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Recently, the Department of Health and Human Service’s Office of Inspector General released a report which found that the workload data used by the Centers for Medicare and Medicaid Services (CMS) to oversee its Zone Program Integrity Contractors (ZPICs) were inaccurate and lacked uniformity.

The study was conducted by collecting and reviewing ZPICs’ workload data related to investigations, case referrals, requests for information, and administrative actions between February 1, 2009 and October 31, 2009. The OIG only reviewed the information of the ZPICs for Zones 4 and 7 because they were the only ZPICs who had completed a full contract year at the time the study was conducted.

According to the OIG, one of the study’s major objectives was to describe the extent of ZPICs’ program integrity activities during the first year of operation. However, this objective went unachieved due to the inaccuracies and lack of uniformity which stemmed from system issues in CMS’s Analysis, Reporting, and Tracking System (CMS ARTS), ZPIC reporting errors, ZPICs’ interpretations of workload definitions, and inconsistencies in requests for information reports. The OIG also identified a number of issues inhibiting CMS from successfully overseeing ZPIC activities. The OIG has stressed that it is important that these issues are corrected so that CMS can properly analyze the ZPICs effectiveness and compare the ZPICs to their predecessors (Program Safeguard Contractors). The OIG has made a number of recommendations to CMS, which include that CMS:

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The Centers for Medicare and Medicaid Services (CMS) recently announced it will release a national provider Comparative Billing Report (CBR) addressing Nerve Conduction Studies on December 6, 2011.

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.

If you are a recipient of a CBR for Nerve Conduction Studies, or are among the other provider types that have been identified to receive CBRs (i.e. physical therapists, chiropractors, ambulance, hospice, podiatry, ordering DME and sleep studies), please contact a Wachler & Associates attorney at 248-544-0888 to discuss evaluating the CBR analysis and development of an appropriate compliance plan that will reduce audit risks.

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On Friday, November 18, CMS released a Q&A about the Part A to Part B Rebilling Demonstration Program. Although the Q&A does not answer many of the questions that arose from the Fact Sheet released on November 15, it does give insight into when those answers could be provided. CMS will hold two special Open Door Forums, one on November 30, 2011 and another on December 8, 2011. Both will be conducted at 2pm EST.

In addition, the Q&A announced that enrollment for the Demonstration Program will begin on December 12, 2011 at 2pm EST and some hospital facilities will be ineligible to participate in the program. For instance, facilities that receive periodic interim payments from CMS and do not participate in Medicare, will not be able to participate. In addition, psychiatric hospitals paid under the Inpatient Psychiatric Facilities Prospective Payment System, Inpatient Rehabilitation Facilities, Long-Term Care Hospitals, cancer hospitals, Critical Access Hospitals, and children’s hospitals all are ineligible to participate.

Finally, the Q&A provided an email for additional questions regarding the Demonstration Program to be sent to CMS. This email is ABRebillingDemo@cms.hhs.gov.

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The Department of Health and Human Services (HHS) is required by the American Recovery and Reinvestment Act of 2009 to provide periodic audits to ensure covered entities are in compliance with the privacy and security rules of HIPAA. To satisfy the requirements under the Act, HHS’ Office for Civil Rights (OCR) initiated its pilot program to perform HIPAA audits of covered entities. OCR has awarded KPMG with the contract to conduct the audits. The audits under the pilot program are scheduled to begin this month and continue until the end of 2012. HHS believes that these audits “present a new opportunity to examine mechanisms for compliance, identify best practices and discover risks and vulnerabilities that may not have come to light through OCR’s ongoing complaint investigations and compliance reviews”

The first round of the pilot program will consist of 20 audits targeting covered entities of various sizes and specialties throughout the healthcare industry. The selected entities will be notified, in writing, by OCR that they have been selected for an audit. The written notification will explain the audit process and will also ask the entity to provide OCR with documentation of their privacy and security compliance efforts. The time allotted for the selected entities to satisfy the initial documentation request is 10 days. After OCR receives the requested documentation, entities will be notified that an onsite visit will be conducted. The onsite visit will likely take place between 30 and 90 days after the entity has been notified of the visit. Upon completion of the visit, the entity will be provided with a draft final report. Once received, the entity is given the opportunity to provide the auditor with written comments. After reviewing the entity’s comments, the auditor will submit a final audit report to OCR.

OCR plans to use the findings in the audit report to determine what types of technical assistance should be developed, and which types of corrective actions are most effective. By the end of 2012, OCR plans to conduct as many as 150 audits. The pilot program will be used by OCR to determine the most successful methods for conducting HIPAA audits in the future.

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The Centers for Medicare & Medicaid Services announced a Recovery Audit Contractor (“RAC”) Pre-Payment Review Demonstration Program on November 15, 2011. The announcement of this program is a major shift in the RAC program because previously RACs were only allowed to conduct post-payment reviews of providers. Although the program is a demonstration and will only affect providers in 11 states, it confirms that CMS policy has shifted from the “pay and chase” model to a more aggressive, proactive and preventative model.

The Pre-Payment Review Demonstration Program (“Demonstration Program”) will be conducted for three years from January 1, 2012 to December 31, 2014. It will be implemented in 11 states. Seven of the states were chosen because of “a high level of fraudulent claims and providers” (MI, FL, CA, TX, NY, LA and IL) and the remaining four states were chosen because of high claims volumes of short inpatient hospital stays (PA, OH, NC and MO). The Demonstration Program will build on the RACs’ existing infrastructure to review claims and will initially focus on inpatient hospital claims, specifically short stays. CMS will choose more specific claim types of reviews as the Demonstration Program continues and RACs will review the claims selected.

The Pre-Payment Review RAC Demonstration Program reflects the ongoing difficulty to balance Medicare program integrity and the detrimental effect a pre-payment review has on Medicare providers. Pre-payment review is an aggressive method for contractors to audit providers and proactively prevent improper payments. However, pre-payment review threatens providers because it significantly impacts cash flow and there are no substantive criteria or procedures in place to determine placement on or removal from pre-payment review. With the harsh impacts of pre-payment review on providers, we also have concerns about RAC auditors being financially incentivized through a contingency fee to place providers on pre-payment review.

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Yesterday, the Centers for Medicare & Medicaid Services (“CMS”) announced the Part A to Part B Rebilling Demonstration Program (“Demonstration Program”). The Demonstration Program will allow a select number of hospitals to receive 90 percent reimbursement of the Part B payment for Part A inpatient short stay claims that are denied on the basis that an inpatient claim was not medically necessary and reasonable because the services were not provided in the appropriate care setting.

Wachler & Associates, P.C. has been instrumental in the effort to obtain Part B reimbursement for hospitals with Part A claims denied as not medically necessary and reasonable. Along with the American Hospital Association (“AHA”) and other industry leaders, Wachler & Associates has met with CMS three times since 2009 to realize Part B reimbursement for hospitals. From the CMS announcement on November 15, it appears that the persistence has resulted in a Demonstration Program that achieves some, but not all, of the industry’s goals.

The Demonstration Program will be conducted for 3 years, beginning on January 1, 2012 and ending on December 31, 2014. Up to 380 hospitals will be chosen to participate in the Demonstration Program and will be accepted on a first-come, first-served basis. In addition, there will be a maximum amount for small, medium and large facilities.

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DCS Healthcare, RAC for Region A, recently added four new issues for providers in Maryland and 16 new issues for providers in all Region A states to its CMS-approved issues list. Listed below are 6 examples of approved issues. Please visit DCS Healthcare’s website to view the remaining issues.

  • Musculoskeletal disorders MS-DRGs: 542-566. 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. MS-DRG: 542-566 (Maryland)
  • Infections MS-DRG: 094-096;177-179;488-489;539-41;602-603;689-690;856-858;862-9;871-872;977. 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. (Maryland)
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HHS this week announced that it would again delay publishing rules implementing the Physician Payments Sunshine Act (“PPSA”), established in last year’s Patient Protection and Affordable Care Act (“PPACA” or “health reform”). PPSA requires drug and medical device manufacturers to publicly report gifts and payments made to physicians and teaching hospitals. While the law requires public disclosure on an annual basis, it does not limit financial relationships between drug and device manufacturers and physicians.

The penalties for non-compliance with this law are fines up to $10,000 per occurrence, not to exceed $150,000 per year, and for each knowing failure to report, the fines are increased to up to $100,000 per occurrence and $1 million aggregate per year.

Beginning January 1, 2012 all drug and device manufacturers must record all gifts and payments to physicians and teaching hospitals. Manufactures must report this information to HHS by March 31, 2013, for HHS publication beginning September 30, 2013.

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CGI Federal, RAC for region B, has recently added a new issue to its CMS-approved issue list for providers in all region B states.

  • Pharmacy Supply Dispensing Fee. Medicare pays pharmacy supply/dispensing fees for immunosuppressive, oral anti-cancer, chemotherapeutic, and oral anti-emetic drugs as well as drugs used as part of an anti-cancer chemotherapeutic regimen when they are submitted on the same claim as the drug being billed. A claim submitted with a pharmacy supply/dispensing fee in the absence of any of the previously mentioned drugs represents an overpayment and will be denied as not medically reasonable and necessary.

Connolly Healthcare, RAC for region C, added two new issues to its CMS-approved issue list for suppliers that bill CIGNA Government Services.

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On October 20, 2011, the Centers for Medicare and Medicaid Services (CMS) released its final rule for Accountable Care Organizations (ACO) participation in the Medicare Shared Savings Program. With this rule, in response to concerns related to start up costs associated with ACOs, CMS has also announced the creation of its Advance Payment Model, which is scheduled to commence in 2012. The Advance Payment Model was created to assist participants in the Share Savings Program that may not have the necessary funds to become and ACO (e.g. physician-owned hospitals and rural providers). These participants would be advanced future payments, which would later be recouped from future shared savings. However, if the ACO fails to complete the full agreement period or earned shared savings then it will be required to return the advance payment. An ACO would receive future payments in three ways: (1) an upfront, fixed payment, (2) an upfront, variable payment, and (3) a variable monthly payment.

The Advance Payment Model may be available to two types of organizations participating in the Shared Savings Program: (1) ACOs that do not include any inpatient facilities AND have less than $50 million in total annual revenue; and (2) ACOs in which the only inpatient facilities are critical access hospitals and/or Medicare low-volume rural hospitals AND have less than $80 million in total annual revenue. ACOs that are co-owned by a health plan will not be eligible to participate. Participants of Pioneer ACOs will also be ineligible. CMS expects to select approximately 50 ACOs that meet the above eligibility requirements to receive funding.

The Advance Payment Model will only be available for ACOs beginning participation in the Medicare Shared Savings Program in either April 2012 or July 2012.

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