Wachler & Associates Health Law Blog

Published on: February 9, 2012

CMS Posts Self-Referral Disclosure Protocol Settlements on Its Website

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.

Published on: February 9, 2012

Medical Billing Professional Sentenced to Prison for Defrauding Medicare and Medicaid

by Wachler & Associates, P.C.

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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Published on: February 6, 2012

CMS Announces New Start Date for Prior Authorization of PMDs and Recovery Audit Prepayment Review Demonstration Programs

by Wachler & Associates, P.C.

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.

Published on: January 30, 2012

CMS’ Q4 Audit Program Activity: $353.7 Million in Improper Payments, Increased Focus on Medical Necessity Claims

by Wachler & Associates, P.C.

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.

Published on: January 27, 2012

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

by Wachler & Associates, P.C.

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: