Wachler & Associates Health Law Blog

Published on: July 18, 2011

GAO Report Finds CMS’ Systems to Detect Fraud ‘Inadequate and ‘Underused’

Despite the large number of Medicare and Medicaid audits and investigations currently being conducted by government contractors, the Government Accountability Office (GAO) recently released a report stating that the federal government’s systems for analyzing Medicare and Medicaid data to detect fraud are “inadequate and underused.”

In 2009, CMS enacted new $150 million systems intended to be a one-stop database accessible to all CMS staff and contractors, law enforcement, and state agencies. However, the report finds that the “share systems data” and other tools to identify and prevent payment of fraudulent claims are still missing. The federal government believes the technology is crucial to curtailing the $60 billion to $90 billion in fraudulent claims paid each year.

The GAO report noted that the current systems don’t even include Medicaid data. Further, only 41 of the 639 analysts charged with using the new detection system have been trained so far. The systems are meant to replace CMS’ “pay and chase” method, which allows criminals to flea before CMS can analyze their claim. The new systems detect fraudulent Medicare and Medicaid claims in real time and deny the claim prior to payment.

Published on: July 14, 2011

CMS to Release Comparative Billing Reports for Physicians Ordering Spinal Orthotic Devices

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) this July. CMS will release 5,000 CBRs to physicians ordering spinal orthotic devices billed to Medicare. 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 spinal orthotic CBR or are among the other provider types that have been identified to receive CBRs (i.e. 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.

Click Here to view a Spinal Orthotic CBR sample

Published on: July 13, 2011

OIG Concerned About the Rising Costs of Hospice Care

by Wachler & Associates, P.C.

In collaboration with Kaiser Health News, the New York Times recently reported on the concerns over the rising costs associated with hospice care. While Medicare is praised for its reimbursement of providers for hospice services because of the medical and emotional support hospice gives to dying patients, there are concerns that hospice is being misused. According to the article, four in 10 Medicare beneficiaries use hospice services before they die and the cost of hospice care has risen from $2.9 billion in 2000 to $12 billion in 2009.

In response to the growing anxiety that hospice is being abused, the Office of Inspector General of the Department of Health and Human services examined the provision of hospice services in nursing homes. The OIG found that hospices routinely failed to document whether the patients belong in hospice care or that the patients received the care they were entitled to. This discovery prompted the OIG to investigate any unusual patterns in hospice stays.

In light of this recent scrutiny of hospice costs, hospice providers should take extra precautions with regard to compliance programs and should consider conducting self-audits to identify potential risk areas within their organizations.

Published on: July 12, 2011

Recently Released Medical Marijuana Memo Contradicts Obama Administration’s Policy Not to Interfere with State Law

by Wachler & Associates, P.C.

In contradiction of President Obama’s campaign promises to let states create their own policies regarding medical marijuana use, the Obama administration released a memo approving federal prosecution of anyone in the business of cultivating or supplying marijuana to patients, whether or not they comply with state law. The original guidelines that were set in October 2009 were put in place as a way to spare seriously ill patients and their caregivers from prosecution. However, the memo stated that these guidelines caused an increase in the commercial cultivation, sale, distribution and use of medical marijuana, in which many of these activities casts suspicion on whether it is truly for medical purposes. In the memo, Deputy Attorney General James Cole stated, “persons who are in the business of cultivating, selling, or distributing marijuana, and those who knowingly facilitate such activities, are in violation of the Controlled Substances Act, regardless of state law.”

There have already been raids on suppliers in the 16 states where medical marijuana is legal under state law. Additionally, officials in 10 states have recently received warnings about possible prosecution if they authorized marijuana-selling dispensaries. These warnings have caused states, such as Washington and Rhode Island, to abandon plans that would legalize medical marijuana dispensaries. Other states, including Delaware and Vermont, have decided to continue in their efforts to legalize medical marijuana by approving a number or dispensaries for patients in need of the drug.

If you are a provider with questions regarding participation in the certification of patients for medical marijuana usage and compliance with state or federal law, including compliance with the Michigan Medical Marihuana Act or the Michigan Medical Marihuana Program, please contact at Wachler & Associates attorney at 248-544-0888.

Published on: July 12, 2011

The University of California at Los Angeles Health System Agrees to Settle After Violating HIPAA

by Wachler & Associates, P.C.

The University of California at Los Angeles Health System (UCLAHS) has agreed to settle potential HIPAA violations stemming from an investigation conducted by the U.S. Department of Health and Human Services (HHS) Office for Civil Rights (OCR). UCLAHS has agreed to pay $865,500, along with implementing a plan of correction to ensure future compliance with HIPAA.

The investigation was sparked by two separate complaints filed with OCR from two celebrity patients. Allegedly, UCLAHS employees repeatedly viewed the electronic health information of these patients without the necessary authorization. OCR also discovered that the employees looked at the electronic protected health information of a number of other patients over a span of three years.

Under HIPAA, entities must reasonably restrict access to patient information to those employees who have a legitimate work-related reason to view the information. Furthermore, entities are required to sanction employees who have violated these policies. OCR maintains a firm stance that entities should properly train all employees about the current laws protecting patient health information and should have policies in place to ensure compliance with these policies.

Published on: July 11, 2011

Recent RAC Updates

by Wachler & Associates, P.C.

DCS Healthcare (RAC for Region A) added a new issue for medical necessity claims to its CMS-approved issues list for providers in Maryland.

APR-DRG 204-Syncope (All severity and risk of mortality levels).

CGI (RAC for Region B) added three new issues to its CMS-approved list issues for providers in all Region B states.

Published on: July 11, 2011

CMS Releases Article Discussing DRG Coding Vulnerabilities for Inpatient Hospitals

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) released a MLN Matters article this week discussing Diagnosis Related Group (DRG) Coding vulnerabilities for inpatient hospitals. DRG validation review, executed by Recovery Audit Contractors (RACs), focuses on the hospital’s selection of principal and secondary diagnoses and procedures for a claim. The recent MLN Matters article notes that auditors in the RAC program have discovered coding errors that may result in RAC overpayment demands in connection with DRG validation reviews.

The MLN Matters article reminds inpatient hospitals of the risks associated with coding a record prior to receiving the complete medical record. For example, the article identifies the situation where the emergency room report, History and Physical, and early progress notes identify one condition, where continued evaluation reveals an entirely different condition. This practice may mean that the reported codes do not accurately portray a patient’s conditions and procedures throughout the course of treatment. The recovery auditors, however, will review the entire medical record during DRG validation review and may discover another more accurate code exists for the services provided.

In addition, the article noted that if there is conflicting or contradictory information in the record, the coder should ask the attending physician for clarification to identify the correct principal and secondary diagnoses.

Published on: July 7, 2011

CMS Proposes to Rescind the Signature Requirement for Lab Requisitions Required under the 2011 Medicare Physician Fee Schedule

by Wachler & Associates, P.C.

The Centers for Medicare and Medicaid Services (CMS) has proposed to rescind the current signature requirement for lab requisitions. Currently, the 2011 Medicare Physician Fee Schedule requires a physician’s or nonphysician provider’s signature on all lab requisitions for tests paid under the clinical lab fee schedule, regardless of whether there is a signed order. This requirement was to become effective at the beginning of 2011. However, CMS decided to postpone this requirement due to commentary by providers, labs and other stakeholders of the health care industry. The signature requirement on lab requisitions was proposed by CMS as a way to reduce fraud and improper payments. Recently, CMS has stated it underestimated the burdens that the rule would have on quality of care due to the amount of time it takes providers to obtain the required signatures, especially for providers who do not use electronic health records.

If you have any questions regarding compliance with the Medicare Physician Fee Schedule, or need help defending against a current or future audit, please contact a Wachler & Associates attorney at 248-544-0888.

Published on: July 6, 2011

DRG Coding Vulnerabilities in the Recovery Audit Program

by Wachler & Associates, P.C.

The Centers for Medicare & Medicaid Services (CMS) intends to reduce the Comprehensive Error Rate Testing (CERT) error rate by correcting vulnerabilities identified by Recovery Auditors and other Medicare contractors during DRG Validation reviews. DRG Validation review focuses on the hospital’s selection of principal and secondary diagnoses and procedures on a claim. Recovery Auditors found that a significant amount of claims contain incorrect principal diagnoses.

The Uniform Hospital Discharge Data Set (UHDDS) defines principal diagnoses as the condition responsible for occasioning the patient’s admission to the hospital. UHDDS Guidelines for coding and reporting secondary diagnoses allow the reporting of “any condition that is clinically evaluated, diagnostically tested for, therapeutically treated, or increases nursing care or the length of stay of the patient.”

CMS found that hospitals often code patient records prior to receiving the complete medical record. As Recovery Auditors review the entire medical record when performing DRG validation reviews, hospitals that code prior to receiving the entire report, e.g. without the discharge summary or operative reports, increase their chance of coding errors. Early progress notes may indicate that the patient has one condition, but continuing workup and evaluation determines something entirely different. Therefore, coders must have access to the complete record in order to assign accurate codes. Coders must also clarify any conflicting diagnoses by attending physicians and consultants in order to limit their exposure to Recovery Auditors, who will review data from the entire medical record.

Published on: June 30, 2011

OIG Issues Unfavorable Opinion Involving an Incentive Arrangement Between a DME Supplier and Several IDTFs

by Wachler & Associates, P.C.

On June 14, 2011, the Office of Inspector General (OIG) issued an unfavorable advisory opinion addressing an existing and a proposed arrangement involving contracts between a durable medical equipment (DME) supplier and several independent diagnostic testing facilities (IDTF). The DME supplier (Requestor) provides continuous positive airway pressure supplies (CPAP), which may be prescribed by a physician for patients diagnosed with obstructive sleep apnea. The study may be performed at the IDTFs, and a patient must select a DME supplier to supply the equipment after being prescribed the CPAP.

The existing arrangement involves contracts between Requestor and several IDTFs, some of which have physician investors, where the IDTFs are permitted to display and provide equipment from multiple DME suppliers. The patients are given a list of local DME suppliers, and are advised by IDTFs their right to select which supplier will provide them with the equipment. The contracts only apply to non-federally insured patients. If a non-federally insured patient chooses Requestor’s DME, an IDTF staff member will prepare the CPAP for the patient, along with educating the patient on how to properly use the equipment. For completing these tasks, Requestor pays the IDTF a per-patient fee. Each contract between Requestor and IDTF is non-exclusive and is set for a term of at least one year. Furthermore, Requestor may only terminate the contract for breach or for cause, but the IDTF may terminate the contract at any time.

The proposed arrangement would be similar to the existing arrangements, except for the following three elements: (1) the proposed arrangement would include federally-insured patients; (2) IDTF would be paid a flat monthly/annual fee; and (3) Requestor would have the ability to terminate the contract if it is unsatisfied with the number or patients receiving the services.