Wachler & Associates Health Law Blog

Published on: January 27, 2012

CMS Clarifies Procedure for MAC Claims Against DMEPOS Suppliers’ Surety Bonds

All Medicare suppliers of Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) must obtain and maintain a surety bond of at least $50,000 to participate in the Medicare program. A Centers for Medicare and Medicaid Services (CMS) recent transmittal, effective February 21, clarifies this requirement and describes the procedures that DME Medicare Administrative Contractors (MACs) must follow when making claims against a provider’s surety bond.

Under 42 CFR § 424.57(d)(5)(i), a surety is liable to CMS for 1) the amount of any unpaid claim, plus accrued interest, for which the supplier of DMEPOS is responsible, and 2) the amount of any unpaid claim, civil monetary penalty (CMP) or assessment imposed by CMS or the Office of Inspector General (OIG) on the DMEPOS supplier, plus interest.

First, the DME MACs will notify the surety that payment of a claim must be made to CMS within 30 days. The letter must 1) identify the specific amount to be paid, 2) be accompanied by “sufficient evidence” of the unpaid claim, 3) state that payment shall be made via check or money order and that the Payee shall be the DME MAC, and 4) identify the address to which payment shall be sent. The DME MAC will notify the supplier when payment has been made.

DMEPOS suppliers must then obtain an additional surety bond within 30 calendar days of that letter, and submit to the National Supplier Clearinghouse (NSC) additional coverage of an amount that equals or, in the case of a final adverse action, exceeds $50,000. Suppliers must be aware that failure to submit such additional surety bond coverage within 30 days may result in the NSC revoking the supplier’s Medicare billing privileges.

If the DMEPOS supplier successfully appeals, CMS will notify the surety via letter and repay the surety within 30 days. Although a supplier may want to avoid the necessity of securing an additional surety bond, the DMEPOS appeals process may take longer than 30 days and prudent DMEPOS suppliers should obtain additional coverage to ensure continued Medicare billing privileges.

Published on: January 25, 2012

CMS Publishes Important Reminder to Providers and Suppliers Regarding Referred or Ordered Services and Items

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) recently published an important reminder for all providers and suppliers who provide services and items ordered or referred by other providers and suppliers. The reminder states that Medicare will only pay for items or services for Medicare beneficiaries that have been ordered by a physician or eligible profession enrolled in the Medicare program, and that the individual National Provider Identifier (NPI) of the referring provider or supplier must be included in any claim to Medicare.

CMS also emphasizes that providers and suppliers must ensure that any items or services submitted in Medicare claims were referred by Medicare-enrolled providers of a specialty type authorized to order or refer such services. Further, Medicare will only reimburse for specific items or services ordered or referred by providers or suppliers that are authorized by statute and regulation. Specifically, CMS highlighted that:

Chiropractors are not eligible to order or refer supplies or services of Medicare beneficiaries. Consequently, all services ordered or referred by a chiropractor will be denied.

Home Health Agency (HHA) services may only be ordered or referred by a Doctor of Medicine (M.D.), Doctor of Osteopathy (D.O.) or Doctor of Podiatric Medicine (DPM). Thus, claims for HHA services ordered by any other practitioner specialty will be denied.

Portable X-Ray services may only be ordered by a Doctor of Medicine or Doctor of Osteopathy. Portable X-Ray services ordered by any other practitioners will be denied.

Through this “important reminder,” CMS emphasizes the necessary standards and documentation for healthcare providers and suppliers to successfully bill for providing referred services or items. The reminder demonstrates CMS’ continued focus on ensuring proper referral arrangements and supporting documentation.

Published on: January 23, 2012

RACs Target Skilled Nursing Facilities with High Therapy Resource Utilization Groups

by Wachler & Associates, P.C.

Recent Recovery Audit Contractor (RAC) activity demonstrates that the Centers for Medicare and Medicaid Services (CMS) may soon allow RACs to target skilled nursing facilities (SNFs) with certain levels of Ultra High Therapy Resource Utilization Groups (RUGs).

Although Ultra High Therapy Resource Utilization Groups are not currently a CMS-approved audit topic, RACs are permitted to audit “test claims” and suggest new audit activity based on the results. In a recent demand letter, the RAC stated that the Office of Inspector General (OIG) of the U.S. Department of Health & Human Services has found an “overwhelming majority of error in assignments by providers under the RUGs categorization system to Ultra High Therapy RUGs, resulting in overpayments to SNFs.”

These claims arose out of a 2010 OIG report which alleged that 1) SNFs are increasingly billing higher-paying RUGs, 2) for-profit SNFs are more likely than nonprofit SNFs to bill for higher-paying RUGs, and 3) in general, many SNFs maintain questionable billing for therapy services.

Published on: January 19, 2012

CMS Clarification of 3-Day Payment Window when Inpatient Admission is Denied

by Wachler & Associates, P.C.

In a recent revision of its billing instructions, CMS clarified that when an inpatient stay is determined not to be covered by Part A (e.g. determined not medically necessary or otherwise denied by a Medicare audit or internal audit), there is no inpatient stay, and therefore the outpatient services provided on the date of admission or the preceding 3 calendar days are not required to be bundled. See Medicare Claims Processing Manual, Chapter 4, Section 10.12 and Chapter 1, Section 50.3.2 for the updated billing guidelines. MLN Matters article MM7672 clarifies that if the Part A stay is determined to be non-covered, the Part B services provided prior to the admission (i.e., prior to the admission order), which would otherwise be bundled into the inpatient claim, may be billed separately as if the admission did not take place.

Generally, the 3-day payment window policy requires that all diagnostic outpatient services and non-diagnostic outpatient services related to the inpatient admission provided to a Medicare beneficiary by a hospital (or an entity wholly owned or wholly operated by the hospital) on the date of the beneficiary’s inpatient admission or during the 3 calendar immediately preceding the date of admission are to be included on the bill for the inpatient stay. However, outpatient diagnostic services that are unrelated to the inpatient admission, and are covered by Part B, may be billed separately to Part B.

The limit on this positive development is that the audit denial would need to occur within one year of the date of service in order to meet the timely filing limitations. For instance, if a RAC auditor determines that the inpatient stay is not covered by Part A and that finding occurs after the one year filing limitation, the hospital would likely be unable to bill the services to Part B for reimbursement.

Published on: January 17, 2012

Recent RAC Activity

by Wachler & Associates, P.C.

DCS Healthcare, RAC for Region A, recently added 40 new issues to its CMS-approved issues list for providers in Pennsylvania, Delaware, Connecticut, New Jersey, New York, New Hampshire, Massachusetts, Maine, Vermont and D.C. A sampling of the newly approved issues is included below. Please visit DCS Healthcare’s website to view the remaining issues.

Medical Necessity Review (MNR) for MS-DRG 922 Other Injury, Poisoning and Toxic Effect Diagnosis with MCC. 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. This review will be of MS-DRG 922 Other Injury, Poisoning and Toxic Effect Diagnosis with MCC.
Medical Necessity Review (MNR) for MS-DRG 464 Wound Debridement and Skin Graft Except Hand, for Musculo-Connective Tissue Disorders with CC. 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. This review will be of MS-DRG 464 Wound Debridement and Skin Graft Except Hand, for Musculo-Connective Tissue Disorders with CC.

Published on: January 13, 2012

CNN Quotes Managing Partner Andrew Wachler on ABIM Allegations

by Wachler & Associates, P.C.

Last year, the American Board of Internal Medicine (ABIM) suspended 139 doctors following an investigation into the practices of the Arora Board Review test-prep company. ABIM claimed that the doctors violated ethical and conduct standards by providing test questions to the company.

Wachler & Associates represented over 40 doctors that were suspended without regard to their individual behavior and circumstances. The story, however, has gained national traction and appeared today on the front page of CNN’s website.

CNN traveled to our offices in Royal Oak, MI to interview Andrew Wachler, managing partner of Wachler and Associates. The following is an excerpt from the article:

Published on: January 5, 2012

CMS Announces Interim Final Rule Creating New Standards for EFTs

by Wachler & Associates, P.C.

Today, the Centers for Medicare and Medicaid Services (CMS) announced an interim final rule with comment period which creates new standards for electronic funds transfers (EFT) and remittance advice transaction (RA) under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). According to the U.S. Department of Health and Human Services (HHS), the new standards will save physician practices and hospitals between $3 and $4.5 billion over the next ten years, as well as result in an estimated savings of 800,000 pounds of paper due to the elimination of paper checks.

HHS will require health plans to comply with two standards when transmitting EFT payments to providers: (1) a standard format for when a health plan orders, authorizes, or initiates an EFT with its financial institution, and (2) specification of the data content to be contained within the EFT. Currently, when a provider submits a claim for payment electronically, the RA is often sent separately from the EFT payment, making it difficult for the provider to match the bill with the corresponding payment. The new rule seeks to eliminate these errors by requiring the use of a trace number that automatically connects the RA to the EFT.

Today’s regulation is the second in the series of regulations that CMS is required to design by Section 1104 of the Patient Protection and Affordable Care Act of 2010. The first regulation was announced last July. It implemented operating rules for two electronic health care transactions that give providers a simpler method to determine whether a patient is eligible for coverage and the status of a health claim submitted.

Published on: January 3, 2012

CMS has Delayed the Recovery Auditor Pre-Payment Review Demonstration Program

by Wachler & Associates, P.C.

Last week, CMS announced its decision to delay the Recovery Auditor Pre-Payment Review Demonstration Program until further notice. On its website CMS indicated that the delay was due to comments/suggestions received regarding the program and CMS’ commitment to consider the comments carefully. Although it is unclear at this time whether CMS will eventually implement the demonstration program as it was initially announced or make significant changes to the program, CMS confirmed that it will provide at least 30 days notice before the demonstration program begins.

For more information on pre-payment review and strategies to utilize if on pre-payment review, please contact Wachler & Associates attorney at 248-544-0888 or visit www.racattorneys.com.

Published on: December 30, 2011

CMS Announces Delay of Power Mobility Device Demonstration Program

by Wachler & Associates, P.C.

On December 29, the Centers for Medicare and Medicaid Services (CMS) announced that it would delay the start of the Prepayment Review and Prior Authorization of Power Mobility Devices (PMDs) Demonstration Program. CMS originally announced the demonstration program on November 15 and followed the announcement with special Open Door Forums explaining the program’s implications for providers and suppliers. During the Open Door Forums suppliers expressed their concerns that the program would have dire consequences for suppliers of power mobility devices. Some suppliers also questioned CMS’ failure to consult with industry leaders prior to announcing the demonstration program.

The industry’s pressure was effective. CMS’ decision to delay the start of the program was a result of “intensive collaboration” between CMS and AAHomecare. Industry leaders also obtained support from a number of members of Congress who wrote a letter to Marilyn Tavenner, the Acting Administrator of CMS, to delay the implementation of the program and work with industry leaders. In a press release, AAHomecare’s Vice President of Government Affairs, Walt Gorski stated, “we are pleased that CMS has taken a deep breath to understand the power mobility sector and the impact that any widespread prepayment review would have on Medicare beneficiaries and homecare providers.”

It is unclear at this time how long the start of the program will be delayed. CMS stated that it will review the comments and suggestions provided by industry stakeholders and will provide at least 30 days’ notice prior to the demonstration program implementation date.

Published on: December 29, 2011

CMS Implements 3-day Payment Window Policy for Wholly Owned or Wholly Operated Physician Practices

by Wachler & Associates, P.C.

Recently, the Centers for Medicare and Medicaid Services (CMS) released Change Request 7502 relating to the 3-day payment window policy. For services on or after January 1, 2012, the 3-day payment window will apply when a patient is seen in a physician practice that is wholly owned or wholly operated by a hospital and is admitted as an inpatient within 3-days (or, in the case of non-IPPS hospitals, one day). The window will apply to diagnostic and nondiagnostic services that are clinically related to the reason for the patient’s inpatient admission, regardless of whether the inpatient diagnosis is the same as the outpatient diagnosis.

For claims with dates of service on or after January 1, 2012, a new modifier PD is available and must be appended to the entity’s preadmission diagnostic services, as well as nondiagnostic services related to the admission. When a related inpatient admission has occurred, the wholly owned or wholly operated entity will need to manage their billing processes to ensure that they bill for their physician services appropriately. The hospital is responsible for notifying the wholly owned or wholly operated entity that a patient has been admitted as an inpatient when the entity provided services to the patient within the 3-day window.

When the modifier is present on claims for services, CMS shall pay: