Monthly Archives: June 2021

RAC Audit Update: Renewed Focus on the Two-Midnight Rule

In RAC news, on June 1, 2021, Cotiviti acquired HMS RAC region 4. Don’t be surprised if you see Cotiviti’s logo on RAC audits where you would have seen HMS. This change will have no impact in the day-to-day contract administration and audit timelines under CMS’ guidance. You will continue to follow the guidance in the alleged, improper payment notification letter for submission of medical documentation and discussion period request. In March 2021, CMS awarded Performant an 8.5 year contract to serve as the Region 1 RAC. 

There really cannot be any deviations regardless the name of the RAC Auditor because this area is so regulated. Providers always have appeal rights regardless Medicare/caid RAC audits. Or any other type of audit. Medicaid RAC provider appeals are found in 42 CFR 455.512. Whereas Medicare provider redeterminations and the 5 levels of appeal are found in 42 CFR Subpart I. The reason that RAC audits are spoken about so often is that the Code of Federal Regulations applies different rules for RAC audits versus MAC, TPE, UPIC, or other audits. The biggest difference is that RAC auditors are limited to a 3 year look back period according to 42 CFR 455.508. Other auditors do not have that same limitation and can look back for longer periods of time. Of course, whenever “credible allegations of fraud” is involved, the lookback period can be for 10 years.

The federal regulations also allow States to request exceptions from the Medicaid RAC program. CMS mandates every State to participate in the RAC program. But there is a federal reg §455.516 that allows exceptions. To my knowledge, no State has requested exceptions out of the RAC Audit program.

RAC auditors have announced a renewed focus on the two-midnight rule for hospitals. Again. This may seem like a rerun and it is. You recall around 2012, RACs began noticing high rates of error with respect to patient status in certain short-stay Medicare claims submitted for inpatient hospital services. CMS and the RACs indicated the inpatient care setting was medically unnecessary, and the claims should have been billed as outpatient instead. Remember, for stays under 2 midnights, inpatient status may be used in rare and unusual exceptions and may be payable under Medicare Part A on a case-by-case basis.

Provider Medicaid Contract Termination Reversed in Court!

First and foremost, important, health care news:

The Medicare Administrative Contractors (MACs) have full authority to renew post-payments reviews of dates of service (DOS) during the COVID pandemic. The COVID pause is entirely off. It is going to be a mess to wade through the thousands of exceptions. RAC audits of COVID DOS will be, at best, placing a finger on a piece of mercury. I hope that the auditors remember that everyone was scrambling to do their best during the past year and a half. In the upcoming weeks, I will keep you posted.

I am especially excited today. Last week, I won a permanent injunction for a health care facility that but for this injunction, the facility would be closed, its 300 staff unemployed, and its 600 Medicare and Medicaid consumers without access to their mental health and substance abuse providers, their primary care physicians, and the Suboxone clinic. The Judge’s clerk emailed us on Friday. The email was terse although the clerk signified that the email was important by clicking the little, red, exclamation point. It simply stated: After speaking with Judge X, she is dismissing the government’s MTD and granting Petitioner’s permanent injunction. Petitioner’s counsel can send a proposed decision within 10 days. Such a simple email affected so many lives!

We hear Ellen Fink-Samnick MSW, ACSW, LCSW, CCM, CRP, speak about social determinants of health (SDoH) on RACMonitor. Well, this company is minority-owned and the mass percentage of staff and consumers are minorities.

Why was this company on the brink of closing down? The managed care organization (MCO) terminated the company’s Medicaid contract. Medicaid comprised the majority of its revenue. The MCO’s reason was that the company violated 42 CFR §455.106, which states:

“Information that must be disclosed. Before the Medicaid agency enters into or renews a provider agreement, or at any time upon written request by the Medicaid agency, the provider must disclose to the Medicaid agency the identity of any person who:

(1) Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and

(2) Has been convicted of a criminal offense related to that person‘s involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs.”

The former CEO – for years – he relied on professional tax accountants for the company’s taxes and his own personal family’s taxes. His wife, who is a physician, relied on her husband to do their personal taxes as one of his “honey-do” tasks. CEO relied on a sub-par accountant for a couple years and pled guilty to failing to pay personal taxes for two years. The plea ended up in the newspaper and the MCO terminated the facility.

We argued that the company, as an entity, was bigger than just the CEO. Quickly, we filed for a TRO to keep the company open. Concurrently, we transitioned the company from the CEO to Dr. wife. Dr became CEO in a seamless transition. A long-time executive stepped up as HR management.

Yet, according to testimony, the MCO terminated the company’s contract when the newspaper published the article about CEO’s guilty plea. The article was published in a local paper on April 9 and the termination notice was sent out April 19th. It was a quick decision.

We argued that 42 CFR §455.106 didn’t apply because CEO’s guilty plea was:

  1. Personal and not related to Medicare or Medicaid; and
  2. Not a conviction but a voluntary plea agreement.

The Judge agreed. We won the TRO for immediate relief. After a four-day hearing and 22 witnesses for Petitioner, we won the preliminary injunction. At this point, the MCO hired outside counsel with our tax dollars, which I did bring up in the final hearing on the merits.

New outside counsel was super excited to be involved. He immediately propounded a ton of discovery asking for things that he already had and for criminal documents that we had no access to because, by law, the government has possession of and CEO never had. Well, new lawyer was really excited, so he filed motions to compel us to produce these unobtainable documents. He filed for sanctions. We filed for sanctions back.

It grew more litigious as the final hearing on the merits approached.

Finally, we presented our case for a permanent injunction, emphasizing the importance of the company and the smooth transition to the new, Dr. CEO. We won! Because we won, the company is open and providing medically necessary services to our most needy population.

And…I get to draft the proposed decision.