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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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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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The Centers for Medicare and Medicaid Services (CMS) will begin accepting applications on August 1, 2012 for Advance Payment Model Accountable Care Organizations (ACOs). Organizations applying for the Advance Payment Model would begin participation January 1, 2013.

Organizations participating in the Advance Payment Model would receive an advance payment on the shared savings they are expected to earn. Participating ACOs earn three types of payments:

• Upfront, fixed payment.

• Upfront, variable payment based on the number of its preliminarily prospectively assigned beneficiaries.

• A monthly payment of varying amount based on the size of the ACO, also based on the number of its preliminarily prospectively assigned beneficiaries.

The Advanced Payment ACO model is designed to test whether providing an advance on shared savings (as detailed above) will increase health organization participation in the Shared Savings Program, and to determine whether those advance payments can lead to better ACO care for beneficiaries and more savings for the Medicare program.

The Advanced Payment Model is available to participants in the Shared Savings Program, and allows organizations to receive advance payments that will be repaid from thee future shared savings they earn.

More information on Accountable Care Organizations and eligibility for the Shared Savings Program can be found here.
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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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The United States Department of Justice (“DOJ”) announced yesterday that a Detroit-area resident, Louisa Thompson, plead guilty on June 20, 2012, to one count of criminal conspiracy to commit health care fraud in the Eastern District of Michigan federal court.

The Health Care Fraud Prevention and Enforcement Action Team (HEAT) task force, a DOJ and U.S. Department of Health and Human Services (HHS) multi-agency joint venture, headed the investigation of Ms. Thompson. The HEAT task force, which is an initiative of the federal Medicare Fraud Strike Force, uses data analysis and community policing to detect health care fraud perpetrators who steal billions of dollars from the federal government.

The task force discovered that since 2006, Ms. Thompson had billed Medicare for psychotherapy services through two companies, TGW Medical Inc. and Caldwell Thompson Manor Inc., despite these services having never been performed, or performed by unlicensed staff. Ms. Thompson has yet to be sentenced in the case, and faces up to 10 years imprisonment and a $250,000 fine.

Based on recent Medicare Fraud Task Force activity, it appears the HEAT task force is targeting psychological and psychotherapy service providers aggressively, both for criminal prosecution as well as for civil actions to recover money that Medicare and Medicaid has paid. The government’s most-used tool in civil health care cases is the False Claims Act.

The False Claims Act (FCA) was drafted in1893 and was originally intended to prohibit and prevent fraudulent claims against the government during the Civil War. Its purpose was to force government contractors to deliver promised materials, hold them accountable if they did not, and deter fraudulent activity. Under the FCA a qui tam relator (whistleblower) could bring suit on behalf of the United States, and be rewarded with a percentage of the government’s recovery.

In the late-1980s the federal government began using the FCA to pursue fraud in the federal health care programs. In recent years the government has relied on the FCA to combat fraud and abuse in the healthcare arena for conduct that did not reach the standards for criminal prosecution. The penalties for violation of the FCA can be up to $11,000 per false claim as well as three times the damage to the government.
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On June 7, 2012, Ann Maxwell, Regional Inspector General, Office of Evaluation and Inspections, Office of Inspector General (OIG), Department of Health and Human Services (HHS), testified before the U.S. House of Representatives Committee on Oversight and Government Reform: Subcommittee on Government Organization, Efficiency and Financial Management. She testified about an OIG assessment of Medicaid program integrity, which concluded that more needs to be done to protect the integrity of Medicaid payments.

The testimony focused on two national Medicaid integrity programs: the Centers for Medicare and Medicaid Services’ (CMS) National Medicaid Audit Program, and the Medicare-Medicaid Data Match Program (Medi-Medi). The National Medicaid audit program consists of two types of Medicaid Integrity Contractors (MIC), Review MICs and Audit MICs. Review MICs conduct data mining and Audit MICs conduct audits of specific providers. The Medi-Medi program joins together CMS and State and Federal agencies to collaborate and analyze billing trends to identify potential fraud, waste, and abuse. OIG assessment of the programs, as outlined in the testimony, indicates that neither program is effectively accomplishing its mission.

The OIG concluded that the National Medicaid Audit program did not identify overpayments in an amount to prevent a negative return on investment. In fiscal year 2010, CMS paid MICs $32.1 million, while the Audit MICs identified only $6.9 million in the first six months of the year. The Medi-Medi Program also yielded a negative return on investment, recovering $57.8 million in 2007 and 2008, while CMS spent $60 million on the program during the same period.

During the period of OIG review, the National Medicaid Audit Program Review MICs did not produce any potential fraud leads for referral to law enforcement, and CMS did not have a formalized process for Review MICs to identify potential leads. CMS has now implemented a formalized process.

Also during the OIG review period, Review MICs did not complete all of the required tasks for which they were contracted. Along with other tasks Review MICs are contracted to perform, they must provide or recommend audit leads to CMS. Review MICs provided no audit leads during the review period, and CMS stated that it did not expect them to provide audit leads.

Ms. Maxwell’s testimony included OIG recommendations to CMS to improve the efficiency and effectiveness of Medicaid programs. These recommendations include:

• Devote the resources necessary to improve the quality of the Medicaid data available to conduct national Medicaid program integrity data analysis and mining.
• Improve the ability of contractors to properly analyze Medicaid data in light of state-specific policies.
• Evaluate the goals, design, and operations of Medicaid programs to determine what aspects should be a part of a national Medicaid program integrity strategy.
• Hold contractors responsible for all tasks outlined in their contracts.
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The Centers for Medicare and Medicaid Services (CMS) has extended the deadline for submitting a Notice of Intent to Apply to June 29, 2012 for Accountable Care Organizations (ACO) interested in participating in the Shared Savings Program beginning January 1, 2013. CMS will be accepting applications for the January 2013 start date from August 1 through September 9, 2012.

ACOs that do not file the Notice of Intent to Apply prior to the June 29 deadline will be unable to participate in the Shared Savings Program for the January 2013 start date. Furthermore, the Notice of Intent to Apply is not binding, which means that an ACO may submit its Notice and subsequently decide not to apply for the Program.
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In June 2012 the Centers for Medicare and Medicaid Services (CMS) released Recovery Audit Program appeals data for fiscal year 2011. The report indicates that of the claim denials appealed, 43.4% were returned in the provider’s favor.

In fiscal year 2011, 903,372 claims were determined to be overpayments. Of those overpayments, 56,620 were appealed by the provider and 24,548 were returned in the provider’s favor.

The data shows that the type of claims overturned on appeal were more commonly automated claims, but far more money was overturned in complex claims. Nearly $30 million in overpayments was overturned on appeal in complex claim denials alone.
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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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On May 29, 2012 the United States District Court for the Eastern District of North Carolina overturned the Medicare Appeals Counsel’s (MAC’s) decision regarding one evaluation and management (E/M) service claim.

Six years earlier, a CMS Program Safeguard Contractor audited Dr. Ojebuoboh. It was determined that the government had overpaid Dr. Ojebuoboh approximately $179,000. Dr. Ojebuoboh contested the overpayment through the five-step Medicare appeals process. Before the matter reached federal district court, the physician had managed to reduce the overpayment amount to $12,000.

On appeal to federal district court, Dr. Ojebuoboh argued, among other things, that the MAC reached the wrong decision as to services provided for three beneficiaries: WB, MT, and OW. At this stage, Dr. Ojebuoboh had the right to judicial review of specific claims, however; in order to overturn the prior holding he had to prove that the MAC’s decision was arbitrary and capricious. This is a difficult standard to prove as it presumes that the MAC’s decision is correct. The federal district court determined that the MAC must explain its reasons for denying the claims, yet; it need not thoroughly detail every element of every component.
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