Articles Posted in Medicare

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On March 22, 2013, the Centers for Medicare and Medicaid Services (CMS) released Change Request 8185 to implement CMS Ruling (CMS-1455-R) and provide Medicare contractors with additional guidance for accepting claims rebilled from Part A to Part B. The CMS Ruling, which was released on March 13, 2013, permits hospital providers to rebill under Part B for Part A inpatient claims denied as not reasonable and necessary.

The Change Request reiterates the numerous revisions to the Part B payment policy when a Part A claim is denied as not reasonable and necessary. While the CMS Ruling remains in effect, the Change Requests instructs hospitals to submit Part B inpatient claims with the condition code “W2.” By attaching the “W2” condition code, the hospital is acknowledging that the Part B claim is a duplicate of the Part A claim that was previously denied, no payment shall be made for items or services included on the Part A claim, and the beneficiary will be refunded for any amounts collected from the beneficiary with respect to the Part A claim. Furthermore, by including the “W2” condition code, the hospital attests that no appeals are pending with respect to the previously submitted Part A claim and that any previous appeal of the Part A claim has become final, binding or dismissed, and no further appeal will be filed on the Part A claim. Any Part B inpatient claim submitted under the CMS Ruling that does not include condition code “W2” will be rejected by the contractor. The effective date of the Change Request mirrors that of the CMS Ruling, which took immediate effect on March 13, 2013. However, the implementation date of the Change request is July 1, 2013. Despite the delayed implementation date of the Change Request, hospitals may submit their Part B claims prior to the implementation date, according to CMS.

Wachler & Associates will continue to monitor the developments of CMS’s revised policy on Part B billing following the denial of a Part A inpatient hospital claim. If you have any questions regarding these developments or questions regarding the Medicare appeals process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

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The Office of Medicare Hearings and Appeals (OMHA) has released its instructions and recommended request form for withdrawing a Part A appeal pursuant to the Center for Medicare & Medicaid Services (CMS) Ruling 1455-R. On March 13, 2013, CMS issued Ruling 1455-R, which allows hospitals to bill for certain services under Part B when a Part A inpatient claim was denied as not reasonable and necessary. The Ruling remains in effect until the proposed rule becomes finalized. Under the Ruling, a hospital must withdraw its Part A appeal in order to submit claims for Part B reimbursement.

Wachler & Associates will continue to monitor the developments of CMS’s revised policy on Part B billing following the denial of a Part A inpatient hospital claim. If you have any questions regarding these developments or questions regarding the RAC appeals process, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

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Medicare administrative contractors (MACs) are expected to begin recouping money for annual wellness visits (AWV) erroneously paid to both facilities and physicians for the same visit.

For the past two years, CMS has erroneously allowed an AWV on a professional and institutional claim for the same patient on the same day. In some cases, this resulted in double billing to CMS. The erroneous collecting began with dates of service processed on or after April 4, 2011, and could continue through March 31, 2013 because the new policy will not take effect until April 1, 2013. CMS will recoup the double payments made from January 1, 2011 through March 31, 2013 from whoever billed the second claim. The new policy, Change Request 8107, will only allow payment for the professional service, regardless of whether it is paid on a professional or institutional claim.

If you need assistance determining how this new policy may affect your practice, or if you have any other health care law questions, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888.

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On January 31, 2013, the Senate Finance Committee released a report aimed at combating waste, fraud and abuse in Medicare and Medicaid. In May of 2012, the Senate Finance Committee invited interested stakeholders to submit white papers offering recommendations and innovative solutions to improve program integrity efforts, strengthen payment reforms, and enhance fraud and abuse enforcement efforts. In response, a variety of healthcare industry experts, including Wachler & Associates, submitted nearly 2,000 pages of input and recommendations. Wachler & Associates submitted instances of egregious contractor errors, including improper recoupment of alleged overpayments, contractors sending appeals correspondence to the wrong addresses and improper referral of alleged overpayments to the Department of Treasury. Based on the Finance Committee’s review, the white papers discussed five broad themes: improper payments, beneficiary protection, audit burden, data management, and enforcement.

Improper payment issues were discussed by 44 percent of health insurers and providers who submitted white papers. Solutions regarding improper payment issues included allowing reimbursement at the outpatient service level if inpatient status is denied or for certain types of complex cases; and clarifying the guidance on or abolishing outpatient observation status. Beneficiary protection was discussed by 57 percent of insurers and providers, many of whom discussed the use of outpatient observation status by hospitals to avoid recovery audit contractor’s (RAC) scrutiny of claims, as well as provider and patient frustration with payer documentation requirements, which may lead them to forfeit certain courses of treatment or care. Furthermore, 60 percent of providers and insurers discussed audit burden issues, and were specifically concerned with the number of audit entities involved, the volume and complexity of payment rules and regulations, whether payment rules are applied consistently and whether audit entities are inappropriately overturning medical necessity decisions, audit entities interactions with providers during the audit process, difficulty communicating with audit entities during the audit process, and financial burden of payment suspensions and the impact on business.

Ninety-four percent of white papers included recommendations to combat waste, fraud, and abuse. Some of the recommendations included were:

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The Health and Human Services Department (HHS) and the Department of Justice (DOJ) recovered a record $4.2 billion from healthcare fraud investigations last year, according to their jointly issued Health Care Fraud and Abuse Control Program Annual Report for Fiscal Year 2012. DOJ and HHS reported that it deposited the $4.2 billion to U.S. Department of Treasury and Centers for Medicare & Medicaid Services (CMS) accounts. On average over the last three years, the federal government has recovered $7.90 for every dollar it spends investigating healthcare fraud and abuse. This is the highest three-year average return on investment in the 16-year history of the Health Care Fraud and Abuse (HCFAC) Program.

The bulk of these recoveries, it appears, are from pharmaceutical and device manufacturers and wholesalers. In July 2012, GlaxoSmithKline paid over $3 billion in a settlement deal to resolve its criminal and civil liability arising from the company’s failure to report certain safety data, its alleged false price reporting practices, and its unlawful promotion of certain prescription drugs. In November 2011, Merck Sharp & Dohme paid $950 million to resolve its criminal and civil liabilities related to its promotion and marketing of the painkiller Vioxx. In April 2012, McKesson Corporation paid $190 million to resolve claims that it violated the FCA by reporting inflated pricing information for a large number of prescription drugs, causing Medicaid to overpay for those drugs.

The DOJ also reported the number of its enforcement actions. In 2012, the DOJ opened 1,131 new criminal and 885 new civil healthcare fraud investigations. The DOJ also reported that 826 criminal defendants were convicted of healthcare fraud-related crimes during the FY 2012. Furthermore, the Office of Inspector General (OIG) excluded 3,131 individuals and entities based on criminal convictions for crimes related to Medicare and Medicaid, patient abuse or neglect, and as a result of licensure revocations.

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Senators Charles Schumer (D- NY) and Sherrod Brown (D – OH) are co-sponsors of the “Improving Access to Medicare Coverage Act of 2013 bill that would count observation stays toward the three-day minimum required for Medicare to cover the costs of follow up care after a serious hospitalization.

In recent years, the Centers for Medicare & Medicaid Services (CMS) has expanded its auditing programs in order to control the cost of Medicare and to prevent fraud and abuse. The auditing program scrutinizes claims for care that was not medically necessary and reasonable. If a Medicare contractor concludes that a beneficiary was allegedly improperly admitted as an inpatient, the contractor will request that the hospital return the identified overpayment. Although hospitals may appeal to challenge a Medicare contractor’s conclusion that an inpatient admission was not medically necessary and reasonable, it is evident that the audits have affected hospitals’ inpatient admission rates. Specifically, the unfortunate consequence of Medicare audit contractors’ aggressiveness is some hospitals may be motivated to place patients in observation status to avoid auditors’ scrutiny and potential financial penalties. An indication that this consequence is being realized is that the number and length of observation stays have skyrocketed. A study by Brown University reports a 34% increase in observation stays from 2007-2009. Currently, in order to receive rehabilitation or in home nursing care after a hospital stay, a Medicare patient must have a three-day inpatient hospital stay. However, hundreds of thousands of seniors are being denied Medicare coverage for therapy each year because they are admitted to the hospital under observation status instead of inpatient status.

Senator Schumer claims that correcting this “observation stay loophole” will save seniors money and will allow hospitals to provide better care for patients. CMS would have to cover the additional cost of follow up services for patients who have had a three-day stay in observation status. In the midst of the national budget debate, it will be interesting to see if the Improving Access to Medicare Coverage Act of 2013 will get any traction in Congress. In 2011 a similar act was introduced in both houses of Congress, but did not go anywhere.

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Recently, the Office of Inspector General (OIG) released a report focusing on various areas of concerns pertaining to Medicare appeals at the Administrative Law Judge (ALJ) level. In 2005, the responsibility for conducting ALJ appeals was transferred from the Social Security Administration to the Department of Health and Human Services (HHS). Upon this transfer, HHS established the Office of Medicare Hearings and Appeals (OMHA) which formed a group of ALJs committed to deciding Medicare appeals. In addition, ALJs were required to follow new regulations that addressed the application of Medicare policies, acceptance of new evidence, and the participation of the Centers for Medicare and Medicaid Services (CMS) in the appeals. In its report, the OIG assessed the impact of these changes on ALJ appeals by gathering and analyzing appeals data from fiscal year (FY) 2010.

The report contains several findings in which the OIG determined to be significant. For instance, the OIG found that 85 percent of all appeals decided by ALJs in FY 2010 were filed by providers, compared to 11 percent filed by beneficiaries and 3 percent filed by State Medicaid agencies. Moreover, the OIG found that a small subset of these providers were frequent filers, accounting for nearly one-third of all appeals.

The OIG also found that ALJs reversed prior-level appeals and granted fully favorable decisions to appellants 56 percent of the time. Meanwhile, Qualified Independent Contractors (QICs) decided fully in favor of appellants in only 20 percent of appeals. The OIG determined that these differences in fully favorable decisions were due to a number of key factors. One factor was the tendency of ALJs to interpret Medicare policies less strictly than QICs, finding that ALJs often granted fully favorable decisions when the intent of a Medicare policy was met, rather than the strict letter of the policy, whereas QICs strived to follow Medicare policies more strictly. Another reason stated in the OIG’s report for the favorable outcome disparity was due to the difference in the degree of specialization in Medicare program areas between ALJs and QICs. Each of the QICs specialize in a particular Medicare program area (e.g. Part A, Part B and DMEOPS appeals), while ALJs receive randomly assigned appeals that involve all Medicare program areas.

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A proposed settlement agreement was filed in the federal District Court of Vermont on October 16, 2012 which, if approved, would clarify Medicare coverage for beneficiaries of skilled nursing facilities (SNFs), home health services (HH), and outpatient therapy services (OPT).

Jimmo v Sebelius.pdf

The settlement proposal is the result of Jimmo v. Sebelius, a class action lawsuit brought by a class of Medicare beneficiaries that challenges Medicare contractors’ consistent denials of home health services provided to Medicare beneficiaries because a beneficiary’s condition failed to improve or did not have the possibility for improvement. The home health provider community and Medicare beneficiary supporters have consistently advocated that Medicare contractors’ denial of home health services based on the alleged “improvement standard” was inconsistent with Medicare policy and regulations. The class action lawsuit challenged the “improvement standard” arguing that medically necessary home health services may be provided to Medicare beneficiaries with chronic conditions because although their conditions may not “improve,” the home health services will prevent the beneficiaries from deteriorating further. The proposed settlement, filed in October, includes provisions that would require the Centers for Medicare & Medicaid Services (CMS) to not only revise portions of the Medicare Manuals to clarify that an “improvement” requirement does not exist for medically necessary home health services, but to also educate Medicare contractors and other reviewers on the appropriate standards to apply when reviewing home health services.

Among the provisions of the settlement proposal are revisions to the Medicare Benefit Policy Manual. Revisions would be made to chapters 7, 8, and 15 of the manual, and would clarify coverage standards for SNF, HH, and OPT care to cover patients that have no improvement potential, but still need maintenance care in their current state of health. The clarified standards would allow for coverage of skilled SNF, HH, and OPT services for maintenance of a patient’s condition even if there is no restoration or improvement potential. Currently, most Medicare contractors consistently deny coverage for home health services that are provided to beneficiaries with no restoration or improvement potential. In addition to the revisions to the Medicare manuals, the proposed settlement would include two review periods for the plaintiffs to review changes to the Medicare Benefit Policy Manual before any of the terms are implemented as rules in the Medicare manuals. During the two review periods, 21 and 14 days respectively, Plaintiffs would be allowed to provide comments and suggestions which the Centers for Medicare and Medicaid Services (CMS) must make a good faith effort to utilize.

CMS would also be required under the settlement agreement to engage in an educational campaign about the revisions for providers, suppliers, and contractors. The campaign would include written materials communicated via MLN Matters articles and program transmittals, as well as changes to CMS call center customer service scripts.

In addition to the educational materials, the settlement would also require CMS to hold an open door forum on the manual revisions, as well as hold two national calls. The two national calls, one for providers & suppliers and one for contractors & adjudicators, would communicate the policy clarifications related to the revisions.

The proposed settlement, if approved, would have a major impact on home health providers and Medicare beneficiaries. Consistently during the Medicare appeals process, on behalf of our clients we have advocated against Medicare contractors’ improper denial of home health services because the beneficiary did not “improve” during the certification period. Although we have experienced some success on behalf of our clients, particularly at the Administrative Law Judge hearing stage of appeal, the inconsistent standards applied by lower level Medicare contractors meant that our clients were forced to spend their time and resources appealing improper claim denials. If approved, the proposed settlement could eliminate inconsistent decisions and help facilitate home health care providers’ reimbursement for medically necessary services.
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The American Hospital Association (AHA) sent a letter to the Department of Health and Human Services Inspector General Daniel Levinson on October 24, 2012, urging the Office of Inspector General (OIG) to focus on inappropriate claim denials by Recovery Audit Contractors (RACs). The letter stresses that RAC effectiveness needs to be evaluated and integrity programs need to be streamlined.

According to the AHA’s RACTrac survey data, seventy-five percent of appealed RAC denials are reversed. The AHA asserts that because the RACs are paid on a contingency fee basis, there is a strong financial incentive to deny more claims and increase contingency payments. The implication is that RACs are not monitored effectively and are thus allowed to inappropriately deny claims to increase contingency payments. The letter explicitly states that, “[d]enying payment for an entire inpatient stay is far more lucrative for the contractors than identifying an incorrect payment amount or an unnecessary medical service.”

The AHA further urges that more provider education is needed to improve the rates of payment errors. According to the RACTrac survey, more than half of the respondents indicated that they have received no education from the Centers for Medicare and Medicaid Services (CMS) on avoiding payment errors. The letter stresses that program integrity could be strengthened with provider education.
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Representatives Sam Graves (R-MO), Todd Akin (R-MO), Billy Long (R-MO), and Adam Schiff (D-CA) introduced a bill to Congress on October 16, 2012 which proposes to reduce the Medicare contractor audit burden on hospitals. The bill, called the Medicare Audit Improvement Act of 2012 (Act), proposes changes to the ways contractors may conduct audits and imposes additional requirements on contractors.

Medicare Audit Improvement Act of 2012.pdf

Among the requirements introduced in the Act are limits to the amount of additional documentation a Medicare contractor may request for complex pre-payment audits and complex post-payment audits. The Act would limit the additional documentation requests for hospitals’ Part A claims to the lesser of 2 percent of those claims for the year, or 500 additional documentation requests during any 45 day period.

The Act also proposes penalties for contractors that fail to maintain compliance with Medicare program requirements. Specifically, the Act calls for financial penalties when a contractor fails to complete an audit determination within the applicable timeframes, and when a contractor fails to provide communication in a timely manner regarding claim denials and appeals. Further, the Act proposes to impose financial penalties for appeals which are overturned. When a party successfully appeals a claim denial, the Act would require the contractor to pay a monetary penalty to the party that prevailed in the appeal. This aspect of the Act is notable given the number of claim denials, particularly in the area of short-stay inpatient admissions, that are overturned at the ALJ level of appeal.

Medical necessity audits are also addressed by the Act. Under the Act, pre-payment and post-payment medical necessity audits would only be allowed if it addresses a widespread payment error rate. A widespread payment error rate is defined in the Act as a 40 percent payment error rate as determined by a significant sampling of claims submitted, adjusted to take into account claim denials overturned on appeal. Also, the Act calls for a restoration of due process rights under the AB Rebilling Demonstration Program. This mean that the Centers for Medicare and Medicaid Services (CMS) could not require providers in the demonstration project to waive their right to the appeals process for inpatient claim denials which, under the demonstration, could then be re-billed under Medicare Part B for 90 percent of the Part B payment.

Contractors would also be required to publish performance data under the Act. Contractors would be required to publish data each year on:

• the aggregate number of audits conducted,

• the aggregate number of denials for each audit type,

• denial rates,

• the aggregate number of appeals filed by providers,

• the aggregate rate of appeals, and

• the appeal outcomes at each stage of appeal.

Additionally, publication of performance evaluations of contractors performed by independent entities, including error rates, would be required.
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