Category Archives: Appeal Deadlines
Hospital is shocked to learn that its Medicare contract with Health and Human Services may be terminated by April 16, 2017. Medicaid services may also be adversely affected. The hospital was notified of the possible Medicare contract termination on March 27, 2017, and is faced with conceivably losing its Medicare contract within a month of notification. Legal action cannot act fast enough – unless the hospital requests an emergency temporary restraining order, motion to stay, and preliminary injunction and files it immediately upon learning that its Medicare contract is terminated.
The Center for Medicare and Medicaid Services (CMS) threatened Greenville Memorial Hospital, part of Greenville Health System, in South Carolina, that Medicare reimbursements will cease starting April 16, 2017. According to CMS, Memorial’s emergency department is not compliant with Medicare regulations.
A public notice in the Greenville News says: “Notice is hereby given that effective April 15, 2017, the agreement between GHS Greenville Memorial Hospital, 701 Grove Road, Greenville, S.C. 29605 and the Secretary of Health and Human Service, as a provider of Hospital Services and Health Insurance for the Aged and Disabled Program (Medicare) is to be terminated. GHS Greenville Memorial Hospital does not meet the following conditions of participation. 42 CFR 482.12 Governing Body, 42 CFR 482.13 Patients’ Rights and 42 CFR 482.23 Nursing Services.”
“The Centers for Medicare and Medicaid Services has determined that GHS Greenville Memorial Hospital is not in compliance with the conditions of coverage. The Medicare program will not make payment for hospital services to patients who are admitted after April 16, 2017.”
The findings came after an onsite audit was conducted on March 13, 2017. Memorial was notified of the report on March 27, 2017.
Memorial must have submitted a corrective action plan by April 3, 2017, but it has not been released.
The emergency department at Memorial treats about 300 patients per day. An employee of Memorial estimates that the termination would lose net revenue from Medicare and Medicaid could potentially reach around $495 million. Greenville Memorial received $305 million in Medicare funding and $190 million from Medicaid in the most recent fiscal year, accounting for nearly six in 10 patients, officials said.
While CMS and Memorial refuse to discuss the details of the alleged noncompliance, CMS’ public notice cites three CFR cites: 42 CFR 482.12 Governing Body, 42 CFR 482.13 Patients’ Rights and 42 CFR 482.23 Nursing Services.
42 CFR 482.12 requires that hospitals have governing bodies and plans to follow Medicare regulations. Subsection (f) specifically requires that if a hospital has an emergency department that the hospital must follow 42 CFR 482.55 “Conditions of Participation,” which states that “The hospital must meet the emergency needs of patients in accordance with acceptable standards of practice.
(a) Standard: Organization and direction. If emergency services are provided at the hospital –
- The services must be organized under the direction of a qualified member of the medical staff;
- The services must be integrated with other departments of the hospital;
- The policies and procedures governing medical care provided in the emergency service or department are established by and are a continuing responsibility of the medical staff.
(b) Standard: Personnel.
- The emergency services must be supervised by a qualified member of the medical staff.
- There must be adequate medical and nursing personnel qualified in emergency care to meet the written emergency procedures and needs anticipated by the facility.”
The Memorial audit stemmed from a March 4, 2017, death of Donald Keith Smith, 48, who died as a result of traumatic asphyxiation. After an altercation, the patient was placed on a gurney, supposedly, face-down. South Carolina’s Department of Health and Environmental Controls Site Survey Agency investigated the hospital after the death and the audit found that hospital security officers improperly restrained Smith, strapping him face down to a gurney during an altercation, rendering him unable to breathe. The death was ruled a homicide.
Memorial terminated the security officers involved in the death.
Now the hospital is faced with its own potential death. The loss of Medicare and, perhaps, Medicaid reimbursements could financially kill the hospital. Let’s see what happens…
Class Action Lawsuit Alleges Right to Inpatient Hospital Stays: Hospitals Are Damned If They Do…and Don’t!
Hospitals – “Lend me your ears; I come to warn you, not to praise RACs. The evil that RACs do lives after them; The good is oft interred with their appeals; So let it be with lawsuits.” – Julius Caesar, with modifications by me.
A class action lawsuit is pending against U.S. Health and Human Services (HHS) alleging that the Center for Medicare and Medicaid Services (CMS) encourages (or bullies) hospitals to place patients in observation status (covered by Medicare Part B), rather than admitting them as patients (covered by Medicare Part A). The Complaint alleges that the treatments while in observation status are consistent with the treatments if the patients were admitted as inpatients; however, Medicare Part B reimbursements are lower, forcing the patient to pay more out-of-pocket expenses without recourse.
The United States District Court for the District of Connecticut refused to dismiss the class action case on February 8, 2017, giving the legal arguments within the Complaint some legal standing, at least, holding that the material facts alleged warrant investigation.
The issue of admitting patients versus keeping them in observation has been a hot topic for hospitals for years. If you recall, Recovery Audit Contractors (RACs) specifically target patient admissions. See blog and blog. RAC audits of hospital short-stays is now one of the most RAC-reviewed issues. In fiscal year 2014, RACs “recouped” from hospitals $1.2 billion in allegedly improper inpatient claims. RACs do not, however, review outpatient claims to determine whether they should have been paid as inpatient.
On May 4, 2016, CMS paused its reviews of inpatient stays to determine the appropriateness of Medicare Part A payment. On September 12, 2016, CMS resumed them, but with more stringent rules on the auditors’ part. For example, auditors cannot audit claims more than the six-month look-back period from the date of admission.
Prior to September 2016, hospitals would often have no recourse when a claim is denied because the timely filing limits will have passed. The exception was if the hospital joined the Medicare Part A/Part B rebilling demonstration project. But to join the program, hospitals would forfeit their right to appeal – leaving them with no option but to re-file the claim as an outpatient claim.
With increased scrutiny, including RAC audits, on hospital inpatient stays, the class action lawsuit, Alexander et al. v. Cochran, alleges that HHS pressures hospitals to place patients in observation rather than admitting them. The decision states that “Identical services provided to patients on observation status are covered under Medicare Part B, instead of Part A, and are therefore reimbursed at a lower rate. Allegedly, the plaintiffs lost thousands of dollars in coverage—of both hospital services and subsequent skilled nursing care—as a result of being placed on observation status during their hospital stays.” In other words, the decision to place on observation status rather than admit as an inpatient has significant financial consequences for the patient. But that decision does not affect what treatment or medical services the hospital can provide.
While official Medicare policy allows the physicians to determine the inpatient v. observation status, RAC audits come behind and question that discretion. The Medicare Policy states that “the decision to admit a patient is a complex medical judgment.” Ch. 1 § 10. By contrast, CMS considers the determination as to whether services are properly billed and paid as inpatient or outpatient to be a regulatory matter. In an effort to avoid claim denials and recoupments, plaintiffs allege that hospitals automatically place the patients in observation and rely on computer algorithms or “commercial screening tools.”
In a deposition, a RAC official admitted that if the claim being reviewed meets the “commercial screening tool” requirements, then the RAC would find the inpatient status is appropriate, as long as there is a technically valid order. No wonder hospitals are relying on these commercial screening tools more and more! It is only logical and self-preserving!
This case was originally filed in 2011, and the Court of Appeals overturned the district court’s dismissal and remanded it back to the district court for consideration of the due process claims. In this case, the Court of Appeals held that the plaintiffs could establish a protected property interest if they proved their allegation “that the Secretary—acting through CMS—has effectively established fixed and objective criteria for when to admit Medicare beneficiaries as ‘inpatients,’ and that, notwithstanding the Medicare Policy Manual’s guidance, hospitals apply these criteria when making admissions decisions, rather than relying on the judgment of their treating physicians.”
HHS argues that that the undisputed fact that a physician makes the initial patient status determination on the basis of clinical judgment is enough to demonstrate that there is no due process property interest at stake.
The court disagreed and found too many material facts in dispute to dismiss the case.
Significant discovery will be explored as to the extent to which hospitals rely on commercial screening tools. Also whether the commercial screening tools are applied equally to private insureds versus Medicare patients.
Significant discovery will be explored on whether the hospital’s physicians challenge changing a patient from inpatient to observation.
Significant discovery will be explored as to the extent that CMS policy influences hospital decision-making.
Hospitals need to follow this case closely. If, in fact, RAC audits and CMS policy is influencing hospitals to issue patients as observation status instead of inpatient, expect changes to come – regardless the outcome of the case.
As for inpatient hospital stays, could this lawsuit give Medicare patients the right to appeal a hospital’s decision to place the patient in observation status? A possible, future scenario is a physician places a patient in observation. The patient appeals and gets admitted. Then hospital’s claim is denied because the RAC determines that the patient should have been in observation, not inpatient. Will the hospitals be damned if they do, damned if they don’t?
In the meantime:
Hospitals and physicians at hospitals: Review your policy regarding determining inpatient versus observation status. Review specific patient files that were admitted as inpatient. Was a commercial screening tool used? Is there adequate documentation that the physician made an independent decision to admit the patient? Hold educational seminars for your physicians. Educate! And have an attorney on retainer – this issue will be litigated.
When you have a Medicare appeal, it is not uncommon for the appeal process to last years and years – up to 3-6 years in some cases. There has been a backlog of approximately 800,000+ Medicare appeals (almost 1 million), which, with no change, would take 11 years to vet.
A Federal Court Judge says – that is not good enough!
Judge James Boasburg Ordered that the Medicare appeal backlog be eliminated in the following stages:
- 30% reduction from the current backlog by Dec. 31, 2017 (approximately a 300,000 case reduction within 1 year);
- 60% reduction from the current backlog by Dec. 31, 2018;
- 90% reduction from the current backlog by Dec. 31, 2019; and
- Elimination of the backlog of cases by Dec. 31, 2020;
A Medicare appeal has 5 steps. See blog. The backlog is at the Administrative Law Judge (ALJ) level – or, Level 3.
This backlog is largely attributable to the Medicare Recovery Audit Contractor (RAC) programs. In 2010, the federal government implemented the RAC program to recoup allegedly improper Medicare reimbursement payments. The RAC program (for both Medicare and Medicaid) has been criticized for being overly broad and burdensome and “nit picking,” insignificant paperwork errors. See blog.
While the RAC program has recovered a substantial sum of alleged overpayments, concurrently, it has cost health care providers an infinite amount of money to defend the allegations and has left Health and Human Services (HHS) with little funds to adjudicate the number of Medicare appeals, which increase every year. The number of Medicare appeals filed in fiscal year 2011 was 59,600. In fiscal year 2013, that number boomed to more than 384,000. Today, close to 1 million Medicare appeals stand in wait. The statutory adjudication deadline for appeals at the ALJ level is 90 days, yet the average Medicare appeal can last over 546 days.
The American Hospital Association (AHA) said – enough is enough!
AHA sued HHS’ Secretary Sylvia Burwell in 2014, but the case was dismissed. AHA appealed the District Court’s Decision to the Court of Appeals, which reversed the dismissal and gave the District Court guidance on how the backlog could be remedied.
Finally, last week, on December 5, 2016, the District Court published its Opinion and set forth the above referenced mandated dates for eliminating the Medicare appeal backlog.
While, administratively, the case was dismissed, the District Court retained “jurisdiction in order to review the required status reports and rule on any challenges to unmet deadlines.”
In non-legalese, the Court said “The case is over, but we will be watching you and can enforce this Decision should it be violated.”
This is a win for all health care providers that accept Medicare.
In a groundbreaking decision published today by the Court of Appeals (COA), the Court smacked down Public Consulting Group’s (PCG), as well as any other contracted entity’s, authority to wield an “adverse decision” against a health care provider. This solidifies my legal argument that I have been arguing on this blog and in court for years!
The Department of Health and Human Services (DHHS) is the “single state agency” charged with managing Medicaid. Federal law requires that that one agency manage Medicaid with no ability to delegate discretionary decisions. Case law in K.C. v. Shipman upheld the federal law. See blog.
Yet, despite K.C. v. Shipman, decided in 2013, in Court, DHHS continued to argue that it should be dismissed from cases in which a contracted vendor rendered the adverse decision to recoup, terminate, or suspend a health care provider. DHHS would argue that it had no part of the decision to recoup, terminate, or suspend, that K.C. Shipman is irrelevant to health care provider cases, and that K.C. v. Shipman is only pertinent to Medicaid recipient cases, to which I countered until I was “blue in the face” is a pile of horse manure.
DHHS would argue that my interpretation would break down the Medicaid system because DHHS cannot possibly review and discern whether every recoupment, termination, and/or suspension made by a contracted vendor was valid (my words, not theirs). DHHS argued that it simply does not have the manpower, plus if it has the authority to contract with a company, surely that company can determine the amount of an alleged overpayment…WRONG!!
In fact, in DHHS v. Parker Home Care, LLC, the COA delineates the exact process for the State determining an overpayment with its contracted agent PCG.
- DHHS may enter into a contract with a company, such as PCG.
- A private company, like PCG, may perform preliminary and full investigations to collect facts and data.
- PCG must submit its findings to DHHS, and DHHS must exercise its own discretion to reach a tentative decision from six options (enumerated in the NC Administrative Code).
- DHHS, after its decision, will notify the provider of its tentative decision.
- The health care provider may request a reconsideration of the tentative decision within 15 days.
- Failure to do so will transform the tentative decision into a final determination.
- Time to appeal to OAH begins upon notification of the final determination by DHHS (60 days).
Another interesting part of this decision is that the provider, Parker Home Care, received the Tentative Notice of Overpayment (TNO) in 2012 and did nothing. The provider did not appeal the TNO.
However, because PCG’s TNO did not constitute a final adverse decision by DHHS (because PCG does not have the authority to render a final adverse decision), the provider did not miss any appeal deadline. The final adverse decision was determined to be DHHS’ action of suspending funds to collect the recoupment, which did not occur until 2014…and THAT action was timely appealed.
The COA’s message to private vendors contracted with DHHS is crystal clear: “There is only one head chef in the Medicaid kitchen.”
When you are accused of a $12 million dollar overpayment by Medicare, obviously, you appeal it.But do you expect that appeal to take ten years or longer? Are such long, wait periods allowed by law? That is what Cumberland Community Hospital System, Inc. (Cape Fear) discovered in a 4th Circuit Court of Appeals Decision, on March 7, 2016, denying a Writ of Mandamus from the Court and refusing to order the Secretary of Health and Human Services (HHS) Burwell to immediately adjudicate Cape Fear’s Medicare appeals to be heard within the Congressional requirement that appeals be heard and decided by Administrative Law Judges (ALJs) within 90 days.
According to the Center for Medicare and Medicaid Services‘ (CMS) website, an “ALJ will generally issue a decision within 90 days of receipt of the hearing request. Again, according to CMS’ website, this time frame may be extended for a variety of reasons including, but not limited to:
- The case being escalated from the reconsideration level
- The submission of additional evidence not included with the hearing request
- The request for an in-person hearing
- The appellant’s failure to send a notice of the hearing request to other parties
- The initiation of discovery if CMS is a party.”
In Cape Fear’s case, the Secretary admitted that the Medicare appeal backlog equates to more than 800,000 claims and would, likely, take over 10 years to adjudicate all the claims. Even the 4th Circuit Court, which, ultimately, dismissed Cape Fear’s complaint, agrees with Cape Fear and calls the Medicare appeal backlog “incontrovertibly grotesque.”
Generally, the rule is that if the ALJ does not render a decision after 180 days of the filing of the case, then the provider has the right to escalate the case to the Medicare Appeals Council, which is the 4th step of a Medicare appeal. See blog for more details on the appeal process.
What about after 3,650 days? Get a big pie in the face?
The United States Code is even less vague than CMS’ website. Without question 42 U.S.C. states that for a:
“(1)Hearing by administrative law judge; (A)In general
Except as provided in subparagraph (B), an administrative law judge shall conduct and conclude a hearing on a decision of a qualified independent contractor under subsection (c) of this section and render a decision on such hearing by not later than the end of the 90-day period beginning on the date a request for hearing has been timely filed.”
(emphasis added). And, BTW, subsection (B) is irrelevant here. It contemplates when a party moves for or stipulates to an extension past the 90-day period.
So why did Cape Fear lose? How could the hospital lose when federal administrative code specifically spells out mandatory 90-day limit for a decision by an ALJ? Ever heard of a statute with no teeth? [i.e., HIPAA].
No one will be surprised to read that I have my opinions. First, a writ of mandamus was not the legal weapon to wield. It is an antiquated legal theory that rarely makes itself useful in modern law. I remember the one and only time I filed a writ of mandamus in state court in an attempt to hold a State Agency liable for willfully violating a Court’s Order. I appeared before the judge, who asked me, “Do you know how long I have been on this bench?” To which I responded, “Yes, Your Honor, you have been on the bench for X number of years.” He said, “Do you know how many times I have granted a writ of mandamus?” I said, “No, Your Honor.” “Zero,” he said, “Zero.” The point is that writs of mandamus are rare. A party must prove to the court that he/she has a clear and indisputable right to what is being asked of the court.
Secondly, in my mind, Cape Fear made a disastrous mistake in arguing that it has a clear right for its Medicare appeals to be adjudicated immediately. Think about it…there are 800,000+ Medicare appeals pending before the ALJs. What judge would ever order the administrative court to immediately drop all other 799,250 pended claims (Cape Fear had 750 claims pending) and to adjudicate only Cape Fear’s claims? It is the classic slippery slope…if you do this for Cape Fear, then you need to order the same for the rest of the pended claims.
In this instance, it appears that Cape Fear requested too drastic a measure for a federal judge to order. The claims were doomed from the beginning.
However, I cannot fault Cape Fear for trying since the code is crystal clear in requiring a 90-day turnaround time. The question becomes…what is the proper remedy for a gross disregard, even if unwillful, of the 90-day turnaround period?
This would have taken thinking outside the box.
Medicare providers have some rights. I discuss those rights frequently on this blog. But the population that the courts inevitably want to insulate from “David and Goliath situations” are the recipients. Unlike the perceived, “big, strong, and well-attorneyed” hospital, recipients often find themselves lacking legal representation to defend their statutorily-given right to choose their provider and exercise their right to access to care.
Had Cape Fear approached the same problem from a different perspective and argued violations of law on behalf of the beneficiaries of Cape Fear’s quality health care services, a different result may have occurred.
Another way Cape Fear could have approached the same problem, could have been a request for the Court to Cape Fear’s funds owed for service rendered to be released pending the litigation.
As always, there is more than one way to skin a cat. I humbly suggest that when you have such an important case to bring…BRING IT ALL!!
Monday, February 22, 2016, The Centers for Medicare and Medicaid Services (CMS) announced that it plans to increase onsite visits and monitoring of health care providers. One of the top priorities for CMS is to verify that provider enrollment and address are correct…
Because, as you know, providers with correct addresses on file are less likely to commit Medicare fraud. Medicare Fraud 101 – Give CMS the wrong address. Really? (While I applaud their valiant effort, the fraud that I have witnessed has not been a health care provider using a fake address to provide fake services…that is too Ponzi, too shallow in thought…too easily detected. Oh no, the fraud I have encountered were providers with actual practices with correct addresses, but embellishing on the amount of services provided to an actual Medicare enrollee to cushion their pockets. This is much more difficult to detect.
But CMS has its reasons for sniffing out fake addresses. CMS’ address hunt-down comes on the heels of a report from June 2015 out of the Government Accountability Office (GAO), which determined that approximately 22% of Medicare provider addresses are “potentially ineligible.” Additionally, last March (2015) CMS decreased the amount of audits conducted by Medicare Administrative Contractors (MACs), which are one of the entities that investigate Medicare provider eligibility.
Whenever the GAO finds potential errors, CMS usually puts on the whole dog and pony show…or, maybe, for a change, a pig and pony show…
With all these political talks about donkeys and elephants, I would like to take a moment and blog about a pig. Some of you know that I own a pet pig. She is 4 1/2 years old and about 30 pounds. See below.
Isn’t she cute?! Some of you will remember my last blog about Oink was “Our Medicaid Budget: Are We Just Putting Lipstick on a Pig?”
The reason I bring up Oink is that she is the smartest, most animated animal I have ever encountered. She is also the best “sniffer-outer” I have ever encountered. Her keen sense of smell is well beyond any human’s sense of smell. If you liken Oink to CMS and Medicare fraud to a Skittle, the Skittle would have no chance.
These upcoming and increased number of audits is CMS’ way of sniffing out fraud. However, CMS’ sense of smell is not up to snuff like Oink’s sense of smell.
Searching for erroneous addresses in order to detect fraud, waste, and abuse (FWA) will, inevitably, be over-inclusive. Meaning, many of the erroneous addresses will not be committing Medicare fraud. Some erroneous addresses exist because providers simply moved to another location and either failed to inform CMS or CMS’ database was not updated with the new address. Other erroneous addresses exist because health care providers went out of business and never informed CMS. A new company leases the property and it appears to CMS that fraudulent billing was occurring a couple years ago out of, for example, what is now a Jimmy John’s.
Searching for erroneous addresses in order to detect FWA will, inevitably, be under-inclusive. Meaning, that many providers committing Medicare fraud do so with accurate office addresses.
My contention is that if you want to find FWA, you need to dig deeper than an incorrect address. Sniffing out Medicare fraud is a bit more in depth than finding improper addresses. That would be like tossing handfuls of Skittles on the ground and expecting Oink to only find the green ones.
In fiscal year 2014, Medicare paid $554 billion for health care and related services. CMS estimates that $60 billion (about 10 percent) of that total was paid improperly (not only because of incorrect addresses).
CMS is responsible for developing provider and supplier enrollment procedures to help safeguard the program from FWA. CMS contracts with Medicare Administrative Contractors (MACs) and the National Supplier Clearinghouse (NSCs) to manage the enrollment process. MACs are responsible for verifying provider and supplier application information in Provider Enrollment, Chain and Ownership System (PECOS) before the providers and suppliers are permitted to enroll into Medicare. CMS currently contracts with 12 MACs, each of which is responsible for its own geographic region, known as a “jurisdiction.
As you can see, we live in Jurisdiction 11. These MACs act as the “sniffer-outers” for CMS.
According to the GAO June 2015 report, about 23,400 (22 percent) of the 105,234 addresses that GAO initially identified as a Commercial Mail Receiving Agency (CMRA), vacant, or invalid address are potentially ineligible for Medicare providers and suppliers. “About 300 of the addresses were CMRAs, 3,200 were vacant properties, and 19,900 were invalid. Of the 23,400 potentially ineligible addresses, [GAO] estimates that, from 2005 to 2013, about 17,900 had no claims associated with the address, 2,900 were associated with providers that had claims that were less than $500,000, and 2,600 were associated with providers that had claims that were $500,000 or more per address.”
In other words, out of 105,234 addresses, only 2,600 actively billed Medicare for over $500,000 from 2005 through 2013 (8 years). Had CMS narrowed the scope and looked at practices that billed over $500,000 since 2010, I fancy the the number would have been much lower, because, as discussed above, many of these providers either moved or went out-of-business.
Now, 2,600 is not a nominal number. I am in no way undermining CMS’ efforts to determine the accuracy of providers’ addresses; I am not insinuating that these efforts are unnecessary or a complete waste of time. I think verification of health care providers’ addresses is an important aspect of detecting FWA. Instead, I believe that, as discussed above, verifying providers’ addresses is a poor, under and over-inclusive attempt at searching for FWA. Because, as I stated at the beginning of this blog, the people who are intentionally trying to defraud the system, are not going to intentionally give an erroneous address. It is just too easy for the government to discover the error. No, the people who are intentionally defrauding the state will have a legitimate office.
For example, in my opinion, it is unlikely that anyone intentionally trying to defraud the system will inform the government that they provide health care services from the following places:
Again, if I liken CMS’ search for FWA by detecting inaccurate addresses to Oink, it would be like tossing a handful of Skittles on the ground and expecting Oink to only find the green ones.
If CMS audits are to Oink as fraud is to Skittles, then I think there is a less intrusive, less inclusive way to detect FWA rather than throwing out packets of Skittles for Oink. All that does is make Oink eat too much.
The Centers for Medicare & Medicaid Services released its final rule today on the return of overpayments. The final rule requires providers and suppliers receiving funds under the Medicare/Medicaid program to report and return overpayments within 60 days of identifying the overpayment, or the date a corresponding cost report is due, whichever is later. As published in the February 12, 2016 Federal Register, the final rule clarifies the meaning of overpayment identification, the required lookback period, and the methods available for reporting and returning identified overpayments to CMS. See https://www.federalregister.gov/articles/2016/02/12/2016-02789/medicare-program-reporting-and-returning-of-overpayments.
The point in time in which an overpayment is identified is significant because it triggers the start of the 60-day period in which overpayments must be returned. CMS originally proposed that an overpayment is identified only when “the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment.” The final rule changes the meaning of identification, stating that “a person has identified an overpayment when the person has or should have, through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment. The change places a burden on healthcare providers and suppliers to have reasonable policies and programs in place which monitor the receipt of Medicare/Medicaid payments.
6-Year Lookback Period
The final rule also softens the period for which health care providers and suppliers may be liable for the return of overpayments. As the rule was originally proposed, CMS required a 10-year lookback period, consistent with the False Claims Act. Now, overpayments must be reported and returned only if a person identifies the overpayment within six years of the date the overpayment was received.
Guidance in Reporting and Returning Overpayments
The final rule provides that providers and suppliers must use an applicable claims adjustment, credit balance, self-reported refund, or other appropriate process to satisfy the obligation to report and return overpayments. If a health care provider or supplier has reported a self-identified overpayment to either the Self-Referral Disclosure Protocol managed by CMS or the Self-Disclosure Protocol managed by the Office of the Inspector General (OIG), the provider or supplier is considered to be in compliance with the provisions of this rule as long as they are actively engaged in the respective protocol.
Medicare is the largest payor of clinical lab services in the nation. Clinical lab services include everything from blood counts to urinalyses, and every letter of the alphabet in between. Lab services are performed by hospitals, independent labs, physicians, or other institutions.
Medicare Part B (which covers lab services) has had increased enrollment over the past few years, but the amount billed to Part B over the past few years has increased at a much higher rate. In other words, the amount of lab services billed to Part B has increased disproportionately to the increase in enrollment. Any number of factors could contribute to this: defensive practice of medicine, more reliance on laboratory testing, more labs…
Regardless, the higher billing amounts in lab services has now won the prestigious award of “Increased CMS Scrutiny!” (sarcasm, people). And the crowd goes wild!!!!
Mid-2014, the U.S. Office of Inspector General (OIG) published a study entitled, “Questionable Billing for Medicare Part B Clinical Laboratory Services.” OIG determined that Medicare allowed $1.5 billion to be paid for claims with questionable billing. It recommended that CMS: (1) review the labs identified with questionable billing and take appropriate action; (2) review program integrity strategies and determine whether such strategies are adequate; and (3) ensure that claims with invalid and ineligible ordering-physician numbers are not being paid.
In normal and expectant government time frames, the “dinosauric beast” has now determined, a little over a year later, that laboratory service claims warrant enhanced scrutiny. And a little over 85 years after its discovery, we finally determine that Pluto isn’t a planet.
CMS zoomed in their lens of scrutiny on lab services multiple times over a decade ago. Each “CMS zoom” resulted in millions and millions of money given to the federal government, which perpetuates the feds to zoom more and more…it’s easy money.
For example, in 2000, OIG issued Project LabScam, which resulted in substantial settlements against Laboratory Corporation of America Holdings, SmithKline Beecham, Met/Path, Damon, Roche, and Allied.
In 2002, OIG found that Medicare incorrectly paid $7.4 million for lab services with invalid ordering UPINs and $15.3 million for lab service claims with inactive ordering UPINs.
What does this mean to providers of lab services today?
It means you need to be prepared for an audit.
When I was young, one of my favorite games was “Red Rover.” Children would grasp arms and form a straight line facing the other team, which was doing the same. I would yell, “Red River, Red Rover, send Holly right over!” At which time, little Holly would be released from her line and prepare to run, full speed, into my line of little kids’ arms. Inevitably, once we saw where Holly was running, we would tighten up our grasps on one another’s arms to prepare for the impact.
Similarly, in preparation for upcoming audits, lab service providers need to tighten up.
The best way to be certain of your risks in a potential audit is to hire a professional consultant or an experienced attorney to review a large sample of your documents. This allows an outsider to provide an unbiased opinion as to your risk. You may have the best billing manager in the world, but, when it comes to a self audit, he or she already believes that his or her documentation is stellar and that the organization of such documents is self evident. Having an outsider audit your records is worth its weight in gold and the best way to tighten up pre-audit.
The second best way to be certain of your risks in a potential audit is to self audit. Even if you hire a consultant or an attorney for a one time, third-party audit, you still want to self-audit multiple times a year. Every now and then you need to kick the old tires.
How do you self audit?
FYI: My general explanation of how to self audit will be appropriate for all health care service provider types. I will describe some more detailed ways to self audit that will be specific to lab services.
In order to self audit, I teach the IAKA method, not to be confused with IKEA.
- Identify common risks
- Audit a sample of your documents
- Keep record of each step of your audit, including findings
- Act on the findings.
What are the common red flags in your industry?
For lab services, common red flags may be high average allowed amounts per ordering physician, high percentage of claims with ineligible ordering-physician numbers, high percentage of claims with compromised beneficiary numbers, and high percentage of duplicate lab tests.
Here’s an area to look into that you may not otherwise consider in a self audit: what percentage of your lab clients live outside 100 miles? This may sound hoaky, but I had a lab service client flagged because 92% of the clients resided over 150 miles away. There was a perfectly reasonable explanation for such anomaly, the lab was located in a large, prestigious hospital in a rural area and people came from miles away to the hospital, but the statistic still flagged it.
Another specific item to review is, on average, how much does each physician bill in the laboratory? Do you have 4 physicians who bill, on average, $60,000+ per ordering physician? Because, for an independent lab, that would be very high.
For the actual self audit, you want to break up the audit into two categories: standards and procedures and document compliance.
For standards and procedures, you are reviewing whether you are properly orienting new hires, the specific training you implement, your criminal background check procedures, HIPAA training, your license renewal processes, your certification renewal processes, etc.
For document compliance, you are reviewing for physician signatures and dates.
NOTE: It is not required, but it is extremely prudent to print the name of the signator underneath all signatures. I have seen auditors ding providers on “physicians not being licensed/credentialed” because the auditor could not read the name of the physician.
You are also reviewing for medical necessity, eligible ordering-physician numbers, distance the client is to the lab, amount prescribed to that particular client, amount prescribed by that particular physician, whether that test prescribed for the same client within a 12 month period, coding compliance, etc.
It is imperative that you keep meticulous records while you conducting the audits. You want to be able to show an auditor that you caught a mistake and that you implemented a plan of correction to remedy the mistake going forward. And that, in actuality, you remedied the mistake going forward. This documentation is essential for possible defenses to alleged potential overpayments, false claims, and, even, alleged criminal actions. Your documentation skills could be the difference between paying millions in penalties, or, in the extreme case, jail.
I got ahead of myself in the prior section by saying that you need to document the way in which you fix the mistake. But I cannot emphasize it enough. Acting on your findings is important, obviously, but documenting the actions is more important. Ever hear the saying, “If it isn’t documented, it didn’t happen?” Take that as gospel.
Be prepared. Be proactive. Be ready. Tighten up!
What is the doctrine of exhaustion of administrative remedies? And why is it important?
If you are a Medicaid or Medicare provider (which, most likely, you are if you are reading this blog), then knowing your administrative remedies is vital. Specifically, you need to know your administrative remedies if you receive an “adverse determination” by the “Department.” I have placed “adverse determination” and the “Department” in quotation marks because these are defined terms in the North Carolina statutes and federal regulations.
What are administrative remedies? If you have been damaged by a decision by a state agency then you have rights to recoup for the damages.
However, just like in the game of Chess, there are rules…procedures to follow…you cannot bring your castle out until the pawn in front of it has moved.
Similarly, you cannot jump to NC Supreme Court without beginning at the lowest court.
What is an adverse determination?
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My mom taught me a song when I was young called, “A Hole in the Bucket.” It is a maddening song about a lazy husband named Henry who begins the song telling his wife Liza that “There’s a hole in the bucket, dear Liza, dear Liza….” To which Liza sings, “Then fix it, dear Henry, dear Henry…”
The song continues with Henry singing excuses and impediments to his ability to fix the hole in the bucket and Liza explaining to Henry how to overcome these excuses. The song goes around and around until, in order to fix the bucket, Henry would have to sharpen an ax on a stone that “is too dry,” and the only way to wet the stone is with the bucket that has a hole. “There’s a hole in the bucket…” And the songs starts anew and can be sung continuously, never-ending.
My husband and daughter audibly groan when I begin such song.
And you can’t blame them! It is discouraging and frustrating when something is caught in a never-ending circle with no end and no conclusion. It is human nature to try to resolve issues; it is also ingrained in Americans’ minds that hard work yields results. When hard work yields nothing but a big, fat goose-egg, it is exacerbating.
Kind of like claims in NCTracks…
When NCTracks went live on July 1, 2013, providers immediately began to complain the claims were being erroneously denied and they were receiving no reimbursements. Folks with whom I spoke with were at their wits-ends, spending hours upon hours trying to discern why claims were being denied and what process they could undertake to fix “the hole in the bucket.”
The problem persisted so long and I was contacted by so many providers that I instigated the NCTracks class action lawsuit, which is still pending on appeal, to the best of my knowledge, at my former firm. Although it was dismissed at the Business Court level, I believe it is on appeal. See blog.
Providers complained that, when they contacted CSC’s Help Desk regarding denied claims, the customer service representatives would have little to no understanding of the claims process and instruct them to re-file the denied claims, which created a perpetual cycle of unadjudicated claims.
“It was infuriating!” One provider explained. “It was as if we were caught in the spin cycle with no hope of stopping. I wanted to yell, ‘I’m dry all ready!!'”
“I was spending 20+ a week on NCTracks billing problems,” another said.
To which, I said, “There’s a hole in the bucket, dear Liza, dear Liza.”
Over two years after the “go live” date, the Department has now (finally) informed providers that there is an informal reconsideration review process for denials from CSC.
The September 2015 Medicaid Bulletin states that:
“This article provides a detailed explanation of the N.C. Division of Medical Assistance (DMA) procedures for Informal Reconsideration Review of adverse claim actions (denials, disallowances and adjustments) made by its fiscal agent, CSC.”
The Bulletin provides a 30 day time period during which a provider can appeal a denied claim:
“Time Limit for Submission of Request
- A provider may request a reconsideration review within 30 calendar days from receipt of final notification of payment, payment denial, disallowances, payment adjustment, notice of program reimbursement and adjustments. If no request is received within the respective 30 calendar day period, DMA’s action will become final.”
(emphasis in original).
You must request reconsideration review within 30 calendar days of the final notification. BUT what exactly is “final notification?” The initial denial? The second denial after re-submitting? The third? Or, what if, your claim is pending…for months…is that a denial? When CSC tells you to re-submit, does the time frame in which to file a reconsideration review start over? Or do you have to appeal every single denial for every single claim, even if the claim is re-submitted and re-denied 10 times?
This new informal appeal process is as clear as mud.
Notice the penalty for NOT appealing within 30 days…”DMA’s action will become final.”
This means that, if you fail to appeal a denial within 30 days, then the claim is denied and you cannot request a reconsideration review. Theoretically, there is a legal argument that, once the “final decision” is rendered, even if it were rendered due to you failing to request a reconsideration review, you would have 60 days to appeal such final decision to the Office of Administrative Hearings (OAH). Although, acting as the Devil’s advocate, there is an argument that your failure to request a reconsideration review and taking the appeal straight to OAH is “failing to exhaust your administrative remedies.” See blog. Which could result in your appeal being dismissed for lack of jurisdiction. This goes to show you the importance of having your attorney involved at the earliest juncture, otherwise you could risk losing appeal rights.
Let’s think about the “time limit for submission of request” in a real-life hypothetical.
You keep receiving denials for dialysis claims for no apparent reason. You received 20 denials on September 4, 2015. You contact a CSC customer service representative on September 8, 2015, four days later, due to Labor Day weekend. The customer service representative instructs you to re-file the claims because you must include the initial date of treatment in order to have the claims processed and paid (which was not required with HP Enterprises’ system). Is this the “final notification?” It does not seem so, since you are allowed to re-submit…
You revise all 20 claims to include the first treatment date on the claim and re-submit them on September 9, 2015. Since you re-submitted prior to the September 10th cutoff, you expect payment by September 16, 2015, 12 days after the initial denial.
You receive your explanation of benefits (EOBs) and 5 claims were adjudicated and paid, while 15 were denied again.
You contact CSC customer service and the representative instructs you to re-submit the 15 claims. The rep does not know why the claims were denied, but she/he suggests that you review the claims and re-submit. After hours of investigative work, you believe that the claims were denied because the NPI number was wrong…or the incorrect address was processed…or…
You miss the September 17th cut-off because you were trying to figure out why these claims were denied. you submit them for payment for the September 29th checkwrite date (25 days after the initial denial).
At this point, if any claims are denied, you wouldn’t know until October 6th, 32 days after the initial denial.
In my scenario, when is the final adjudication?
If the answer is that the final adjudication is at the point that the provider tries all possible revisions to the claims and continues to re-submit the claims until he/she cannot come up with another way to re-submit, then there is never final adjudication. As in, the provider could continue various changes to the billing ad nauseam and re-submit…and re-submit…and re-submit…”There’s a hole in the bucket!”
If the answer is that the final adjudication is the initial denial, then, in my scenario, the provider would be required to appeal every single denial, even for the same claim and every time it is denied.
You can imagine the burden to the provider if my second scenario is correct. You may as well hire a full-time person whose only task is to appeal denied claims.
Regardless, this new “Informal Reconsideration Review” purports to create many more questions than answers.
So may rules are enacted with good intentions, but without the “real life” analysis. How will this actually affect providers?
“There’s a hole in the bucket, dear Liza, dear Liza.”
“Then fix it.”