Medicare

Published on: January 30, 2023

Top Healthcare Law Issues in 2023

As the COVID-19 public health emergency (PHE) gets extended yet again and while the healthcare industry continues to grapple with the numerous changes and developments over the past several years, providers should gear up for an uncertain landscape in 2023. Between the massive influx of providers implementing telehealth services and the countless unprecedented changes and reforms within the healthcare industry as a whole, the PHE has continued to be a constant, underlying source of uncertainty for providers when it comes to compliance and government imposition. There are several focus areas that healthcare providers in 2023 should approach with caution and this blog will briefly discuss some of those areas.

The COVID-19 pandemic ushered in a nationwide shift in how providers deliver healthcare services, as services delivered via telehealth became more widely utilized and more readily covered by governmental and commercial payors. However, some of the fundamental regulatory flexibilities and policy waivers that made this shift possible are temporary, which creates an unpredictable environment for providers in 2023. To make matters more complex, telehealth services have been an area of increased scrutiny by enforcement agencies and appear to remain a focus of future enforcement action. Moreover, the increased prevalence of telehealth services raises data privacy concerns generally, but in particular for providers subject to HIPAA. When the PHE does inevitably come to an end, so too will some of the flexibilities that allow HIPAA-covered providers to accessibly provide telehealth services without greater data privacy controls. Providers should take the opportunity to analyze possible changes to their data privacy practices to ensure compliance following the end of the PHE.

Over the course of the past several years, providers have seen heightened levels of government enforcement activity related to alleged fraud and abuse within the healthcare industry, and it does not appear to be slowing down any time soon. In 2021 alone, the Department of Justice (DOJ) generated $5.6 billion in False Claims Act (FCA) settlements and judgments. As several of the Department’s stated priorities have not changed since February 2022, providers can expect to see continued enforcement action in areas such as opioid abuse, Medicare managed care (Part C), and audits looking for allegedly medically unnecessary services. Furthermore, a series of memoranda issued by current and past attorneys general seem to sway back and forth concerning the limitations on the uses of sub-regulatory guidance in FCA cases, adding even greater uncertainty to future fraud and abuse enforcement activity.

Published on: January 26, 2023

UPIC Audits on the Rise

by Wachler & Associates, P.C.

Healthcare providers have seen a disturbing rise in audits by Medicare Unified Program Integrity Contractors (UPICs). The stated purpose for the UPICs is to investigate instances of suspected fraud, waste, and abuse in Medicare or Medicaid claims. However, UPICs are often over-zealous in alleging fraud where there is none, thereby causing devastating consequences for Medicare providers.

Like the Medicare Administrative Contractors (MACs), Recovery Audit Contractors (RACs), and the now-defunct Zone Program Integrity Contractors (ZPICs), UPICs are government contractors that have been tasked by the Centers for Medicare & Medicaid Services (CMS) to review claims submitted by Medicare providers and identify alleged overpayment to providers. Currently, the companies that hold contracts to act as UPICs are CoventBridge Inc., Qlarant Integrity Solutions, LLC, and SafeGuard Services. However, UPIC investigations are different from other types of Medicare audits because the UPICs are meant to specifically seek out fraud and a UPIC investigation is more likely to lead to collateral consequences, such as a suspension of Medicare payments or a revocation of Medicare billing privileges.

A UPIC investigation often follows the same trajectory. First, the UPIC will conduct a series of probe audits of the provider. These may seem inconsequential because they involve only a few claims or a small dollar value at issue. Second, the UPIC will deny nearly every claim it reviews and indicate that it has found a “credible allegation of fraud.” Third, the UPIC will lead CMS to suspend the provider’s Medicare payments. Around the same time as the Notice of Suspension, the UPIC will request additional medical records, usually for significantly more claims than before. Fourth, and usually several months later, the UPIC will issue another set of audit findings. This final audit will often include a statistical extrapolation and demand a significant repayment, often in the hundreds of thousands or millions of dollars. In some cases, the UPIC can also lead CMS to revoke the provider’s Medicare billing privileges.

Published on: January 23, 2023

COVID-19 Telehealth Integrity Report Issued by Pandemic Response Accountability Committee (PRAC)

by Wachler & Associates, P.C.

In December 2022, the Pandemic Response Accountability Committee (PRAC) Health Care Subgroup released its report focusing on telehealth fraud, waste, and abuse risks associated with select healthcare programs across six federal agencies during the first year of the COVID-19 pandemic.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) conducted this report by leading a group of OIGs from each of the six federal agencies involved. Including the HHS OIG, those six federal agencies are the Department of Defense (DoD), the Office of Personal Management (OPM), the Department of Veterans Affairs (VA), the Department of Labor (DOL), and the Department of Justice (DOJ). The report summarizes potential program integrity risks identified by the six participating OIGs. Specifically, the report aims to inform stakeholders how expanded use of telehealth during the COVID-19 pandemic helped individuals access healthcare during uncertain times, while also raising awareness about the critical importance of safeguarding expanded telehealth services against fraud, waste, and abuse.

Among the key findings across federal healthcare programs, the OIGs identified:

Published on: December 19, 2022

Medicare Telehealth Updates in 2023 Physician Fee Schedule

by Wachler & Associates, P.C.

Recently, the Centers for Medicare & Medicaid Services (CMS) published its Final Rule implementing changes to the Medicare Physician Fee Schedule for CY 2023. In addition to recent clinical laboratory updates, the Final Rule also includes certain changes regarding billing and reimbursement for telehealth services and gives providers guidance on transitioning away from the flexibilities that arose out of the COVID-19 public health emergency (PHE).

In determining whether new telehealth services may be included on the list of Medicare-covered codes, CMS assigns each potential addition to one of three defined categories. Category 1 services are those similar to professional consultation, office visits, and office psychiatry services already on the approved telehealth list. Category 2 services, which are not similar to services already on the approved telehealth list, are assessed by CMS to determine whether there is evidence of clinical benefit to patients when the service is provided via telehealth. Category 3 encompasses services added on a temporary basis during the PHE that would facilitate continued access to medically necessary services during the pandemic, but for which there is insufficient evidence to evaluate the services for permanent addition under Category 1 or Category 2 criteria.

In the Final Rule, CMS made the following changes with respect to the approved Medicare Telehealth Services List:

Published on: December 13, 2022

Extrapolation in Medicare Advantage Audits Causes Controversy

by Wachler & Associates, P.C.

Medicare Advantage (MA) plans are learning what Medicare providers have long known about the flawed way in which Medicare uses statistical extrapolation in its audits. The Centers for Medicare & Medicaid Services (CMS) has indicated that, for the first time, it intends to apply statistical extrapolations to overpayments and other payment errors by MA plans, which were uncovered in recently released federal audits. CMS conducted 90 audits of MA plans examining billings for approximately 18,000 patients from 2011 through 2013 that resulted in a finding of about $12 million in net overpayments associated with the plans. CMS now intends to extrapolate the results of those audits across the entire membership of each plan – likely millions of patients – and recoup from the plans an estimated $650 million of total overpayments, which CMS has indicated it intends to recoup even though no action has been taken since the audits were conducted.

These circumstances and the issues that the MA plans are pointing out with Medicare’s extrapolation methodology may sound familiar to any Medicare provider that has been subjected to an extrapolated Medicare audit. CMS, its contractors, and other federal agencies, such as the Department of Health and Human Services (HHS) Office of Inspector General (OIG), have used statistical extrapolation against Medicare providers for decades, while strong opposition from the insurance industry has kept it from being applied to audits of MA plans. However, the recent growth of MA plans and the recent release of some CMS audit results have led CMS to begin to apply it to MA plans.

While statistical extrapolation can be a valid and useful auditing tool where the auditor carefully employs sound statistical principles and valid methodologies, Medicare extrapolations are often sloppy, imprecise, and difficult to challenge. As MA plans are now learning, Medicare extrapolations (especially those conducted by contractors) often include errors that skew the results, overestimate the alleged overpayment, or would render the extrapolation outright invalid in an academic or accounting setting, including: over-sampling high-value claims, double-counting claims, using a sample that does not represent the universe to which it is extrapolated, combining dozens of unrelated services or codes into a single sample frame or universe, ignoring information in favor of the provider, failure to use stratification or cluster sampling where the data set used demands it for precision, unacceptably low levels of precision, and demands for astronomical and business-shattering overpayments after having actually reviewed only a small number of claims. Moreover, HHS’s reviewers – who are charged with reviewing these audits for accuracy – will often bend over backwards to explain why an error-riddled extrapolation was appropriate, while the agency has built a fortress of regulations, caselaw, and manual provisions that make it very difficult to challenge even the most flawed extrapolations.

Published on: December 7, 2022

Clinical Laboratory Updates in 2023 Physician Fee Schedule

by Wachler & Associates, P.C.

On November 2, 2022, the Centers for Medicare & Medicaid Services (CMS) published its Final Rule implementing changes to the Medicare Physician Fee Schedule for CY 2023. Included within this Final Rule are important changes for clinical laboratories that will take effect on January 1, 2023.

There are two notable changes affecting clinical labs included in the Final Rule. First, CMS is implementing congressionally mandated changes to the Protecting Access to Medicare Act (PAMA) reporting regulations, which updates reporting timelines and limits the phase-in of laboratory test payment reductions. Laboratories should take steps to have their 2019 data accessible and prepare to report before the March 31, 2023 deadline. Second, CMS is issuing regulations to both codify and modify policies on billing Medicare for specimen collection fees and travel allowances. The changes also increase specimen collection payment rates that had previously remained unchanged for years. Specifically, as it relates to specimen collection, the changes may affect codes 36415, G0471, P9612, and P9615, but do not appear to relate to codes G2023 and G2024. As the regulations relate to travel allowances, the changes may affect codes P9603 and P9604.

Following the implementation of PAMA in 2014, Medicare has set the clinical laboratory fee schedule (CLFS) rates based on data reported by applicable laboratories on the payment rates they receive from commercial payors. The initial reporting period occurred in early 2017 based on data from 2016. However, the second reporting period was delayed due to the COVID-19 public health emergency, which was intended for early 2020. Thus, CMS is revising the definitions of “data collection period” and “data reporting period” to specify that for the data reporting period of January 1, 2023 through March 31, 2023, the data collection period is January 1, 2019 through June 30, 2019. Moreover, CMS clarified that data reporting is required every three years beginning January 2023. As a result, CLFS payment rates for CY 2024 through CY 2026 will be based on data collected in the first half of 2019 and reported in early 2023.

Published on: November 21, 2022

OIG Updates Work Plan for November 2022

by Wachler & Associates, P.C.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) announced several new changes in its Work Plan update for November 2022. The OIG Work Plan forecasts the projects that OIG plans to implement over the foreseeable future. These projects usually include OIG audits and evaluations. Below are the highlights from the Work Plan update of which providers and suppliers should take notice.

First, OIG will conduct a targeted audit of Medicaid nursing facilities’ use of funds related to direct patient care. In carrying out this audit, OIG plans to select three facilities in selected states to determine what percentage of Medicaid nursing facility revenue is being expended on direct patient care. The three facilities selected for review will be composed of one of each of the following types: for-profit, not-for-profit, and governmental.

Second, OIG will perform a nationwide audit of inpatient rehabilitation facilities (IRFs). In prior years, IRF claims audits and Hospital Compliance audits that include IRF claims have revealed alleged high error rates related to IRF stays which did not support that the IRF care was reasonable and necessary in accordance with Medicare requirements. In response to these findings, IRF stakeholders have asserted that Medicare audit contractors and OIG have misconstrued the IRF coverage regulations. OIG plans to utilize this planned nationwide audit to better understand which claims IRFs believe are properly payable by Medicare and whether there are areas in which CMS can clarify Medicare IRF claims payment criteria. This audit will be an independent performance audit in accordance with Generally Accepted Government Auditing Standards.

Published on: November 9, 2022

CMS Focuses Enforcement on Poorly Performing Nursing Homes

by Wachler & Associates, P.C.

In a recent news release, the Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) announced revisions to the Special Focus Facility Program (SFFP), which addresses poor nursing home performance, that will have the effect of increased scrutiny of these troubled facilities. According to CMS, nursing homes that consistently perform poorly in comparison to their peers will be required to comply with stricter standards and demonstrate systemic quality improvements in order to avoid enforcement actions, including exclusion from the Medicare and Medicaid programs.

The increased scrutiny stems from the Biden Administration’s recently announced plan for reforms to nursing home conditions and complicated ownership structures that HHS contends impede oversight of skilled nursing facilities. The focus of the reforms is to increase nursing home quality and safety by requiring minimum staffing levels, enhanced infection control measures, and oversight of nursing homes owned by for-profit companies, among other policies. There are currently 88 nursing homes with persistent records of noncompliance participating in the SFFP in 2022, representing about 0.5% of all nursing homes. In order to complete the program, nursing homes must pass two consecutive inspections that occur approximately every six months. Under the revised program, nursing homes will not be allowed to exit the program if inspections reveal more than a certain number of deficiencies, or if facilities have not significantly improved.

CMS recommends that skilled nursing facilities work with quality improvement organizations and external consultants to implement evidence-based interventions and make meaningful changes to staffing and leadership. State Survey Agencies are also advised to take nursing homes’ staffing levels into consideration, in addition to their compliance histories, when selecting candidates for the SFFP. If nursing homes demonstrate continued noncompliance with the quality rules or fail to demonstrate efforts to improve, CMS has indicated that it will impose severe enforcement sanctions, such as discretionary denials of payment for new admissions, civil monetary penalties, or directed plans of correction. Importantly, any facilities cited for “immediate jeopardy” deficiencies in two surveys while participating in the SFFP may be terminated from the Medicare and Medicaid programs. Lastly, CMS is extending the monitoring period for possible enforcement actions against nursing homes that have successfully completed the SFFP if their performances decline after they are no longer subject to the extra oversight. Nursing homes participating in the SFFP should be aware of the heightened scrutiny that they will be subject to and take actions to ensure compliance with the quality standards, staffing requirements, and other key focus areas under the revised program.

Published on: November 7, 2022

CMS Seeks Comments on Proposed National Healthcare Provider Directory

by Wachler & Associates, P.C.

On October 7, 2022, the Centers for Medicare & Medicaid Services (CMS) published a request for information (RFI) notice seeking public comment on a proposed national healthcare provider directory. CMS states in the RFI that the directory would be a “centralized data hub” for healthcare provider, facility, and entity directory information across the country. Under the proposal, CMS would establish and maintain the national directory and validate the data against primary sources. The national directory would also be application programming interface (API)-enabled.

While patients already use provider directories to locate healthcare providers and learn about the services they offer, these directors are typically maintained by individual payers and may not be the most accurate source of provider information. Moreover, reporting contact and services data to payers places a significant administrative burden on providers. In the RFI, CMS cites a 2019 study conducted by the Council for Affordable Quality Healthcare (CAQH), which found that physician practices collectively spend around $2.7 billion annually on directory maintenance. Viewed differently, that figure equates to about $1,000 per month per practice, or one staff member workday per week. According to CAQH, a single streamlined platform for reporting provider directory information would save practices over $4,700 each year, or approximately $1.1 billion in collective annual savings nationwide. Although it is worth noting that payors would likely still require providers to report contact and services data to them, meaning CMS is only adding an additional administrative burden.

CMS’s proposed nationwide directory purports to streamline existing data across its system and publish easily accessible information using interoperable technology in a centralized location. According to CMS, the proposed directory would not only give patients more accurate provider information, but also improve health data exchange and care coordination between providers. A national directory also has the potential to improve public health reporting, a major challenge for the healthcare industry during the COVID-19 pandemic.

Published on: November 2, 2022

OIG Recommends UPICs Conduct More Medicaid Audits

by Wachler & Associates, P.C.

On October 3, 2022, the US Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a report detailing OIG’s findings related to the efficacy of the Unified Program Integrity Contractor (UPIC) program. As many healthcare providers may know, UPICs are the primary program integrity contractors for the Centers for Medicare & Medicaid Services (CMS) and the only program integrity contractors with authority to review both Medicare and Medicaid claims. UPICs are tasked with investigating instances of suspected fraud, waste, and abuse in the Medicare and Medicaid programs. However, much of their work amounts to medical review and payment recovery, as their investigations rarely identify meaningful fraud, although it can cause tremendous damage to a provider when the UPIC accuses a provider of fraud

OIG conducted a qualitative study of each of the five UPICs’ 2019 activities, including surveying each UPIC to find out about the challenges they faced in performing program integrity activities. OIG also solicited input from CMS about the effects of the unification of Medicare and Medicaid program integrity activities, how CMS measures the effectiveness of UPICs, and any challenges UPICs face in conducting their work. Notably, OIG did not assess whether UPICs were appropriately targeting providers with audits and suspensions, or whether UPIC findings were upheld on review by other contractors or Administrative Law Judges in the administrative appeals process. Rather, OIG’s report seems to imply that more auditing is always better, regardless of its efficacy or its impact on healthcare providers.

As a result of the study, OIG found that UPICs conducted substantially more Medicare program integrity work compared to Medicaid work. The study revealed that UPICs conducted only minimal activities related to Medicaid managed care, even though most Medicaid enrollees receive services through managed care. OIG further noted that UPICs reported no data analysis projects completed or vulnerabilities identified related to Medicaid managed care in 2019. Overall, UPICs conducted disproportionately fewer Medicaid activities compared to the levels of funding they receive from CMS for Medicaid program integrity activities.