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Recently, a group of 35 health care organizations wrote a letter to the Centers for Medicare and Medicaid Services (CMS) expressing their concerns regarding CMS’ new demonstration programs. The organizations requested that CMS rescind the Recovery Audit Prepayment Demonstration and revise the Prior Authorization Demonstration for power mobility devices. Both demonstrations were scheduled to begin on January 1, 2012, but were subsequently delayed due to the concerns expressed by numerous health care organizations. The revised scheduled start date for the demonstration programs is now on or after June 1, 2012.

In regards to the Recover Audit Contractors (RAC) prepayment demonstration, the organizations have requested that CMS rescind the program in its entirety. The reasons for this request include:

  • The demonstration would threaten patient access to care because patients who have the conditions under the targeted prepayment code sets may be inappropriately turned away due to the high level of cost-related scrutiny prescribed by the hospital’s policies and procedures. The organizations believe that physicians, when making potentially life-threatening diagnoses, should not be influenced by the hospital’s reservations that stem from increased government scrutiny and the risk of losing payments.
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On April 12, 2012, the Office of Inspector General (OIG) for the Department of Health and Human Services (HHS) published an updated list of excluded providers, persons and entities from Medicare, Medicaid and other Federal health care programs, known as the List of Excluded Individuals and Entities (LEIE).

HHS is authorized by Section 1128 of the Social Security Act to exclude persons from participating in Federal health care programs. HHS has delegated this authority to the OIG. This delegation grants the OIG the authority to exclude individuals and entities from participating in Medicare, Medicaid and other Federal health care programs, as well as the authority to impose civil money penalties (CMP) for program-related misconduct. In addition, the Balanced Budget Act (BBA) of 1997 authorizes the OIG to impose additional CMP against any health care entity or provider that employs or enters into contracts with an excluded individual or entity if such an agreement involves providing any item or service to Federal program beneficiaries.

If an individual or entity is excluded from Federal health care programs, no federal payment may be made for any items or services. These items or services not only include those furnished by an excluded individual or entity, but also include any item or service that was directed or prescribed by an excluded physician when the furnishing entity knew or should have known of the exclusion and whether or not the payment is made to the non-excluded provider.

Section 1128 of the Social Security Act establishes which individuals and entities are excluded from Federal health care programs. The Act includes both mandatory and permissive exclusions. As the phrase implies, a mandatory exclusion is that in which the OIG must exclude from Federal health care programs (e.g. felony conviction relating to health care fraud). On the other hand, a permissive exclusion enables the OIG to use its discretion in determining whether exclusion is the correct remedial action to enforce (e.g. individuals controlling a sanctioned entity).

An excluded party may be subject to CMP if it violates its exclusion. A violation will be found if the excluded party submits, or causes to be submitted, a claim for Federal reimbursement for providing an item or service to a Federal program beneficiary. Furthermore, since program reinstatement is not automatic, a violation of an exclusion may severely diminish any possibility of being reinstated into Federal health care programs in the future. In addition, further CMP may be sought for any health care provider who employs or contracts with an excluded individual or entity when such agreement involves rendering any item or service that is to be reimbursed, directly or indirectly, by a Federal health care program.

The OIG advises health care providers to check the OIG List of Excluded Individuals/Entities prior to engaging in any agreement with another provider. The OIG website is updated regularly and provides up-to-date lists of all exclusions and reinstatements to the Federal health care programs. The lists for March of 2012 have recently been added to the database.
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Yesterday, the Department of Health and Human Services (HHS) announced a proposed rule that would simplify the administrative processes for health care providers by establishing a unique health plan identifier (HPID) under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HHS estimates that the HPID would save the entire health care industry up to $4.6 billion over the next ten years.

Currently, multiple identifiers are used to identify health plans in standard transactions. These identifiers differ in length and format, which has created frustration among health care providers. Due to the current lack of a standard identifier, health care providers are faced with onerous burdens that lead to an inefficient use of their time. HHS has highlighted several of the problems associated with the lack of a standard identifier, which include: misrouting of transactions, rejected transactions due to insurance identification errors, and difficulty determining patient eligibility.

The proposed rule has been designed to eliminate the above mentioned problems by simplifying the administrative process for providers. The rule proposes that health plans have a unique identifier of a standard length and format in order to increase standardization within the HIPAA standard transactions. The standardization will enhance the automation and simplification in the provider’s administrative process. HHS believes that these enhancements will enable providers to avoid greater administrative costs by decreasing the amount of time providers will need to spend interacting with health plans, as well as decrease unnecessary material costs because the automated process will shift the currently-used manual transactions to an electronic transaction.

In addition to establishing a unique HPID, the proposed rule also adopts the use of an “other provider” identifier (OEID) for entities that are not health plans, health care providers, or individuals, but still need to be identified in HIPAA standard transactions. Finally, the proposed rule would also delay the required compliance date in which covered entities must comply with the International Classification of Diseases, 10th Edition (ICD-10), which are the new codes used to classify diseases. The compliance date for ICD-10, originally set for October 1, 2013, will be pushed back to October 1, 2014.
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On April 2, 2012 DCS Healthcare posted new approved issues to its approved issues list for some Region A states. Among them were two issues for skilled nursing facilities:

· CT Scans, Head and Neck, Incorrect Billing: Potential incorrect billing of CT scans not supported by medical necessity (NGS LCD 28516 (A48015))

· CT Scans, Trunk and Extremities, Incorrect Billing: Potential incorrect billing of CT scans not supported by medical necessity (NGS LCD 28516 (A48015))

In late March 2012, CGI posted a new approved issue to its approved issues list for Region B states. The new issue involves a complex medical necessity review:

· Minor Musculoskeletal Procedures ; MS-DRGs 479, 484, 494, 497, 499, 502, 508, 509, 512, 517 (Medical Necessity): The purpose of this complex review is to identify claims that have been reviewed validating medical necessity in short stay, uncomplicated admissions. This review will identify if medical necessity was met per Medicare guidelines.

On March 23, 2012, Connolly added new approved issues to its approved issues list for Region C states:

· Hospice Related Services -Outpatient CMS Issue Number: C000162012: Services related to a Hospice terminal diagnosis provided during a Hospice period are included in the Hospice payment and are not paid separately.

· Excessive Drug Units Billed – Carrier (At this time, Medical Necessity will be excluded from this review) CMS Issue Number: C001562011: Drugs and Biologicals should be billed in multiples of the dosage specified in the HCPCS code long descriptor. The number of units billed should be assigned based on the dosage increment specified in that HCPCS long descriptor, and correspond to the actual amount of the drug administered to the patient, including any appropriate, discarded drug waste. If the drug dose used in the care of a patient is not a multiple of the HCPCS code dosage descriptor, the provider rounds to the next highest unit. Drug waste should be coded according to the requirements of the local contractor. Claims billed with excessive units will be reviewed to determine the correct number of billable/payable units.

On March 19, 2012, HealthDataInsights added several new issues to its approved issues list for Region D states:

· Acute Inpatient Hospitalization – Major Male Pelvic Procedures with CC/MC (DRG 707): Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

· Acute Inpatient Admission – OR Procedure with Principal Diagnosis of Mental Illness (DRG 876): Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.
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The Centers for Medicare and Medicaid Services (CMS) recently announced it will release a national provider Comparative Billing Report (CBR) targeting Cardiology Services. The CBRs will be released to a maximum of 5,000 providers on April 23, 2012.

The CBRs are produced by Safeguard Services under contract with CMS and will provide comparative data to help show how these individual providers compare to other providers within the same field. These comparative studies are designed to help providers review their coding and billing practices and utilization patterns, and take proactive compliance measures. Providers should view CBRs as a tool, rather than a warning, as a way to aid them in properly complying with Medicare billing rules. It is also important to understand that CBRs do not contain patient or case-specific data, but rather only summary billing information as a method of ensuring privacy.
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The Centers for Medicare and Medicaid Services (CMS) issued a memo to Medicare Shared Savings Program (MSSP) applicants on March 16, 2012, in response to questions from Accountable Care Organization (ACO) applicants. The memo clarified and provided guidance on some of the requirements ACO applicants to the MSSP will have to attest to should they choose to sign a participation agreement for the MSSP.

The memo provides definitions for “ACO participant” and “ACO provider/supplier” according to federal regulations. An ACO participant is an individual or group of ACO providers/suppliers that is identified by a Medicare-enrolled Taxpayer Identification Number (TIN) that alone or together with one or more other ACO participants comprises the ACO. An ACO provider/supplier is a provider or supplier enrolled in Medicare that bills for items and services furnished to Medicare fee-for-service beneficiaries under a Medicare billing number assigned to the TIN of an ACO participant. An ACO participant is identified by its Medicare-enrolled TIN number. The memo highlights the point that an ACO participant is identified by its Medicare-enrolled TIN. The key point of this section of the memo is that an ACO participant is not eligible to participate in an ACO unless all ACO providers/suppliers associated with the ACO participant TIN have agreed to comply with the program regulations. More simply stated, an ACO participant is not eligible for an ACO unless all providers and suppliers billing under its TIN have agreed to participate.

Further, all agreements between or among an ACO, ACO participant, and ACO provider/supplier must be executed before the ACO submits its application. The application process requires that an applying ACO provide a list of the ACO participants and associated providers/suppliers. Agreements to participate in the program must be executed by all of these parties prior to submission of the application.

The memo also specifies minimum content for an agreement or contract between an ACO and ACO participant. Agreements must contain an explicit requirement that the ACO participant agrees to participate in and comply with the requirements of the MSSP. Agreements must also contain the rights and obligations of ACO participants and ACO providers/suppliers, as well as give authority to the ACO to terminate the rights of an ACO participant for non-compliance. Furthermore, ACOs cannot require that beneficiaries be referred to ACO participants or providers/suppliers except as expressly permitted by regulation.

The final topic the memo covers is the eligibility requirement pertaining to the ACO’s governing body. Federal regulations require that an ACO have an identifiable governing body with the authority to execute the functions of the ACO. In cases where the ACO is comprised of multiple, otherwise independent ACO participants, the ACO must have a legal entity and governing body that is distinct and separate from each of them. The governing body must have oversight of, and responsibility for, strategic direction. The governing body must also have management which is accountable for the ACO’s activities, and governing body members who have a fiduciary duty to the ACO.
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The Centers for Medicare and Medicaid Services (CMS) has published a final rule for standards regarding Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers. The rule, published March 14, 2012 in the Federal Register, revises and specifies the definition of “direct solicitation” as it applies to DMEPOS suppliers. The rule also eliminates the requirement that DMEPOS suppliers comply with local zoning ordinances. In the official comments, CMS indicated that all zoning issues are better left to the states.

The rule limits the contact a DMEPOS supplier can make with a beneficiary. Previously, “direct solicitation” had been broadly defined as telephonic contact. The August 27, 2010 final rule broadened the definition of “direct solicitation” to include not only telephonic contact, but also in-person contact, email, and instant messaging. The new adopted rule, which will be effective April 13, 2012, eliminates the prohibition on “direct solicitation” and only restricts direct contact with the beneficiary by telephone. The new adopted rule further requires that a DMEPOS supplier must have written permission from the beneficiary to contact the beneficiary by telephone.

The new rule also allows DMEPOS suppliers to contract with a third party to provide licensed services, provided the third party is appropriately licensed under applicable state laws. The prior rule prohibited DMEPOS suppliers from contracting licensed services.
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The first enforcement action from a breach report required by the Health Information Technology for Economic and Clinical Health (HITECH) Act Breach Notification Rule has resulted in an agreement by Blue Cross Blue Shield of Tennessee (BCBST) to pay the Department of Health and Human Services (HHS) $1.5 million.

BCBST reported that unencrypted hard drives had been stolen from a leased storage facility in Tennessee. The hard drives contained personal health information of more than one million people, and included information such as social security numbers and dates of birth. An investigation discovered BCBST failed to ensure the facility had proper security measures in place as required by HIPAA rules. The settlement also requires BCBST to establish a corrective action plan to revise its security policies and conduct training.

The HITECH Breach Notification Rule requires HIPAA covered entities to promptly make notifications in the event of a breach that affects more than 500 individuals. The entity must notify each individual affected, the HHS Secretary, and the media. A breach of information affecting fewer than 500 individuals need only be reported to the HHS Secretary on an annual basis.

More information on the HITECH Breach Notification Rule can be found on the Department of Health and Human Services website.

HIPAA Privacy and Security Rules are enforced by the Health Human Services (HHS) Office for Civil Rights. HIPAA Security Rules establish requirements for how entities must secure and protect electronic health information, and ensure that it remains secure and protected.

More information on the HHS Office for Civil Rights can be found on their website.
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Having compliance plans and procedures in place is becoming increasingly important for Medicare providers and suppliers. On February 16, 2012, CMS released a proposed rule to implement Section 128(d) of the Social Security Act (“Act”) which was added by the Affordable Care Act (“ACA”) and deals with the reporting and returning of overpayments. The proposed rule is significant in that it includes a ten year look back period and proposes a definition for when an overpayment is “identified” which includes a duty for providers and suppliers to make reasonable inquiries when an overpayment is suspected.

The ACA created Section 1128(d) of the Act to detail the requirements for reporting and returning overpayments. Overpayments are defined in Part 4(B) of the law as “any funds that a person receives or retains under title XVIII or XIX [42 USCS Section 1395 et seq. or 1396 et seq.] to which the person, after applicable reconciliation, is not entitled under such title.” Part 2 requires an overpayment be reported and returned by the later of 60 days from the date on which the overpayment is “identified” or the date any corresponding cost report is due. The statute itself does not define “identification” however, the proposed implementing regulation, 401.305(a)(2) defines “identification” as being when “the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.” (77 Fed. Reg. 9179, 9182, February 16, 2012). CMS believes that this will provide an incentive to providers and suppliers to exercise reasonable diligence to determine whether an overpayment exists. CMS goes on in the proposed rule to suggest that without such a definition, a provider or supplier might avoid activities which can be done to determine an overpayment such as “self-audits, compliance checks, and other additional research.”

CMS provides a nonexhaustive list of examples of when an overpayment is identified and the provider or supplier should make a “reasonable inquiry with all deliberate speed” to determine if an overpayment exists, including:

  • when a provider receives an anonymous compliance hotline telephone complaint about a potential overpayment;
  • when a provider or supplier reviews billing or payment records and learns it incorrectly coded certain services resulting in increased payment;
  • when a provider or supplier learns that a patient death occurred prior to the date of service on a claim submitted for service;
  • when a provider or supplier learns that services were provided by an unlicensed or excluded individual on its behalf;
  • when a provider or supplier performs an internal audit and discovers overpayments;
  • when a provider or supplier is informed by a government agency of an audit that discovered a potential overpayment and the provider or supplier fails to make a reasonable inquiry;
  • when a provider or supplier experiences a significant increase in Medicare revenue with no apparent reason for the increase.

While this list is not exhaustive, it should give providers and suppliers pause and reason to evaluate and update compliance plans. If a provider or supplier acts in reckless disregard or deliberate ignorance of whether it received an overpayment, then it could be found to have knowingly retained an overpayment. And, if an overpayment is retained after the deadline, it becomes an obligation under the False Claims Act, the provider or supplier may have liability under the Civil Monetary Penalties Law, and the provider or supplier could be excluded from participation in Federal Health Care programs.
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As part of healthcare reform, Section 6401(a) of the Affordable Care Act requires all providers and suppliers who enrolled in the Medicare program prior to March 25, 2011 to revalidate their provider enrollment under the new screening criteria. Providers and suppliers who enrolled after March 25, 2011 do not need to revalidate at this time as they have already been screened.

Medicare Administrative Contractors (MACs) will be sending revalidation notices to individual providers and suppliers between now and March 23, 2015. Providers and suppliers must complete the enrollment forms within 60 days of receiving the request from the MACs. If a provider fails to submit the provider enrollment forms after receiving the request, it may lead to a suspension of the provider’s Medicare billing privileges.

Providers and suppliers may not revalidate their provider enrollment until they have received a revalidation notice from their MAC. The CMS website provides a list of all the providers and suppliers to whom revalidation notices have been sent (See “download” section). In case a revalidation notice has been sent but never received, every provider is encouraged to check the list to determine whether or not they are currently expected to revalidate. If you are listed, but have not received the request, you should contact your Medicare contractor.
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