Articles Posted in Medicare

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In a recent news release, the Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) announced revisions to the Special Focus Facility Program (SFFP), which addresses poor nursing home performance, that will have the effect of increased scrutiny of these troubled facilities. According to CMS, nursing homes that consistently perform poorly in comparison to their peers will be required to comply with stricter standards and demonstrate systemic quality improvements in order to avoid enforcement actions, including exclusion from the Medicare and Medicaid programs.

The increased scrutiny stems from the Biden Administration’s recently announced plan for reforms to nursing home conditions and complicated ownership structures that HHS contends impede oversight of skilled nursing facilities. The focus of the reforms is to increase nursing home quality and safety by requiring minimum staffing levels, enhanced infection control measures, and oversight of nursing homes owned by for-profit companies, among other policies. There are currently 88 nursing homes with persistent records of noncompliance participating in the SFFP in 2022, representing about 0.5% of all nursing homes. In order to complete the program, nursing homes must pass two consecutive inspections that occur approximately every six months. Under the revised program, nursing homes will not be allowed to exit the program if inspections reveal more than a certain number of deficiencies, or if facilities have not significantly improved.

CMS recommends that skilled nursing facilities work with quality improvement organizations and external consultants to implement evidence-based interventions and make meaningful changes to staffing and leadership. State Survey Agencies are also advised to take nursing homes’ staffing levels into consideration, in addition to their compliance histories, when selecting candidates for the SFFP. If nursing homes demonstrate continued noncompliance with the quality rules or fail to demonstrate efforts to improve, CMS has indicated that it will impose severe enforcement sanctions, such as discretionary denials of payment for new admissions, civil monetary penalties, or directed plans of correction. Importantly, any facilities cited for “immediate jeopardy” deficiencies in two surveys while participating in the SFFP may be terminated from the Medicare and Medicaid programs. Lastly, CMS is extending the monitoring period for possible enforcement actions against nursing homes that have successfully completed the SFFP if their performances decline after they are no longer subject to the extra oversight. Nursing homes participating in the SFFP should be aware of the heightened scrutiny that they will be subject to and take actions to ensure compliance with the quality standards, staffing requirements, and other key focus areas under the revised program.

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On October 7, 2022, the Centers for Medicare & Medicaid Services (CMS) published a request for information (RFI) notice seeking public comment on a proposed national healthcare provider directory. CMS states in the RFI that the directory would be a “centralized data hub” for healthcare provider, facility, and entity directory information across the country. Under the proposal, CMS would establish and maintain the national directory and validate the data against primary sources. The national directory would also be application programming interface (API)-enabled.

While patients already use provider directories to locate healthcare providers and learn about the services they offer, these directors are typically maintained by individual payers and may not be the most accurate source of provider information. Moreover, reporting contact and services data to payers places a significant administrative burden on providers. In the RFI, CMS cites a 2019 study conducted by the Council for Affordable Quality Healthcare (CAQH), which found that physician practices collectively spend around $2.7 billion annually on directory maintenance. Viewed differently, that figure equates to about $1,000 per month per practice, or one staff member workday per week. According to CAQH, a single streamlined platform for reporting provider directory information would save practices over $4,700 each year, or approximately $1.1 billion in collective annual savings nationwide. Although it is worth noting that payors would likely still require providers to report contact and services data to them, meaning CMS is only adding an additional administrative burden.

CMS’s proposed nationwide directory purports to streamline existing data across its system and publish easily accessible information using interoperable technology in a centralized location. According to CMS, the proposed directory would not only give patients more accurate provider information, but also improve health data exchange and care coordination between providers. A national directory also has the potential to improve public health reporting, a major challenge for the healthcare industry during the COVID-19 pandemic.

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On October 3, 2022, the US Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a report detailing OIG’s findings related to the efficacy of the Unified Program Integrity Contractor (UPIC) program. As many healthcare providers may know, UPICs are the primary program integrity contractors for the Centers for Medicare & Medicaid Services (CMS) and the only program integrity contractors with authority to review both Medicare and Medicaid claims. UPICs are tasked with investigating instances of suspected fraud, waste, and abuse in the Medicare and Medicaid programs. However, much of their work amounts to medical review and payment recovery, as their investigations rarely identify meaningful fraud, although it can cause tremendous damage to a provider when the UPIC accuses a provider of fraud

OIG conducted a qualitative study of each of the five UPICs’ 2019 activities, including surveying each UPIC to find out about the challenges they faced in performing program integrity activities. OIG also solicited input from CMS about the effects of the unification of Medicare and Medicaid program integrity activities, how CMS measures the effectiveness of UPICs, and any challenges UPICs face in conducting their work. Notably, OIG did not assess whether UPICs were appropriately targeting providers with audits and suspensions, or whether UPIC findings were upheld on review by other contractors or Administrative Law Judges in the administrative appeals process. Rather, OIG’s report seems to imply that more auditing is always better, regardless of its efficacy or its impact on healthcare providers.

As a result of the study, OIG found that UPICs conducted substantially more Medicare program integrity work compared to Medicaid work. The study revealed that UPICs conducted only minimal activities related to Medicaid managed care, even though most Medicaid enrollees receive services through managed care. OIG further noted that UPICs reported no data analysis projects completed or vulnerabilities identified related to Medicaid managed care in 2019. Overall, UPICs conducted disproportionately fewer Medicaid activities compared to the levels of funding they receive from CMS for Medicaid program integrity activities.

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One of the most destructive types of audits that a Medicare provider can suffer from a Medicare contractor is a UPIC audit. A UPIC (Unified Program Integrity Contractor) is a type of Medicare contractor that combines several program integrity functions that were previously handled by different entities. The primary goal of the UPICs is to identify potential fraud; however, they are often quick to accuse providers of significant fraud and bring devastating consequences to providers without giving the providers an opportunity to respond. Even a UPIC audit for a relatively small number of claims or a relatively small dollar value should be treated as a significant investigation.

A UPIC may initiate an investigation based on several types of leads. The UPICs are authorized to use analysis of claims data to identify potential billing irregularities or suspected fraud, and this is the most frequent source of a UPIC investigation. This means that providers with unusual billing patters or high utilization are inherently more susceptible to UPIC investigations, even if these billing practices are for entirely legitimate reasons, such as a particular patient population. The UPICs may also receive referrals from other agencies and from outside sources, such as news media, interviews, or beneficiary complaints.

Once a UPIC initiates an investigation, it has many tools at its disposal. It may utilize records requests, onsite reviews at the place of business of the provider or supplier, or interviews of employees of the provider or supplier. Often UPIC audits begin as small probe audits, possible only a dozen claims valued at a few thousand dollars. These small probe audits may at first appear to be not worth defending or appealing. However, UPICs often use the results of these small probe audits to jump to the conclusion that the provider is committing fraud and, seemingly out of nowhere, suspend the provider’s Medicare payments. The UPIC may also persuade the Centers for Medicare & Medicaid Services (CMS) to revoke the provider’s Medicare billing privileges because the UPIC’s probe audits have made it appear as though the provider has a pattern of submitting claims that do not meet Medicare requirements. At this point, it may be too late to appeal the results of the earlier probe audits, leaving the provider in the unenviable position of defending itself when CMS thinks the results of the probe audits are set in stone.

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With low rates of Medicare reimbursement, complex and unclear regulations, tremendous administrative burden, and the often arbitrary actions of Medicare contractors, a growing number of physicians and healthcare providers may wonder if there is an alternative to participation in Medicare. There is. Some providers have the option to “opt-out” of Medicare. Opting-out of Medicare refers to the process by which a healthcare practitioner foregoes any right to bill Medicare and collect reimbursement from Medicare. Instead, the practitioner is reimbursed directly by his or her patients. Opting-out of Medicare can be part of a larger concierge medicine model. Not every provider type is eligible to opt-out of Medicare, but for those who may opt-out, it can be an intriguing option.

Unfortunately, opting-out of Medicare cannot be accomplished by simply not enrolling in the Medicare program. Because the entitlement to Medicare services technically belongs to the beneficiary, a provider who provides Medicare-covered services to Medicare beneficiaries generally must either bill Medicare for the services or opt-out. The provider generally cannot bill the beneficiary (other than co-pays, etc.) for Medicare-covered services because, among other reasons, the beneficiary may then be entitled to bill Medicare themselves for the covered services. These rules generally do not apply to services that are not covered by Medicare.

Therefore, a healthcare practitioner who intends to bill Medicare beneficiaries directly for services that would otherwise be covered by Medicare must undergo the formal process of opting-out of Medicare. First, the practitioner must submit a set of documents, including an affidavit, to the Medicare Administrative Contractors (MACs) in any jurisdiction in which they would otherwise submit Medicare claims. Second, the practitioner must enter into a “private contract” with every Medicare beneficiary to whom he or she provides Medicare-covered services. These “private contracts” are required to contain several specific terms in order to be effective. Once a provider opts-out, the opt-out is generally effective for two years. While a practitioner must opt-out for all patients and all services, opting-out generally does not affect a practitioner’s ability to order other items or services that are covered by Medicare or the practitioner’s group’s ability to bill Medicare.

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The Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced several new changes in its Work Plan update in August 2022. The OIG Work Plan forecasts the projects that OIG plans to implement over the foreseeable future. These projects usually include OIG audits and evaluations. Below are the highlights from the Work Plan update of which providers and suppliers should take notice.

First, OIG will perform an audit of selected HHS divisions to evaluate the effectiveness of security controls to determine whether service providers are identifying and reporting cybersecurity events. The audit seeks to ensure HHS’s compliance with the Federal Information Security Management Act and OMB Circular A-130 which requires Federal agencies to ensure that service providers meet the security requirements for transmitting, processing, or storing Federal information.

Second, OIG will perform a nationwide review of skilled nursing facility (SNF) costs for services, facilities, and supplies furnished by entities with common ownership with the SNF. Medicare regulations require that the cost of services, facilities, and supplies furnished to a provider by an organization under common ownership or control be the same or lower than the cost of comparable services and supplies purchased elsewhere. Accordingly, the review will compare these costs to determine whether skilled nursing facilities are reporting these related-party costs in accordance with the Medicare regulations. The review will also consider how a skilled nursing facility’s allocation of Medicare funds can impact beneficiary care.

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When a Medicare contractor denies a claim, the provider generally has a right to a lengthy appeal process, which is both complex and contains many strict deadlines. In some circumstances, claims can take years to fully progress through the appeals process. However, some limited cases may be eligible for settlement depending on the circumstances at hand.

The federal agency that oversees Medicare, the Centers for Medicare & Medicaid Services (CMS), performs few audits itself. In most cases, they outsource these audits to a series of independent contractors, such as Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SRMC). Most 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 has options when responding to Medicare audits from the very beginning. Sometimes providers receive Additional Document Requests (ADRs) from the contractor demanding information or documentation to support the claims. These requests must be reviewed carefully. However, it is important to note that they often contain generic language that makes it difficult to determine which specific documents the contractor is requesting. Once the contractor reviews the additional documentation supplied, 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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SMRC audits can be a difficult and baffling ordeal for a provider. They can last for months or years with very little information provided to the healthcare provider but can have devasting impacts. The Supplemental Medical Review Contractor, or SMRC, is a contractor with the Centers for Medicare & Medicaid Services (CMS) that 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 and remains the current SMRC.  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 SMRC’s audit areas are chosen by CMS and are referred to as “projects.” 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. Not every SMRC project is created equal. Some SMRC projects are intended as program integrity audits to identify suspected fraud or are intended as medical necessity reviews to identify overpayments, while other SMRC projects are simply data collection and analysis meant to inform future CMS policy. Where a provider is subject to a SMRC audit, knowing which project the audit falls under can provide valuable information.

Where CMS assigns a project to a SMRC, the SMRC first sends targeted providers an Additional Documentation Request (ADR) letter, usually  in a distinctive green envelope with the Noridian SMRC logo. Upon receipt of the requested medical records and/or supporting documents, the SMRC conducts the review based on the analysis of national claims data, statutory and regulatory coverage, and coding, payment, and billing requirements. Once the review is complete, the provider should receive a Review Results Letter. A provider may sometimes be given 14 days to request a voluntary Discussion and Education session with the SMRC. The provider generally also can appeal the SMRC’s findings directly to the SMRC. Where a SMRC denies an appeal, it may refer the matter to the local MAC to collect the alleged overpayment, which is generally subject to the Medicare claims appeal process. If the SMRC suspects fraud, it may also refer the matter to CMS or other government agencies.

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Healthcare providers are often required to collect co-pays, deductibles, or coinsurance payments from patients. These requirements may be imposed by participation agreements with commercial insurers or, in the case of Medicare and Medicaid, federal and state laws or regulations. It can be tempting to waive copays and other amounts due from patients because it improves patient relationships and may lead to more business. However, waiving copays and the like can implicate beneficiary inducement laws, the Anti-Kickback Statute, the Civil Monetary Penalties Statute, the False Claims Act, and other laws.

While there are some legitimate reasons to waive copays, in most cases, the provider must attempt to collect from the patients. Where a provider attempts to collect copays and other amounts from patients but is unsuccessful and there is no other legitimate reason to waive the copay, what collection efforts are providers required to use to comply with the laws listed above and avoid accusations of waiving copays?

In general, a healthcare provider must use “reasonable collection efforts” to collect copays and the like from patients. Some actions that a provider may consider are: sending multiple bills or invoices to the patient, collections or demand letters, phone calls to or personal contact with the patient, use of a collections agency, threats of litigation, drafts of litigation documents to send to the patient, and initiation of litigation against the patient. Some of these measures are draconian and may well cost more than the copay to be collected. While the size of the amount to be collected can be a factor in determining what collection efforts are “reasonable,” in nearly every case, the provider must make some attempt to collect. That is, a provider generally cannot refuse collection efforts simply because the amount due is small.  Further, a provider’s collection policy generally must be the same for all patients, regardless of the payor.

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CMS uses a tool known as Comparative Billing Reports, or CBR, to analyze a provider’s billing or prescribing patterns. After collecting each provider’s patterns in a certain Medicare Fee-for-Service area, these patterns are then compared to those of peers in the same state, in the same specialty, and across the country. Accumulating these patterns allows CMS to estimate average billing and prescribing patterns are for providers. It also helps determine which providers may be outliers. These outliers are often informed of their status in order to encourage adjustments in billing practices if necessary. Sometimes, CMS develops “Special Edition” CBRs which give more extensive resources to a particular subset and could include up to 4 letters. Though the CBR letters generally require no response from the provider, it is important to take the information into consideration to avoid complications or possible audits in the future. Under some circumstances, a provider may also choose to follow-up or refute any inaccurate information in a CBR letter.

Recently, CMS released a new CBR letter to critical care providers who were considered after the latest CBR data accumulation. This data came from all dates of service during the year 2021 and the trend was established by looking at cumulative data from 2019 to 2021. According to the letter, the criteria for receiving the latest CBR are that a provider:

    • 1. Is significantly higher compared to either state or national averages in any of the three metrics (i.e., greater than or equal to the 90th percentile), and
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