Wachler & Associates Health Law Blog

Published on: April 14, 2014

OIG Finds Limited Compliance with Face-to-Face Home Health Requirements

In a report released on Thursday, April 10, the Office of the Inspector General (“OIG”) found that, thus far, there has been limited compliance with the face-to-face documentation requirement for home health providers. As a result, the OIG determined that Medicare paid $2 billion to home health providers that should not have been paid. In an effort to increase compliance with the face-to-face requirement, the OIG has outlined specific recommendations that CMS could implement which would impact home health providers. The OIG’s findings and recommendations should serve as an alert to home health providers to carefully review their compliance with face-to-face encounter documentation requirements.

The Patient Protection and Affordable Care Act (“ACA”) included language that established the face-to-face encounter requirement. Although initially scheduled to be effective January 1, 2011, the Centers for Medicare and Medicaid Services (CMS) delayed implementation until April 1, 2011.

The face-to-face encounter documentation requirement provides that for initial certification periods only, a home health agency must obtain documentation from the certifying physician that the physician had a face-to-face encounter with the patient. The face-to-face documentation must be signed and dated by the physician. It must include the date the encounter occurred, and include a brief narrative that describes why the patient is homebound and why the skilled services are medically necessary to treat the patient’s illness or injury. A home health agency’s reimbursement for the home health services for an initial certification period is dependent upon the certifying physician’s proper documentation of the face-to-face encounter.

Published on: April 8, 2014

Moody’s Report: Two-Midnight Rule to Weaken Hospital Profitability

by Wachler & Associates, P.C.

On Wednesday, March 12, Moody’s Investor Services released a report predicting that Medicare’s new inpatient admissions policy, the “Two-Midnight rule”, will negatively affect hospitals’ bottom lines. The Two-Midnight rule instructs physicians and hospitals to use a two-midnight benchmark and order admission for patients expected to require hospital care crossing at least two midnights.

The Moody’s report stated that “on average, the [Two-Midnight] rule could cause revenue reduction averaging $3,000 to $4,000 per case.” The report suggests that these reduced reimbursement rates will be especially devastating since the cost of treating patients will remain the same. The report also suggests that the Two-Midnight rule will expedite the already increasing trend of more outpatient observation stays, which will put more pressure on hospital revenues. The impetus for this increasing trend of outpatient care observation stays has been the frequent challenges by RACs to the medical necessity requirement of short-stay admissions.

The report also concludes that under the Two-Midnight rule, hospitals with shorter lengths of stay will be most affected. The hospitals that are expected to be most affected are classified as ‘low acuity’ community hospitals. While these types of hospitals tend to have a larger number of cases resulting in shorter hospital stays, these stays typically still consume a large of amount of resources, such as diagnostic testing.

Published on: April 4, 2014

Two-Midnight Rule Enforcement Delay Extended to March 31, 2015

by Wachler & Associates, P.C.

On April 1, 2014, President Barack Obama signed into law a bill (H.R. 4302) extending the enforcement delay of the two-midnight rule. Under the newly adopted law, Recovery Audit Contractors (RACs) will not conduct patient status reviews of inpatient hospital admissions on a post-payment basis until March 31, 2015. The two-midnight rule, which took effect October 1, 2013, provides that inpatient hospital admissions are generally appropriate when the physician expects the beneficiary will require medically necessary hospital services for 2 or more midnights. Since taking effect, hospitals’ inpatient admission claims under the two-midnight rule have been free from review by the RACs.

Prior to the extended enforcement delay to March 31, 2015, the enforcement of the two-midnight rule was previously delayed by CMS to March 31, 2014, and again to September 30, 2014. Also extended to March 31, 2015 under the new law is the Medicare Administrative Contactors’ (MACs) ability to conduct “Probe and Educate” reviews of a limited set – 10-25 claims depending on the size of the hospital – of inpatient admission claims for each hospital, which are conducted on a prepayment basis. When conducting “Probe and Educate” reviews, CMS has instructed the MACs to review hospital’s compliance with the admission order requirements, the certification requirements, and the two-midnight benchmark.

Until March 31, 2015, hospital inpatient admissions under the two-midnight rule will be subjected only to a limited number of prepayment claim reviews by the MACs. Thus, for inpatient claims with dates of admission October 1, 2013 through March 31, 2015, the RACs will not conduct prepayment reviews, and both the RACs and the MACs will not conduct post-payment reviews.

Published on: April 1, 2014

HHS to Conduct Pre-Audit HIPAA Surveys

by Wachler & Associates, P.C.

On February 24, 2014, the Department of Health and Human Services’ (HHS) Office for Civil Rights (“OCR”) announced in the Federal Register that it plans to survey up to 1,200 organizations to identify candidates for audits under the Health Insurance Portability and Accountability Act (HIPAA) Audit Program. In accordance with the Health Information Technology for Economic and Clinical Health (“HITECH”) Act, OCR is required to schedule periodic audits to ensure that covered entities and business associates are in compliance with HIPAA Privacy, Security, and Breach Notification Rules.

According to the notice, the survey will assess covered entities and business associates’ “suitability” (e.g., size, complexity and fitness) for an audit by collecting information from these respondents such as “number of patient visits or insured lives, use of electronic information, revenue, and business locations.” Although the total number of entities to be audited in 2014 is unclear, HHS expects that expanding the audit program to up to 1,200 organizations will provide a more accurate depiction of covered entities and business associates’ compliance with HIPAA. HHS will be accepting comments regarding this pre-audit survey until April 25, 2014.

Since the inception of the HIPAA Privacy and Security Rules in 1996, Wachler & Associates has counseled providers and other covered entities of all sizes in HIPAA compliance. In order to attain compliance, providers should update security policies and procedures, business associate agreements, privacy policies and procedures, and HIPAA privacy notices. In addition, all employees should receive ongoing training in HIPAA compliance. If your entity does not already have these procedures in place, Wachler & Associates can help you implement these important compliance measures. If you have any questions or require assistance developing and implementing a HIPAA compliance plan for your organization, please contact an experienced healthcare attorney at 248-544-0888 or at wapc@wachler.com.

Published on: March 21, 2014

Fox 2 Detroit Interviews Wachler & Associates’ Andrew Wachler regarding Beaumont, Botsford, Oakwood Merger

by Wachler & Associates, P.C.

Wachler & Associates partner Andrew Wachler appeared on Fox 2 Detroit this morning to discuss the recent announcement that Beaumont Health System, Botsford Health Care, and Oakwood Healthcare have signed a letter of intent to form a new $3.8 billion nonprofit health system.

In his interview, Mr. Wachler described the advantages this affiliation will provide in improving patient care and accessibility. He indicated that it could allow patients access to each hospitals’ various specializations and also allow the hospitals to share technology and capital resources, which in time has the potential to improve quality of care and reduce costs.

Mr. Wachler also explained that the Affordable Care Act, which includes the concepts of bundled payments and Accountable Care Organizations (ACOs), incentivizes large health systems to manage care efficiently, and may consequently result in a greater focus on wellness and preventive care.

Published on: March 11, 2014

Legislation Unveiled to Clarify Two-Midnight Rule

by Wachler & Associates, P.C.

On Thursday, in a bipartisan effort, two senators unveiled a proposed bill that attempts to clarify the infamous two-midnight rule. Senator Robert Menendez, a Democrat from New Jersey and Senator Deb Fischer, a Republican from Nebraska are co-sponsors of the bill. Titled as Two-Midnight Rule Coordination and Improvement Act of 2014, the bill mirrors a similar one currently working its way through the House of Representatives and has the support of numerous hospital and doctor associations.

Most notably, the bill would require the Secretary of the Department of Health and Human Services to consult with interested stakeholders – such as hospitals, physicians, Medicare administrative contractors, recovery audit contractors, and other parties determined appropriate by the Secretary – to determine the criteria for short inpatient stays. Additionally, the bill would require CMS to develop a payment methodology for the shorter inpatient stays. Although, in developing the payment methodology, the bill does not require consultation with the same stakeholders used in developing the criteria for shorter inpatient stays, the bill strongly encourages CMS to consider the criteria that the stakeholders developed.

Equally important in the bill are the timing provisions relating to the implementation of the criteria for shorter inpatient stays. Most importantly, the proposed bill keeps the current enforcement delay in place. The bill would also provide an additional year long delay in the enforcement of the two-midnight rule if the criteria for shorter inpatient stays are not implemented during the IPPS annual notice and comment rulemaking process for fiscal year 2015. If the criteria are in place during the fiscal year 2015 rulemaking process (i.e., regulations are finalized in 2014), the bill authorizes RACs to begin their work at the time of implementation, but not prior to October, 1, 2014. This measure ensures that hospitals are not subject to audits until the criteria are made final.

Published on: February 28, 2014

Medicare to Re-Review Denials under the 2-Midnight Rule

by Wachler & Associates, P.C.

On Tuesday, the Centers for Medicare and Medicaid Services (CMS) ordered its Medicare Administrative Contractors (MACs) to take a second look at all of the claims that the MAC denied under the Probe and Educate review process. These re-reviews are being done to ensure that the MACs’ claim denials, and the education provided to the hospitals up to this point, is consistent with CMS’s recent clarifications regarding the two-midnight rule and physician orders and certification requirements. During the re-reviews, if the MAC determines that its previous decision to deny the claim was improper, the MAC may reverse the denial and issue payment outside of the Medicare appeals process.

While the re-review process is in effect, hospitals should contact their MAC to determine whether a re-review has taken place. Until this confirmation is received, hospitals should not file a redetermination appeal request. CMS announced that it will waive the 120 day timeframe for filing a redetermination appeal for any redetermination requests received before September 30, 2014 for Probe and Educate denials that occurred on or before January 30, 2014. If a hospital has already filed an appeal for a claim denial on or before January 30, 2014, that claim will also be subject to a re-review by the MAC. Upon re-review, if the MAC upholds its original denial decision, that claim will be automatically transferred to a redetermination appeal.

Hospitals should welcome the news for these re-reviews. First, there is the possibility that healthcare providers will be reimbursed for claims that were improperly denied upon initial review. Secondly, the re-review process will be less formalistic, and thus less costly and time-consuming than the normal appeal process.

Published on: February 26, 2014

Medicare Therapy Cap Exception Extended

by Wachler & Associates, P.C.

On December 18, 2013, Congress enacted legislation extending the Medicare therapy cap until March 31, 2014. The 2014 outpatient therapy cap limits are $1,920 for physical therapy and speech-language pathology services combined, and $1,920 for occupational therapy services. In order to qualify for an exception to the therapy cap limits and continue to receive Medicare reimbursement, therapists must first document the need for medically reasonable and necessary services in the beneficiary’s medical record and, separately, the therapist must indicate on the Medicare claim for services that the outpatient therapy services above the therapy cap are medically reasonable and necessary. Further, starting January 1, 2014, the Medicare outpatient therapy cap limits will also apply to therapy services performed in critical access hospitals.

Providers that meet or exceed the $3,700 threshold in therapy expenditures will be subject to a manual review. The manual review process for 2013 is not expected to change in 2014. Under the manual medical review process, Recovery Audit Contractors (RACs) will conduct either prepayment or postpayment review for claims exceeding $3,700 depending on the state. Currently, only Florida, California, Michigan, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri are subject to prepayment review, while the rest of the nation is subject to postpayment review.

A bill that is currently working its way through Congress seeks to permanently repeal the therapy caps. The Medicare Access to Rehabilitation Act has bipartisan support and its sponsors argue that an arbitrary cap on outpatient services without regard to clinical need discriminates against some of the most vulnerable and needy Medicare recipients.

Published on: February 20, 2014

RACs to Stop Requesting Medical Records from Providers

by Wachler & Associates, P.C.

Recently, the Centers for Medicare and Medicaid Services (CMS) announced that, effective February 22, Recovery Audit Contractors (RACs) may no longer send additional documentation requests (ADRs) to providers for post-payment audits. In addition, February 28 is the last day a Medicare Administrative Contractor (MAC) may send prepayment ADRs for the RAC Prepayment Review Demonstration. According to CMS, this pause in ADRs is being implemented to allow the RACs to complete all outstanding claim reviews by the end of their current contracts. Furthermore, CMS stated that this pause will also allow CMS to continue to refine and improve the RAC program. This announcement was published less than a week after the Office of Medicare Hearings and Appeals (OMHA) Medicare Appellant Forum, which was held to address the current backlog of cases pending at the ALJ level of appeal.

It appears that, as a result of provider input as well as recent legislative participation, CMS is recognizing the challenges to providers of intense RAC scrutiny and withholding of payment without the corresponding appeal rights afforded under the statute. From this notice, we are hopeful that the ADRs will cease virtually immediately from the RACs and that, as of June 1, the MAC will not be able to effectuate offset for initial denials by the RACs. Hopefully, this will provide some needed relief to Medicare providers and give OMHA a chance to reduce its backlog so that, in the future, providers may receive due process in the timely manner that they are entitled to.

Wachler & Associates will continue to keep you updated on CMS’s changes to the RAC program and appeals process. If you need assistance in your defense of a Medicare audit, or have questions pertaining to best practices for appealing to the ALJ, please contact an experienced health care attorney at Wachler & Associates at 248-544-0888 or wapc@wachler.com

Published on: February 18, 2014

CMS Revises Medicare Policy Manuals Clarifying that Improvement Standards are Not Required for Coverage

by Wachler & Associates, P.C.

On January 15, 2014, the Centers for Medicare & Medicaid Services (CMS), issued revisions to their policy manuals, including the Medicare Benefit Policy Manual, that clarify that “Improvement Standards” are not required for determining claims for Medicare coverage involving skilled care, including skilled nursing facilities (SNF), home health (HH), and outpatient therapy (OPT) benefits. The purpose of these revisions is to comply with the January 24, 2013 Jimmo v. Sebelius settlement agreement which required clarification that coverage of skilled nursing and skilled therapy services “…does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care.” Citing the agreement’s justification, CMS noted that, no “Improvement Standard” is to be applied in determining Medicare coverage for maintenance claims that require skilled care. Medicare has long recognized that even in situations where no improvement is possible, skilled care may nevertheless be needed for maintenance purposes (i.e., to prevent or slow a decline in condition). The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition. Thus, such coverage depends not on the beneficiary’s restoration potential, but on whether skilled care is required, along with the underlying reasonableness and necessity of the services themselves. The manual revisions serve to reflect and articulate this basic principle more clearly.

Included with the manual revisions, CMS took the opportunity to introduce additional guidance for appropriate documentation in facilitating accurate coverage determinations for claims involving skilled care. CMS noted that, “While the presence of appropriate documentation is not, in and of itself, an element of the definition of a ‘skilled’ service, such documentation serves as the means by which a provider would be able to establish and a Medicare contractor would be able to confirm that skilled care is, in fact, needed and received in a given case.”

The manual clarifications fulfill the first step required of CMS in the Jimmo settlement agreement. The agreement also sets forth an educational campaign, in which CMS agreed to disseminate written materials to contractors, adjudicators, providers, and suppliers, and conduct national conference calls with providers and suppliers as well as Medicare contractors, Administrative Law Judges, medical reviewers, and agency staff, to communicate the policy clarifications and answer questions. CMS has also committed to engage in accountability measures to ensure beneficiaries receive the care to which they are entitled. Such measures include review of a random sample of SNF, HH, and OPT coverage decisions to determine overall trends and identify any problems, as well as a review of individual claims determinations that may not have been made in accordance with the principles set forth in the settlement agreement.