Category Archives: Federal Law

The Reality of Prepayment Review and What To Do If You Are Tagged – You’re It!

Prepayment review is a drastic tool (more like a guillotine) that the federal and state governments via hired contractors review the documentation supporting services for Medicare and Medicaid prior to the provider receiving reimbursement. The providers who are placed on prepayment review are expected to continue to render services, even if the provider is not compensated. Prepayment review is a death sentence for most providers.

The required accuracy rating varies state to state, but, generally, a provider must meet 75% accuracy for three consecutive months.

In the governments’ defense, theoretically, prepayment review does not sound as Draconian as it is. Government officials must think, “Well, if the provider submits the correct documentation and complies with all applicable rules and regulations, it should be easy for the provider to meet the requirements and be removed from prepayment review.” However, this false reasoning only exists in a fantasy world with rainbows and gummy bears. Real life prepayment review is vastly disparate from the rainbow and gummy bears prepayment review.

In real life prepayment review:

  • The auditors may use incorrect, inapplicable, subjective, and arbitrary standards.

I had a case in which the auditors were denying 100% ACTT services, which are 24-hour mental health services for those 10% of people who suffer from extreme mental illness. The reason that the auditor was denying 100% of the claims was because “lower level services were not tried and ruled out.” In this instance, we have a behavioral health care provider employing staff to render ACTT services (expensive), actually rendering the ACTT services (expensive), and getting paid zero…zilch…nada…for a reason that is not required! There is no requirement that a person receiving ACTT services try a lower level of service first. If the person qualifies for ACTT, the person should receive ACTT services. Because of this auditor’s misunderstanding of ACTT, this provider was almost put out of business.

Another example: A provider of home health was placed on prepayment review. Again, 90 – 100% of the claims were denied. In home health, program eligibility is determined by an independent assessment conducted by the Division of Medical Assistance (DMA) via Liberty, which creates an individualized plan of care. The provider submitted claims for Patient Sally, who, according to her plan, needs help dressing. The service notes demonstrated that the in-home aide helped Sally dress with a shirt and pants. But the auditor denies every claim the provider bills for Sally (which is 7 days a week) because, according to the service note, the in-home aide failed to check the box to show she/he helped put on Sally’s shoes. The auditor fails to understand that Sally is a double amputee – she has no feet.

Quis custodiet ipsos custodes – Who watches the watchmen???

  • The administrative burden placed on providers undergoing prepayment review is staggering.

In many cases, a provider on prepayment review is forced to hire contract workers just to keep up with the number of document requests coming from the entity that is conducting the prepayment review. After initial document requests, there are supplemental document requests. Then every claim that is denied needs to be re-submitted or appealed. The amount of paperwork involved in prepayment review would cause an environmentalist to scream and crumple into the fetal position like “The Crying Game.”

  • The accuracy ratings are inaccurate.

Because of the mistakes the auditors make in erroneously denying claims, the purported “accuracy ratings” are inaccurate. My daughter received an 86 on a test. Given that she is a straight ‘A’ student, this was odd. I asked her what she got wrong, and she had no idea. I told her to ask her teacher the next day why she received an 86. Oops. Her teacher had accidentally given my daughter an 86; the 86 was the grade of another child in the class with the same first name. In prepayment review, the accuracy ratings are the only method to be removed from prepayment, so the accuracy of the accuracy ratings is important. One mistaken, erroneously denied claim damages the ratings, and we’ve already discussed that mistakes/errors occur. You think, if a mistake is found, call up the auditing entity…talk it out. See below.

  • The communication between provider and auditor do not exist.

Years ago my mom and I went to visit relatives in Switzerland. (Not dissimilar to National Lampoon’s European Vacation). They spoke German; we did not. We communicated with pictures and hand gestures. To this day, I have no idea their names. This is the relationship between the provider and the auditor.

Assuming that the provider reaches a live person on the telephone:

“Can you please explain to me why claims 1-100 failed?”

“Don’t you know the service definitions and the policies? That is your responsibility.”

“Yes, but I believe that we follow the policies. We don’t understand why these claims are denied. That’s what I’m asking.”

“Read the policy.”

“Not helpful.”

  • The financial burden on the provider is devastating.

If a provider’s reimbursements are 80 – 100% reliant on Medicaid/care and those funds are frozen, the provider cannot meet payroll. Yet the provider is expected to continue to render services. A few years ago, I requested from NC DMA a list of providers on prepayment review and the details surrounding them. I was shocked at the number of providers that were placed on prepayment review and within a couple months ceased submitting claims. In reality, what happened was that those providers were forced to close their doors. They couldn’t financially support their company without getting paid.

Ok, now we know that prepayment review can be a death sentence for a health care provider. How can we prepare for prepayment review and what do we do if we are placed on prepayment review?

  1. Create a separate “what if” savings account to pay for attorneys’ fees. The best defense is a good offense. You cannot prevent yourself from being placed on prepayment review – there is no rhyme or reason for such placement. If you believe that you will never get placed on prepayment review, then you should meet one of my partners. He got hit by lightning – twice! (And lived). So start saving! Legal help is a must. Have your attorney on speed dial.
  2. Self-audit. Be proactive, not reactive. Check your documents. If you use an electronic records system, review the notes that it is creating. If it appears that all the notes look the same except for the name of the recipient, fix your system. Cutting and pasting (or appearing to cut and paste) is a pitfall in audits. Review the notes of the highest reimbursement code. Most likely, the more the reimbursement rate, the more likely to get flagged.
  3. Implement an in-house policy about opening the mail and responding to document requests. This sounds self evident, but you will be surprised how many providers have multiple people getting and opening the mail. The employees see a document request and they want to be good employees – so they respond and send the documents. They make a mistake and BOOM – you are on prepayment review. Know who reviews the mail and have a policy for notifying you if a document request is received.
  4. Buck up. Prepayment review is a b*^%$. Cry, pray, meditate, exercise, get therapy, go to the spa, medicate…whatever you need to do to alleviate stress – do it.
  5. Do not think you can get off prepayment review alone and without help. You will need help. You will need bodies to stand at the copy machine. You will need legal help. Do not make the mistake of allowing the first three months pass before you contact an attorney. Contact your attorney immediately.

Medicare Appeals Backlog: Is HHS In Danger of Being Held in Contempt?

Four months after the Center for Medicare and Medicaid Services’ (CMS) Final Rule went in effect (March 2017) attempting to eliminate the Medicare appeal backlog and 6 months before United States District Court for the District of Columbia’s first court-imposed deadline (end of 2017) of reducing the Medicare appeal backlog by 30%, the Department of Health and Human Services (HHS) are woefully far from either. According to HHS’ June 2017 report on the Medicare appeal backlog, 950,520 claims will remain in the backlog by 2021. This is in stark contrast to the District Court’s Order that HHS completely eliminate the backlog by 2020. So will HHS be held in contempt? Throw the Secretary in jail? That is what normally happened when someone violates a Court Order.

Supposedly, HHS’ catastrophic inability to decrease the Medicare appeal backlog is not from a lack of giving the ole college try. But, in its June 2017 report, HHS blames funding.

CMS issued a new Final Rule in January 2017, which took effect March 2017, in hopes of reducing the massive Medicare provider appeal backlog that has clogged up the third level of appeal of Medicare providers’ adverse actions. In the third level of appeal, providers make their arguments before an administrative law judge (ALJ). For information on all the Medicare appeal levels, click here.

The Office of Medicare Hearings and Appeals (OMHA) claims that it currently can adjudicate roughly 92,000 appeals annually. The current backlog is approximately 667,326 appeals that HHS estimates will grow to 950,520 by 2021. The average number of days between filing a Petition with OMHA and adjudicating the case is around 1057.2 days. 

HHS had high hopes that these changes would eliminate the backlog. In HHS’ Final Rule Fact Sheet, it states “with the administrative authorities set forth in the final rule and the FY 2017 proposed funding increases and legislative actions outlined in the President’s Budget, we estimate that that the backlog of appeals could be eliminated by FY 2020.” The changes made to the Medicare appeals process by the January 2017 Final Rule is the following:

Changes to the Medicare Appeals Process

The changes in the final rule are primarily focused on the third level of appeal and will:

  • Designate Medicare Appeals Council decisions (final decisions of the Secretary) as precedential to provide more consistency in decisions at all levels of appeal, reducing the resources required to render decisions, and possibly reducing appeal rates by providing clarity to appellants and adjudicators.
  • Allow attorney adjudicators to decide appeals for which a decision can be issued without a hearing and dismiss requests for hearing when an appellant withdraws the request. That way ALJs can focus on conducting hearings and adjudicating the merits of more complex cases.
  • Simplify proceedings when CMS or CMS contractors are involved by limiting the number of entities (CMS or contractors) that can be a participant or party at the hearing.
  • Clarify areas of the regulations that currently causes confusion and may result in unnecessary appeals to the Medicare Appeals Council.
  • Create process efficiencies by eliminating unnecessary steps (e.g., by allowing ALJs to vacate their own dismissals rather than requiring appellants to appeal a dismissal to the Medicare Appeals Council); streamlining certain procedures (e.g., by using telephone hearings for appellants who are not unrepresented beneficiaries, unless the ALJ finds good cause for an appearance by other means); and requiring appellants to provide more information on what they are appealing and who will be attending a hearing.
  • Address areas for improvement previously identified by stakeholders to increase the quality of the process and responsiveness to customers, such as establishing an adjudication time frame for cases remanded from the Medicare Appeals Council, revising remand rules to help ensure cases keep moving forward in the process, simplifying the escalation process, and providing more specific rules on what constitutes good cause for new evidence to be admitted at the OMHA level of appeal.

In early June 2017, HHS issued its second status report on the Medicare appeals backlog and the outlook does not look good.

CMS held a call on June 29, 2017, to discuss recent regulatory changes intended to streamline the Medicare administrative appeal processes, reduce the backlog of pending appeals, and increase consistency in decision-making across appeal levels.

Now HHS is in danger of violating a Court Order.

In December 2016, the District Court for the District of Columbia held in American Hospital Association v Burwell case Ordered HHS to release to status reports every 90 days and the complete elimination of the backlog by 2020, HHS is also required to observe several intermediary benchmarks: 30% reduction by the end of 2017, 60% by the end of 2018, 90% by the end of 2019, and then ultimately 100% elimination by the end of 2020.

BUT LITTLE TO NOTHING HAS CHANGED.

HHS itself has maintained since the requirements were instituted that the elimination of the backlog would not be possible. June’s report projects 950,520 claims will remain by 2021, but this projection is still very far from meeting the court order.

HHS blames funding.

But even significant increase of funding (from about $107 million in 2017, to $242 million in 2018) will not cure the problem! I find it very disturbing that $242 million could not eliminate the Medicare appeal backlog. So what will happen when HHS fails to meet the Court’s mandate of a 30% reduction of the backlog by the end of 2017? Hold the Secretary in contempt?

The court in Burwell drafted a “what if” into the Decision—the Court stated: “if [HHS] fails to meet [these] deadlines, Plaintiffs may move for default judgment or to otherwise enforce the writ of mandamus.”  This allows the Court authority to enforce its Decision, but it has not motivated HHS to try any innovative procedures to reduce the backlog. So far no additional actions have been attempted, and the backlog remains.

If HHS is in violation of the Court Order at the end of 2017, the Court could issue harsh penalties. (Or the Court could do nothing and be a complete disappointment).

Medicare/caid Fraud, Tattletails, and How To Self Disclose

On July 13, 2017, Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Tom Price, M.D., announced the Department of Justice’s (DOJ) biggest-ever health care fraud takedown. 412 health care providers were charged with health care fraud. In total, allegedly, the 412 providers schemed and received $1.3 billion in false billings to Medicare, Medicaid, and TRICARE. Of the 412 defendants, 115 are physicians, nurses, and other licensed medical professionals. Additionally, HHS has begun the suspension process against 295 health care providers’ licenses.

The charges include allegations of billing for medically unnecessary treatments or services that were not really provided. The DOJ has evidence that many of the defendants had illegal kickback schemes set up. More than 120 of the defendants were charged with unlawfully or inappropriately prescribing and distributing opioids and other narcotics.

While this particular sting operation resulted from government investigations, not all health care fraud is discovered through government investigation. A great deal of fraud is uncovered through private citizens coming forward with incriminating information. These private citizens can file suit against the fraudulent parties on behalf of the government; these are known as qui tam suits.

Being a whistleblower goes against what most of us are taught as children. We are taught not to be a tattletail. I have vivid memories from elementary school of other kids acting out, but I would remain silent and not inform the teacher. But in the health care world, tattletails are becoming much more common – and they make money for blowing that metaphoric whistle.

What is a qui tam lawsuit?

Qui tam is Latin for “who as well.” Qui tam lawsuits are a type of civil lawsuit whistleblowers (tattletails) bring under the False Claims Act, a law that rewards whistleblowers if their qui tam cases recover funds for the government. Qui tam cases are a powerful weapon against Medicare and Medicaid fraud. In other words, if an employee at a health care facility witnesses any type of health care fraud, even if the alleged fraud is unknown to the provider, that employee can hire an attorney to file a qui tam lawsuit to recover money on behalf of the government. The government investigates the allegations of fraud and decides whether it will join the lawsuit. Health care entities found guilty in a qui tam lawsuit will be liable to government for three times the government’s losses, plus penalties.

The whistleblower is rewarded for bringing these lawsuits. If the government intervenes in the case and recovers funds through a settlement or a trial, the whistleblower is entitled to 15% – 25% of the recovery. If the government doesn’t intervene in the case and it is pursued by the whistleblower team, the whistleblower reward is between 25% – 30% of the recovery.

These recoveries are not low numbers. On June 22, 2017, a physician and rehabilitative specialist agreed to pay $1.4 million to resolve allegations they violated the False Claims Act by billing federal health care programs for medically unreasonable and unnecessary ultrasound guidance used with routine lab blood draws, and with Botox and trigger point injections. If a whistleblower had brought this lawsuit, he/she would have been awarded $210,000 – 420,000.

On June 16, 2017, a Pennsylvania-based skilled nursing facility operator agreed to pay roughly $53.6 million to settle charges that it and its subsidiaries violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary therapy and hospice services. The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by 7 former employees of the company. The whistleblower award – $8,040,000 – 16,080,000.

There are currently two, large qui tam cases against United Health Group (UHG) pending in the Central District of California. The cases are: U.S. ex rel. Benjamin Poehling v. UnitedHealth Group, Inc. and U.S. ex rel. Swoben v. Secure Horizons, et al. Both cases were brought by James Swoben, who was an employee and Benjamin Poehling, who was the former finance director of a UHG group that managed the insurer’s Medicare Advantage Plans. On May 2, 2027, the U.S. government joined the Poehling lawsuit.

The charges include allegations that UHG:

  • Submitted invalid codes to the Center for Medicare and Medicaid Services (CMS) that it knew of or should have known that the codes were invalid – some of the dates of services at issue in the case are older than 2008.
  • Intentionally avoided learning that some diagnoses codes or categories of codes submitted to their plans by providers were invalid, despite acknowledging in 2010 that it should evaluate the results of its blind chart reviews to find codes that need to be deleted.
  • Failed to follow up on and prevent the submissions of invalid codes or submit deletion for invalid codes.
  • Attested to CMS each year that the data they submitted was true and accurate while knowing it was not.

UHG would not be in this expensive, litigious pickle had it conducted a self audit and followed the mandatory disclosure requirements.

What are the mandatory disclosure requirements? Glad you asked…

Section 6402(a) of the Affordable Care Act (ACA) creates an express obligation for health care providers to report and return overpayments of Medicare and Medicaid. The disclosure must be made by 60 days days after the date that the overpayment was identified or the date any corresponding cost report is due, if applicable. Identification is defined as the point in which the provider has determined or should have determined through the exercise of due diligence that an overpayment exists. CMS expects the provider to proactively investigate any credible information of a potential overpayment. The consequences of failing to proactively investigate can be seen by the UHG  lawsuits above-mentioned. Apparently, UHG had some documents dated in 2010 that indicated it should review codes and delete the invalid codes, but, allegedly, failed to do so.

How do you self disclose?

According to CMS:

“Beginning June 1, 2017, providers of services and suppliers must use the forms included in the OMB-approved collection instrument entitled CMS Voluntary Self-Referral Disclosure Protocol (SRDP) in order to utilize the SRDP. For disclosures of noncompliant financial relationships with more than one physician, the disclosing entity must submit a separate Physician Information Form for each physician. The CMS Voluntary Self-Referral Disclosure Protocol document contains one Physician Information Form.”

“Bye Felicia” – Closing Your Doors To a Skilled Nursing Facility May Not Be So Easy – You Better Follow the Law Or You May Get “Sniffed!”

There are more than 15,000 nursing homes across the country. Even as the elderly population balloons, more and more nursing homes are closing. The main reason is that Medicare covers little at a nursing home, but Medicare does cover at-home and community-based services; i.e., personal care services at your house. Medicare covers nothing for long term care if the recipient only needs custodial care. If the recipient requires a skilled nursing facility (SNF), Medicare will cover the first 100 days, although a co-pay kicks in on day 21. Plus, Medicare only covers the first 100 days if the recipient meets the 3-day inpatient hospital stay requirement for a covered SNF stay. For these monetary reasons, Individuals are trying to stay in their own homes more than in the past, which negatively impacts nursing homes. Apparently, the long term care facilities need to lobby for changes in Medicare.

Closing a SNF, especially if it is Medicare certified, can be tricky to maneuver the stringent regulations.  You cannot just be dismissive and say, “Bye, Felicia,” and walk away. Closing a SNF can be as legally esoteric as opening a SNF. It is imperative that you close a SNF in accordance with all applicable federal regulations; otherwise you could face some “sniff” fines. Bye, Felicia!

Section 6113 of the Affordable Care Act dictates the requirements for closing SNFs. SNF closures can be voluntary or involuntary. So-called involuntary closures occur when health officials rule that homes have provided inadequate care, and Medicaid and Medicare cut off reimbursements. There were 106 terminations of nursing home contracts in 2014, according to the federal Centers for Medicare and Medicaid Services (CMS).

Regardless, according to law, the SNF must provide notice of the impending closure to the State and consumers (or legal representatives) at least 60 days before closure. An exception is if the SNF is shut down by the state or federal government, then the notice is required whenever the Secretary deems appropriate. Notice also must be provided to the State Medicaid agency, the patient’s primary care doctors, the SNF’s medical director, and the CMS regional office. Once notice is provided, the SNF may not admit new patients.

Considering the patients who reside within a SNF, by definition, need skilled care, the SNF also has to plan and organize the relocation of its patients. These relocation plans must be approved by the State.

Further, if the SNF violates these regulations the administrator of the facility and will be subject to civil monetary penalty (CMP) as follows: A minimum of $500 for the first offense; a minimum of $1,500 for the second offense; and a minimum of $3,000 for the third and subsequent offenses. Plus, the administrator could be subject to higher amounts of CMPs (not to exceed ($100,000) based on criteria that CMS will identify in interpretative guidelines.

If you are contemplating closing a SNF, it is imperative that you do so in accordance with the federal rules and regulations. Consult your attorney. Do not be dismissive and say, “Bye, Felicia.” Because you could get “sniffed.”

Do You Pay Your Billing Agent a Percentage of Claims? You May Be in Violation of Federal law!

The Office of Inspector General (OIG) recently disseminated hundreds of recoupment letters to providers in New York who had percentage-based contracts with billing agents. OIG is seeking recoupment for services spanning a five-year period, plus 9% interest. See example redacted letter from OIG.

oig letter

42 CFR 447.10 prohibits the re-assignment of provider claims and applies only to Medicaid. It is recommended that you pay your billing agent a flat fee or on a time basis.

North Carolina Medical Society also discourages fee splitting. On the NCMS website, the Society warns that “Except in instances permitted by law (N.C. Gen. Stat. § 55B-14(c)), it is the position of the Board that a licensee cannot share revenue on a percentage basis with a non-licensee. To do so is fee splitting and is grounds for disciplinary action.”

Not all States prohibit fee splitting, and if Medicare or Medicaid is not involved, then we look to state law. But if Medicare or Medicaid is involved, then federal law matters. Some States prohibit fee splitting for doctors, chiropractors, and hospitals, while other states do not prohibit fee splitting for massage therapists. So it is important to know your State’s laws.

Lawyers also have fee-splitting prohibitions. To split fees with a nonlawyer constitutes the practice of law without a license (and probably multiple other ethical concerns).

Physicians, group practices and management services organizations should continue to carefully examine their current and proposed arrangements to ensure compliance with the fee-splitting prohibition applicable to your State. If you are unsure, consult an attorney.

OIG may have started these audits in New York, but, as New York State says “Excelsior” – ever upward – we can be sure that OIG will continue across the country.

House Bill 403: A Potential Upheaval of Medicaid!

Is this the end of the managed care organizations (MCOs)?

If the Senate’s proposed committee substitute (PCS) to House Bill 403 (HB 403) passes the answer is yes. The Senate’s PCS to House Bill 403 was just favorably reported out of the Senate Health Care Committee on June 15, 2017. The next step for the bill to advance will be approval by the Senate Rules Committee. Click here to watch its progress.

As my readers are well aware, I am not a proponent for the MCOs. I think the MCOs are run by overpaid executives, who pay themselves too high of bonuses, hire charter flights, throw fancy holiday parties, and send themselves and their families on expensive retreats – to the detriment of Medicaid recipients’ services and Medicaid providers’ reimbursement rates. See blog. And blog.

Over the last couple days, my email has been inundated by people abhorred with HB 403 – urging the Senators to retain the original HB 403, instead of the PCS version. As with all legislation, there are good and bad components. I went back and re-read these emails, and I realized multiple authors sat on an MCO Board. Of course MCO Board members will be against HB 403! Instead of hopping up and down “for” or “against” HB 403, I propose a (somewhat) objective review of the proposed legislation in this blog.

While I do not agree with everything found in HB 403, I certainly believe it is a step in the right direction. The MCOs have not been successful. Medically necessary behavioral health care services have been reduced or terminated, quality health care providers have been terminated from catchment areas, and our tax dollars have been misused.

However, I do have concern about how quickly the MCOs would be dissolved and the new PHPs would be put into effect. There is no real transition period, which could provide safety nets to ensure continuity of services. We all remember when NCTracks was implemented in 2013 and MMIS was removed on the same day. There was no overlap – and the results were catastrophic.

The following bullet points are the main issues found in HB 403, as currently written.

  • Effective date – MCOs dissolve immediately (This could be dangerous if not done properly)

Past legislation enacted a transition time to dissolve the MCOs. Session Law 2015-245, as amended by Session Law 2016-121, provided that the MCOs would be dissolved in four years, allowing the State to implement a new system slowly instead of yanking the tablecloth from the table with hopes of the plates, glasses, and silverware not tumbling to the ground.

According to HB 403, “on the date when Medicaid capitated contracts with Prepaid Health Plans (PHPs) begin, as required by S.L. 2015-245, all of the following shall occur:…(2) The LME/MCOs shall be dissolved.”

Session Law 2015-245 states the following timeline: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly
with the LME/MCOs in the same manner as currently utilized.”

HB 403 revises Session Law 2015-245’s timeline by the following: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly with the LME/MCOs in the same manner as currently utilized.

Instead of a 4-year transition period, the day the PHP contracts are effective, the MCOs no longer exist. Poof!! Maybe Edward Bulwer-Lytton was right when he stated, “The pen is mightier than the sword.”

Again, I am not opposed to dissolving the MCOs for behavioral health care; I just want whatever transition to be reasonable and safe for Medicaid recipients and providers.

With the MCOs erased from existence, what system will be put in place? According to HB 403, PHPs shall manage all behavioral health care now managed by MCOs and all the remaining assets (i.e., all those millions sitting in the savings accounts of the MCOs) will be transferred to DHHS in order to fund the contracts with the PHPs and any liabilities of the MCOs. (And what prevents or does not prevent an MCO simply saying, “Well, now we will act as a PHP?”).

What is a PHP? HB 403 defines PHPs as an entity, which may be a commercial plan or provider-led entity with a PHP license from the Department of Insurance and will operate a capitated contract for the delivery of services. “Services covered by PHP:

  1. Physical health services
  2. Prescription drugs
  3. Long-term care services
  4. Behavioral health services

The capitated contracts shall not cover:

  1. Behavioral health
  2. Dentist services
  3. The fabrication of eyeglasses…”

It would appear that dentists will also be managed by PHPs. As currently written, HB 403 also sets no less than three and no more than five contracts between DHHS and the PHPs should be implemented.

Don’t we need a Waiver from the Center for Medicare and Medicaid Services (CMS)?

Yes. We need a Waiver. 42 CFR 410.10(e) states that “[t]he Medicaid agency may not delegate, to other than its own officials, the authority to supervise the plan or to develop or issue policies, rules, and regulations on program matters.” In order to “Waive” this clause, we must get permission from CMS. We had to get permission from CMS when we created the MCO model. The same is true for a new PHP model.

Technically, HB 403 is mandating DHHS to implement a PHP model before we have permission from the federal government. HB 403 does instruct DHHS to submit a demonstration waiver application. Still, there is always concern and hesitancy surrounding implementation of a Medicaid program without the blessing of CMS.

  • The provider network (This is awesome)

HB 403 requires that all contracts between PHPs and DHHS have a clause that requires PHPs to not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates.

  • PHPs use of money (Also good)

Clearly, the General Assembly drafted HB 403 out of anger toward the MCOs. HB 403 implements more supervision over the new entities. It also disallows use of money on alcohol, first-class airfare, charter flights, holiday parties or similar social gatherings, and retreats, which, we all know these are precisely the activities that State Auditor Beth Wood found occurring, at least, at Cardinal. See Audit Report.

HB 403 also mandates that the Office of State Human Resources revise and update the job descriptions for the area directors and set limitations on salaries. No more “$1.2 million in CEO salaries paid without proper authorization.”

  • Provider contracts with the PHPs (No choice is never good)

It appears that HB 403 will not allow providers to choose which PHP to join. DHHS is to create the regions for the PHPs and every county must be assigned to a PHP. Depending on how these PHPs are created, we could be looking at a similar situation that we have now with the MCOs. If the State is going to force you to contract with a PHP to provide Medicaid services, I would want the ability to choose the PHP.

In conclusion, HB 403 will re-shape our entire Medicaid program, if passed. It will abolish the MCO system, apply to almost all Medicaid services (both physical and mental), open the provider network, limit spending on inappropriate items, and assign counties to a PHP.

Boy, what I would give to be a fly on the wall in all the MCO’s boardrooms (during the closed sessions).

Durable Medical Equipment and Home Health and Hospice Targeted in Region 5!

Durable Medical Equipment (DME) providers across the country are walking around with large, red and white bullseyes on their backs. Starting back in March 2017, the RAC audits began targeting DME and home health and hospice. DME providers also have to undergo audits by the Comprehensive Error Rate Testing Program (CERT).

bullseye

The RAC for Jurisdiction 5, Performant Recovery, is a national company contracted to perform Recovery Audit Contractor (RAC) audits of durable medical equipment, prosthetic, orthotic and supplies (DMEPOS) claims as well as home health and hospice claims. Medicare Part B covers medically necessary DME. The following are the RAC regions:

Region 1 – Performant Recovery, Inc.

Region 2 – Cotiviti, LLC

Region 3 – Cotiviti, LLC

Region 4 – HMS Federal Solutions

Region 5 – Performant Recovery, Inc.

racregions

As you can see from the above map, we are in Region 3. The country is broken up into four regions. But, wait, you say, you said that Performant Recovery is performing RAC audits in region 5 – where is region 5?

Region 5 is the whole country.

The Centers for Medicare and Medicaid (CMS) has contracted with Performant Recovery to audit DME and home health and hospice across the whole country.

dmemap

DME and home health and hospice providers – There is nowhere to hide. If you provide equipment or services within the blue area, region 5, you are a target for a RAC audit.

What are some common findings in a RAC audit for DME?

Without question, the most common finding in a RAC or CERT audit is “insufficient documentation.” The problem is that “insufficient documentation” is nebulous, at best, and absolutely incorrect, at worst. This error is by auditors if they cannot conclude that the billed services were actually provided, were provided at the level billed, and/or were medically necessary. An infuriating discovery was when I was defending a DME RAC audit and learned that the “real” reason for the denial of a claim was that no one went to the consumers door, knocked on it, and verified that a wheelchair had, in fact, been delivered. In-person verification of delivery is not a requirement, nor should it be. Such a burdensome requirement would unduly prejudice DME companies. Yes, you need to be able to show a signed and dated delivery slip, but you do not have to go to the consumer’s house and snap a selfie with the consumer and the piece of equipment.

Another common target for RAC audits is oxygen tubing, oxygen stands/racks, portable liquid oxygen systems, and oxygen concentrators.  RAC auditors mainly look for medical necessity for oxygen equipment. Hospital beds/accessories are also a frequent find in a RAC audit. A high use of hospital beds/accessories codes can enlarge the target on your back.

Another recurrent issue that the RAC auditors cite is billing for bundled services separately. Medicare does not make separate payment for DME provider when a beneficiary is in a covered inpatient stay. RAC auditors check whether suppliers are inappropriately receiving separate DME payment when the beneficiary is in a covered inpatient stay.  Suppliers can’t bill for DME items used by the patient prior to the patient’s discharge from the hospital. Medicare doesn’t allow separate billing for surgical dressings, urological supplies, or ostomy supplies provided in the hospital because reimbursement for them is wrapped into the Part A payment. This prohibition applies even if the item is worn home by the patient when leaving the hospital.

As always, documentation of the face to face encounter and the prescription are also important.

You can find the federal regulation for DME documentation at 42 CFR 410.38 – “Durable medical equipment: Scope and conditions.”

Once you receive an alleged overpayment, know your rights! Appeal, appeal, appeal!! The Medicare appeal process can be found here.

Gordon & Rees Ranked Among 50 Largest U.S. Law Firms by Law360

Here’s a little unabashed, yet well-deserved honor my firm recently obtained. Number 48!! Go Team G&RSM! #Medicaidatty #Medicareatty

Gordon Rees Scully Mansukhani now ranks as the 48th largest law firm in the United States per Law360 in its annual rankings of the 400 largest law firms in the nation. The firm attained this distinction by moving up five spots from the prior year’s rankings and 23 positions from the 2015 list, and currently comprises some 733 attorneys and 304 partners throughout the U.S.

“This distinction represents an important milestone for the firm,” commented Firmwide Managing Partner Dion N. Cominos. “We continue to have good fortune in growing our platform with outstanding lawyers; most importantly, however, the growth has not occurred for its own sake but instead to allow us to best service our clients on a national stage.”

During the last three years, the firm has expanded its U.S. headcount by more than 26 percent and, since 2000, Gordon & Rees has added more than 30 new offices, and now has a major outpost in eight of the 10 largest cities in the United States. In 2017 alone, the firm has opened five new offices: Cincinnati and Columbus, Ohio; Oklahoma City, Oklahoma; Salt Lake City, Utah; and Milwaukee, Wisconsin.

Gordon & Rees is a national litigation and business transactions firm with more than 700 lawyers in 43 offices across the United States. Our lawyers provide full service representation to public and private companies ranging from the Fortune 500 to start-ups. Founded in 1974, Gordon & Rees is recognized among the fastest growing and largest law firms in the country and continues to climb the ranks of both The Am Law 200 and The National Law Journal.”

Legislative Update For May 10, 2017

I am a member of the Health Law Section’s Legislative Committee, along with attorneys Shawn Parker, and Scott Templeton. Together we drafted summaries of all the potential House and Senate Bills that have passed one house (crossed over) and have potential of becoming laws. We published it on the NC Bar Association Blog. I figured my readers would benefit from the Bill summaries as well. Please see below blog.

On behalf of the North Carolina Bar Association Health Law Section’s Legislative Committee,  we are providing the following 2017 post-crossover legislative update.

The North Carolina General Assembly has been considering a substantial number of bills of potential relevance to health law practitioners this session. The Health Law Section’s Legislative Committee, with the help of NCBA staff, has been monitoring these bills on virtually a daily basis.

The General Assembly’s rules provide for a “crossover date” during the legislative session, which this year was April 27. The importance of that date is essentially that, with certain caveats, unless a bill has passed one chamber (House or Senate) by the crossover date, the bill will no longer be considered by the legislature. The following listing provides brief descriptions of current proposed legislation, in two categories.

The first category includes bills that passed either the House or Senate by the crossover date, and therefore remain in consideration by the legislature. The second category includes bills that did not pass either chamber before the crossover date, but because the bills contain an appropriation or fee provisions, they may continue to be considered pursuant to legislative rules.

In addition to the bills listed below, a number of bills did not make crossover and do not meet an exception to the crossover rule, and are likely “dead” for this legislative session. We recognize, however, that the legislature is capable of “reviving” legislation by various mechanisms. The Legislative Committee continues to monitor legislation during the session, and in addition to this update, we may provide further updates as appropriate, and also anticipate doing a final summary once the legislature has adjourned later this year.

Bills That Passed One Chamber by the Crossover Date.

House Bills 

HB 57: Enact Physical Therapy Licensure Compact

Makes North Carolina a member of the Physical Therapy Licensure Compact, upon the 10th member state to enact the compact. Membership in the compact would allow physical therapists who hold licenses in good standing in any other compact state to practice physical therapy in North Carolina. Likewise, physical therapists holding a valid license in North Carolina would be able to practice physical therapy in any of other the compact member states.

 HB 140: Dental Plans Provider Contracts/Transparency

Provides that insurance companies that offer stand-alone dental insurance are subject to the disclosure and notification provisions of G.S. 58-3-227.

 HB 156: Eyeglasses Exemption from Medicaid Capitation

Adds the fabrication of eyeglasses to the list of services that are not included as part of transitioning the State Medicaid program to a capitated system.

HB 199: Establish Standards for Surgical Technology

Creates standards for surgical technology care in hospitals and ambulatory surgical facilities, specifically prohibiting employing or contracting with a surgical technologist unless that technologist produces one of four enumerated qualifications.

HB 206: N.C. Cancer Treatment Fairness

Requires insurance coverage parity so orally administered anti-cancer drugs are covered on a basis no less favorable than intravenously administered or injected anti-cancer drugs.

 HB 208 : Occupational Therapy Choice of Provider

Adds licensed occupational therapists to the list of providers for whom insurers are required to pay for services rendered, regardless of limitations to access of such providers within the insurance contract.

 HB 243: Strengthen Opioid Misuse Prevention (STOP) Act

Requires, among other things, practitioners to review information in the state-controlled substance reporting system prior to prescribing certain targeted controlled substance and limits the length of supply that a targeted controlled substance may be prescribed for acute pain relief.

HB 258: Amend Medical Malpractice Health Care Provider Definition

Includes paramedics, as defined in G.S. 131E-155, within the definition of health care provider for the purposes of medical malpractice actions.

HB 283: Telehealth Fairness Act

Requires health benefit plans to provide coverage for health care services that are provided via telemedicine as if the service were provided in person.

HB 307: Board Certified Behavioral Analyst/Autism Coverage

Adds board certified behavioral analysts as professionals that qualify for reimbursement for providing adaptive behavioral treatments under North Carolina’s mandatory coverage requirements for autism spectrum disorder.

 HB 403: LME/MCO Claims Reporting/Mental Health Amendments

Requires Local Management Entities/Managed Care Organizations (LME/MCOs) to use a state-designated standardized format for submitting encounter data, clarifies that the data submitted may be used by DHHS to, among other authorized purposes, set capitation rates. Also modifies multiple statutory requirements and references related to LME/MCOs. Limits the LME/MCOs’ use of funds to their functions and responsibilities under Chapter 122C. Also limits the salary of an area director unless certain criteria are met.

HB 425: Improve Utilization of MH Professionals

Allows licensed clinical addiction specialists to own or have ownership interest in a North Carolina professional corporation that provides psychotherapeutic services. Allows licensed professional counselors or licensed marriage and family therapist to conduct initial examinations for involuntary commitment process when requested by the LME and approved by DHHS.

HB 550: Establish New Nurse Licensure Compact

Repeals the current nurse licensure compact codified at G.S. 90-171.80 – 171.94 and codifies a substantially similar compact, which North Carolina will join upon adoption by the 26th state, allowing nurses to have one multi-state license, with the ability to practice in both their home state and other compact states.

HB 631: Reduce Admin. Duplication MH/DD/SAS Providers

Directs DHHS to establish a work group to examine and make recommendations to eliminate administrative duplication of requirements affecting healthcare providers.

Senate Bills 

SB 42: Reduce Cost and Regulatory Burden/Hospital Construction

Directs the N.C. Medical Care Commission to adopt the American Society of Healthcare Engineers Facility Guidelines for physical plant and construction requirements for hospital facilities and to repeal the current set of rules pertaining to such requirements under the current hospital facilities rules within the North Carolina Administrative Code.

SB 161: Conforming Changes LME/MCO Grievances/Appeals

Provides a technical change to North Carolina LME/MCO enrollee grievance statutes by renaming “managed care actions” as “adverse benefit determinations” to conform to changes in federal law.

SB 368: Notice of Medicaid SPA Submissions

Directs DHHS to notify the General Assembly when DHHS submits to the federal government an amendment to the Medicaid State Plan, or decides not to submit a previously published amendment.

 SB 383: Behavioral Health Crisis EMS Transport

Directs DHHS to develop a plan for adding Medicaid coverage for ambulance transports to behavioral health clinics under Medicaid Clinical Coverage Policy 15.

SB 384: The Pharmacy Patient Fair Practices Act

Prohibits pharmacy benefits managers from using contract terms to prevent pharmacies from providing direct delivery services and allows pharmacists to discuss lower-cost alternative drugs with and sell lower-cost alternative drugs to its customers.

SB 630: Revise IVC Laws to Improve Behavioral Health

Makes substantial revisions to Chapter 122C regarding involuntary commitment laws.

Bills That Did Not Pass Either Chamber by the Crossover Date, But Appear to Remain Eligible for Consideration.

House Bills

HB 88: Modernize Nursing Practice Act

Eliminates the requirement of physician supervision for nurse practitioners, certified nurse midwives, clinical nurse specialists and certified registered nurse anesthetists.

HB 185: Legalize Medical Marijuana

Creates the North Carolina Medical Cannabis Act.  Among many other provisions, it provides that physicians would not be subject to arrest, prosecution or penalty for recommending the medical use of cannabis or providing written certification for the medical use of cannabis pursuant to the provision of the newly created article.

HB 270: The Haley Hayes Newborn Screening Bill

Directs additional screening tests to detect Pompe disease, Mucopolysaccharidosis Type I, and X-linked Adrenoleukodystrophy as part of the state’s mandatory newborn screening program.

HB 858: Medicaid Expansion/Healthcare Jobs Initiatives

Repeals the legislative restriction on expanding the state’s Medicaid eligibility and directs DHHS to provide Medicaid coverage to all people under age 65 with incomes equal to or less than 133 percent of the federal poverty guidelines. Appropriates funds and directs the reduction of certain recurring funds to implement the act. Additionally the bill creates and imposes an assessment on each hospital that is not fully exempt from both the current equity and upper payment limit assessments imposed by state law.

HB 887: Health Insurance Mandates Study/Funds

Appropriates $200,000 to fund consultant services to assist the newly established Legislative Research Commission committee on state mandatory health insurance coverage requirements.

HB 902: Enhance Patient Safety in Radiological Imaging.

Creates a new occupational licensure board to regulate the practice of radiologic imaging and radiation therapy procedures by Radiologic Technologists and Radiation Therapists.

Senate Bills

SB 73: Modernize Nursing Practice Act

Eliminates the requirement of physician supervision for nurse practitioners, certified nurse midwives, clinical nurse specialists and certified registered nurse anesthetists.

SB 290: Medicaid Expansion/Healthcare Jobs Initiative

Repeals the legislative restriction on expanding the state’s Medicaid eligibility and directs DHHS to provide Medicaid coverage to all people under age 65 with incomes equal to or less than 133 percent of the federal poverty guidelines. Appropriates funds, directs the reduction of certain recurring funds to implement the Act. Additionally the bill creates and imposes an assessment on each hospital that is not fully exempt from both the current equity and upper payment limit assessments imposed state law.

SB 579: The Catherine A. Zanga Medical Marijuana Bill

Creates the North Carolina Medical Cannabis Act.  Among many other provisions, it provides that physicians would not be subject to arrest, prosecution or penalty for recommending the medical use of cannabis or providing written certification for the medical use of cannabis pursuant to the provision of the newly created article.

SB 648: Legalize Medical Marijuana

Creates the North Carolina Medical Cannabis Act.  Among many other provisions, it provides that physicians would not be subject to arrest, prosecution or penalty for recommending the medical use of cannabis or providing written certification for the medical use of cannabis pursuant to the provision of the newly created article.

Please contact a member of the Health Law Section’s Legislative Committee should you have any questions regarding this report.  The Committee’s members are Knicole Emanuel, Shawn Parker, and Scott Templeton (chair).

EHR: What’s In YOUR Contract? Legal Issues You Need to Know.

Electronic health records or EHR have metamorphosed health care. Choosing a vendor can be daunting and the prices fluctuate greatly. As a provider, you probably determine your EHR platform on which vendor’s program creates the best service notes… or which creates the most foolproof way of tracking time… or which program is the cheapest.

But…what’s in YOUR contract can be legally deadly.

Regardless how you choose your EHR vendor, you need to keep the following legal issues in mind when it comes to EHR and the law:

Regulatory and Clinical Coverage Policy Compliance

Most likely, your EHR vendor does not have a legal degree. Yet, you are buying a product and assuming that the EHR program complies with applicable regulations, rules, and clinical coverage policies – whichever are applicable to your type of service. Well, guess what? These regulations, rules, and clinical coverage policies are not stagnant. They are amended, revised, and re-written more than my chickens lay eggs, but a little less often, because my chickens lay eggs every day.

Think about it – The Division of Medical Assistance (DMA) publishes a monthly Medicaid Bulletin. Every month DMA provides more insight, more explanations, more rules that providers will be held accountable to follow.

Does your EHR program update every month?

You need to review your contract and determine whether the vendor is responsible for regulatory compliance or whether you are. If you are, should you put so much faith in the EHR program?

Document Accessibility

You are required to maintain your records (depending on your type of service) anywhere from 5-10 years. Let’s say that you sign a four year contract with EHR Vendor X. The four years expires, and you hire a new EHR vendor. You are audited. But Vendor X does not allow you access to the records because you no longer have a contract with them – not their problem!

You need to ensure that your EHR contract allows you access to your documents (because they are your documents) even in the event of the contract expiring or getting terminated. The excuse that “I don’t have access to that” does not equal a legal defense.

Indemnification

This is otherwise known as the “Blame Game.” If there is a problem with regulatory compliance, as in, the EHR records do not follow the regulations, then you need to know whether the EHR vendor will take responsibility and pay, or help pay, for attorneys’ fees to defend yourself.

Like it or not, the EHR vendor does not undergo audits by the state and federal government. The EHR vendor does not undergo post and pre-payment reviews for regulatory compliance. You do. It is your NPI number that is held accountable for regulatory compliance.

You need to check whether there is an indemnification clause in the EHR contract. In other words, if you are accused of an overpayment because of a mistake on the part of the vendor, will the vendor cover your defense? My guess is that there is no indemnification clause.

HIPAA Compliance

HIPAA laws require that you minimize the access to private health information (PHI) and prevent dissemination. With hard copies, this was easy. You could just lock up the documents. With EHR, it becomes trickier. Obviously, you have access to the PHI as the provider. But who can access your EHR on the vendor-side? Assuming that the vendor has an IT team in case of computer issues, you have to consider to what exactly does that team have access.

I recently attended a legal continuing education class on data breach and HIPAA compliance for health care. One of the speakers was a Special Agent with the FBI. This gentleman prosecutes data breaches for a living. He said that hackers will pay over $500 per private medical document. Health care companies experienced a 72% increase in cyberattacks between 2013 and 2014. Stolen health care information is 10 times more valuable than your credit card information.

Zombie Apocalypse

Obviously, I am exaggerating here. I do not believe that The Walking Dead is real and in our future. But here is my point – You are held accountable for maintaining your medical records, even in the face of an act of God or terrorism.

Example: It was 1996. Provider Dentist did not have EHR; he had hard copies. Hurricane Fran flooded Provider Dentist’s office, ruining all medical records. When Provider Dentist was audited, the government did not accept the whole “there was a hurricane” excuse. Dentist was liable for sever penalties and recoupments.

Fast forward to 2017 and EHR – Think a mass computer shutdown won’t happen? Just ask Delta about its August 2016 computer shutdown that took four days and cancelled over 2000 flights. Or Medstar Health, which operates 10 hospitals and more than 250 outpatient facilities, when in March 2016, a computer virus shut down its emails and…you guessed it…its EHR database.

So, what’s in YOUR contract?