Category Archives: Federal Government

Recoupment, Recoupment, Everywhere and Not a Drop to Keep

The Rime of the Ancient Mariner, a poem written by Samuel Coleridge, states “Water, water everywhere, nor any drop to drink.” It is a tale of retribution. The poem talks about a mariner who is traveling with his fellow sailors. Suddenly, when the mariner finds an albatross chasing them, the mariner at once kills the albatross in cold blood without any major reason. After the killing of the bird, nothing goes well with the mariner. He is not in a position even to hold communion with God. Killing an albatross is symbolic of showing a criminal disregard for a creature of nature.

Now, imagine the mariner is a Medicare or Medicaid auditor. You are the albatross. According to Coleridge, an auditor that needlessly and mindlessly accuses you of owing $1 million in alleged overpayments should suffer dire consequences. However, unlike in poetry, the auditors suffer nothing. The albatross may or may not perish. A health care company may or may not go bankrupt due to the mariner/auditor’s inane actions.

I have a case right now that the auditor applied the 1995 AND 1997 guidelines, instead of only the 1995 or 1997 guidelines. The auditor created a more rigid criteria than what was actually required. Not ok.

So, how do you stop recoupment when you are accused of owing money for allegedly improperly billing Medicare or Medicaid?

  1. Hire an attorney as soon as you receive a Tentative Notice of Overpayment (“TNO”). Do not do, what multiple clients of mine have done, do not wait until the last few days of being allowed to appeal the TNO until you contact an attorney. You want your attorney to have time on his or her side! And yours!
  2. Appeal timely or recoupment will begin. If you do not appeal, recoupment will occur.
  3. Start putting money aside to pay for attorneys’ fees. I hate saying this, but you are only as good (legally) as what you can pay your attorneys. Attorneys have bad reputations regarding billing, but in a situation in which you are accused of owing mass amounts of money or, in the worst case scenario, of fraud against Medicare, you want an experienced, specialized attorney, who understands Medicare and Medicaid. Note: You do not need to hire an attorney licensed or located in your State. Administrative Law Courts (where you go for Medicare and Medicaid legal issues) do not require the attorneys to be legally licensed in the State in which they are practicing. At least, most States do not require attorneys to be licensed in the State in which they are practicing. There are a few exceptions.
  4. Meditate. The process is tedious.

340B Drug Pricing Program: Drug Companies Are Concerned!

The federal 340B Drug Pricing Program allows qualifying hospitals and clinics that treat low-income and uninsured patients to buy outpatient prescription drugs at a discount of 25 percent to 50 percent. The program is intended to help safety-net health care providers stretch their financial resources to reach more financially vulnerable patients and deliver comprehensive services.

The 340B Drug Pricing Program has spiked in use. It has become more and more popular over the years.

In 2020, there were 8,100 provider sites (including both hospitals and pharmacies), but that number rose to 50,000 by 2020. New data released in August 2022 by the Health Resources and Services Administration suggest discounted purchases under the 340B program reached $44 billion in 2021, about 16% more than in 2020. Drug companies are concerned.

On November 30, 2022, the 340B Drug Pricing Program; Administrative Dispute Resolution Notice of Proposed Rulemaking (NPRM) was published in the Federal Register. Section 340B(d)(3) of the Public Health Service Act requires the establishment of an Administrative Dispute Resolution (ADR) process for certain disputes under the 340B Program. Under the statute, the ADR process is designed to resolve:

  • Claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers; and
  • Claims by manufacturers, after the manufacturer has conducted an audit of a covered entity, that a covered entity has violated the prohibition on diversion or duplicate discounts.

This NPRM proposes new requirements and more efficient procedures to make the 340B Program’s ADR process more accessible and efficient, including ensuring that ADR panels hearing disputes are comprised of subject matter experts on the 340B Program, and establishing an independent HRSA reconsideration process. The NPRM will be open for public comment through January 30, 2023. Please refer to the Federal Register (PDF – 315 KB) publication for instructions about how to submit comments.

The question is how does the new proposed rule mesh with the Inflation Reduction Act of 2022? If you recall, the Inflation Reduction Act of 2022 (IRA) allows Medicare to negotiate drug rates. It has been suggested that the following 10 medications will be the first 10 negotiated:

Does the IRA and 340B conflict? How can you negotiate prices of a drug if the drug is already discounted?

Gift Cards Violate AKS? Maybe NOT!!!

Is Giving Gift Cards to Medicaid Consumers Suffering Substance Abuse Issues Who Comply with Weekly Criteria To Promote Wellness Against the Anti-Kickback statute (AKS)?

Yes, but who cares?

OIG does not care and even published an opinion stating that OIG would not penalize the practice.

The AKS is a criminal law that prohibits the knowing and willful payment of “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). Remuneration includes anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies. In some industries, it is acceptable to reward those who refer business to you. However, in the Federal health care programs, paying for referrals is a crime. The statute covers the payers of kickbacks-those who offer or pay remuneration- as well as the recipients of kickbacks-those who solicit or receive remuneration. Each party’s intent is a key element of their liability under the AKS.

Criminal penalties and administrative sanctions for violating the AKS include fines, jail terms, and exclusion from participation in the Federal health care programs. Physicians who pay or accept kickbacks also face penalties of up to $50,000 per kickback plus three times the amount of the remuneration.

Safe harbors protect certain payment and business practices that could otherwise implicate the AKS from criminal and civil prosecution. To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor and satisfy all of its requirements. Some safe harbors address personal services and rental agreements, investments in ambulatory surgical centers, and payments to bona fide employees.

However, study after study after study have demonstrated that people with substance abuse issues have a higher likelihood of success with monetary incentives. See article as an example.

OIG obviously understands the efficacy of gift cards. Maybe Congress can back up OIG because, you can be sure that, if the proposed rule is passed, litigation will ensue. People will claim that the FTC does not have the legal authority to issue such a rule in violation of the AKS.

Non-Compete Clauses Banned, According to Proposed Rule

Non-compete clauses have dominated the health care field for years. Generally, noncompete clauses place restrictions on a person’s ability to work in three different ways:

  1. geographical restrictions,
  2. time restrictions, and
  3. line of business restrictions

On January 5, 2023, the Federal Trade Commission (“FTC”) released a notice of proposed rule-making to prohibit employers from imposing noncompete clauses on workers. Noncompete agreements block people from working for competing, potential employers or starting a competing business, after their employment ends.

Data show that non-compete clauses affect about one and five American workers, approximately 30 million people. However, non-compete clauses are predominantly in healthcare. By far, doctors employed by hospitals sign more non-compete agreements than any other profession. The theory behind eliminating non-compete agreements is that non-compete causes prevent employees from accepting better opportunities that offer higher pay or better working conditions.

Non-compete clauses are common and have been a contentious issue for decades. Some theorize that non-competes disrupt the physician-patient relationship and remove physicians who are already in short supply from the workforce.

I say, eliminating noncompete agreements may evolve healthcare.

As written, the federal rule will supersede state laws that currently govern noncompete and would apply retroactively, invalidating existing agreements.

This proposed rule comes with criticism and legal obstacles that will surely be tested. So for all of you who jumped up and down for the new proposed rule, expect litigation because as much as eliminating noncompete clause is awesome for physicians, hospitals will be adversely affected.

Many people have complained that the rule is over broad and vague. Challenges include whether the FTC has the authority to issue the non-compete rule under Section 5 of the FTC Act, the primary section the FTC cites as providing its rulemaking authority. Section 5 gives the FTC authority to police both “unfair methods of competition” and “unfair or deceptive acts or practices” affecting commerce. Although Section 18 of the FTC Act contains an explicit grant of rulemaking authority to the FTC for unfair or deceptive acts or practices, the statutory authority for the FTC’s ability to make rules for unfair methods of competition is less clear. Even if the federal courts conclude that the FTC had the authority to make a rule under the FTC Act, there will be challenges to the legality of the non-compete rule itself. The FTC claims that the non-compete rule is based on a finding that non-compete clauses constitute an “unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act.”

To address these problems, the FTC’s proposed rule would generally prohibit employers from using noncompete clauses. Specifically, the FTC’s new rule would make it illegal for an employer to: enter into or attempt to enter into a noncompete with a worker; maintain a noncompete with a worker; or represent to a worker, under certain circumstances, that the worker is subject to a noncompete.

The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect.

The agency estimates that the new rule could boost wages by nearly $300 billion a year and expand career opportunities for about 30 million Americans.

The commission invites the public to submit comments. The FTC will review the comments and may make changes, in the final rule, based on the comments and on the FTC’s further analysis of the issue. Comments are due 60 days after the federal register publishes the proposed rule. You have until March 6 to comment.

A Brave New World: No Covenants Not to Compete???

“On January 5, 2023, the Federal Trade Commission released a Notice of Proposed Rulemaking (NPRM) to prohibit employers from imposing noncompete clauses on workers. True to their name, noncompetes block people from working for a competing employer, or starting a competing business, after their employment ends. Evidence shows that noncompete clauses bind about one in five American workers, approximately 30 million people. By preventing workers across the labor force from pursuing better opportunities that offer higher pay or better working conditions, and by preventing employers from hiring qualified workers bound by these contracts, noncompetes hurt workers and harm competition.” Link.

Physician noncompete contracts are a common but sometimes contentious issue, as they have the potential to disrupt the physician-patient relationship and remove physicians — who are already in short supply — from the workforce.

Eliminating noncompete agreements will evolve health care.

The Commission invites the public to submit comments on this proposed rule. The FTC will review the comments and may make changes, in a final rule, based on the comments and on the FTC’s further analysis of this issue. Comments will be due 60 days after the Federal Register publishes the proposed rule. You have until Match 6th to comment.

Don’t Like the Reimbursement Rates? Maybe Litigation Is the Answer!

The Medicare and Medicaid reimbursement rates are a disgrace to health care providers nationwide. The low reimbursement rates are the reason why so many providers refuse to accept Medicare and/or Medicaid patients. Yet, with the pandemic, it is estimated that 100 million people will be on Medicaid by next year. Having a Medicaid card to wave around is useless if providers refuse to accept it.

Hospitals in Nebraska are not putting up with it – and they should not put up with it! Not only can hospitals NOT turn away any person; thus being forced to accept Medicaid and Medicare … and uninsured patients, but the overhead for a hospital is astronomical.

Saying more than half of the state’s hospitals are operating in the red, the Nebraska Hospital Association is calling for a 9.6% increase to Medicaid reimbursement rates this year, and 7.7% next year, after seeing a 2% bump each of the last two years.

The Hospital Association has never demanded this high of a rate increase. Inflation has significantly impacted the costs for Nebraska hospitals. The association says drug costs are up 35%, labor costs are up 20%, supplies are up 15-20%, and food and utilities are up 10%. Overall, it says inflation is up more than 20% per patient compared to the pre-pandemic level. The cost of labor has spiked, especially during the pandemic when emergency room nurses were in such short supply and such demand. Some hospitals were forced to pay nurses $10k a week! Traveling nurses became a “thing,” which allowed nurses to jump around hospitals for the best pay. In no way, I am not campaigning for lower salaries for nurses. Nurses are essential. However, the reimbursement rates are supposed to reflect society’s needs.

The Nebraska Hospital Association is completely in the right to sue for higher reimbursement rates. I commend them. I beseech more association groups to do the same. The dental, pediatric, primary care, home health, long term care facilities, behavioral health care, and other associations across the country should follow suit.

The legal argument is clear. Under §1902(a)(30)(A) of the Social Security Act, State Medicaid programs must ensure that provider payments are “consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers” to provide access to care and services comparable to those generally available. On November 2, 2015, CMS issued a regulation (42 CFR Part 447) under this authority requiring State Medicaid programs to demonstrate that their Medicaid fee-for-service (FFS) non-waiver payment rates ensure sufficient access to care. See blog.

Hospitals lose money on Medicare and Medicaid patients. Considering the legal requirement of reimbursement rates to be consistent with efficiency, economy, and quality of care, I am shocked that MORE associations haven’t litigated this issue. Perhaps the providers within these associations, who pay high yearly memberships, should demand that associations fund this type of litigation.

I have no doubt that the cost of litigation dissuades most associations from making the expensive decision to litigate for better rates. But isn’t litigating for higher reimbursement rates the job of the associations? The cost would be prohibitive for single provider facilities. And, aren’t we always more strong when we band together?

2023 Changes to the Physician Fee Schedule … Starting Now!

Happy 2023 to all my bloggies out there!! Over the New Year’s celebration, thousands gathered in a wet NYC to watch the ball drop. There was a shooting in Mobile, AL, killing one person and injuring 9. About 40 people died in Buffalo over the holidays due to severe cold weather. And a man named Jay Withey rescued 24 people in Buffalo during the blizzard. My friend got COVID and gave it to her mom. I took my 98-year-old grandma out for sushi and played pickleball with my mom and daughter.

Why the word vomit?

Well, it’s a New Year and a new start. I am choosing to have a positive attitude for 2023. Yes, you get audited. Yes, the government blows. Sometimes you do not get rainbows and applesauce every day. But the hard times give you strength. It’s the challenging times that teach you to appreciate the good. I have decided to think about life as school. You may not want to go, but it’s required. Attendance is required.

On the syllabus for today, should you choose to participate, is the 2023 Physicians Fee Schedule (“PFS”). On November 01, 2022, the Centers for Medicare & Medicaid Services (“CMS”) issued a final rule that includes updates and policy changes for Medicare payments under the PFS, and other Medicare Part B issues, effective on or after January 1, 2023. Well, guess what, folks? It is January 2, 2023.

For most services furnished in a physician’s office, Medicare makes payment to physicians and other professionals at a single rate based on the full range of resources involved in furnishing the service. In contrast, PFS rates paid to physicians and other billing practitioners in facility settings, such as a hospital outpatient department (“HOPD”) or an ambulatory surgical center (“ASC”), reflect only the portion of the resources typically incurred by the practitioner in the course of furnishing the service.

Conversion factor

There was a 3% supplemental increase to PFS payments in 2022. That increase expires in 2023. The final 2023 PFS conversion factor is $33.06, a decrease of $1.55 to 2022 PFS conversion factor of $34.61.

What is a conversion factor (“CF”)? It is a convoluted equation that sets Medicare rates that differs depending on whether the health care service is rendered within a facility or out. CF is set by statute.

Evaluation and Management (“E/M”) Visits

For 2023, there are 25 codes that are going away. Here are the codes that are being deleted.

  • Hospital observation services codes 99217—99220, 99224–99226
  • Consultation codes 99241, 99251
  • Nursing facility service 99318
  • Domiciliary, rest home (eg, boarding home), or custodial care services, 99324—99328, 99334-99337, 99339, 99340
  • Home or resident services code 99343
  • Prolonged services codes 99354—99357

There is also a new Section entitled “initial and subsequent services,” which applies to hospital inpatient, observation care and nursing facility codes. It applies to both new and established patient visits. The AMA says,

“For the purpose of distinguishing between initial or subsequent visits, professional services are those face-to-face services rendered by physicians and other qualified health care professionals who may report evaluation and management services. An initial service is when the patient has not received any professional services from the physician or other qualified health care professional or another physician or other qualified health care professional of the exact same specialty and subspecialty who belongs to the same group practice, during the inpatient, observation, or nursing facility admission and stay.”

Admission and Discharge on the Same Day

Lastly, at least for this blog, codes 99234-99236, which are used for hospital inpatient or observation care and include the admission and discharge on the same day. The patient must be in the facility for greater than 8 hours. See the below table for reference:

These are just a few of the PFS 2023 changes. Stay tuned for new Medicare and Medicaid news on this blog by me, Knicole Emanuel.

Family Practice Doctors: Is It CPT 1995 or 1997 Guidance?

Right now, CMS allows physicians to pick to follow the 1995 or 1997 guidelines for determining whether an evaluation and management (“e/m”) visit qualifies for a 99214 versus a 99213. The biggest difference between the two policies is that the 1995 guideline allows you to check by systems, rather than individual organs. Starting January 1, 2023, there are a lot of revisions, including a 2021 guidance that will be used. But, for dates of service before 2021, physicians can pick between 1995 and 1997 guidance.

Why is this an issue?

If you are a family practitioner and get audited by Medicare, Medicaid, or private pay, you better be sure that your auditor audits with the right policy.

According to CPT, 99214 is indicated for an “office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components: a detailed history, a detailed examination and medical decision making of moderate complexity.”

Think 99214 in any of the following situations:

  • If the patient has a new complaint with a potential for significant morbidity if untreated or misdiagnosed,
  • If the patient has three or more old problems,
  • If the patient has a new problem that requires a prescription,
  • If the patient has three stable problems that require medication refills, or one stable problem and one inadequately controlled problem that requires medication refills or adjustments.

The above is simplified and shorthand, so read the 1995 and 1997 guidance carefully.

An insurance company audited a client of mine and clearly used the 1997 guidance. On the audit report, the 1997 guidance was checked as being used. In fact, according to the audit report, the auditors used BOTH the 1997 and 1995 guidance, which, logically, would make a harder, more stringent standard for a 99214 than using one policy.

Now the insurance company claims my client owes money. However, if the insurance company merely applied the 1995 guidance only, then, we believe, that he wouldn’t owe a dime. Now he has to hire me, defend himself to the insurance company, and possibly litigate if the insurance company stands its ground.

Sadly, the above story is not an anomaly. I see auditors misapply policies by using the wrong years all the time, almost daily. Always appeal. Never roll over.

Sometimes it is a smart decision to hire an independent expert to verify that the physician is right, and the auditors are wrong. If the audit is extrapolated, then it is wise to hire an expert statistician. See blog. And blog. The extrapolation rules were recently revised…well, in the last two or three years, so be sure you know the rules, as well. See blog.

Medicare Auditors Fail to Follow the Jimmo Settlement

Auditors are not lawyers. Some auditors do not even possess the clinical background of the services they are auditing. In this blog, I am concentrating on the lack of legal licenses. Because the standards to which auditors need to hold providers to are not only found in the Medicare Provider Manuals, regulations, NCDs and LCDs. Oh, no… To add even more spice to the spice cabinet, common law court cases also create and amend Medicare and Medicaid policies.

For example, the Jimmo v. Selebius settlement agreement dictates the standards for skilled nursing and skilled therapy in skilled nursing facilities, home health, and outpatient therapy settings and importantly holds that coverage does not turn on the presence or absence of a beneficiary’s potential for improvement.

The Jimmo settlement dictates that:

“Specifically, in accordance with the settlement agreement, the manual revisions clarify that coverage of skilled nursing and skilled therapy services in the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) settings “…does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care.” Skilled care may be necessary to improve a patient’s current condition, to maintain the patient’s current condition, or to prevent or slow further deterioration of the patient’s condition.”

This Jimmo standard – not requiring a potential for improvement – is essential for diseases that are lifelong and debilitating, like Multiple Sclerosis (“MS”). For beneficiaries suffering from MS, skilled therapy is essential to prevent regression.

I have reviewed numerous audits by UPICs, in particular, which have failed to follow the Jimmo settlement standard and denied 100% of my provider-client’s claims. 100%. All for failure to demonstrate potential for improvement for MS patients. It’s ludicrous until you stop and remember that auditors are not lawyers. This Jimmo standard is found in a settlement agreement from January 2013. While we will win on appeal, it costs providers money valuable money when auditors apply the wrong standards.

The amounts in controversy are generally high due to extrapolations, which is when the UPIC samples a low number of claims, determines an error rate and extrapolates that error rate across the universe. When the error rate is falsely 100%, the extrapolation tends to be high.

While an expectation of improvement could be a reasonable criterion to consider when evaluating, for example, a claim in which the goal of treatment is restoring a prior capability, Medicare policy has long recognized that there may also be specific instances where no improvement is expected but skilled care is, nevertheless, required in order to prevent or slow deterioration and maintain a beneficiary at the maximum practicable level of function. For example, in the regulations at 42 CFR 409.32(c), the level of care criteria for SNF coverage specify that the “. . . restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.” The auditors should understand this and be trained on the proper standards. The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition.

When you are audited by an auditor whether it be a RAC, MAC or UPIC, make sure the auditors are applying the correct standards. Remember, the auditors aren’t attorneys or doctors.

CMS: Broaden the Definition of “Medically Necessary” Germane to Dental Services!

Dental services do not, historically, “gel-well” with Medicare and Medicaid. In fact, most dentists do not accept Medicare and Medicaid, and, quite frankly, I do not blame them. Accepting Medicare and/or Medicaid comes with accepting the fact that your dental practice can – and will – be audited by CMS or your State government at-will, at any time, for any reason. Your dental practice can be raided at any time by any federal agency, including the FBI, DOJ, OIG, alleging civil and criminal violations when you, as a dentist, had no clue that your medical records could be used against you, if not up to snuff…according to the governmental auditor. Perhaps more dentists would accept Medicare and/or Medicaid patients if the definition of “medically necessary” is broadened. More incentive to accept government programs is always good.

Dental benefits are covered by Medicare only in limited circumstances, and many people on Medicare do not have any dental coverage at all unless they pay for a Medicare Advantage (“MA”) plan. However, Medicare and Medicaid could cover more dental services if Congress or CMS broadens the definition of “medical necessity.” But, even with MA, the scope of dental benefits, when covered, varies widely and is often quite limited, which can result in high out-of-pocket costs among those with expensive dental needs.

Medicare and/or Medicaid will determine whether a dental service is essential – or “medically necessary” – for a beneficiary’s exasperating, primary medical condition. Congress has fallen short on expanding the legal definition of “medical necessary” regarding dental services for Medicare and Medicaid recipients.

In a June 29, 2022, letter to CMS Administrator Chiquita Brooks-LaSure, more than 100 members of the U.S. House of Representatives pled with CMS to expand its definition of “medically necessary” dental care. Lawmakers highlighted the serious issues stemming from the lack of access to affordable dental care. I do not know if you recall, but, in 2013-ish, I blogged about a young, African American boy, named Deamonte, who died in the emergency room from an abscessed tooth that ruptured, when that abscessed tooth could have been remedied by a dentist for a few hundred dollars. See blog.

Nearly half of Medicare beneficiaries (47%), or 24 million people, do not have dental coverage, as of 2019.

Almost half of all Medicare beneficiaries did not have a dental visit within the past year (47%), with higher rates among those who are Black (68%) or Hispanic (61%), have low incomes (73%), or who are in fair or poor health (63%), as of 2018.

In 2021, 94% of Medicare Advantage enrollees in individual plans (plans open for general enrollment), or 16.6 million enrollees, are in a plan that offers access to some dental coverage.

To those dentists or dental surgeons who do accept Medicare and/or Medicaid – THANK YOU!

Medicare and/or Medicaid audits for dental services, while not fun to deal with, are easily defensible…most of the time. A few years ago Medicaid sought to recoup money from dentists who provided services to women believed to be pregnant when the pregnancy was over. See blog. I thought it was absolutely ridiculous that your dentist has the burden to ensure a woman is or is not pregnant. I feel as though many dentists could be slapped by asking. Plus, the services were rendered, so a dentist should not have to pay to provide services.