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CMS recently released the results of its Medicare Fee-for-Service Recovery Audit Program (RAC) for fiscal year 2012. Once again, improper payment numbers have increased from the year before. For the period from October 2011 – December 2011 the audit program collected $397.8 million in overpayments and returned $24.9 million in underpayments. This is a total of $422.7 million in corrections identified by the audit program, with the vast majority of those improper payments coming from Medicare overpayment to providers. The RAC program has collected $1.27 billion in overpayments since 2010, and has returned $187.7 million during that same timeframe. Not surprisingly, RACs have found far more overpayments to providers than they have found underpayments.

A related CMS Quarterly Newsletter indicates that Regions C and D RACs, Connolly and HealthData Insights (HDI) collected the most in overpayments, while Regions A and B RACs, Diversified Collection Services (DCS) and CGI Federal, collected the least.

The report also identified the top recovery issue by region. All issues were medical necessity issues. The top overpayment issues were:

  • Region A: Neurological Disorders- Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with neurological disorders needs to be complete and support all services provided in the setting billed.
  • Region B: Cardiovascular Procedures- Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients undergoing cardiovascular procedures needs to be complete and support all services provided in the setting billed.
  • Region C: Neurological Disorders- Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with neurological disorders needs to be complete and support all services provided in the setting billed.
  • Region D: Minor Surgery and Other Treatment Billed as an Inpatient Stay- When beneficiaries with known diagnoses enter a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for less than 24 hours, they are considered outpatient for coverage purposes regardless of the hour they presented to the hospital, whether a bed was used, and whether they remained in the hospital after midnight.

The yearly report can be found here, while a report on the individual RAC contractors by region can be found here.
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Earlier this month (February 2012) the HHS Office of Inspector General (OIG) released its report regarding the assessment of Review Medicaid Integrity Contractors (MICs). The OIG review looked at Review MIC assignments made between January 1 and June 30, 2010. The objectives of the study were to determine to what extent Review MICs were able to complete assignments, recommend audit leads, and identify potential fraud; and to determine what obstacles the Review MICs encountered during the review process.

CMS awarded MIC responsibility to two firms: Thompson Reuters and AdvanceMed. Assignments are given to Review MICs by CMS on a monthly basis. Each assignment specifies the state from which the claims will come, the type of claims, and a range of service dates. Once an assignment is complete, the Review MIC submits its report to CMS where it undergoes a quality assurance review. The assignment must pass this review to be considered complete.

Of the 361 assignments the Review MICs were tasked with during the OIG review period, 81% were completed and 17% were placed on hold by CMS. Rather than recommend specific audit leads as a result of their findings, CMS required the Review MICs to submit lists of providers ranked by the amounts of their potential overpayments. From these lists of 113,378 providers CMS selected 244 audit targets with a total of $39.8 million in potential overpayments from a retrospective 5-year audit period established by CMS.

The OIG review found that not only were the Review MICs unable to accurately complete assignments because of missing or inaccurate data, but states also invalidated more than one third of sampled potential overpayments. States compared the Review MIC findings with information in their state systems and found that 34% were not overpayments.

The OIG reports makes two recommendations, both of which CMS concurs with. The first is to improve the quality of data that Review MICs can access for conducting data analysis. One option the OIG provides is to facilitate Review MIC access to states’ Medicaid data systems. The CMS comments on the OIG report, in which they concur with the OIG recommendations, indicate that CMS has several initiatives underway to improve the quality of the data available to the Review MICs. One CMS long term strategy is to improve the Medicaid Statistical Information System (MSIS). MSIS is currently the only nationwide database of Medicaid claims and beneficiary eligibility information.

The second OIG recommendation is that CMS should require Review MICs to recommend specific audit leads. The OIG report suggests that these audit leads would have the best potential for recoveries and improve the value of the Review MICs contribution to the Medicaid Integrity Program. In their comments, CMS concurs with this recommendation and that the Review MIC assignments will now include specific recommendations for specific audit targets.

The full OIG report can be found on the OIG website.
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On February 13, 2012 DCS Healthcare added a new CMS approved issue to its approved issues list for DME supplier claims:

• Knee orthosis bundling: Payments for knee orthoses additions, as specified in NHIC’s LCD for knee orthoses, #L27263, are bundled into the payment for specific base knee orthoses, and should be recouped if paid separately.

On February 13 and 15, 2012 Connolly added new CMS approved issues to its approved issues list:

• Therapeutic footwear utilization CMS issue number: C005392010. The LCD and policy article for therapeutic shoes for diabetics limit the use of shoes and inserts as follows: For patients meeting these criteria, coverage is limited to one of the following within one calendar year (January – December): One pair of custom molded shoes (A5501) (which includes inserts provided with these shoes) and two additional pairs of inserts; or one pair of depth shoes (A5500) and three pairs of inserts.

• Rituximab – Non-covered/non-allowed service-Part B CMS issue number: C001442011. An overpayment exists when a provider bills for a service of J9310/Rituximab with an ICD-9 code that is not included in the list of covered ICD-9 codes for J9310/Rituximab with the applicable local coverage determination document(s).
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Zone Program Integrity Contractors (ZPICs) were created by CMS primarily to investigate suspected fraud, waste, and abuse. ZPICs perform similar audit activities as other Medicare contractors, but with a reactive and proactive focus on the identification of possible Medicare fraud. ZPICs employ “innovative” strategies to engage in the early detection of fraud. The strategies include data analysis, pursuing proactive leads from other Medicare contractors or other sources such as the Fraud Investigation Database (FID), law enforcement, news media or the Internet.

Once a ZPIC initiates an audit, it has the authority to conduct prepayment and postpayment medical review, perform announced and/or unannounced onsite audits, interview staff and beneficiaries, and suspend provider payments pursuant to approval from CMS. While any type of Medicare contractor audit can be disruptive to a provider’s business, it is extremely important for a health care professional to recognize when his or her practice is the focus of a ZPIC audit or investigation. This is because ZPICs also have the authority to refer providers and beneficiaries to law enforcement, refer providers for exclusion from the Medicare program, and utilize statistical sampling and extrapolation to determine overpayment amounts. For this reason, it is imperative that Medicare providers aggressively defend against a ZPIC investigation.

There are seven zones in which ZPICs are assigned, and providers should be aware of the ZPIC assigned to their zone. More information on ZPICs and be found on our website.
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Connolly Healthcare recently added 17 new issues to its CMS-approved issues list for Region C states. Below is a sampling of the recently approved issues, which fall in multiple categories. For a full list and more information please visit the Connolly website.

  • Ambulance/transport during a SNF stay to or from a diagnostic or therapeutic site: Ambulance/transport services provided during a SNF stay are not separately paid under the Part B benefit. The cost for these services is considered part of the Part A Prospective Payment made to the SNF Provider. Ambulance transports to or from a diagnostic or therapeutic site other than a hospital or renal dialysis facility (e.g., an independent diagnostic testing facility (IDTF), cancer treatment center, radiation therapy center, wound care center, etc.). The ambulance transport is included in the SNF PPS rate if the first or second character (origin or destination) of any HCPCS code ambulance modifier is “D” (diagnostic or therapeutic site other than “P” or “H”), and the other modifier (origin or destination) is “N” (SNF). The first SNF is responsible for billing the services to the FI.
  • Inappropriate Payments for Transformational Epidural Injections: Local Coverage Determination policy has indicated specific conditions or diagnoses that are covered for Transformational Epidural Injections. Carrier claims have been identified where the first-listed and/or other diagnosis codes do not match to the covered diagnosis codes in the LCD policies.
  • Incorrect diagnosis code billed for blood clotting factor: An overpayment exists when a provider bills for a blood clotting factor with an ICD-9 code that is not included in the list of covered ICD-9 codes within the applicable Local Coverage Determination document(s).
  • Improper payments for Facet Joint Injections: An overpayment exists when a provider bills for an Facet Joint Injection with an ICD-9 code that is not included in the list of covered ICD-9 codes within the applicable Local Coverage Determination document(s).
  • Incorrect billing of Home Health Partial Episode Payment claims: Incorrect billing of Home Health Partial Episode Payment (PEP) claims identified with a discharge status 06 and another home health claim was not billed within 60 days of the claim from date. Additionally, MCO effective dates are not within 60 days of the PEP claim.

HealthDataInsights recently added new issues to its CMS-approved issues list for Region D states. Below is a sampling of the recently approved issues. For a full list and more information please visit the HealthDataInsights website.

  • Acute Inpatient Hospitalization – Bowel and Rectal Procedures (DRG 329, 330, 332, 333, 334, 344, 345 and 346): 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 Hospitalization – Hepatobiliary Procedures (DRG 420, 421, 422, 424 and 425): 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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Connolly Healthcare, RAC for Region C, has recently added its first home health agency issue to its CMS-approved issues list.

The first posted issue targeting home health agencies is an automatic review that will focus on partial episode payments (PEPs). The Medicare Claims Processing Manual defines a PEP as “a reduced episode payment that may be made based on the number of service days in an episode (always less than 60 days, employed in cases of transfers or discharges with readmissions).” The approved home health issue is described below.

Incorrect billing of home health partial episode payment claims. Incorrect billing of home health PEP claims identified with a discharge status 06 and another home health claim was not billed within 60 days of the claim from date. Additionally, MCO effective dates are not within 60 days of the PEP claim.

Home health agencies should be on high alert for RAC audits. In addition, providers may expect additional home health issues to be added for review in the future, including complex reviews.
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The Centers for Medicare and Medicaid Services (CMS) has now posted Self-Referral Disclosure Protocol (SDRP) settlements on the CMS website. Section 6409 of the Patient Protection and Affordable Care Act provides the SDRP process, which allows providers of services and suppliers to self-disclose any actual or potential violations section 1877 of the Social Security Act, also known as the physician self-referral statute or the Stark II regulations. The following is a list of SDRP settlements, which CMS will continue to update on a quarterly basis:

  • On February 10, 2011, a Massachusetts general acute care hospital settled with CMS for $579,000 after disclosing that it failed (1) to satisfy the requirements of the personal services arrangements exception for arrangements with certain hospital department chiefs and the medical staff for leadership services, and (2) to satisfy the requirements of the personal services arrangements exception for arrangements with certain physician groups for on-site overnight coverage for patients at the hospital.
  • On November 11, 2011, a Mississippi critical access hospital settled with CMS for $130,000 after disclosing that it failed to satisfy the requirements of the personal services arrangements exception with certain hospital and emergency room physicians.
  • On January 5, 2012, a California hospital settled with CMS for $6,700 after disclosing that it exceeded the calendar year non-monetary compensation limit for a physician.
  • On January 5, 2012, a Georgia hospital settled with CMS for $4,500 after disclosing that it exceeded the calendar year non-monetary compensation limit for two physicians.

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On January 19, 2012, the Fifth Circuit Court of Appeals upheld the conviction and sentence of a medical billing professional for defrauding Medicare and Medicaid. Sylvia Delgado, a medical billing expert with thirty years of medical coding and billing experience, was the medical director of a group psychotherapy company that performed counseling to the elderly. Delgado formed the company (Synergy) in 2002 with Dr. Rafael Solis, a licensed psychiatrist who works primarily at his office in San Antonio, and Robert Rael, a Licensed Master Social Worker. Dr. Solis performed initial evaluations of patients, prescribed medication, and conducted individual counseling sessions. Thereafter, Dr. Solis would refer his patients to Synergy for group psychotherapy. Dr. Solis did not conduct or supervise the group session, but rather the sessions were conducted by Rael. However, Delgado, who performed all of the billing, would bill the group sessions under Dr. Solis’ Medicare and Medicaid numbers because Rael was not authorized under Texas law to have his own billing numbers. The Medicare and Medicaid reimbursement proceeds were split between Delagado and Rael; Delgado received thirty percent and Rael received seventy percent. Additionally, Synergy began paying Dr. Solis $2,000 per month in January 2005. Between 2002 and 2005, the total amount that Medicare and Medicaid paid to Synergy for the therapy was $1.4 million.

While group psychotherapy can be billed to Medicare and Medicare, the sessions conducted by synergy did not meet the requirements necessary for proper billing. For instance, a provider is typically not allowed to bill multiple sessions for one patient in one day, and the use of more than one group therapy code will be rejected in most circumstances. However, Delgado was able to get around this problem after discovering a billing technique which involved attaching a modifier to the billing code. The modifier was used by Delgado to bill up to six sessions per day per patient.

Another group psychotherapy requirement that Synergy failed to satisfy was that which requires the therapy to be conducted by one of the designated healthcare professional listed in the regulations. Rael was not qualified to conduct the therapy, and even though a non-physician may conduct the therapy so long as the regulation’s supervision requirements are met, Dr. Solis had admitted to investigators that he did not supervise the therapy. Furthermore, there was evidence that Delgado had been informed that Rael was not authorized to conduct the group psychotherapy sessions that took place at Synergy. Moreover, it was also discovered that Rael was not even the one who conducted most of the therapy sessions. The majority sessions were actually conducted by Robert Martinez, who has a sixth grade education.

Finally, the therapy sessions were conducted in a manner that consisted of watching television, eating meals, socializing, being read to, playing loteria, and celebrating birthdays. Despite the fact that the regulations prohibit describing these activities as group therapy, Delgado billed Medicare and Medicaid up to six group psychotherapy sessions per day per patient. In addition, Delgado also billed for group psychotherapy when both Dr. Solis and Rael were out of town.
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The Centers for Medicare and Medicaid Services (CMS) has announced that the Prior Authorization of Power Mobility Devices (PMDs) and the Recovery Audit Prepayment Review Demonstration Programs are expected to move forward on or after June 1, 2012. On December 30, 2011, the two demonstrations were delayed from their initial January 1, 2012 start date. Although CMS initially announced the demonstration programs in November 2011, CMS decided to delay the programs’ implementations after receiving considerable feedback from the provider communities affected by the programs.

In its most recent announcement, CMS stated that the demonstrations programs will begin once they receive Paperwork Reduction Act (PRA) Office of Management and Budget control numbers.

The Prior Authorization of PMDs demonstration program will be initiated in California, Illinois, Michigan, New York, North Carolina, Florida, and Texas. These are all states with high populations of fraud- and error- prone providers. The demonstration will implement a prior authorization process for scooters and power wheelchairs.

As a result of comments CMS received from providers and suppliers, significant modifications have been made to the Prior Authorization of PMDs demonstration program. Most importantly for suppliers, the 100% pre-payment review phase has been removed. Many interested parties had raised the concern that suppliers would be adversely financially impacted by the 100% pre-payment review phase, thus CMS eliminated it and the demonstration will begin immediately with the prior authorization phase. There was also concern regarding the inconsistency of suppliers in some states experiencing 100% pre-payment review, while suppliers in other states were required to receive prior authorizations. The pre-payment review phase was planned to last from between three to nine months for each state, so while one state might only be in that phase for three months, another state might be for nine. As a result, all demonstration states will start prior authorization at approximately the same time instead of the staggered start times as originally planned.

CMS also received many concerns about the ordering physician possibly not being in the best position to submit the prior authorization request. Under the modified demonstration, the physician/treating practitioner or supplier, on behalf of the physician/treating practitioner, may perform the administrative function of submitting the prior authorization request.

The Pre-Payment Review Demonstration Program did not receive any significant changes and will be implemented as proposed in November.

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The Centers for Medicare and Medicaid Services (CMS) publishes quarterly reports identifying improper payment figures and the top audit issues by region. The most recent “Q4” report, covering July 1, 2011 to September 30, 2011, demonstrates a 22% increase in the total correction amount from the previous quarter.

During this period, CMS identified $277.1 million in overpayments and $76.6 million in underpayments, for a total correction amount of $353.7 million. This figure represents a dramatic increase from the two previous quarterly improper payment totals of $208.9 million (Q2) and $289.3 million (Q3). The boost, which is consistent across all regions, indicates that individual recovery auditors nationwide are increasing their efforts to identify incorrect payments, and further supports the industry-wide belief that audits are expanding.

The Q4 recovery audit program update also demonstrates that auditors are increasingly targeting “medical necessity” claims, with a focus on supporting documentation and the setting in which these services are provided. The Q4 update highlighted the following “top issues per region” of the recovery audit program:

Region A – Renal and Urinary Tract Disorders: (Medical Necessity) Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with renal and urinary tract disorders needs to be complete and support all services provided.

Region B – Surgical Cardiovascular Procedures: (Medical Necessity) Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients with surgical cardiovascular procedures needs to be complete and support all services provided.

Region C – Acute Inpatient Admission Neurological Disorders: (Medical Necessity) Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation for patients admitted with neurological disorders needs to be complete and support all services provided.

Region D – Minor Surgery and other treatment billed as Inpatient: (Medical Necessity) When beneficiaries with known diagnoses enter a hospital for a specific minor surgical procedure or other treatment that is expected to keep them in the hospital for less than 24 hours, they are considered outpatient for coverage purposes regardless of the hour they presented to the hospital, whether a bed was used, and whether they remained in the hospital after midnight.

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