Medicare

Published on: August 8, 2012

Breakthrough in the Effort to Obtain Full Part B Reimbursement for Hospitals with Inpatient Claims Denied for Medical Necessity

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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Published on: August 7, 2012

CMS Begins Meaningful Use Audits

by Wachler & Associates, P.C.

According to a posted response to a query in the Frequently Asked Questions section of its website, the Centers for Medicare and Medicaid Services (CMS) have begun Meaningful Use Audits of eligible professionals and eligible hospitals participating in the Medicare and Medicaid EHR Incentive Program.

CMS indicated on the website that the contractor for the audits is Figliozzi and Company. If you are selected for an audit you will receive a letter from Figliozzi and Company on CMS letterhead.

EHR Incentive Programs provide incentive payments to providers and hospitals that implement designated meaningful use EHR technologies. Payment is awarded based on attestations that are submitted by providers. Providers are cautioned to ensure that attestations are accurate. Because the attestation is a statement to receive funding from the federal government, false attestations could be the basis for liability under the Federal False Claims.

We recommend that providers include “self-audits” of meaningful use attestations as part of their compliance program to ensure that they will be able to produce documentation to support the meaningful use attestation statements at the time of a future audit.
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Published on: August 6, 2012

OIG Issues Report on Questionable Billing by Home Health Agencies

by Wachler & Associates, P.C.

On August 2, 2012 the Department of Health and Human Services Office of Inspector General (OIG) issued a report on questionable billing by Home Health Agencies (HHAs). The report found that in 2010, Medicare paid home health claims totaling approximately $5 million as a result of questionable billing, with three specific errors.

The report included recommendations that CMS:

1. Implement claims processing edits or improve existing edits to prevent inappropriate payments.
2. Increase monitoring of billing for home health services.
3. Enforce and consider lowering the 10% cap on the total outlier payments an HHA may receive annually.
4. Consider imposing a temporary moratorium on new HHA enrollments in Florida and Texas.
5. Take appropriate action regarding inappropriate payments and HHAs with questionable billing.

Among the findings of the report, the OIG found that inappropriate payments were made to HHAs for home health claims that overlapped with claims for inpatient hospital stays, overlapped with claims for skilled nursing facility stays, and had service dates after beneficiaries’ deaths–these errors occurred despite the fact that Medicare has automatic edits in place to eliminate these types of errors.

The OIG also found that in 2010, of the HHAs that were found to have questionable billing practices, 80% of those HHAs were located in either: Texas, Florida, California, or Michigan. In fact, the report indicates that in just those four states, more than 2,000 HHAs had questionable billing. Further, 97% of HHAs identified to have questionable billing were located in states that did not have Certificate of Need policies in place limiting the number of HHAs eligible to operate in the state. Nearly one in four HHAs had questionable billing.

In response, CMS concurred with all five OIG recommendations. CMS did, however, disagree with the amount of inappropriate payments made for home health claims that overlapped with inpatient hospital stays and skilled nursing facility stays. CMS comments indicate that it would be difficult to determine what financial impact overlapping claims would have without specific claim data.
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Published on: August 6, 2012

CMS Releases Provider Compliance Interactive Map

by Wachler & Associates, P.C.

On August 1, 2012 the Centers for Medicare and Medicaid Services (CMS) released a Provider Compliance Interactive Map. The map is an interactive online tool that allows users to view state-by-state contact information and websites for contractors and other Medicare resources. The map is intended to simplify access to contact information for providers in each state.
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Published on: August 3, 2012

CMS Considers Changing its Policy Regarding the Services That can be Rebilled to Medicare Part B

by Wachler & Associates, P.C.

In the recently issued Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule for 2013, CMS is soliciting comments regarding policy changes that could be made on the issue of inpatient versus outpatient admission. (To view the CMS factsheet please click here.) CMS is seeking comments on potential changes which could provide some clarity for providers and hospitals regarding inpatient versus outpatient status for purposes of Medicare payment. Comments are due by September 4, 2012.

Currently, when a patient presents to the hospital in a short-stay case, the hospital must decide whether to admit the patient as an inpatient or treat him/her as an outpatient. This decision is not always clear in light of existing Medicare guidance, and the wrong choice can have severe repercussions for the hospital. If the provider orders an inpatient stay, and later, the Recovery Audit Contract (RAC) concludes that the care should have been provided at an outpatient level, the care is deemed not medically reasonable and necessary. Under the current system for reimbursement, the hospital is not reimbursed under Part B for the outpatient services provided unless the hospital undertakes an appeal of the claim denial and is successful before an Administrative Law Judge (ALJ).

Hospitals, in an effort to mitigate costs, err on the side of outpatient care. CMS notes that this practice has doubled in the last four years and that it has a detrimental effect on Medicare beneficiaries.
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Published on: July 20, 2012

Massive Prescription Drug Scheme Uncovered

by Wachler & Associates, P.C.

On July 17, 2012 the United States Attorney’s Office for the Southern District of New York issued a press release announcing the arrest of 48 individuals in what the release calls the largest single prescription drug diversion scheme ever charged at one time. The result of an organized effort by nearly a dozen state and federal agencies, the government has charged the defendants with operating a massive fraud scheme which diverted half a billion dollars’ worth of prescription drugs dispensed to Medicaid patients in the New York City area.

The government alleges the defendants participated in a scheme to buy prescription drugs from patients, to whom the drugs were legitimately dispensed, and then sell them up a chain of buyers where the drugs eventually ended up in the hands of large scale wholesalers. The defendants are alleged to have fraudulently repackaged and labeled the diverted drugs to make them appear as if they were new, before they sold them to unwitting end-users.. In some cases these diverted prescriptions included HIV/AIDS drugs that were expired and potentially no longer medically effective, yet were still dispensed to unknowing patients.

Because many of the patients who sold the drugs received them through a Medicare or Medicaid benefit, and many of the patients who received the drugs from illegal wholesalers used Medicare or Medicaid benefits to obtain the drugs, the press release is calling the alleged fraudulent scheme a double fraud on the health care system. Medicare and Medicaid essentially paid for these drugs twice, once for the legitimate patient who sold their medication, and then once for the end-user, who obtained the drugs from the wholesalers.
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Published on: July 10, 2012

OIG Issues Report on Duplicate Payments for Hospice Medications

by Wachler & Associates, P.C.

On June 28, 2012 the Office of Inspector General (OIG) for the Department of Health and Human Services issued a report to the Centers for Medicare and Medicaid Services (CMS) that addresses instances of duplicative payments for prescription drugs for hospice beneficiaries. The report includes the results of an audit conducted by the OIG which identified instances where Part D payments were made for prescription drugs for hospice care, when the drugs were already covered under Part A hospice coverage, resulting in duplicate payments for the same drugs.

Hospice care provided under Part A has an all-inclusive per diem which covers all aspects of daily hospice care, including drugs specifically for that care. Some drugs may be used for both hospice and non-hospice care for the same beneficiary. Part A per diem coverage could pay for a drug used for hospice care, while Part D could pay for the same type of drug for the same beneficiary if used for non-hospice care. For instance, a beneficiary could receive pain relief medication for hospice care under Part A. If that beneficiary were to fracture a bone, they could receive the same type of pain relief medication that they already receive for hospice care, but if it is for pain relief associated with the broken bone it could be covered under Part D. The OIG audit and report examine drugs that have been paid for under Part D, but were already paid for under Part A hospice per diem.

The OIG audit, conducted during calendar year 2009, found that beneficiaries paid $3,835,557 in copayments on drugs through the Part D program that should have been covered under Part A per diem payments. During the audit period, Part D sponsors for five plans were contacted by the OIG. All five indicated that they had no procedures in place to identify drugs that should have been covered under Part A per diem payments.

Three recommendations were made to CMS in the report, two of which CMS concurred with:

1. Educate sponsors, hospices, and pharmacies that it is inappropriate for Medicare Part D to pay for drugs related to hospice beneficiaries’ terminal illnesses.

2. Perform oversight to ensure that Part D is not paying for drugs that Medicare has already covered under the per diem payments made to hospice organizations.

3. Require sponsors to develop controls that prevent Part D from paying for drugs that are already covered under per diem payments.

CMS did not concur with the recommendation that it perform oversight, stating that it requires conclusive evidence that there is an issue before making payment adjustments, and that implementing an oversight program would be costly and difficult. The OIG responded, stating that their audit work proved that duplicate payments were made and CMS should do more to address the issue.
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Published on: July 10, 2012

CMS Proposes to Add More Face-to-Face Requirements as a Condition of Payment

by Wachler & Associates, P.C.

On July 6, 2012, the Centers for Medicare and Medicaid Services (CMS) issued a 765 page proposed rule addressing changes to the physician fee schedule, payments for Part B drugs, and other Medicare Part B payment policies. (To view the proposed rule please click here .) Of particular interest to providers, CMS implemented face-to-face requirements as a condition of payment for certain durable medical equipment (DME) items.

Face-to-face encounters are required for those items that:

1) currently require a written order prior to delivery per instructions in [CMS’] Program Integrity Manual; 2) cost more than $1,000; 3) [CMS believes] are particularly susceptible to fraud, waste, and abuse; and 4) [CMS believes are] vulnerable to fraud, waste, and abuse based on reports of the HHS Office of Inspector General, Government Accountability Office, or other oversight entities.

CMS explained that it added the face-to-face requirement for certain DMEs because, after empirical study, billed DMEs of the above four characteristics often failed to meet coverage criteria.

The proposed rules are expected to be formally published July 30, 2012. Until then, the public is free to offer commentary.
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Published on: June 29, 2012

Congressional Committee Requests GAO Study of CMS Contractor Redundancies

by Wachler & Associates, P.C.

Members of the United States House Energy and Commerce Committee sent a request on June 26, 2012 to the Government Accountability Office (GAO) requesting a study of redundancy in Centers for Medicare and Medicaid Services (CMS) contractor audits. The request included four specific questions that, at a minimum, the committee wants studied:

1. What process does CMS use to determine whether the contractors’ audit criteria and methodologies are valid, clear, and consistent?

2. How does CMS coordinate among these contractors to ensure that their interactions with providers are not duplicative? Is there any evidence of providers being subjected to multiple overlapping audits on the same topic? If so, how frequently does this occur? Is there any justification for a single provider being audited by multiple contractors at the same time?

3. What are the reasons for requesting that similar information be submitted to multiple contractors? Are there steps CMS is taking to limit duplicative audits, while still ensuring contractors have the tools necessary to pursue program integrity efforts?

4. Does CMS have a strategic plan to coordinate and oversee all of its audit activities and, if so, how is that plan implemented and overseen?

The request asks that all Centers for Medicare and Medicaid Services contractors be studied, including Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), Zone Program Integrity Contractors (ZPICs), Program Safeguard Contractors (PSCs), and Comprehensive Error Rate Testing Review contractors (CERTs).

The request asks that the GAO, “undertake a study that focuses on coordination among contractor efforts and CMS efforts to oversee these contractors to ensure that they are working efficiently and effectively while guaranteeing that beneficiaries are receiving care to which they are entitled.”
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Published on: June 11, 2012

Congressional Subcommittee Hears OIG Testimony on Medicare Benefit Integrity Contractors

by Wachler & Associates, P.C.

On June 8, 2012, Robert Vito, Regional Inspector General for Evaluation and Inspections at the U.S. Department of Health and Human Services (HHS), Office of Inspector General (OIG), testified before the House Energy and Commerce Committee: Subcommittee on Oversight and Investigations. The testimony focused on the current OIG assessment of Medicare contractors’ efforts to counteract fraud at present and in the near future. The testimony focused on Zone Program Integrity Coordinators (ZPIC), who audit and investigate claims and providers enrolled in Medicare Part A and B, and Medicare Drug Integrity Contractors (MEDIC), who focus on Medicare Part C and D.

The testimony revealed that OIG reviews over the last 10 years have found recurring issues with Medicare contractor performance–issues that continue to persist. These issues include:

• Limited results from proactive data analysis.
• Difficulties in obtaining the data needed to detect fraud.
• Inaccurate and inconsistent data reported by contractors.
• Limited use by CMS of contractor-reported fraud and abuse activity data in evaluating contractor performance and investigating variability across contractors.
• Lack of program vulnerability identification and resolution.

One major area for concern for the OIG is proactive data analysis. Medicare contractors, like ZPICs and MEDICs, have continued to pursue a “pay and chase” model of benefit integrity activity, rather than the proactive approach that HHS would like to implement. Proactive analysis would potentially identify fraudulent or otherwise inappropriate claims before they are paid rather than after. Proactive and early identification of fraud and inappropriate payments accounted for only 7 percent of ZPIC investigations, according to a 2011 OIG report. The vast majority of ZPIC and MEDIC audit and investigative activity is based upon “reactive methods” like complaints from other sources.

Vito’s testimony also indicated inaccuracies and lack of uniformity in ZPIC and MEDIC data. System issues, reporting errors, and differing interpretations of fraud terms and definitions have caused drastically different reporting results from different Medicare contractors. In one case, one ZPIC reported 7 times more investigations originating from external sources than the other. This inconsistency prevented OIG from making a conclusive assessment of ZPIC and MEDIC activities.

OIG review found that despite the requirement that Medicare benefit integrity contractors identify and report systemic vulnerabilities in the Medicare program, some contractors are not reporting any vulnerabilities. Vulnerabilities are defined by CMS as fraud, waste, or abuse identified through analysis of Medicare data. In 2009 a total of 62 program vulnerabilities were reported to CMS. Only 21 vulnerabilities included an estimated monetary impact as required. These 21 vulnerabilities totaled an estimated monetary impact of $1.2 billion. As of January 2011, CMS had taken no action on 75% of the vulnerabilities reported in 2009.

The testimony recommended the following continuing actions to improve benefit integrity contractor performance:

• Oversee proactive identification of fraud.
• Provide timely data access.
• Improve accuracy of contractor-reported fraud activity data.
• Assess variability in performance across contractors.
• Ensure program vulnerability identification and resolution.
• Improve overpayment identification and collection.

The OIG will also continue to review Medicare benefit integrity issues, which include continuing evaluations of overpayments and Medicare debt collection, and examining the activities of MACs and RACs. Reviews of new enrollment procedures and prepayment identification of inappropriate claims will also begin.
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