Articles Posted in Fraud & Abuse

Two recent settlements illustrate some of the compliance challenges facing clinical laboratories that perform urine drug testing (UDT). Both settlements involve a clinical laboratory resolving allegations that the lab violated the False Claims Act (FCA).

In the first case, the Department of Justice (DOJ) alleged that the lab performed and then billed federal health care programs for both presumptive testing and confirmatory testing. DOJ alleged that the lab was performing both tests at approximately the same time and providing both results to providers simultaneously. DOJ alleged that this rendered one test or the other medically unnecessary: either there was no result to confirm because the presumptive test came back negative, or the presumptive test was unnecessary because the provider already had the confirmatory test in hand. The lab agreed to pay $16 million to resolve these allegations.

In the second case, a physician practice referred UDTs to its in-house clinical laboratory. DOJ alleged that the physicians ordered excessive and unnecessary UDTs for patients without any individualized assessment of clinical need and caused these claims to be submitted to federal healthcare programs. The physicians agreed to pay $3.9 million to resolve these allegations.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) included several new items in its work plan update in October 2021. The OIG work plan outlines the projects that OIG plans to implement over the foreseeable future. Such projects typically include OIG audits and evaluations. Below are the highlights from the work plan update that providers and suppliers should take notice of.

First, OIG plans to compare the average sales price (ASP) for certain drugs with their corresponding average manufacturer price (AMP) to assess Medicare Part B drug reimbursement. Since Congress established the ASP as the basis for Medicare Part B drug reimbursement, OIG is empowered to monitor market prices to limit excessive Medicare payment amounts. In fact, the Social Security Act requires that OIG compares the ASPs with AMPs, and if the ASP for a drug exceeds the AMP by 5% in the two previous quarters or three previous four quarters, HHS may substitute the reimbursement amount with a lower calculate rate. The memo produced from this investigation will report the number of drugs OIG identified that meet the criteria for substitution of a lower reimbursement amount. Ultimately, providers and suppliers should be aware of the findings in this memo, as they could lead to reduced Medicare Part B reimbursements.

Second, OIG announced their plans for additional oversight of the 50 state Medicaid Fraud Control Units (MFCUs). MFCUs are state agencies that investigate and prosecute Medicaid provider fraud and complaints of patient abuse or neglect in Medicaid-funded facilities, although approximately 75% of MFCU funding comes from the federal government. OIG will conduct on-site reviews of a sample of MFCUs. OIG did not specify which or how many MFCUs they would review. Additionally, OIG will provide guidance regarding Federal regulations, policy and performance through data collection and analysis. Finally, the OIG will provide technical assistance and training to improve MFCU management and operations.

As part of the 2022 Medicare Physician Fee Schedule Proposed Rule, the Centers for Medicare & Medicaid Services (CMS) has proposed to significantly expand its authority to deny or revoke a provider’s or supplier’s Medicare billing privileges.

First, CMS proposed to modify the conditions that it considers when determining whether to revoke a provider for an “abuse of billing privileges.” CMS currently has the authority to revoke a provider’s or supplier’s enrollment for an “abuse of billing privileges,” defined as a pattern or practice of submitting claims that do not meet Medicare requirements. CMS has previously asserted that as few as three non-compliance claims can constitute such a pattern, However, in the current proposal, CMS expressed concern that the existing factors it uses to make such a determination may prevent it from acting against providers or suppliers who enroll in Medicare and engage in short-term periods of high-volume, non-compliant billing. CMS proposed to revise one factor, the percentage of submitted claims that were denied, to instead focus on the percentage of claim denials out of claim submissions during a limited period, such as a single month. CMS also proposed to remove three factors the agency deems largely irrelevant to determining the existence of a pattern or practice of improper billing. Specifically, the agency proposed to remove factors that focus on the reason for the claim denial, the length of time over which the pattern has continued, and the length of time a provider or supplier has been enrolled in Medicare. CMS proposed one new factor that considers the type of improper billing along with any aggravating or mitigating conditions in each case.

CMS also proposed to expand its authority to deny or revoke a provider’s or supplier’s enrollment if any healthcare, administrative, or management services personnel furnishing services payable by any federal health care program is excluded by the OIG, such as a billing specialist, accountant, or human resources specialist. CMS asserted that this proposal would align its authority with a 2013 OIG Special Advisory Bulletin prohibiting a provider or supplier from employing excluded individuals to furnish management or administrative services payable by any federal health care program.

The August 12, 2021 issue of the Medical Learning Network (MLN) Connects newsletter indicates that CMS is planning to resume the Targeted Probe and Educate (TPE) audit program. CMS temporarily suspended pre-payment reviews under the TPE program in response to the Covid-19 public health emergency (PHE) in March 2020. While CMS authorized Medicare Administrative Contractors (MACs) to resume post-payment audits in August 2020, TPE pre-payment reviews generally remained suspended.

The MLN Newsletter does not offer specific information as to when CMS will officially resume TPE audits. The Newsletter also does not indicate whether CMS will focus on new TPE audits or whether the agency intends to resume existing TPE reviews that were suspended at the beginning of the PHE. In a June 2021 Q&A by Palmetto GBA, one of the MACs, Palmetto stated that they “do not have an expected date for TPE to return.” Other MACs have yet to update their websites to reflect CMS’s announcement. However, it appears CMS has given the MACs the go-ahead to resume paused TPE reviews and initiate new reviews.

A TPE review consists of up to three rounds of claims review, with education to the provider after each round. A provider or supplier navigating a TPE review should take care to comply with the program’s requirements and timelines and should be aware of the potential consequences of a review. A TPE review can take months or years to resolve and can have devastating impacts on a provider’s business, up to and including revocation of Medicare billing privileges and placement on the CMS Preclusion List. Closely monitoring the process of the TPE review can be critical to a successful resolution. For more information about TPE reviews, please see our previous blog on Responding to a Targeted Probe and Educate Review.

The Centers for Medicare and Medicaid Services’ (CMS) FY 2022 Budget Justification request to Congress indicates a greater focus on audit activities, including a doubling of CMS’ medical review budget, and an effort to decrease the number of claim denials overturned through the Medicare appeals process. While still in the proposal phase, the budget justification provides a glimpse into CMS’ priorities for the coming fiscal year. Specifically, CMS requests $96.7 million to be used as discretionary funding for medical review activities, which represents an increase of $50.5 million above the FY 2021 Enacted level. Medical review activities can be conducted pre-payment or post-payment and concentrate on areas identified through a variety of means, including targeted data analysis, Comprehensive Error Rate Testing (CERT) results, and oversight agency findings that indicate allegedly questionable billing patterns.

CMS contracts with Medicare Administrative Contractors (MACs) to perform analysis of claims data to identify atypical billing patterns and perform claims review, including medical reviews. The FY 2022 request supports ongoing medical review operations, including Targeted Probe and Educate (TPE) reviews, which CMS temporarily suspended for a portion of 2020 in response to the Public Health Emergency (PHE). CMS recently announced in June 2021 that MACs are authorized to begin conducting post-payment medical reviews for dates of service during and after March 2020. CMS states that the FY 2022 Budget Justification “proposes to significantly increase funding to allow MACs to conduct additional review in FY 2022.” MAC medical reviews were previously limited to dates of service prior to March 2020, which means we can expect to see MACs begin audits of claims submitted during the PHE.

The FY 2022 Budget Justification also would allocate $19 million to the Supplemental Medical Review Contactor (SMRC) to conduct SMRC audits, which provide support for a variety of tasks meant to lower the improper payment rates and increase efficiencies of the medical review function of Medicare. SMRC audits were similarly paused for a period of time during 2020 in response to the PHE. In FY 2020, the SMRC reviewed approximately 80,197 claims, whereas CMS expects the SMRC to review 792,800 claims in FY 2022. So, providers may also anticipate increased SMRC medical reviews.

A healthcare practice or other provider or supplier receives a letter from their Medicare Administrative Contractor (MAC). The letter notifies the provider that they have been selected for a Targeted Probe and Educate (TPE) review. This initial letter, the Notice of Review, likely does not include any specific records requests but indicates that the MAC will request records at a later date. The letter may briefly describe the TPE process as including three rounds of claims review with education after each round. This letter will likely warn that, if a provider/supplier fails to improve the accuracy of its claims after three rounds, the MAC will refer the provider/supplier to CMS for additional action, such as prepayment review, extrapolation of overpayments, referral to a RAC, or other disciplinary action.

A provider or supplier navigating a TPE review should take care to comply with the program’s requirements and timelines and should be aware of the potential consequences of a review. A TPE review can take months or years to resolve and can have devastating impacts on a provider’s business, up to and including revocation of Medicare billing privileges and placement on the CMS Preclusion List.

After the Notice of Review, the MAC will send Additional Documentation Requests (ADR) for 20-40 claims. However, these ADRs may be indistinguishable from any other, with no indication of the added importance of being pursuant to a TPE audit. The ADRs will require a response within 45 days. After the provider submits the documentation, the MAC is required to provide direct one-on-one education to the provider. The MAC will then issue a letter that outlines its findings. If a high number of claims are denied, the MAC will proceed to a second round of review of 20-40 claims and education. If a high number of claims are denied again, the MAC will proceed to a third round.