Compliance

Published on: February 28, 2012

OIG Releases Review MIC Report

Earlier this month (February 2012) the HHS Office of Inspector General (OIG) released its report regarding the assessment of Review Medicaid Integrity Contractors (MICs). The OIG review looked at Review MIC assignments made between January 1 and June 30, 2010. The objectives of the study were to determine to what extent Review MICs were able to complete assignments, recommend audit leads, and identify potential fraud; and to determine what obstacles the Review MICs encountered during the review process.

CMS awarded MIC responsibility to two firms: Thompson Reuters and AdvanceMed. Assignments are given to Review MICs by CMS on a monthly basis. Each assignment specifies the state from which the claims will come, the type of claims, and a range of service dates. Once an assignment is complete, the Review MIC submits its report to CMS where it undergoes a quality assurance review. The assignment must pass this review to be considered complete.

Of the 361 assignments the Review MICs were tasked with during the OIG review period, 81% were completed and 17% were placed on hold by CMS. Rather than recommend specific audit leads as a result of their findings, CMS required the Review MICs to submit lists of providers ranked by the amounts of their potential overpayments. From these lists of 113,378 providers CMS selected 244 audit targets with a total of $39.8 million in potential overpayments from a retrospective 5-year audit period established by CMS.

The OIG review found that not only were the Review MICs unable to accurately complete assignments because of missing or inaccurate data, but states also invalidated more than one third of sampled potential overpayments. States compared the Review MIC findings with information in their state systems and found that 34% were not overpayments.

The OIG reports makes two recommendations, both of which CMS concurs with. The first is to improve the quality of data that Review MICs can access for conducting data analysis. One option the OIG provides is to facilitate Review MIC access to states’ Medicaid data systems. The CMS comments on the OIG report, in which they concur with the OIG recommendations, indicate that CMS has several initiatives underway to improve the quality of the data available to the Review MICs. One CMS long term strategy is to improve the Medicaid Statistical Information System (MSIS). MSIS is currently the only nationwide database of Medicaid claims and beneficiary eligibility information.

The second OIG recommendation is that CMS should require Review MICs to recommend specific audit leads. The OIG report suggests that these audit leads would have the best potential for recoveries and improve the value of the Review MICs contribution to the Medicaid Integrity Program. In their comments, CMS concurs with this recommendation and that the Review MIC assignments will now include specific recommendations for specific audit targets.

The full OIG report can be found on the OIG website.
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Published on: February 27, 2012

Zone Program Integrity Contractor (ZPIC) Audits

by Wachler & Associates, P.C.

Zone Program Integrity Contractors (ZPICs) were created by CMS primarily to investigate suspected fraud, waste, and abuse. ZPICs perform similar audit activities as other Medicare contractors, but with a reactive and proactive focus on the identification of possible Medicare fraud. ZPICs employ “innovative” strategies to engage in the early detection of fraud. The strategies include data analysis, pursuing proactive leads from other Medicare contractors or other sources such as the Fraud Investigation Database (FID), law enforcement, news media or the Internet.

Once a ZPIC initiates an audit, it has the authority to conduct prepayment and postpayment medical review, perform announced and/or unannounced onsite audits, interview staff and beneficiaries, and suspend provider payments pursuant to approval from CMS. While any type of Medicare contractor audit can be disruptive to a provider’s business, it is extremely important for a health care professional to recognize when his or her practice is the focus of a ZPIC audit or investigation. This is because ZPICs also have the authority to refer providers and beneficiaries to law enforcement, refer providers for exclusion from the Medicare program, and utilize statistical sampling and extrapolation to determine overpayment amounts. For this reason, it is imperative that Medicare providers aggressively defend against a ZPIC investigation.

There are seven zones in which ZPICs are assigned, and providers should be aware of the ZPIC assigned to their zone. More information on ZPICs and be found on our website.
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Published on: February 14, 2012

RAC Posts First Home Health Issue

by Wachler & Associates, P.C.

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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Published on: February 9, 2012

CMS Posts Self-Referral Disclosure Protocol Settlements on Its Website

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) has now posted Self-Referral Disclosure Protocol (SDRP) settlements on the CMS website. Section 6409 of the Patient Protection and Affordable Care Act provides the SDRP process, which allows providers of services and suppliers to self-disclose any actual or potential violations section 1877 of the Social Security Act, also known as the physician self-referral statute or the Stark II regulations. The following is a list of SDRP settlements, which CMS will continue to update on a quarterly basis:

On February 10, 2011, a Massachusetts general acute care hospital settled with CMS for $579,000 after disclosing that it failed (1) to satisfy the requirements of the personal services arrangements exception for arrangements with certain hospital department chiefs and the medical staff for leadership services, and (2) to satisfy the requirements of the personal services arrangements exception for arrangements with certain physician groups for on-site overnight coverage for patients at the hospital.
On November 11, 2011, a Mississippi critical access hospital settled with CMS for $130,000 after disclosing that it failed to satisfy the requirements of the personal services arrangements exception with certain hospital and emergency room physicians.
On January 5, 2012, a California hospital settled with CMS for $6,700 after disclosing that it exceeded the calendar year non-monetary compensation limit for a physician.
On January 5, 2012, a Georgia hospital settled with CMS for $4,500 after disclosing that it exceeded the calendar year non-monetary compensation limit for two physicians.

Published on: February 9, 2012

Medical Billing Professional Sentenced to Prison for Defrauding Medicare and Medicaid

by Wachler & Associates, P.C.

On January 19, 2012, the Fifth Circuit Court of Appeals upheld the conviction and sentence of a medical billing professional for defrauding Medicare and Medicaid. Sylvia Delgado, a medical billing expert with thirty years of medical coding and billing experience, was the medical director of a group psychotherapy company that performed counseling to the elderly. Delgado formed the company (Synergy) in 2002 with Dr. Rafael Solis, a licensed psychiatrist who works primarily at his office in San Antonio, and Robert Rael, a Licensed Master Social Worker. Dr. Solis performed initial evaluations of patients, prescribed medication, and conducted individual counseling sessions. Thereafter, Dr. Solis would refer his patients to Synergy for group psychotherapy. Dr. Solis did not conduct or supervise the group session, but rather the sessions were conducted by Rael. However, Delgado, who performed all of the billing, would bill the group sessions under Dr. Solis’ Medicare and Medicaid numbers because Rael was not authorized under Texas law to have his own billing numbers. The Medicare and Medicaid reimbursement proceeds were split between Delagado and Rael; Delgado received thirty percent and Rael received seventy percent. Additionally, Synergy began paying Dr. Solis $2,000 per month in January 2005. Between 2002 and 2005, the total amount that Medicare and Medicaid paid to Synergy for the therapy was $1.4 million.

While group psychotherapy can be billed to Medicare and Medicare, the sessions conducted by synergy did not meet the requirements necessary for proper billing. For instance, a provider is typically not allowed to bill multiple sessions for one patient in one day, and the use of more than one group therapy code will be rejected in most circumstances. However, Delgado was able to get around this problem after discovering a billing technique which involved attaching a modifier to the billing code. The modifier was used by Delgado to bill up to six sessions per day per patient.

Another group psychotherapy requirement that Synergy failed to satisfy was that which requires the therapy to be conducted by one of the designated healthcare professional listed in the regulations. Rael was not qualified to conduct the therapy, and even though a non-physician may conduct the therapy so long as the regulation’s supervision requirements are met, Dr. Solis had admitted to investigators that he did not supervise the therapy. Furthermore, there was evidence that Delgado had been informed that Rael was not authorized to conduct the group psychotherapy sessions that took place at Synergy. Moreover, it was also discovered that Rael was not even the one who conducted most of the therapy sessions. The majority sessions were actually conducted by Robert Martinez, who has a sixth grade education.

Finally, the therapy sessions were conducted in a manner that consisted of watching television, eating meals, socializing, being read to, playing loteria, and celebrating birthdays. Despite the fact that the regulations prohibit describing these activities as group therapy, Delgado billed Medicare and Medicaid up to six group psychotherapy sessions per day per patient. In addition, Delgado also billed for group psychotherapy when both Dr. Solis and Rael were out of town.
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Published on: February 6, 2012

CMS Announces New Start Date for Prior Authorization of PMDs and Recovery Audit Prepayment Review Demonstration Programs

by Wachler & Associates, P.C.

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.

Published on: January 25, 2012

CMS Publishes Important Reminder to Providers and Suppliers Regarding Referred or Ordered Services and Items

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) recently published an important reminder for all providers and suppliers who provide services and items ordered or referred by other providers and suppliers. The reminder states that Medicare will only pay for items or services for Medicare beneficiaries that have been ordered by a physician or eligible profession enrolled in the Medicare program, and that the individual National Provider Identifier (NPI) of the referring provider or supplier must be included in any claim to Medicare.

CMS also emphasizes that providers and suppliers must ensure that any items or services submitted in Medicare claims were referred by Medicare-enrolled providers of a specialty type authorized to order or refer such services. Further, Medicare will only reimburse for specific items or services ordered or referred by providers or suppliers that are authorized by statute and regulation. Specifically, CMS highlighted that:

Chiropractors are not eligible to order or refer supplies or services of Medicare beneficiaries. Consequently, all services ordered or referred by a chiropractor will be denied.

Home Health Agency (HHA) services may only be ordered or referred by a Doctor of Medicine (M.D.), Doctor of Osteopathy (D.O.) or Doctor of Podiatric Medicine (DPM). Thus, claims for HHA services ordered by any other practitioner specialty will be denied.

Portable X-Ray services may only be ordered by a Doctor of Medicine or Doctor of Osteopathy. Portable X-Ray services ordered by any other practitioners will be denied.

Through this “important reminder,” CMS emphasizes the necessary standards and documentation for healthcare providers and suppliers to successfully bill for providing referred services or items. The reminder demonstrates CMS’ continued focus on ensuring proper referral arrangements and supporting documentation.

Published on: January 19, 2012

CMS Clarification of 3-Day Payment Window when Inpatient Admission is Denied

by Wachler & Associates, P.C.

In a recent revision of its billing instructions, CMS clarified that when an inpatient stay is determined not to be covered by Part A (e.g. determined not medically necessary or otherwise denied by a Medicare audit or internal audit), there is no inpatient stay, and therefore the outpatient services provided on the date of admission or the preceding 3 calendar days are not required to be bundled. See Medicare Claims Processing Manual, Chapter 4, Section 10.12 and Chapter 1, Section 50.3.2 for the updated billing guidelines. MLN Matters article MM7672 clarifies that if the Part A stay is determined to be non-covered, the Part B services provided prior to the admission (i.e., prior to the admission order), which would otherwise be bundled into the inpatient claim, may be billed separately as if the admission did not take place.

Generally, the 3-day payment window policy requires that all diagnostic outpatient services and non-diagnostic outpatient services related to the inpatient admission provided to a Medicare beneficiary by a hospital (or an entity wholly owned or wholly operated by the hospital) on the date of the beneficiary’s inpatient admission or during the 3 calendar immediately preceding the date of admission are to be included on the bill for the inpatient stay. However, outpatient diagnostic services that are unrelated to the inpatient admission, and are covered by Part B, may be billed separately to Part B.

The limit on this positive development is that the audit denial would need to occur within one year of the date of service in order to meet the timely filing limitations. For instance, if a RAC auditor determines that the inpatient stay is not covered by Part A and that finding occurs after the one year filing limitation, the hospital would likely be unable to bill the services to Part B for reimbursement.

Published on: January 5, 2012

CMS Announces Interim Final Rule Creating New Standards for EFTs

by Wachler & Associates, P.C.

Today, the Centers for Medicare and Medicaid Services (CMS) announced an interim final rule with comment period which creates new standards for electronic funds transfers (EFT) and remittance advice transaction (RA) under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). According to the U.S. Department of Health and Human Services (HHS), the new standards will save physician practices and hospitals between $3 and $4.5 billion over the next ten years, as well as result in an estimated savings of 800,000 pounds of paper due to the elimination of paper checks.

HHS will require health plans to comply with two standards when transmitting EFT payments to providers: (1) a standard format for when a health plan orders, authorizes, or initiates an EFT with its financial institution, and (2) specification of the data content to be contained within the EFT. Currently, when a provider submits a claim for payment electronically, the RA is often sent separately from the EFT payment, making it difficult for the provider to match the bill with the corresponding payment. The new rule seeks to eliminate these errors by requiring the use of a trace number that automatically connects the RA to the EFT.

Today’s regulation is the second in the series of regulations that CMS is required to design by Section 1104 of the Patient Protection and Affordable Care Act of 2010. The first regulation was announced last July. It implemented operating rules for two electronic health care transactions that give providers a simpler method to determine whether a patient is eligible for coverage and the status of a health claim submitted.

Published on: December 29, 2011

CMS Implements 3-day Payment Window Policy for Wholly Owned or Wholly Operated Physician Practices

by Wachler & Associates, P.C.

Recently, the Centers for Medicare and Medicaid Services (CMS) released Change Request 7502 relating to the 3-day payment window policy. For services on or after January 1, 2012, the 3-day payment window will apply when a patient is seen in a physician practice that is wholly owned or wholly operated by a hospital and is admitted as an inpatient within 3-days (or, in the case of non-IPPS hospitals, one day). The window will apply to diagnostic and nondiagnostic services that are clinically related to the reason for the patient’s inpatient admission, regardless of whether the inpatient diagnosis is the same as the outpatient diagnosis.

For claims with dates of service on or after January 1, 2012, a new modifier PD is available and must be appended to the entity’s preadmission diagnostic services, as well as nondiagnostic services related to the admission. When a related inpatient admission has occurred, the wholly owned or wholly operated entity will need to manage their billing processes to ensure that they bill for their physician services appropriately. The hospital is responsible for notifying the wholly owned or wholly operated entity that a patient has been admitted as an inpatient when the entity provided services to the patient within the 3-day window.

When the modifier is present on claims for services, CMS shall pay: