Articles Posted in Audit

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Recently, a group of 35 health care organizations wrote a letter to the Centers for Medicare and Medicaid Services (CMS) expressing their concerns regarding CMS’ new demonstration programs. The organizations requested that CMS rescind the Recovery Audit Prepayment Demonstration and revise the Prior Authorization Demonstration for power mobility devices. Both demonstrations were scheduled to begin on January 1, 2012, but were subsequently delayed due to the concerns expressed by numerous health care organizations. The revised scheduled start date for the demonstration programs is now on or after June 1, 2012.

In regards to the Recover Audit Contractors (RAC) prepayment demonstration, the organizations have requested that CMS rescind the program in its entirety. The reasons for this request include:

  • The demonstration would threaten patient access to care because patients who have the conditions under the targeted prepayment code sets may be inappropriately turned away due to the high level of cost-related scrutiny prescribed by the hospital’s policies and procedures. The organizations believe that physicians, when making potentially life-threatening diagnoses, should not be influenced by the hospital’s reservations that stem from increased government scrutiny and the risk of losing payments.
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On April 2, 2012 DCS Healthcare posted new approved issues to its approved issues list for some Region A states. Among them were two issues for skilled nursing facilities:

· CT Scans, Head and Neck, Incorrect Billing: Potential incorrect billing of CT scans not supported by medical necessity (NGS LCD 28516 (A48015))

· CT Scans, Trunk and Extremities, Incorrect Billing: Potential incorrect billing of CT scans not supported by medical necessity (NGS LCD 28516 (A48015))

In late March 2012, CGI posted a new approved issue to its approved issues list for Region B states. The new issue involves a complex medical necessity review:

· Minor Musculoskeletal Procedures ; MS-DRGs 479, 484, 494, 497, 499, 502, 508, 509, 512, 517 (Medical Necessity): The purpose of this complex review is to identify claims that have been reviewed validating medical necessity in short stay, uncomplicated admissions. This review will identify if medical necessity was met per Medicare guidelines.

On March 23, 2012, Connolly added new approved issues to its approved issues list for Region C states:

· Hospice Related Services -Outpatient CMS Issue Number: C000162012: Services related to a Hospice terminal diagnosis provided during a Hospice period are included in the Hospice payment and are not paid separately.

· Excessive Drug Units Billed – Carrier (At this time, Medical Necessity will be excluded from this review) CMS Issue Number: C001562011: Drugs and Biologicals should be billed in multiples of the dosage specified in the HCPCS code long descriptor. The number of units billed should be assigned based on the dosage increment specified in that HCPCS long descriptor, and correspond to the actual amount of the drug administered to the patient, including any appropriate, discarded drug waste. If the drug dose used in the care of a patient is not a multiple of the HCPCS code dosage descriptor, the provider rounds to the next highest unit. Drug waste should be coded according to the requirements of the local contractor. Claims billed with excessive units will be reviewed to determine the correct number of billable/payable units.

On March 19, 2012, HealthDataInsights added several new issues to its approved issues list for Region D states:

· Acute Inpatient Hospitalization – Major Male Pelvic Procedures with CC/MC (DRG 707): Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

· Acute Inpatient Admission – OR Procedure with Principal Diagnosis of Mental Illness (DRG 876): Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.
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The Centers for Medicare and Medicaid Services (CMS) recently announced it will release a national provider Comparative Billing Report (CBR) targeting Cardiology Services. The CBRs will be released to a maximum of 5,000 providers on April 23, 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.
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CMS recently released the results of its Medicare Fee-for-Service Recovery Audit Program (RAC) for fiscal year 2012. Once again, improper payment numbers have increased from the year before. For the period from October 2011 – December 2011 the audit program collected $397.8 million in overpayments and returned $24.9 million in underpayments. This is a total of $422.7 million in corrections identified by the audit program, with the vast majority of those improper payments coming from Medicare overpayment to providers. The RAC program has collected $1.27 billion in overpayments since 2010, and has returned $187.7 million during that same timeframe. Not surprisingly, RACs have found far more overpayments to providers than they have found underpayments.

A related CMS Quarterly Newsletter indicates that Regions C and D RACs, Connolly and HealthData Insights (HDI) collected the most in overpayments, while Regions A and B RACs, Diversified Collection Services (DCS) and CGI Federal, collected the least.

The report also identified the top recovery issue by region. All issues were medical necessity issues. The top overpayment issues were:

  • Region A: Neurological Disorders- Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with neurological disorders needs to be complete and support all services provided in the setting billed.
  • Region B: Cardiovascular Procedures- Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients undergoing cardiovascular procedures needs to be complete and support all services provided in the setting billed.
  • Region C: Neurological Disorders- Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with neurological disorders needs to be complete and support all services provided in the setting billed.
  • Region D: Minor Surgery and Other Treatment Billed as an Inpatient Stay- When beneficiaries with known diagnoses enter a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for less than 24 hours, they are considered outpatient for coverage purposes regardless of the hour they presented to the hospital, whether a bed was used, and whether they remained in the hospital after midnight.

The yearly report can be found here, while a report on the individual RAC contractors by region can be found here.
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On February 13, 2012 DCS Healthcare added a new CMS approved issue to its approved issues list for DME supplier claims:

• Knee orthosis bundling: Payments for knee orthoses additions, as specified in NHIC’s LCD for knee orthoses, #L27263, are bundled into the payment for specific base knee orthoses, and should be recouped if paid separately.

On February 13 and 15, 2012 Connolly added new CMS approved issues to its approved issues list:

• Therapeutic footwear utilization CMS issue number: C005392010. The LCD and policy article for therapeutic shoes for diabetics limit the use of shoes and inserts as follows: For patients meeting these criteria, coverage is limited to one of the following within one calendar year (January – December): One pair of custom molded shoes (A5501) (which includes inserts provided with these shoes) and two additional pairs of inserts; or one pair of depth shoes (A5500) and three pairs of inserts.

• Rituximab – Non-covered/non-allowed service-Part B CMS issue number: C001442011. An overpayment exists when a provider bills for a service of J9310/Rituximab with an ICD-9 code that is not included in the list of covered ICD-9 codes for J9310/Rituximab with the applicable local coverage determination document(s).
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Connolly Healthcare recently added 17 new issues to its CMS-approved issues list for Region C states. Below is a sampling of the recently approved issues, which fall in multiple categories. For a full list and more information please visit the Connolly website.

  • Ambulance/transport during a SNF stay to or from a diagnostic or therapeutic site: Ambulance/transport services provided during a SNF stay are not separately paid under the Part B benefit. The cost for these services is considered part of the Part A Prospective Payment made to the SNF Provider. Ambulance transports to or from a diagnostic or therapeutic site other than a hospital or renal dialysis facility (e.g., an independent diagnostic testing facility (IDTF), cancer treatment center, radiation therapy center, wound care center, etc.). The ambulance transport is included in the SNF PPS rate if the first or second character (origin or destination) of any HCPCS code ambulance modifier is “D” (diagnostic or therapeutic site other than “P” or “H”), and the other modifier (origin or destination) is “N” (SNF). The first SNF is responsible for billing the services to the FI.
  • Inappropriate Payments for Transformational Epidural Injections: Local Coverage Determination policy has indicated specific conditions or diagnoses that are covered for Transformational Epidural Injections. Carrier claims have been identified where the first-listed and/or other diagnosis codes do not match to the covered diagnosis codes in the LCD policies.
  • Incorrect diagnosis code billed for blood clotting factor: An overpayment exists when a provider bills for a blood clotting factor with an ICD-9 code that is not included in the list of covered ICD-9 codes within the applicable Local Coverage Determination document(s).
  • Improper payments for Facet Joint Injections: An overpayment exists when a provider bills for an Facet Joint Injection with an ICD-9 code that is not included in the list of covered ICD-9 codes within the applicable Local Coverage Determination document(s).
  • Incorrect billing of Home Health Partial Episode Payment claims: Incorrect billing of Home Health Partial Episode Payment (PEP) claims identified with a discharge status 06 and another home health claim was not billed within 60 days of the claim from date. Additionally, MCO effective dates are not within 60 days of the PEP claim.

HealthDataInsights recently added new issues to its CMS-approved issues list for Region D states. Below is a sampling of the recently approved issues. For a full list and more information please visit the HealthDataInsights website.

  • Acute Inpatient Hospitalization – Bowel and Rectal Procedures (DRG 329, 330, 332, 333, 334, 344, 345 and 346): Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.
  • Acute Inpatient Hospitalization – Hepatobiliary Procedures (DRG 420, 421, 422, 424 and 425): Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

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Connolly Healthcare, RAC for Region C, has recently added its first home health agency issue to its CMS-approved issues list.

The first posted issue targeting home health agencies is an automatic review that will focus on partial episode payments (PEPs). The Medicare Claims Processing Manual defines a PEP as “a reduced episode payment that may be made based on the number of service days in an episode (always less than 60 days, employed in cases of transfers or discharges with readmissions).” The approved home health issue is described below.

Incorrect billing of home health partial episode payment claims. Incorrect billing of home health PEP claims identified with a discharge status 06 and another home health claim was not billed within 60 days of the claim from date. Additionally, MCO effective dates are not within 60 days of the PEP claim.

Home health agencies should be on high alert for RAC audits. In addition, providers may expect additional home health issues to be added for review in the future, including complex reviews.
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The Centers for Medicare and Medicaid Services (CMS) has announced that the Prior Authorization of Power Mobility Devices (PMDs) and the Recovery Audit Prepayment Review Demonstration Programs are expected to move forward on or after June 1, 2012. On December 30, 2011, the two demonstrations were delayed from their initial January 1, 2012 start date. Although CMS initially announced the demonstration programs in November 2011, CMS decided to delay the programs’ implementations after receiving considerable feedback from the provider communities affected by the programs.

In its most recent announcement, CMS stated that the demonstrations programs will begin once they receive Paperwork Reduction Act (PRA) Office of Management and Budget control numbers.

The Prior Authorization of PMDs demonstration program will be initiated in California, Illinois, Michigan, New York, North Carolina, Florida, and Texas. These are all states with high populations of fraud- and error- prone providers. The demonstration will implement a prior authorization process for scooters and power wheelchairs.

As a result of comments CMS received from providers and suppliers, significant modifications have been made to the Prior Authorization of PMDs demonstration program. Most importantly for suppliers, the 100% pre-payment review phase has been removed. Many interested parties had raised the concern that suppliers would be adversely financially impacted by the 100% pre-payment review phase, thus CMS eliminated it and the demonstration will begin immediately with the prior authorization phase. There was also concern regarding the inconsistency of suppliers in some states experiencing 100% pre-payment review, while suppliers in other states were required to receive prior authorizations. The pre-payment review phase was planned to last from between three to nine months for each state, so while one state might only be in that phase for three months, another state might be for nine. As a result, all demonstration states will start prior authorization at approximately the same time instead of the staggered start times as originally planned.

CMS also received many concerns about the ordering physician possibly not being in the best position to submit the prior authorization request. Under the modified demonstration, the physician/treating practitioner or supplier, on behalf of the physician/treating practitioner, may perform the administrative function of submitting the prior authorization request.

The Pre-Payment Review Demonstration Program did not receive any significant changes and will be implemented as proposed in November.

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The Centers for Medicare and Medicaid Services (CMS) publishes quarterly reports identifying improper payment figures and the top audit issues by region. The most recent “Q4” report, covering July 1, 2011 to September 30, 2011, demonstrates a 22% increase in the total correction amount from the previous quarter.

During this period, CMS identified $277.1 million in overpayments and $76.6 million in underpayments, for a total correction amount of $353.7 million. This figure represents a dramatic increase from the two previous quarterly improper payment totals of $208.9 million (Q2) and $289.3 million (Q3). The boost, which is consistent across all regions, indicates that individual recovery auditors nationwide are increasing their efforts to identify incorrect payments, and further supports the industry-wide belief that audits are expanding.

The Q4 recovery audit program update also demonstrates that auditors are increasingly targeting “medical necessity” claims, with a focus on supporting documentation and the setting in which these services are provided. The Q4 update highlighted the following “top issues per region” of the recovery audit program:

Region A – Renal and Urinary Tract Disorders: (Medical Necessity) Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with renal and urinary tract disorders needs to be complete and support all services provided.

Region B – Surgical Cardiovascular Procedures: (Medical Necessity) Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with surgical cardiovascular procedures needs to be complete and support all services provided.

Region C – Acute Inpatient Admission Neurological Disorders: (Medical Necessity) Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients admitted with neurological disorders needs to be complete and support all services provided.

Region D – Minor Surgery and other treatment billed as Inpatient: (Medical Necessity) When beneficiaries with known diagnoses enter a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for less than 24 hours, they are considered outpatient for coverage purposes regardless of the hour they presented to the hospital, whether a bed was used, and whether they remained in the hospital after midnight.

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All Medicare suppliers of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) must obtain and maintain a surety bond of at least $50,000 to participate in the Medicare program. A Centers for Medicare and Medicaid Services (CMS) recent transmittal, effective February 21, clarifies this requirement and describes the procedures that DME Medicare Administrative Contractors (MACs) must follow when making claims against a provider’s surety bond.

Under 42 CFR § 424.57(d)(5)(i), a surety is liable to CMS for 1) the amount of any unpaid claim, plus accrued interest, for which the supplier of DMEPOS is responsible, and 2) the amount of any unpaid claim, civil monetary penalty (CMP) or assessment imposed by CMS or the Office of Inspector General (OIG) on the DMEPOS supplier, plus interest.

First, the DME MACs will notify the surety that payment of a claim must be made to CMS within 30 days. The letter must 1) identify the specific amount to be paid, 2) be accompanied by “sufficient evidence” of the unpaid claim, 3) state that payment shall be made via check or money order and that the Payee shall be the DME MAC, and 4) identify the address to which payment shall be sent. The DME MAC will notify the supplier when payment has been made.

DMEPOS suppliers must then obtain an additional surety bond within 30 calendar days of that letter, and submit to the National Supplier Clearinghouse (NSC) additional coverage of an amount that equals or, in the case of a final adverse action, exceeds $50,000. Suppliers must be aware that failure to submit such additional surety bond coverage within 30 days may result in the NSC revoking the supplier’s Medicare billing privileges.

If the DMEPOS supplier successfully appeals, CMS will notify the surety via letter and repay the surety within 30 days. Although a supplier may want to avoid the necessity of securing an additional surety bond, the DMEPOS appeals process may take longer than 30 days and prudent DMEPOS suppliers should obtain additional coverage to ensure continued Medicare billing privileges.

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