Wachler & Associates Health Law Blog

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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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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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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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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