Articles Posted in Compliance

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.

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.

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:

The Department of Health and Human Services (HHS) is required by the American Recovery and Reinvestment Act of 2009 to provide periodic audits to ensure covered entities are in compliance with the privacy and security rules of HIPAA. To satisfy the requirements under the Act, HHS’ Office for Civil Rights (OCR) initiated its pilot program to perform HIPAA audits of covered entities. OCR has awarded KPMG with the contract to conduct the audits. The audits under the pilot program are scheduled to begin this month and continue until the end of 2012. HHS believes that these audits “present a new opportunity to examine mechanisms for compliance, identify best practices and discover risks and vulnerabilities that may not have come to light through OCR’s ongoing complaint investigations and compliance reviews”

The first round of the pilot program will consist of 20 audits targeting covered entities of various sizes and specialties throughout the healthcare industry. The selected entities will be notified, in writing, by OCR that they have been selected for an audit. The written notification will explain the audit process and will also ask the entity to provide OCR with documentation of their privacy and security compliance efforts. The time allotted for the selected entities to satisfy the initial documentation request is 10 days. After OCR receives the requested documentation, entities will be notified that an onsite visit will be conducted. The onsite visit will likely take place between 30 and 90 days after the entity has been notified of the visit. Upon completion of the visit, the entity will be provided with a draft final report. Once received, the entity is given the opportunity to provide the auditor with written comments. After reviewing the entity’s comments, the auditor will submit a final audit report to OCR.

OCR plans to use the findings in the audit report to determine what types of technical assistance should be developed, and which types of corrective actions are most effective. By the end of 2012, OCR plans to conduct as many as 150 audits. The pilot program will be used by OCR to determine the most successful methods for conducting HIPAA audits in the future.

On October 20, 2011, the Centers for Medicare and Medicaid Services (CMS) released its final rule for Accountable Care Organizations (ACO) participation in the Medicare Shared Savings Program. With this rule, in response to concerns related to start up costs associated with ACOs, CMS has also announced the creation of its Advance Payment Model, which is scheduled to commence in 2012. The Advance Payment Model was created to assist participants in the Share Savings Program that may not have the necessary funds to become and ACO (e.g. physician-owned hospitals and rural providers). These participants would be advanced future payments, which would later be recouped from future shared savings. However, if the ACO fails to complete the full agreement period or earned shared savings then it will be required to return the advance payment. An ACO would receive future payments in three ways: (1) an upfront, fixed payment, (2) an upfront, variable payment, and (3) a variable monthly payment.

The Advance Payment Model may be available to two types of organizations participating in the Shared Savings Program: (1) ACOs that do not include any inpatient facilities AND have less than $50 million in total annual revenue; and (2) ACOs in which the only inpatient facilities are critical access hospitals and/or Medicare low-volume rural hospitals AND have less than $80 million in total annual revenue. ACOs that are co-owned by a health plan will not be eligible to participate. Participants of Pioneer ACOs will also be ineligible. CMS expects to select approximately 50 ACOs that meet the above eligibility requirements to receive funding.

The Advance Payment Model will only be available for ACOs beginning participation in the Medicare Shared Savings Program in either April 2012 or July 2012.

Today, the Centers for Medicare and Medicaid Services (CMS) released its final rule for Medicare’s Accountable Care Organizations (ACO). The program is designed to encourage health care providers to coordinate care in order to achieve cost-savings and improve the quality of care for Medicare patients. Due to substantial criticism from the health care industry, CMS made a number of significant modifications to the proposed rules that were released in March. According to CMS, these modifications include:

• Greater flexibility in eligibility to participate in the Shared Savings Program
• Multiple start dates in 2012

On October 3, 2011, the Department of Health and Human Services Office of Inspector General (OIG) issued an unfavorable advisory opinion regarding a proposed arrangement under which physicians would invest in a company that would provide pathology laboratory management services to a third party.

Under the proposed arrangement, a physician who owns and manages a limited liability company (“Requestor”) would enter into a management contract with a pathology laboratory (“Path Lab”), whereby the Requestor would provide the Path Lab with various clinical laboratory services for a fixed number of hours each year. The Requestor would also provide utilities, furniture, fixture, the exclusive use of laboratory space and equipment, and marketing and billing services. In return, the Path Lab would pay a usage fee to the Requestor that would be calculated based on a percentage of the lab’s income which would be fixed in advanced for a 12-month term.

The Requestor’s owner/manager would offer an opportunity for physicians to invest in the Requestor. The new physician investors are anticipated to have little or no background experience in the clinical laboratory services field. According to the Requestor, the value of the investment interest that would be held by physician investors in a position to generate business for the Requestor through referral of laboratory specimens to the Path Lab would exceed 40 percent. Additionally, the Requestor anticipates that the business generated through referrals by physician investors would equate to substantially more than 40 percent of the Requestor’s gross revenue related to the furnishing of health care items and services. Finally, the Requestor has certified that each of the physician investors would have the option of referring specimens to the Path Lab but referrals are not implicitly or explicitly a condition of the arrangement.