Audit

Published on: August 31, 2012

CMS Begins Prepayment Review Demonstration Program

On August 27, 2012 the Centers for Medicare and Medicaid Services (CMS) began the Recovery Auditor Prepayment Review Demonstration Program. The program includes prepayment reviews of certain types of claims with high rates of improper payments in eleven states. The states included in the program are Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina, and Missouri. Currently, the only claim type being reviewed by the program is MS-DRG 312: Syncope and Collapse. CMS anticipates adding additional claims for review as the program gets underway.
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Published on: August 13, 2012

OIG Report Finds Overpayments for Cancer Drug Herceptin

by Wachler & Associates, P.C.

The Department of Health and Human Services Office of Inspector General (OIG) released a report on July 31, 2012 which indicates that Medicare contractors made overpayments to providers for the breast cancer drug Herceptin. In an audit of Medicare contractor Novitas Solutions, Inc.‘s (Novitas), formerly Highmark Medicare Services, activities from January 2008 through December 2010, the OIG found that incorrect payments were made to providers in four states for full multiuse vials of Herceptin. States included in the audit were Delaware, the District of Columbia, New Jersey, and Pennsylvania.

Herceptin is a breast cancer treatment drug that comes in a multiuse vial containing 44 billable units of the drug. When properly reconstituted and stored, it is viable for 28 days. The OIG audit found that in many cases the vials were used for a single administration and then discarded, with charges entered for the entire vial which included the unused discarded portions. The Medicare Claims Processing Manual states that while single use vials may be charged for any unused or discarded amounts of drugs or biologicals, multiuse vials are only subject to payment for the portions used. The OIG identified overpayments in the amount of $1,576,374.00 for unused and discarded portions of multiuse vials of Herceptin.

The OIG made the following recommendations to Novitas:

1. That Novitas recover the $1,576,374 in identified overpayments;
2. That Novitas implement a system edit that identifies for review line items for multiuse-vial drugs with units of service equivalent to one or more entire vials;
3. That Novitas use the results of the audit in provider education activities.
Novitas concurred with all three recommendations, and commented that claims history adjustments will be initiated.

The OIG audit is part of a national review of the use of Herceptin, which started with a pilot audit, the results of which were released July 10, 2012. Providers can expect a review of this drug in every state. Recovery Audit Contractors (RACs) in two regions have already put Herceptin multiuse vials on their approved issues lists. Connolly in Region C and HealthDataInsights in Region D have approved issues posted for Herceptin. Providers should anticipate that RACs in Regions A and B may follow.
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Published on: August 10, 2012

CMS to Release Comparative Billing Reports for SNF Billing Practices

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) recently announced it will release a national provider Comparative Billing Report (CBR) targeting Skilled Nursing Facility (SNF) Billing Practices. The CBRs will be released to a maximum of 5,000 providers on August 31, 2012.

The CBRs are produced by Safeguard Services under contract with CMS and will provide comparative data to help show how these individual providers compare to other providers within the same field. These comparative studies are designed to help providers review their coding and billing practices and utilization patterns, and take proactive compliance measures. Providers should view CBRs as a tool, rather than a warning, as a way to aid them in properly complying with Medicare billing rules. It is also important to understand that CBRs do not contain patient or case-specific data, but rather only summary billing information as a method of ensuring privacy.

If you are a recipient of a CBR for SNF Billing Practices, or are among the other provider types that have been identified to receive CBRs (e.g. cardiology services, ordering DME, physical therapists, chiropractors, ambulance, hospice, podiatry, and sleep studies), please contact an experienced healthcare attorney at Wachler & Associates at 248-544-0888 to discuss evaluating the CBR analysis and development of an appropriate compliance plan that will reduce audit risks.

Published on: August 8, 2012

Breakthrough in the Effort to Obtain Full Part B Reimbursement for Hospitals with Inpatient Claims Denied for Medical Necessity

by Wachler & Associates, P.C.

Since the RAC Demonstration Program launched in 2005 and the final RAC program launched in 2008, Wachler & Associates, P.C. has been instrumental in the effort to obtain full Part B outpatient reimbursement for hospitals where a short-stay inpatient claim has been denied for lack of medical necessity. Although our legal arguments for Part B payment resonated with many administrative law judges (ALJs) and ALJs would issue orders for full Part B reimbursement, we have been trying to establish a precise process to effectuate the orders for full Part B reimbursement, including observation services. Last week, after our ongoing communication with Centers for Medicare & Medicaid Services (CMS) and a Medicare Administrative Contractor, we obtained a CMS memorandum which provides a very specific avenue for hospitals to obtain full Part B reimbursement in the event that an inpatient claim is denied as not being medically necessary and reasonable and the ALJ issues an order for outpatient observation services.

The CMS memorandum dated July 13, 2012, is from a number of officials from CMS to “All Fiscal Intermediaries (FIs), Carriers, and Part A and Part B Medicare Administrative Contractors (A/B MACs)”. The memorandum explains that there have been multiple ALJ decisions where the ALJ has upheld the contractors’ denials of the inpatient services as not reasonable and necessary, but then ordered the contractor to pay the hospital full Medicare Part B outpatient reimbursement, including observation. As a result of these ALJ orders, CMS issued mandatory instructions for claims administration contractors to follow in the event that an ALJ decision instructs CMS to make payments for Medicare Part B outpatient/observation services. Most importantly, the instructions require contractors to contact the provider to obtain a Part B claim within 30 calendar days of receipt of the effectuation notice from the Administrative QIC (AdQIC). The instructions note that an order for outpatient/observation services is only required if the ALJ did not specify payment for observation level of care. In instances where the ALJ’s specified coverage of “observation level of care,” observation charges may be added to the replacement claim, as the ALJ is specifically substituting the order to admit for the order for observation. The provider must send the replacement claim to the contractor within 180 days from the date the contractor contacts the provider or else the contractor must close the case and consider effectuation completed.

While the memorandum states that the Manuals do not provide support for this position, CMS recognizes that ALJs are issuing orders for Part B observation services and are directing the claims administration contractors to effectuate an adjusted payment to the hospital in accordance with these decisions. As such, CMS issued this memorandum to clearly instruct claims administration contractors how to effectuate an ALJ’s order for payment for Part B observation services.

Wachler & Associates believes that this is an extremely important advancement in the effort to obtain accurate payment for hospitals where an inpatient short-stay claim has been denied for lack of medical necessity. Although there is still more work to be done to solidify hospitals’ ability to obtain Part B reimbursement, this memo is the most clear indication that we have received from CMS that contractors are now required to effectuate an ALJ’s order for Part B reimbursement. Persuading an ALJ to order payment for observation and all underlying outpatient care is a legal, not a clinical, argument. We have a number of legal arguments and authorities that we rely upon to persuade a judge to issue a precise order for Part B reimbursement, including observation services and underlying outpatient care.
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Published on: August 6, 2012

CMS to Hold Special Open Door Forum on RAC Audit Prepayment Review Program

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) have announced a Special Open Door Forum on the Recovery Audit Prepayment Review Demonstration Program set to begin August 27, 2012. The Special Open Door Forum will be held August 9, 2012 from 2:00-4:00pm EST. Instructions and materials can be found on the CMS website.
The Recovery Audit Prepayment Review program will allow Recovery Audit Contractors (RACs) to review claims before they are paid. The demonstration program will focus on providers in eleven states: FL, CA, MI, TX, NY, LA, IL, PA, OH, NC, and MO.
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Published on: August 3, 2012

CMS Considers Changing its Policy Regarding the Services That can be Rebilled to Medicare Part B

by Wachler & Associates, P.C.

In the recently issued Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule for 2013, CMS is soliciting comments regarding policy changes that could be made on the issue of inpatient versus outpatient admission. (To view the CMS factsheet please click here.) CMS is seeking comments on potential changes which could provide some clarity for providers and hospitals regarding inpatient versus outpatient status for purposes of Medicare payment. Comments are due by September 4, 2012.

Currently, when a patient presents to the hospital in a short-stay case, the hospital must decide whether to admit the patient as an inpatient or treat him/her as an outpatient. This decision is not always clear in light of existing Medicare guidance, and the wrong choice can have severe repercussions for the hospital. If the provider orders an inpatient stay, and later, the Recovery Audit Contract (RAC) concludes that the care should have been provided at an outpatient level, the care is deemed not medically reasonable and necessary. Under the current system for reimbursement, the hospital is not reimbursed under Part B for the outpatient services provided unless the hospital undertakes an appeal of the claim denial and is successful before an Administrative Law Judge (ALJ).

Hospitals, in an effort to mitigate costs, err on the side of outpatient care. CMS notes that this practice has doubled in the last four years and that it has a detrimental effect on Medicare beneficiaries.
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Published on: July 13, 2012

Recent RAC Activity

by Wachler & Associates, P.C.

CGI has added a new issue to its approved issues list for Region B:

Outpatient Bevacizumab (Avastin) services: Bevacizumab (Avastin) represents 10mg per unit and should be billed one (1) unit for every 10mg per patient. Claims for J9035 should be submitted so that the billed units represent the administered units, not the total number of milligrams.

HealthDataInsights has posted a new issue to its approved issues list:

Multi-use vial wastage: Herceptin (Trastuzumab). Multi-use vials are not subject to payment for discarded amounts of drug or biological. Per, the manufacturer label, J9355 Injection, Trastuzumab, 10mg (Herceptin) is only supplied in a multi-use vial. Providers should only bill the units associated with the dose administered to the patient.
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Published on: June 29, 2012

Congressional Committee Requests GAO Study of CMS Contractor Redundancies

by Wachler & Associates, P.C.

Members of the United States House Energy and Commerce Committee sent a request on June 26, 2012 to the Government Accountability Office (GAO) requesting a study of redundancy in Centers for Medicare and Medicaid Services (CMS) contractor audits. The request included four specific questions that, at a minimum, the committee wants studied:

1. What process does CMS use to determine whether the contractors’ audit criteria and methodologies are valid, clear, and consistent?

2. How does CMS coordinate among these contractors to ensure that their interactions with providers are not duplicative? Is there any evidence of providers being subjected to multiple overlapping audits on the same topic? If so, how frequently does this occur? Is there any justification for a single provider being audited by multiple contractors at the same time?

3. What are the reasons for requesting that similar information be submitted to multiple contractors? Are there steps CMS is taking to limit duplicative audits, while still ensuring contractors have the tools necessary to pursue program integrity efforts?

4. Does CMS have a strategic plan to coordinate and oversee all of its audit activities and, if so, how is that plan implemented and overseen?

The request asks that all Centers for Medicare and Medicaid Services contractors be studied, including Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), Zone Program Integrity Contractors (ZPICs), Program Safeguard Contractors (PSCs), and Comprehensive Error Rate Testing Review contractors (CERTs).

The request asks that the GAO, “undertake a study that focuses on coordination among contractor efforts and CMS efforts to oversee these contractors to ensure that they are working efficiently and effectively while guaranteeing that beneficiaries are receiving care to which they are entitled.”
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Published on: June 1, 2012

Recent RAC Activity

by Wachler & Associates, P.C.

On May 29, 2012, Connolly added new approved issues to its Approved Issues List for providers in Region C states. The new approved issues are across five categories and include:

• Medical Necessity: Other O.R. Procedure of the Blood & Blood Forming Organs MS-DRG 802, 803, 804 W/MCC, W/CC, w/o CC/MCC CMS Issue Number: C000672012. RACs will review documentation to validate the medical necessity of short stay, uncomplicated admissions. Medicare only pays for inpatient hospital services that are medically necessary for the setting billed and that are coded correctly. Medical documentation will be reviewed to determine that the services were medically necessary and were billed correctly for MS-DRG 802, 803 and 804.

• Medical Necessity: Disease and Disorders of the Female Reproductive System MS-DRG 750, w/o CC/MCC CMS Issue Number: C000642012. RACs will review documentation to validate the medical necessity of short stay, uncomplicated admissions. Medicare only pays for inpatient hospital services that are medically necessary for the setting billed and that are coded correctly. Medical documentation will be reviewed to determine that the services were medically necessary and were billed correctly for MS-DRG 750.

• Medical Necessity: Diseases and Disorders of the Kidney and Urinary Tract MS-DRG’S 656,659,662,665,671,686,687,709,710 and 711 W/CC, W/MCC, w/o CC/MCC CMS Issue Number: C000622012. RACs will review documentation to validate the medical necessity of short stay, uncomplicated admissions. Medicare only pays for inpatient hospital services that are medically necessary for the setting billed and that are coded correctly. Medical documentation will be reviewed to determine that the services were medically necessary and were billed correctly for MS-DRG’S 656, 659, 662, 665, 671, 686, 687, 709, 710 and 711.

For a full list of Approved Issues in RAC Region C, visit the Connolly website.
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Published on: May 31, 2012

CMS to Release Comparative Billing Reports for Evaluation and Management Services

by Wachler & Associates, P.C.

CMS (Centers for Medicare & Medicaid Services) expects to publish Comparative Billing Reports (CBRs) on Evaluation and Management (E/M) Services on June 4, 2012.

Since 2010, CMS, through Safeguard Services (SGS), has produced national comparative billing reports in select fields. These comparative studies are designed to help providers review their coding and billing practices and utilization patterns, and take proactive compliance measures. A CBR outlines the provider’s billing patterns and compares those patterns to other similar entities. Pursuant to Safeguard Services website, E/M services CBRs will be given to providers that meet the following criteria:

Filed Medicare Part B final claims with dates of service from January 1 to December 31, 2011;
Claims were retrieved from the Integrated Data Repository (IDR) on April 13, 2012;
The provider is a specialty primary care provider (General Practice, Family Practice, Internal Medicine, Nurse Practitioner, Multispecialty Clinic or Group Practice, Preventive Medicine, or Physician Assistant);
Billed CPT codes 99201, 99202, 99203, 99204, 99205, 99211, 99212, 99213, 99214, and 99215;
Place of service was in the office (11);
Allowed charges greater than $0; and
Provided greater than or equal to 100 total units for the combination of the aforementioned CPT codes.

The sole intent of conducting CBRs is to educate providers as to potential fraud and abuse; they are not punitive. Providers should view CBRs as a tool, rather than a warning, as a way to aid them in properly complying with Medicare billing rules. It is also important to understand that CBRs do not contain patient or case-specific data, but rather only summary billing information as a method of ensuring privacy.

E/M services are specifically targeted because they are susceptible to fraud and abuse. From 2001 to 2010 Medicare payments for E/M Services increased by 48 percent. CMS will publish CBRs that analyze Medicare Part B final claims data from January 1, 2011 through December 31, 2011. Collective trends in the individual CBRs will be published for the nation to inspect.
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