medicare

Published on: October 5, 2021

CMS Proposes Repeal of Breakthrough Devices Medicare Coverage Rule

The Centers for Medicare & Medicaid Services (CMS) recently announced a proposal to repeal the Medicare Coverage of Innovative Technology (MCIT) rule that has been delayed several times. The latest news in the MCIT saga comes from a CMS announcement expressing concerns with the final rule, specifically that it will require more time for adequate implementation.

The final rule was implemented to reduce the time it takes for FDA-approved medical technology to become covered under Medicare. The MCIT would reduce these wait times by granting Medicare coverage to breakthrough devices immediately after receiving FDA approval. The FDA designates medical devices as “breakthrough devices” when they are shown to be more effective at diagnosing or treating serious diseases than the currently available devices. This designation allows these devices to have reduced development, assessment, and review timelines.

However, CMS announced reservations about the final rule and has proposed changes. CMS’s primary concern is that the final MCIT is not acting in Medicare recipients’ best interest because it could provide coverage for breakthrough devices that are not reasonable and necessary to treat Medicare recipients’ diseases or conditions. This concern stems from the current guidelines for clinical trials for medical devices. Specifically, the FDA does not require Medicare recipients to be included in clinical trials for medical devices. Since Medicare recipients generally have more comorbidities than the general population, the clinical trials may not accurately reflect Medicare patient outcomes. CMS has also expressed concern that the final rule takes away its tools to deny coverage when it becomes apparent that a particular device can be harmful to the Medicare population. If the rule goes into effect, and a device approved under it is later found to be harmful to Medicare recipients, CMS would be limited in the actions it could take to withdraw or modify coverage. Lastly, CMS believes there could be confusion and disruption stemming from devices receiving approval without a clear path for appropriate coding and payment.

Published on: September 30, 2021

HHS Expands Settlement Conference Facilitation

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) recently announced the annual expansion of the Settlement Conference Facilitation (SCF) program. SCF is an alternate dispute resolution mechanism used to resolve Medicare claims appeals. However, because SCF is meant to help reduce the appeal backlog, only appeals filed before a certain date are eligible. With the latest expansion, appeals involving requests for Administrative Law Judge (ALJ) hearing or Medicare Appeal Council review filed on or before June 30, 2021 are now eligible for SCF.

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 for an available ALJ to hear the appeal, which can take three to five years, at which point the only prior review of a contractor’s decisions has been done by other contractors. This has 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. In response to this, HHS is now under court order to reduce this backlog of cases.

Published on: September 20, 2021

HHS Announces Another $25.5 Billion in COVID-19 Provider Funding, Grace Period for Provider Relief Fund

by Wachler & Associates, P.C.

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.

Published on: September 10, 2021

CMS Proposes to Expand Its Authority to Revoke Medicare Billing Privileges

by Wachler & Associates, P.C.

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.

Published on: September 7, 2021

Implications if Medicare Expands to Cover Dental Services

by Wachler & Associates, P.C.

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.

Published on: August 30, 2021

Biden Administration Proposes to Rescind “Most Favored Nation” Drug Rule

by Wachler & Associates, P.C.

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 wapc@wachler.com.

Published on: August 19, 2021

CMS Relaunches TPE Audit Program After Public Health Emergency Pause

by Wachler & Associates, P.C.

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.

Published on: August 5, 2021

CMS FY 2022 Budget Justification Requests Increased Funding for Medical Review

by Wachler & Associates, P.C.

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.

Published on: July 26, 2021

CMS Proposes to Keep Medicare Coverage for Some Audio-Only Services

by Wachler & Associates, P.C.

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.

Published on: July 20, 2021

Deadlines Approaching to Report Cardiac Device Overpayments

by Wachler & Associates, P.C.

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.