On August 15, 2012 the Recovery Audit Contractor (RAC) for Region A changed its name from Diversified Collection Services (DCS) to Performant Recovery, Inc.
According to the website, processes, people, and contact information will remain the same.
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On September 12, 2012, the Centers for Medicare and Medicaid Services (CMS) released a national provider Comparative Billing Report (CBR) targeting podiatry services. The CBRs will be released to a maximum of 5,000 podiatry service providers. This is the second time in which podiatry services have been the focal point of a CBR.
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 assist providers in reviewing their coding and billing practices and utilization patterns, and take proactive compliance measures by conducting self-audits through meaningful comparisons to other podiatry providers billing similar codes. 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. CMS suggests that providers should view CBRs as an educational tool, rather than a warning, to help aid them in properly complying with Medicare billing rules. However, based upon our experience, it is clearly an indication that individuals receiving CBRs are prospective audit targets because their utilization of these codes exceeds their peers.
The recently released podiatry services CBRs are to serve as a follow up to the CBRs previously received by providers in April 2011. This repeat study is intended to serve the same educational and compliance goals as the prior study; however the newly issued CBRs provide more recent billing data–billed Medicare Part B claims data with service dates from May 1, 2011 through April 30, 2012 that were processed by July 27, 2012. Furthermore, the POS and CPT codes addressed in the recently released CBRs are identical to the codes utilized in the prior study; which include POS codes 11 (office) and 31 (skilled nursing facility), and the following CPT codes:
On August 22, 2012 the American Hospital Association (AHA) published the results of a survey which indicates that Recovery Audit Contractor (RAC) claim denials were up in the second quarter of 2012 from the first quarter. The results of the survey include data collected from more than 2,000 hospitals nationwide.
The survey reveals that hospitals saw an increase in RAC denials in the second quarter of 2012 of 24%. Additionally, medical record requests rose 22% and the dollar value of claims denied increased 21%. Hospitals reported Short Stay Medically Unnecessary as the most common reason for denial. According to the survey 70% of denials were listed as Short Stay Medically Unnecessary, which is a rise of 1% from the first quarter of 2012.
Hospitals are spending an increasing amount on RAC issues. In the second quarter of 2012, 55% of the hospitals in the survey indicated they spent more than $10,000 on RAC issues. Hospitals also spent an average of $24,064 on external legal counsel in the same quarter.
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In a press release on August 15, 2012 Congressman Dan Boren, who represents Oklahoma’s second Congressional District, announced that letters have been sent to Secretary of Health and Human Services, Kathleen Sebelius; U.S. Congressman Dave Camp, Chairman of the House Ways and Means Committee; and U.S. Congressman Fred Upton, Chairman of the House Energy and Commerce Committee urging a congressional investigation into the Centers for Medicare and Medicaid Services (CMS) Recovery Audit Contractor (RAC), Connolly, Inc.
Congressman Boren accuses Connolly of, “overzealous predatory tactics against several…hospitals with their aggressive, overly critical approach.” He further states that, “[t]hese practices have the potential to create a life-threatening situation for patient care in impoverished rural communities….”
While speaking on a webcast on August 27, 2012, the Congressman said that Connolly treats rural hospitals more harshly than larger urban hospitals. As a result, rural hospitals, that frequently have a much smaller cash flow than their urban counterparts, are faced with a financial situation that could put patient care at risk. He indicated that if Connolly continues to put unnecessary financial strain on rural hospitals, some will be forced to shut down, leaving some rural areas without access to critical care facilities and putting residents in life threatening situations.
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On August 9, 2012, CGS, the MAC for J15, announced that it will begin complex medical review MS-DRG 312, syncope and collapse, based on findings that the claim denial rate for MS-DRG 312 during a probe conducted in Ohio was 79.9%. This means that providers in Ohio could see MS-DRG 312 claims audited as part of the prepayment review demonstration program and in post-payment reviews conducted by the MAC.
The potential for a double audit faced by providers in Ohio is contrary to statements made by CMS during the special open door forum on August 9, 2012. During the forum, CMS stated that a provider may hear from both a RAC and a MAC for claim review but it should not be on the same MS-DRG or the same claim. So far it is unclear how CMS will address this issue.
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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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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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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.
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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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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