Medicare

Published on: December 5, 2011

CMS AB Demonstration Program: Hospitals’ Participation in December 8 Open Door Forum

As discussed in earlier posts, hospitals that participate in CMS’ upcoming Part A to Part B Rebilling Demonstration Program will be required to waive their right to appeal claims denied for lack of medical necessity for services provided in the inpatient setting. CMS’ rationale for this “all or nothing” approach is the concern that a participating hospital could appeal the denial of the Part A inpatient claim and at the same time resubmit the claim for Part B reimbursement. As any participating provider that intentionally engages in that type of billing practice would expose themselves to liability for double-billing, it is unrealistic for CMS to anticipate that participation in the demonstration program would encourage this behavior. During the RAC demonstration programs, in which hospitals were afforded the flexibility denied to them for the AB demonstration program, there was no evidence that hospitals tried to “game” the system.

Further, despite CMS’ overreaching concerns that hospitals will take advantage of a more flexible demonstration program that allowed case-by-case appeals, the agency’s concerns do not extend to the likelihood that RACs will take advantage of the demonstration program’s structure. CMS claims that the RACs will not know the hospitals that participate in the demonstration program, and therefore will not have an incentive to deny more claims from those hospitals knowing that they are immune from appeals. However, RACs will very likely know the participants because those hospitals will not submit appeals for the denied inpatient claims and the RACs will receive smaller contingency fees for those denied claims.

We strongly urge hospitals to participate in the CMS’ December 8 special Open Door Forum (details below). During the Open Door Forum, hospitals should express their dismay with the current structure of the demonstration program, specifically the waiver of any appeal rights for denied inpatient claims. In addition, hospitals must incorporate into their RAC appeals process the effort to obtain Part B payment for inpatient services denied as not medically necessary. Only through a concerted effort by the hospital industry will we convince CMS to modify the current rebilling system.

Published on: November 30, 2011

Open Door Forum for Part A to Part B Rebilling Demonstration Program

by Wachler & Associates, P.C.

This afternoon, CMS conducted the first special Open Door Forum (ODF) on the Part A to Part B Rebilling Demonstration Program. The ODF involved a brief overview of the Demonstration Program followed by many questions by the ODF participants. Although the ODF provided some clarification on the Demonstration Program, CMS’ answers also gave rise to many concerns regarding the fairness of the Demonstration Program.

One of the most serious concerns is a Demonstration Program participant’s right to appeal a denial of an inpatient claim. According to CMS’ answers from callers’ questions, participation in the Demonstration Program is “all-or-nothing”. This means that if a participant’s claim is denied for lack of medical necessity for services provided in the inpatient setting, the participant’s only option is to resubmit the claim for outpatient reimbursement. Even if the participant disagrees with the contractor’s denial of the inpatient claim, the participant will not be allowed to appeal the inpatient denial. Clearly this limitation has very serious consequences for hospitals because it requires participants to waive all of their due process rights for these claims. First, between the RAC Demonstration Program and Permanent Program we have had success in overturning 90% of short-stay inpatient claims denied for services provided in the wrong setting. Accordingly, requiring a hospital to waive the right to challenge these denials appears to be a high price to pay to participate in the AB Demonstration Program. The limitation highlights the inequity of a system where a provider must choose between either appealing the denial of an inpatient claim, but being unable to rebill the claim for outpatient reimbursement or rebilling the claim for 90% reimbursement of the outpatient claim, but waiving all due process rights.

In a program where RACs are paid through a contingency fee based upon the dollar amount of claims they deny, it is concerning that RACs now have an incentive and unbridled discretion to deny inpatient claims where there will be no right to appeal. During the ODF, CMS insisted that the RACs will not be informed of the hospitals participating in the demonstration program and thus, will not have an incentive to deny more inpatient claims. However, RACs will likely be able to deduce the participants because the participants will not appeal any inpatient claim denials and RACs contingency fee for participants will be different from non-participants. Specifically the contingency fees that RACs will receive as a result of denials from participants will not be the contingency fee of the full inpatient claim or the outpatient claim, but of the difference between the full inpatient claim and outpatient claim. This differential will be unique to program participants. Therefore, it is likely that RACs will know the participants of the Demonstration Program and could target them because of the participants’ inability to appeal denied inpatient claims.

Published on: November 21, 2011

CMS Announces Special Open Door Forum for Part A to Part B Rebilling Demonstration Program

by Wachler & Associates, P.C.

On Friday, November 18, CMS released a Q&A about the Part A to Part B Rebilling Demonstration Program. Although the Q&A does not answer many of the questions that arose from the Fact Sheet released on November 15, it does give insight into when those answers could be provided. CMS will hold two special Open Door Forums, one on November 30, 2011 and another on December 8, 2011. Both will be conducted at 2pm EST.

In addition, the Q&A announced that enrollment for the Demonstration Program will begin on December 12, 2011 at 2pm EST and some hospital facilities will be ineligible to participate in the program. For instance, facilities that receive periodic interim payments from CMS and do not participate in Medicare, will not be able to participate. In addition, psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System, Inpatient Rehabilitation Facilities, Long-Term Care Hospitals, cancer hospitals, Critical Access Hospitals, and children’s hospitals all are ineligible to participate.

Finally, the Q&A provided an email for additional questions regarding the Demonstration Program to be sent to CMS. This email is ABRebillingDemo@cms.hhs.gov.

Published on: October 24, 2011

20 Notable Aspects of the Final ACO Rule

by Wachler & Associates, P.C.

On October 20, 2011, CMS released the much awaited final rule for implementation of the Medicare Shared Savings Program for providers and suppliers participating in Accountable Care Organizations (ACOs). The following are 20 notable aspects of the final rule:

•1. While the proposed rule would have required all ACOs to share risk of loss in the final year of the three year participation period, the final rule created an alternative for a “shared savings only” track (one-sided model) that will not require any sharing of losses. The final rule also retains the proposed two-sided model that will allow ACOs to share in an increased portion of savings, so long as the ACO also agrees to share in any losses to the program.

•2. The final rule will allow ACOs beginning in April 1, 2012 or July 1, 2012 to have a longer first performance year (21 months or 18 months respectively) and an option to receive an interim payment calculation following the first 12 months of participation. One-sided ACOs receiving an interim payment will be required to demonstrate a self-executing repayment mechanism similar to that which the two-sided ACOs must demonstrate.

Published on: September 27, 2011

DMEPOS Competitive Bidding Round 2 Update

by Wachler & Associates, P.C.

The Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Process was mandated by Congress through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which replaced the current fee schedule payment procedure for DMEPOS items with a competitive bidding process. The purpose of the statute is to set DMEPOS payment amounts in a more effective manner, which will result in saving the Medicare program money and reducing beneficiary out-of-pocket expenses.

Bids closed for Round 1 of the DMEPOS competitive bidding program on December 21, 2009. In November of 2010 CMS announced the winners of Round 1 and in January of this year implemented the contracts.

This past summer, the Centers for Medicare and Medicaid Services (CMS) began its pre-bidding supplier awareness program. For this fall, CMS will announce the bidding schedule, begin the bidder education program, and commence the bidder registration period to obtain user ID and passwords. The bidding will begin in winter 2012.

Published on: September 21, 2011

President Obama Plans to Reform Medicare and Medicaid to Further Aid the Deficit Reduction

by Wachler & Associates, P.C.

On Monday, President Barack Obama gave a speech on the issues of economic growth and deficit reduction. The President released his plan on how to pay for the American Jobs Act that he recently sent to Congress and announced methods to reduce the country’s debt over time.

The plan included structural reforms to reduce the costs of health care in the Medicare and Medicaid programs. One part of the plan that will impact providers is an increased focus on decreasing wasteful subsidies and erroneous payments in the Medicare and Medicaid programs. The President’s plan specifically concentrates on reducing overpayments in Medicare and making Medicaid more efficient and accountable. Finally the President made clear that although Medicare and Medicaid will be reformed, the government “will not abandon the fundamental commitment that this country has kept for generations.”

If you have any questions relating to Medicare or Medicaid audits, including ZPICs, RACs, MACs or MICs, or any other health law questions, please contact a Wachler & Associates attorney at 248-544-0888.

Published on: September 16, 2011

OIG Responds to the Senate Finance Committee’s Concerns Over PODs

by Wachler & Associates, P.C.

On September 13, 2011, the Office of Inspector General (OIG) responded to a letter from the Senate Finance Committee which addressed its concerns about the recent increase of physician-owned distributorships (PODs) and the potential adverse effects that these entities could have on the Medicare program and its beneficiaries. The Committee asked the OIG to assess the adequacy of the adequacy of the guidance that the OIG has issued in regards to the legality of PODs under the Federal Anti-Kickback Statute and whether further guidance or action is required to address the growing trend of these entities.

OIG will be initiating a review of PODs that will seek to determine the extent to which PODs provide spinal implants purchased by hospitals. This study will be nationally representative of hospitals that bill Medicare for these services, and OIG will review information from hospitals to determine the prevalence of PODs, what services PODs offer to hospitals, and whether PODs save hospitals money when acquiring spinal implants. In addition, OIG will look at Medicare claims data to analyze whether the identified PODs are linked with a high use of spinal implants. OIG will use the information from this study to determine whether or not to issue further guidance relating to PODs.

Current guidance from OIG establishes that the opportunity for the referring physician to earn a profit may be deemed illegal under the Federal Anti-Kickback Statute. However, OIG makes clear in the letter to the Committee that the Anti-Kickback Statute is an intent-based statute and different POD models raise different levels of legal concern. Therefore, OIG emphasizes the view that several of the legal questions raised by the Committee depend on the specific facts of the case (e.g. the terms under which a physician-owner may invest in the entity and the return on the physician’s investment).

Published on: September 12, 2011

Medicare Strike Force Operation Results in Largest Fraudulent Medicare Billing Takedown in Strike Force History

by Wachler & Associates, P.C.

On September 7, 2011, Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced that a Medicare Strike Force operation resulted in a nationwide takedown involving the highest amount of fraudulent Medicare billings in a single Medicare Strike Force takedown. The takedown was operated across eight cities and led to 91 defendants, many of which are health care professionals, being charged for their participation in Medicare fraud schemes which accumulated roughly $295 million in fraudulent billings. Some of the indictments are described below:

45 defendants in Miami were charged for their participation in Medicare fraud schemes which totaled $159 million in fraudulent billings for home health care, mental health services, DME, physical therapy and HIV infusion. One of these schemes allegedly involved recruiters being paid by a mental health care facility to recruit beneficiaries to the center who were ineligible to receive such services.
Two defendants in Houston were charged with fraudulently billing $62 million for home health care services and DME. The scheme allegedly involved one defendant who sold beneficiary information to 100 different home health care agencies in the Houston area who then used that information to fraudulently bill Medicare for services that were either medically unnecessary or never provided.

Published on: September 2, 2011

Medicare Fraud Indictments in Detroit

by Wachler & Associates, P.C.

Nearly a month after the federal government handed down indictments to defendants involved in one of Michigan’s largest prescription drug schemes, the federal government indicted 18 more people allegedly involved in Medicare fraud schemes. According to a Detroit Free Press article, the U.S. District Court indicted people for their alleged involvement in a number of different health care fraud operations. One of the charges was handed down to a Troy doctor who allegedly billed for home health services when she was out of the country, as well as for certain services that were physically unable to be completed in a single day. Another indictment was handed down to an owner of a Detroit company who is being accused of billing Medicare for psychotherapy for numerous beneficiaries who were no longer alive. Combined, all 18 defendants are accused of billing Medicare for $28 million.

The Medicare Fraud Task Force has no charged 138 people in Detroit with allegations of fraudulent billings totaling nearly $150 million. According to Maureen Reddy, a Detroit-based FBI special agent, home health fraud is currently the largest type of fraud in the Detroit area. The recent indictments also establish that Medicare fraud investigations are also expanding to other areas of health care services, such as psychotherapy.

These indictments are another example of the government’s focus on the Detroit area in Medicare and Medicaid investigations. For more information on Medicare Fraud defense, or assistance with interpreting and understanding Medicare and Medicaid regulations, including the anti-kickback statute, please contact a Wachler & Associates attorney at 248-544-0888.

Published on: August 24, 2011

HHS Introduces the Bundled Payments Initiative to Help Providers Coordinate Patient Care

by Wachler & Associates, P.C.

The U.S. Department of Health and Human Services (HHS) recently initiated the Bundled Payments for Care Improvement initiative (Bundled Payments initiative) in an effort to promote better patient health, better care and lower costs. Rather than paying for services separately, the Bundled Payment initiative will bundle payments for services delivered throughout an entire episode of care. Currently, health care providers bill Medicare separately for the services that a beneficiary receives. However, this new initiative seeks to bundle all of the services that a patient receives during a single hospital stay or during recovery from that stay, giving providers greater incentive to better coordinate care with other providers who treat that patient. The Centers for Medicare and Medicaid Services (CMS) believe that this enhanced coordination will reduce unnecessary duplication of services, reduce medical errors, improve patient health, and lower costs.

The new Center for Medicare and Medicaid Innovation recently released its Request for Applications which outlines four approaches to bundled payments. Providers will be afforded flexibility in determining which services will be bundled together, allowing providers of different sizes to decide which bundle payment schemes work best for them. This flexibility is expected to quicken providers’ desire to participate in the Bundled Payments initiative.

According to HHS, the initiative is based on research and successful demonstration projects, such as a Medicare heart bypass surgery demonstration that saved the program $42.3 million and saved patients $7.9 million in coinsurance. The Bundled Payments initiative is viewed as being a step forward in creating the kind of relationship that patients expect their providers to have with each other in an effort to promote better care and payment efficiency.