Medicare

Published on: February 17, 2015

CMS Modifies Manual Medical Review Process for Outpatient Therapy Claims Above Cap

The Protecting Access to Medicare Act of 2014 extended the process for exceptions to Medicare’s outpatient therapy caps through March 2015. Exceptions to Medicare’s outpatient therapy caps are allowed for medically necessary and reasonably therapy services. However, claims above $3,700 for physical therapy and speech language pathology services combined, and above $3,700 for occupational therapy services, are subject to manual medical review by recovery audit contractors (RACs). The caps are calculated per beneficiary, per year. While manual medical reviews of outpatient therapy claims above the cap were put on hold last year, existing RACs received approval on January 16, 2015 to resume sending additional documentation requests (ADRs) to Part B providers.

However, CMS recently introduced a new post-payment review system that requires RACs to review outpatient therapy claims using a new manual medical review process. RACs will now be required to review claims using a tiered approach to ADRs. The process allows for 100% review of provider claims above the $3,700 therapy caps (“eligible claims”), but prevents the RACs from requesting large and potentially unmanageable amounts of records at one time.

Beginning in January 2015, the new manual medical review process permits RACs to review 100% of a provider’s eligible claims using a 5-step approach to ADRs. A RAC’s first ADR may only review one claim, but additional ADRs may request records for an increasing percentage of claims. The second ADR may review up to 10% of eligible claims, the third ADR may review up to 25% of eligible claims, and the fourth ADR may review up to 50% of eligible claims. Finally, a RAC’s fifth ADR to a particular provider may review 100% of the provider’s total eligible claims. Please note that the new tiered approach retains the RAC’s cycle of 45 days between ADRs.

Published on: January 29, 2015

HHS Sets Timelines for Focus of Reimbursement to Shift from Quantity to Quality

by Wachler & Associates, P.C.

On January 26, 2015, the U.S. Department of Health and Human Services (“HHS”), for the first time ever, announced a timeline and corresponding goals to shift the basis of Medicare reimbursement away from the quantity of care provided towards the quality furnished to beneficiaries. With the passage of the Patient Protection and Affordable Care Act (“ACA”) in 2010, Congress created several new payment models, including Accountable Care Organizations (“ACOs”), primary care medical homes, and new models of payment bundling for care. These models all share the commonality that they incentivize physicians to coordinate care for their beneficiaries, maintain quality, and control costs. With the proliferation of these models that focus on quality over quantity, HHS was compelled to reform the Medicare reimbursement process.

Specifically, HHS announced its goal of tying 30 percent of fee-for-service Medicare payments to quality output through alternative payment models, like ACOs or bundled payment arrangements, by the end of 2016. Furthermore, HHS plans on increasing that amount to 50 percent by the end of 2018. If this goal is met, half of all payments to physicians and hospitals will be made through alternative payment models by 2018. Additionally, HHS set a timeline for tying 85 percent of fee-for-service, or traditional, Medicare payments to quality output by 2016 through the Hospital Value Based Purchasing and Hospital Readmissions Reduction Programs. This number is also set to increase to 90% by 2018.

To accomplish this, HHS has created the Health Care Payment Learning and Action Network (“the Network”). The Network is an organization made up of health care stakeholders including private payers, consumers, providers, employers, and state Medicaid programs. The Network, which will hold its first meeting in March 2015, plans to expand alternative payment models nationwide into all areas of health care. HHS hopes that the intensity exhibited by the Network will even surpass its initial goals for program expansion.

Published on: January 28, 2015

CMS Announces New RAC Contract for DME, Home Health and Hospice Claims

by Wachler & Associates, P.C.

On December 30, 2014, the Centers for Medicare & Medicaid Services (CMS) announced that they had awarded the Region 5 Recovery Audit Contract (RAC) to Connolly, LLC. CMS contracts with RACs to identify and correct improper payments. Connolly, which has been the RAC for Region C, was awarded the Region 5 contract which covers claims for durable medical equipment, prosthetics, orthotics and supplies (DMEPOS), home healthcare and hospice providers. With the awarding of the new RAC contract focused on DME, home health and hospice providers, these provider types can expect increased scrutiny of their Medicare claims.

CMS also outlined a number of “improvements” to the RAC program that will take effect with each new RAC contract awarded, beginning with the Region 5 contract awarded on December 30, 2014.

One of the “improvements” brought by the new RAC program is that the CMS has reduced the RAC look-back period to 6 months from the date of service for patient status reviews where hospitals submitted the claim within 3 months of the date of service. Previously, the look-back period for RACs was from 3 years and hospitals had to submit a claim within one year from the date of service in order to comply with the timely filing rules, leaving hospitals with the inability to rebill denials from patient status reviews. Another improvement is that the CMS has established new Additional Documentation Request (ADR) limits based on a provider’s compliance with Medicare rules. Specifically, the ADR limits will align with providers’ denial rates (i.e., providers with low denial rates will have lower ADR limits), and ADR limits will be adjusted as a providers’ denial rates decrease.

Published on: January 13, 2015

House Republicans Release Proposal to Eliminate Two-Midnight Rule

by Wachler & Associates, P.C.

In November 2014, Republicans in the U.S. House of Representatives circulated a “discussion draft,” which proposed significant reforms to the process by which Medicare reimburses hospitals for short stays. Perhaps most notably, the GOP proposal would eliminate the two-midnight rule. Since its enactment, the two-midnight rule has remained controversial among healthcare providers. Under the two-midnight rule, an admission is appropriate only when the patient remains in the hospital for two midnights. However, since its adoption, the rule has created confusion and elicited criticism from providers who claim that it undermines their clinical decision-making process. Acknowledging the issue, the Centers for Medicare and Medicaid Services (CMS) limited enforcement of the two-midnight rule and solicited stakeholders for suggestions on improving it.

The discussion draft also proposes the establishment of a new Medicare payment system for hospital stays. Under the proposal, the payment system would go into effect in fiscal year 2020 and unify the currently separate inpatient and outpatient payment systems. During the five years before the implementation, CMS would be tasked with developing a transitional, per-diem payment system for short-term hospital stays. Additionally, CMS would restrain Recovery Audit Contractors (RAC) until the new payment system is adopted. This reprieve is important when establishing a new payment system because of the RAC program’s onerous presence in the healthcare industry. Just last year, the RAC program recouped over $3 billion in Medicare overpayments, and audit appeals have created such a backlog that many appellants are waiting over three years for a decision. The backlog of appeals violates the statutory requirement for Administrative Law Judges to decide Medicare appeals within 90 days of the request for hearing.

Also included in the GOP’s discussion draft is a partial elimination of the Patient Protection and Affordable Care Act’s (ACA) moratorium on the expansion of physician-owned hospitals. Currently, the law prohibits new physician-owned hospitals, expansion of existing physician-owned hospitals, and an increase in the percentage of physician ownership in existing physician-owned hospitals. Any reduction of the physician-owned hospital limitation would be welcomed news in the physician community. Further, in an effort to curb costs, the proposal also includes provisions that would promulgate a nationwide bundled payment program. Upon analyzing these proposals, many stakeholders believe that the circulation of the discussion draft indicates the direction of the anticipated Medicare debate in Congress and expect several of these provisions to be at the forefront of discussions in the next congressional session.

Published on: December 22, 2014

Final Rule Tightens Provider Enrollment Policies, Expands CMS Authority

by Wachler & Associates, P.C.

On December 3, 2014, the Centers for Medicare and Medicaid Services (“CMS”) released a final rule that broadens its authority to deny providers or suppliers from enrolling in Medicare and revoke providers already participating. The final rule, which is scheduled to go into effect on February 3, 2015, permits CMS to deny or revoke enrollment of providers with abusive billing patterns or practices, deny enrollment of providers affiliated with unpaid Medicare debt and deny or revoke enrollment of providers if a managing employee has been convicted of certain felonies.

CMS plans to identify improper billing by analyzing several factors such as:

The percentage of denied claims;
The reason for the denials; and
The length of any billing irregularities.

Providers and suppliers affiliated with entities with unpaid Medicare debt may prevent the enrollment denial or revocation if they agree to a structured repayment plan or pay the debt in full. The purpose of this provision is to prevent entities from incurring substantial Medicare debt, exiting the program and then re-enrolling as a new entity. Currently, CMS can only deny enrollment to those who have overpayments. The final rule explicitly expands this power to include Medicare debt, which includes overpayments as well as other financial obligations.

Published on: December 17, 2014

Medicare Pilot Program Requires Prior Authorization for Ambulance Transport Services

by Wachler & Associates, P.C.

On December 1, 2014, the Centers for Medicare and Medicaid Services (“CMS”) launched a three-year pilot program (“the program”) in an effort to curb improper Medicare payments to ambulances providers. Under the program, CMS requires prior authorization for repetitive, scheduled, non-emergent ambulance transport claims billed using the following HCPCS codes: (1) A0425 – BLS/ALS mileage, per mile; (2) A0426 – Ambulance service, Advanced Life Support (ALS), non-emergency transport, Level 1; and (3) A0428 – Ambulance service, Basic Life Support (BLS), non-emergency transport. CMS defines a “repetitive ambulance service” as medically necessary ambulance transportation services that are furnished three or more times in a ten-day period, or at least once per week for at least three weeks. According to CMS, these services are often used by elderly beneficiaries that require transportation for dialysis, cancer, or wound treatment.

The prior authorization the process requires the ambulance provider to request provisional affirmation of coverage by CMS before a service is rendered to a beneficiary and before a claim is submitted for payment. CMS believes that prior authorization will ensure that the ambulance service is medically necessary and meets the applicable Medicare coverage criteria. According to CMS, the Medicare Administrative Contractor (MAC) will make every effort to review the prior authorization request and postmark decisions letters win ten business days. Each prior authorization decision may affirm up to 40 round trips per request in a 60-day period. The prior authorization request submitted by an ambulance provider must include:

The beneficiary’s name, Medicare number, and date of birth;

Published on: November 12, 2014

CMS Announces Increased Reimbursement for Telehealth

by Wachler & Associates, P.C.

On October 31, 2014, the Centers for Medicare and Medicaid Services (CMS) released its CY 2015 Physician Fee Schedule Final Rule. The rule included several important changes as it relates to telehealth services. With respect to reimbursement rates, in the final rule CMS increased Medicare payments to telehealth originating sites by 0.8 percent.

In addition, the final rule provides seven new procedure codes that cover the following telehealth services:

Psychotherapy services (CPT codes 90845, 90846, and 90847);
Prolonged services in the office (CPT codes 99354 and 99355); and
Annual wellness visits (HCPCS codes G0438 and G0239).

For billing purposes, the originating site fee will be $24.83. CMS also introduced new CPT code 99490, which allows physicians to bill Medicare for chronic care management. The monthly, unadjusted, non-facility fee will be $42.60. Most importantly, CPT 99490 is considered a physician service and is, therefore, available nationwide and not restricted to rural-only telehealth.

Although these changes in the final rule have been received by many telehealth advocates and providers as welcomed developments, CMS did not eliminate the requirement for patients to be located in a rural area in order to receive telehealth services, despite suggestions from many commenters in response to the 2015 Physician Fee Schedule proposed rule to expand the reach of telehealth.

Published on: November 4, 2014

Office of Medicare Hearings and Appeals Hosts Second Medicare Appellant Forum

by Wachler & Associates, P.C.

On October 29th, the Office of Medicare Hearings and Appeals (OMHA) hosted its second Appellant Forum in Washington, D.C. OMHA is responsible for the Administrative Law Judge (ALJ) level of the Medicare administrative process, and thus operates the third level of appeals for Medicare audit denials. The Appellant Forum was intended to provide updates to Medicare audit appellants on the status of OMHA operations and to relay information regarding OMHA initiatives to reduce backlog in the processing of Medicare appeals.

Representatives from Wachler & Associates attended the Appellant Forum and gained valuable information for appellants facing delays in Medicare ALJ appeals. OMHA’s Chief ALJ, Hon. Nancy Griswold, explained the historical backdrop that led to OMHA’s current backlog in appeals and described OMHA’s attempts to find a “holistic solution” to ALJ workload.

Judge Griswold also updated providers on statistics regarding OMHA’s appellant workload. She explained that Medicare Part A and Part B appeals amount to 99% of the appeals pending at the ALJ level. Further, that despite increased productivity by ALJs, OMHA currently receives 4 times the amount of appeals per day as the ALJ’s are able to adjudicate per day. In January 2014, OMHA received 14,000 appeal receipts per week. The unprecedented amount of appeals has caused OMHA to fail to meet its 90-day statutory requirement for adjudication. As of September 2014, the average wait time for an ALJ decision was 514 days, which again marked a significant increase from the fiscal year 2013 average.

Published on: October 28, 2014

CMS Extends Fraud and Abuse Waivers for ACO Shared Savings Program

by Wachler & Associates, P.C.

On October 17, 2014, the Centers for Medicare and Medicaid Services (CMS) extended its interim final rule regarding fraud and abuse waivers for accountable care organizations (ACOs) that participate in the Medicare Shared Savings Program. The Medicare Shared Savings Program was one of the initial steps taken under the Affordable Care Act to both increase quality and lower costs in the Medicare program. ACOs that participate in the Medicare Shared Savings Program can share in the savings generated to Medicare.

Originally, the interim final rule was published in the November 2, 2011 Federal Register, and had the typical three-year period before becoming a final rule. The continuation of the interim final rule extends the timeline for an additional year, establishing a new deadline of November 2, 2015. The interim final rule offers five waivers to ACOs, which allow healthcare entities to form and operate ACOs without fear of violating federal fraud and abuse laws. The ACO waivers include:

An ACO participation waiver;

Published on: September 30, 2014

Medicare to Introduce More Star Ratings to Compare Providers

by Wachler & Associates, P.C.

CMS recently announced that it will soon be adding additional star ratings to the Medicare.gov website by 2015. CMS has already implemented the star rating system to provide consumers quality and safety information regarding nursing homes and physician groups on a five-star scale. The system is supposed to allow consumers to make informed decisions about their provider, while giving providers something to strive for. CMS Deputy Administer for Innovation and Quality, Dr. Patrick Conway, stated that the star rating system is based on scientific standards of both accuracy and rigor. Because providers differ on the quality of care and services they offer to customers, CMS touts its star rating system as giving consumers a “snap-shot” of the care an individual provider offers. By 2015, CMS plans to add hospital groups and dialysis and homecare providers to the rating system.

While advocates of the consumer-oriented star-rating system are excited about the inclusion of more provider types, many providers are speaking out against the system. According to a recent article on Modern Healthcare, after being notified of dialysis and homecare providers’ inclusion, a spokesman for Kidney Care Partners–a coalition of dialysis providers–claimed that the star rating system compares apples and oranges. The spokesman argued that the inaccurate comparison results in confused patients not really understanding what the amount of stars mean. Proponents of the rating system try to rebut views like those expressed by Kidney Care Partners, by arguing that the health care community should stress transparency, rather than worry about the imperfections in the rating system. Echoing these sentiments, Dr. John Santa, the Medical Director for Consumer Reports, stated that no provider will score well on every rating system, but the abundance of ratings will eventually provide a clearer picture of providers’ quality of care and safety.

Although proponents of the star rating system continue to espouse its positive aspects, many providers remain concerned. Because providers can lose accreditation for scoring poorly on certain measures of safety and quality, and even face fines, these ratings are becoming more important. Several providers urge CMS to delay the inclusion of more provider types to the rating system until it can provide a more complete performance rating. They assert that the measurement differences may result in one provider scoring high in one program and low in another and, although the system does not have to be perfect, it must be reliable. Opponents say that to allow otherwise is to misguide patients and may potentially lead to unfair financial penalties on the entities.