Wachler & Associates Health Law Blog

Published on: September 27, 2011

DMEPOS Competitive Bidding Round 2 Update

The Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Process was mandated by Congress through the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, which replaced the current fee schedule payment procedure for DMEPOS items with a competitive bidding process. The purpose of the statute is to set DMEPOS payment amounts in a more effective manner, which will result in saving the Medicare program money and reducing beneficiary out-of-pocket expenses.

Bids closed for Round 1 of the DMEPOS competitive bidding program on December 21, 2009. In November of 2010 CMS announced the winners of Round 1 and in January of this year implemented the contracts.

This past summer, the Centers for Medicare and Medicaid Services (CMS) began its pre-bidding supplier awareness program. For this fall, CMS will announce the bidding schedule, begin the bidder education program, and commence the bidder registration period to obtain user ID and passwords. The bidding will begin in winter 2012.

Published on: September 22, 2011

CMS to Release Comparative Billing Reports for Chiropractors Who Practice in the Office Setting

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) recently announced it will release a national provider Comparative Billing Report (CBR) focused on chiropractors who practice in the office setting. The CBRs will be released on September 26, 2011 to 5,000 different providers. These CBRs will be similar to the ones released to chiropractors last fall; however, the new CBRs will focus on data from 2010.

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 centered on chiropractic services in the office setting, or are among the other provider types that have been identified to receive CBRs (i.e. ordering DME, physical therapists, chiropractors, ambulance, hospice, podiatry, 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.

Published on: September 21, 2011

President Obama Plans to Reform Medicare and Medicaid to Further Aid the Deficit Reduction

by Wachler & Associates, P.C.

On Monday, President Barack Obama gave a speech on the issues of economic growth and deficit reduction. The President released his plan on how to pay for the American Jobs Act that he recently sent to Congress and announced methods to reduce the country’s debt over time.

The plan included structural reforms to reduce the costs of health care in the Medicare and Medicaid programs. One part of the plan that will impact providers is an increased focus on decreasing wasteful subsidies and erroneous payments in the Medicare and Medicaid programs. The President’s plan specifically concentrates on reducing overpayments in Medicare and making Medicaid more efficient and accountable. Finally the President made clear that although Medicare and Medicaid will be reformed, the government “will not abandon the fundamental commitment that this country has kept for generations.”

If you have any questions relating to Medicare or Medicaid audits, including ZPICs, RACs, MACs or MICs, or any other health law questions, please contact a Wachler & Associates attorney at 248-544-0888.

Published on: September 16, 2011

OIG Responds to the Senate Finance Committee’s Concerns Over PODs

by Wachler & Associates, P.C.

On September 13, 2011, the Office of Inspector General (OIG) responded to a letter from the Senate Finance Committee which addressed its concerns about the recent increase of physician-owned distributorships (PODs) and the potential adverse effects that these entities could have on the Medicare program and its beneficiaries. The Committee asked the OIG to assess the adequacy of the adequacy of the guidance that the OIG has issued in regards to the legality of PODs under the Federal Anti-Kickback Statute and whether further guidance or action is required to address the growing trend of these entities.

OIG will be initiating a review of PODs that will seek to determine the extent to which PODs provide spinal implants purchased by hospitals. This study will be nationally representative of hospitals that bill Medicare for these services, and OIG will review information from hospitals to determine the prevalence of PODs, what services PODs offer to hospitals, and whether PODs save hospitals money when acquiring spinal implants. In addition, OIG will look at Medicare claims data to analyze whether the identified PODs are linked with a high use of spinal implants. OIG will use the information from this study to determine whether or not to issue further guidance relating to PODs.

Current guidance from OIG establishes that the opportunity for the referring physician to earn a profit may be deemed illegal under the Federal Anti-Kickback Statute. However, OIG makes clear in the letter to the Committee that the Anti-Kickback Statute is an intent-based statute and different POD models raise different levels of legal concern. Therefore, OIG emphasizes the view that several of the legal questions raised by the Committee depend on the specific facts of the case (e.g. the terms under which a physician-owner may invest in the entity and the return on the physician’s investment).

Published on: September 15, 2011

CMS Releases Its Final Rule Implementing the Medicaid RAC Program

by Wachler & Associates, P.C.

Yesterday, the Centers for Medicare and Medicaid Services (CMS) released its Medicaid RACs final rule after previously delaying its expected April 1^st implementation date. The Medicaid RAC program was created as a tool to fight Medicaid fraud and abuse, and the program shares many characteristics with the Medicare RAC program which has already recovered $670 million to date in 2011. The regulations are effective January 1, 2012.

According to the rule, “This final rule implements section 6411 of the Patient Protection and Affordable Care Act (the Affordable Care Act), and provides guidance to States related to Federal/State funding of State start-up, operation and maintenance costs of Medicaid Recovery Audit Contractors (Medicaid RACs) and the payment methodology for State payments to Medicaid RACs. This rule also directs States to assure that adequate appeal processes are in place for providers to dispute adverse determinations made by Medicaid RACs. Lastly, the rule directs States to coordinate with other contractors and entities auditing Medicaid providers and with State and Federal law enforcement agencies.”

Health and Human Services projects that the Medicaid RAC program will save taxpayers $2.1 billion over the next five years, of which $900 million will be returned to the states. Vice President Biden stated in a press release that, “if we’re going to spur jobs and economic growth and restore long-term fiscal solvency, we need to make sure hard-earned tax dollars don’t go to waste.”

Published on: September 15, 2011

CMS Releases a New RAC Statement of Work

by Wachler & Associates, P.C.

On September 12, 2011, The Centers for Medicare & Medicaid Services released a new Recovery Audit Contractor (RAC) Statement of Work. A number of updates and clarifications were made to the previous RAC Statement of Work. One addition institutes a new type of review known as a semi-automatic review. This is a new two-part review that can include both automated and complex reviews. The new Statement of Work also clarifies the difference between DRG Validation and Clinical Validation by adding definitions of each. The Statement of Work defines DRG Validation as the process of reviewing physician documentation and determining whether the correct codes, and sequencing were applied to the billing of the claim. Clinical validation is defined as a separate process, which involves a clinical review of the case to see whether or not the patient truly possesses the conditions that were documented. Another addition was clarification to the process known as “Allowance for a Discussion Period.” For example, if the recovery auditor is notified by the contractor during the discussion period that the provider initiated the appeals process, the recovery auditor shall immediately discontinue the discussion period and send the provider a letter stating that the recovery auditor cannot continue the discussion period once an appeal has been filed. Click here to view the entire RAC Statement of Work.

If you need assistance in preparing for, or defending against RAC audits, or implementing a compliance program geared toward identifying and correcting potential risk areas related to RAC audits, please contact a Wachler & Associates attorney at 248-544-0888.

Published on: September 12, 2011

Medicare Strike Force Operation Results in Largest Fraudulent Medicare Billing Takedown in Strike Force History

by Wachler & Associates, P.C.

On September 7, 2011, Attorney General Eric Holder and Health and Human Services (HHS) Secretary Kathleen Sebelius announced that a Medicare Strike Force operation resulted in a nationwide takedown involving the highest amount of fraudulent Medicare billings in a single Medicare Strike Force takedown. The takedown was operated across eight cities and led to 91 defendants, many of which are health care professionals, being charged for their participation in Medicare fraud schemes which accumulated roughly $295 million in fraudulent billings. Some of the indictments are described below:

45 defendants in Miami were charged for their participation in Medicare fraud schemes which totaled $159 million in fraudulent billings for home health care, mental health services, DME, physical therapy and HIV infusion. One of these schemes allegedly involved recruiters being paid by a mental health care facility to recruit beneficiaries to the center who were ineligible to receive such services.
Two defendants in Houston were charged with fraudulently billing $62 million for home health care services and DME. The scheme allegedly involved one defendant who sold beneficiary information to 100 different home health care agencies in the Houston area who then used that information to fraudulently bill Medicare for services that were either medically unnecessary or never provided.

Published on: September 8, 2011

OIG Finds IDTFs Did Not Comply With Medicare Standards During Unannounced Site Visits

by Wachler & Associates, P.C.

In May and June 2010, the Office of Inspector General (OIG) performed unannounced site visits at independent diagnostic testing facilities (IDTF) in the Miami and Los Angeles areas. During these visits, OIG discovered that IDTFs in both areas did not comply with certain Medicare standards. For instance, several of the facilities were found to not have a physical facility at the location on file with CMS, as well as other facilities not being open during business hours. Noncompliance with these Medicare standards could lead to the revocation of the IDTF’s Medicare billing privileges along with a number of other administrative actions.

IDTF services have been determined to be vulnerable to fraud and abuse. In 1997, OIG conducted site visits where it discovered that twenty percent of IDTFs were not at the filed CMS location. Additionally, OIG estimated that $71.5 million in improper Medicare payments were disbursed to IDTFs in 2001.

During the unannounced site visits, OIG found that 27 of the 92 Miami-area IDTFs and 46 of the 132 Los Angeles-area IDTFs failed to comply with certain Medicare standards. As a result of these findings, OIG made a number of recommendations to CMS including that CMS periodically conduct announced site visits to IDTFs, take actions against noncompliant IDTFs identified by the OIG site visits, and to immediately stop payments to IDTFs whose billing privileges are being revoked. The OIG also recommended that CMS impose a moratorium on the enrollment of IDTFs in the Los Angeles area. There was no similar recommendation for IDTFs in the Miami area because of the existing special enrollment project that screens new enrollees.

Published on: September 2, 2011

Medicare Fraud Indictments in Detroit

by Wachler & Associates, P.C.

Nearly a month after the federal government handed down indictments to defendants involved in one of Michigan’s largest prescription drug schemes, the federal government indicted 18 more people allegedly involved in Medicare fraud schemes. According to a Detroit Free Press article, the U.S. District Court indicted people for their alleged involvement in a number of different health care fraud operations. One of the charges was handed down to a Troy doctor who allegedly billed for home health services when she was out of the country, as well as for certain services that were physically unable to be completed in a single day. Another indictment was handed down to an owner of a Detroit company who is being accused of billing Medicare for psychotherapy for numerous beneficiaries who were no longer alive. Combined, all 18 defendants are accused of billing Medicare for $28 million.

The Medicare Fraud Task Force has no charged 138 people in Detroit with allegations of fraudulent billings totaling nearly $150 million. According to Maureen Reddy, a Detroit-based FBI special agent, home health fraud is currently the largest type of fraud in the Detroit area. The recent indictments also establish that Medicare fraud investigations are also expanding to other areas of health care services, such as psychotherapy.

These indictments are another example of the government’s focus on the Detroit area in Medicare and Medicaid investigations. For more information on Medicare Fraud defense, or assistance with interpreting and understanding Medicare and Medicaid regulations, including the anti-kickback statute, please contact a Wachler & Associates attorney at 248-544-0888.

Published on: September 1, 2011

CMS Introduces Its esMD Pilot Enabling Providers to Electronically Submit Requested Documentation to Review Contractors

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) estimates that the Medicare Fee-For-Service Program issues billions of dollars in improper Medicare and Medicaid payments every year. The majority of improper payments are identified through the contractor’s manual review of the provider’s medical records compared with the provider’s claims. Review Contractors request medical records by mailing a paper letter to the provider. To fulfill a request for medical records, the provider typically has only two methods for submitting the records to the Review Contractor- paper mail or fax.

This month, CMS plans to implement Phase 1 of its voluntary Electronic Submission of Medical Documentation (esMD) pilot which will offer providers a more efficient method to deliver medical records to the Review Contractor that made the document request. During Phase 1 of esMD, providers will have the option to electronically submit medical records to the requesting contractor. To keep the medical records and other documentation secure during the electronic exchange between the provider and the contractor, esMD will employ the technology of the Nationwide Health Information Network called CONNECT-compatible gateways.

CMS plans to introduce Phase 2 of esMD in 2012. During this phase, Review Contractors will electronically send documentation requests to providers when the contractor selects their claims for review.