Articles Tagged with Medicare

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Recently, the Office of Inspector General (OIG) released a report focusing on various areas of concerns pertaining to Medicare appeals at the Administrative Law Judge (ALJ) level. In 2005, the responsibility for conducting ALJ appeals was transferred from the Social Security Administration to the Department of Health and Human Services (HHS). Upon this transfer, HHS established the Office of Medicare Hearings and Appeals (OMHA) which formed a group of ALJs committed to deciding Medicare appeals. In addition, ALJs were required to follow new regulations that addressed the application of Medicare policies, acceptance of new evidence, and the participation of the Centers for Medicare and Medicaid Services (CMS) in the appeals. In its report, the OIG assessed the impact of these changes on ALJ appeals by gathering and analyzing appeals data from fiscal year (FY) 2010.

The report contains several findings in which the OIG determined to be significant. For instance, the OIG found that 85 percent of all appeals decided by ALJs in FY 2010 were filed by providers, compared to 11 percent filed by beneficiaries and 3 percent filed by State Medicaid agencies. Moreover, the OIG found that a small subset of these providers were frequent filers, accounting for nearly one-third of all appeals.

The OIG also found that ALJs reversed prior-level appeals and granted fully favorable decisions to appellants 56 percent of the time. Meanwhile, Qualified Independent Contractors (QICs) decided fully in favor of appellants in only 20 percent of appeals. The OIG determined that these differences in fully favorable decisions were due to a number of key factors. One factor was the tendency of ALJs to interpret Medicare policies less strictly than QICs, finding that ALJs often granted fully favorable decisions when the intent of a Medicare policy was met, rather than the strict letter of the policy, whereas QICs strived to follow Medicare policies more strictly. Another reason stated in the OIG’s report for the favorable outcome disparity was due to the difference in the degree of specialization in Medicare program areas between ALJs and QICs. Each of the QICs specialize in a particular Medicare program area (e.g. Part A, Part B and DMEOPS appeals), while ALJs receive randomly assigned appeals that involve all Medicare program areas.

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On September 26, 2012 The Department of Health and Human Services Office of Inspector General (OIG) issued a report on Schedule II drugs inappropriately billed to Medicare Part D. The report found that Medicare Part D inappropriately paid for $24.6 million in Schedule II drugs billed as refills, despite federal law prohibiting refills of Schedule II drugs.

OIG Report on Schedule II Drug Refills.pdf

Schedule II drugs are the second most controlled drugs under the Controlled Substances Act. They are classified as drugs which have a medical use, but have a high potential for abuse and may lead to severe psychological or physical dependence. Schedule II drugs with the highest number of refills billed to Medicare in 2009 include fentanyl, oxycodone-acetaminophen, morphine sulphate, and methadone HCI.

According to the report, 12,356 pharmacies billed for refills of Schedule II drugs, of which six percent were long-term-care pharmacies. Despite consisting of only six percent of the pharmacies that billed for refills of Schedule II drugs, long-term-care pharmacies were responsible for seventy-five percent of the refills. The report raises the possibility that some of these pharmacies actually incorrectly billed partial fills as refills. Partial fills are permitted for Schedule II drugs because of prohibitions on the amount a pharmacy can keep on hand at any one time. As a result, pharmacies will do partial fills of a prescription over a period of time, rather than filling the whole thing at once. In the CMS response to the report, CMS urged that it was likely that a majority of the refills were actually partial fills that were incorrectly billed. In turn, the OIG responded that even if that were the case it is still illegal to bill a refill of a Schedule II drug, regardless of the circumstances.

The OIG report further found that more than 25,000 refills of Schedule II drugs that were billed had invalid prescriber information. Prescriptions for Schedule II drugs require the name, address, and signature of the prescriber. Refills without proper prescriber information accounted for $1.4 million paid by Medicare Part D in 2009.

In 2009, the report concluded, 75% of all Medicare Part D sponsors paid for Schedule II drugs billed as refills, which indicates there are not appropriate safeguards in place to stop refills. The OIG made the following recommendations to CMS:

1. Issue guidance to sponsors to prevent billing of Schedule II refills and to ensure accurate billing of partial refills.

2. Exclude Schedule II refills when calculating payments to sponsors.

3. Monitor sponsors to ensure that they validate prescriber numbers for Schedule II drugs.

4. Follow up on sponsors and pharmacies with high numbers of refills of Schedule II drugs.

In response to these recommendations, CMS indicated that it will not work with sponsors and pharmacies to determine why there are not controls in place to prevent Schedule II refills. CMS will instead explore the use of PDE edits to prevent billing. CMS also did not agree to exclude Schedule II drugs billed as refills from payments to sponsors, and indicated that it will instead examine PDE edits to alert sponsors to inappropriate refills.
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On September 14, 2012 the Office of Management and Budget (OMB) issued a report to Congress pursuant to the Sequestration Transparency Act of 2012 (STA). The report indicates that under the Budget Control Act of 2011 (BCA), Medicare spending could be cut by almost $11.1 billion in fiscal year 2013 if a plan is not enacted to reduce the national deficit by $1.2 trillion.

The BCA requires that the Joint Select Committee on Deficit Reduction propose a plan to reduce the deficit by $1.2 trillion, and that Congress enact that plan. If a plan is not enacted by January 2, 2013, automatic spending cuts, known as sequestration, will occur on that date. Medicare direct spending is budgeted at almost $554.3 billion. The BCA limits the amount by which Medicare non-administrative spending can be cut to 2%. This would equal roughly $11.1 billion in fiscal year 2013. Because the sequestration would apply to non-administrative spending, providers would likely see a majority of the effects of the sequestration. Medicaid is exempt from sequestration.

It appears that efforts will continue to be made to enact a deficit reduction plan before Congress adjourns at the end of 2012.

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On August 15, 2012 the Recovery Audit Contractor (RAC) for Region A changed its name from Diversified Collection Services (DCS) to Performant Recovery, Inc.

According to the website, processes, people, and contact information will remain the same.
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The Department of Justice (DOJ) reportedly set an email to hospitals nationwide on August 30, 2012 instructing them to examine implantable defibrillator surgeries covered by Medicare to determine if they were improperly billed to Medicare. The email, as reported by modernhealthcare.com, included a “resolution model” with instructions for hospitals to self-audit, and estimate monetary penalties under the False Claims Act.

The DOJ has been conducting an investigation into improperly billed implantable defibrillator surgeries for more than two years, and the resolution model sent to hospitals is the first attempt by the DOJ to come to a settlement resolution for these instances.

The investigation centers around a National Coverage Determination (NCD) set by the Centers for Medicare and Medicaid Services (CMS) which establishes the instances in which an implantable defibrillator is covered by Medicare.
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Since the RAC Demonstration Program launched in 2005 and the final RAC program launched in 2008, Wachler & Associates, P.C. has been instrumental in the effort to obtain full Part B outpatient reimbursement for hospitals where a short-stay inpatient claim has been denied for lack of medical necessity. Although our legal arguments for Part B payment resonated with many administrative law judges (ALJs) and ALJs would issue orders for full Part B reimbursement, we have been trying to establish a precise process to effectuate the orders for full Part B reimbursement, including observation services. Last week, after our ongoing communication with Centers for Medicare & Medicaid Services (CMS) and a Medicare Administrative Contractor, we obtained a CMS memorandum which provides a very specific avenue for hospitals to obtain full Part B reimbursement in the event that an inpatient claim is denied as not being medically necessary and reasonable and the ALJ issues an order for outpatient observation services.

The CMS memorandum dated July 13, 2012, is from a number of officials from CMS to “All Fiscal Intermediaries (FIs), Carriers, and Part A and Part B Medicare Administrative Contractors (A/B MACs)”. The memorandum explains that there have been multiple ALJ decisions where the ALJ has upheld the contractors’ denials of the inpatient services as not reasonable and necessary, but then ordered the contractor to pay the hospital full Medicare Part B outpatient reimbursement, including observation. As a result of these ALJ orders, CMS issued mandatory instructions for claims administration contractors to follow in the event that an ALJ decision instructs CMS to make payments for Medicare Part B outpatient/observation services. Most importantly, the instructions require contractors to contact the provider to obtain a Part B claim within 30 calendar days of receipt of the effectuation notice from the Administrative QIC (AdQIC). The instructions note that an order for outpatient/observation services is only required if the ALJ did not specify payment for observation level of care. In instances where the ALJ’s specified coverage of “observation level of care,” observation charges may be added to the replacement claim, as the ALJ is specifically substituting the order to admit for the order for observation. The provider must send the replacement claim to the contractor within 180 days from the date the contractor contacts the provider or else the contractor must close the case and consider effectuation completed.

While the memorandum states that the Manuals do not provide support for this position, CMS recognizes that ALJs are issuing orders for Part B observation services and are directing the claims administration contractors to effectuate an adjusted payment to the hospital in accordance with these decisions. As such, CMS issued this memorandum to clearly instruct claims administration contractors how to effectuate an ALJ’s order for payment for Part B observation services.

Wachler & Associates believes that this is an extremely important advancement in the effort to obtain accurate payment for hospitals where an inpatient short-stay claim has been denied for lack of medical necessity. Although there is still more work to be done to solidify hospitals’ ability to obtain Part B reimbursement, this memo is the most clear indication that we have received from CMS that contractors are now required to effectuate an ALJ’s order for Part B reimbursement. Persuading an ALJ to order payment for observation and all underlying outpatient care is a legal, not a clinical, argument. We have a number of legal arguments and authorities that we rely upon to persuade a judge to issue a precise order for Part B reimbursement, including observation services and underlying outpatient care.
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On August 1, 2012 the Centers for Medicare and Medicaid Services (CMS) released a Provider Compliance Interactive Map. The map is an interactive online tool that allows users to view state-by-state contact information and websites for contractors and other Medicare resources. The map is intended to simplify access to contact information for providers in each state.
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In the recently issued Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule for 2013, CMS is soliciting comments regarding policy changes that could be made on the issue of inpatient versus outpatient admission. (To view the CMS factsheet please click here.) CMS is seeking comments on potential changes which could provide some clarity for providers and hospitals regarding inpatient versus outpatient status for purposes of Medicare payment. Comments are due by September 4, 2012.

Currently, when a patient presents to the hospital in a short-stay case, the hospital must decide whether to admit the patient as an inpatient or treat him/her as an outpatient. This decision is not always clear in light of existing Medicare guidance, and the wrong choice can have severe repercussions for the hospital. If the provider orders an inpatient stay, and later, the Recovery Audit Contract (RAC) concludes that the care should have been provided at an outpatient level, the care is deemed not medically reasonable and necessary. Under the current system for reimbursement, the hospital is not reimbursed under Part B for the outpatient services provided unless the hospital undertakes an appeal of the claim denial and is successful before an Administrative Law Judge (ALJ).

Hospitals, in an effort to mitigate costs, err on the side of outpatient care. CMS notes that this practice has doubled in the last four years and that it has a detrimental effect on Medicare beneficiaries.
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On June 8, 2012, Robert Vito, Regional Inspector General for Evaluation and Inspections at the U.S. Department of Health and Human Services (HHS), Office of Inspector General (OIG), testified before the House Energy and Commerce Committee: Subcommittee on Oversight and Investigations. The testimony focused on the current OIG assessment of Medicare contractors’ efforts to counteract fraud at present and in the near future. The testimony focused on Zone Program Integrity Coordinators (ZPIC), who audit and investigate claims and providers enrolled in Medicare Part A and B, and Medicare Drug Integrity Contractors (MEDIC), who focus on Medicare Part C and D.

The testimony revealed that OIG reviews over the last 10 years have found recurring issues with Medicare contractor performance–issues that continue to persist. These issues include:

• Limited results from proactive data analysis.
• Difficulties in obtaining the data needed to detect fraud.
• Inaccurate and inconsistent data reported by contractors.
• Limited use by CMS of contractor-reported fraud and abuse activity data in evaluating contractor performance and investigating variability across contractors.
• Lack of program vulnerability identification and resolution.

One major area for concern for the OIG is proactive data analysis. Medicare contractors, like ZPICs and MEDICs, have continued to pursue a “pay and chase” model of benefit integrity activity, rather than the proactive approach that HHS would like to implement. Proactive analysis would potentially identify fraudulent or otherwise inappropriate claims before they are paid rather than after. Proactive and early identification of fraud and inappropriate payments accounted for only 7 percent of ZPIC investigations, according to a 2011 OIG report. The vast majority of ZPIC and MEDIC audit and investigative activity is based upon “reactive methods” like complaints from other sources.

Vito’s testimony also indicated inaccuracies and lack of uniformity in ZPIC and MEDIC data. System issues, reporting errors, and differing interpretations of fraud terms and definitions have caused drastically different reporting results from different Medicare contractors. In one case, one ZPIC reported 7 times more investigations originating from external sources than the other. This inconsistency prevented OIG from making a conclusive assessment of ZPIC and MEDIC activities.

OIG review found that despite the requirement that Medicare benefit integrity contractors identify and report systemic vulnerabilities in the Medicare program, some contractors are not reporting any vulnerabilities. Vulnerabilities are defined by CMS as fraud, waste, or abuse identified through analysis of Medicare data. In 2009 a total of 62 program vulnerabilities were reported to CMS. Only 21 vulnerabilities included an estimated monetary impact as required. These 21 vulnerabilities totaled an estimated monetary impact of $1.2 billion. As of January 2011, CMS had taken no action on 75% of the vulnerabilities reported in 2009.

The testimony recommended the following continuing actions to improve benefit integrity contractor performance:

• Oversee proactive identification of fraud.
• Provide timely data access.
• Improve accuracy of contractor-reported fraud activity data.
• Assess variability in performance across contractors.
• Ensure program vulnerability identification and resolution.
• Improve overpayment identification and collection.

The OIG will also continue to review Medicare benefit integrity issues, which include continuing evaluations of overpayments and Medicare debt collection, and examining the activities of MACs and RACs. Reviews of new enrollment procedures and prepayment identification of inappropriate claims will also begin.
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On May 29, 2012 the United States District Court for the Eastern District of North Carolina overturned the Medicare Appeals Counsel’s (MAC’s) decision regarding one evaluation and management (E/M) service claim.

Six years earlier, a CMS Program Safeguard Contractor audited Dr. Ojebuoboh. It was determined that the government had overpaid Dr. Ojebuoboh approximately $179,000. Dr. Ojebuoboh contested the overpayment through the five-step Medicare appeals process. Before the matter reached federal district court, the physician had managed to reduce the overpayment amount to $12,000.

On appeal to federal district court, Dr. Ojebuoboh argued, among other things, that the MAC reached the wrong decision as to services provided for three beneficiaries: WB, MT, and OW. At this stage, Dr. Ojebuoboh had the right to judicial review of specific claims, however; in order to overturn the prior holding he had to prove that the MAC’s decision was arbitrary and capricious. This is a difficult standard to prove as it presumes that the MAC’s decision is correct. The federal district court determined that the MAC must explain its reasons for denying the claims, yet; it need not thoroughly detail every element of every component.
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