Category Archives: Federal Law

A Medicare Mistake: Your Missing Contract

-written by Todd Yoho, my paralegal, who has worked closely with me for over a decade. He knows more about Medicare and Medicaid than he probably cares to, but no one could contest that he doesn’t know his stuff!

There is a film almost everyone in the legal field has seen at least once. A comedic drama from 1973 titled, The Paper Chase. It follows the journey of a first year law student at Harvard Law School, and his particular frustrations with his Contracts course and professor. Contracts are one of the first things a law student studies, and some attorneys spend their career reviewing, drafting, revising, and negotiating contracts. They are that important.

In the health care, provider world, contracts are the lifeblood of your company. Contracts are how you secure work, ensure rates for revenue, and contain vital information should someone act contrary to the contract. If you have a dispute with an entity, your first act should be to consult an attorney and provide them with a copy of your contract. There should be a section about dispute resolution, which you should carefully scrutinize before signing any contract. It may be mandatory arbitration, it may stipulate a particular venue, or it may cite specific rules and statutes that, if you are not an attorney, may read like obtuse, dense, “word salad” put together by people who do not have to live and operate under the very laws they enact.

But, what if you don’t have a copy of your contract? You signed it years ago, your business has moved several times, or it just disappeared in the hectic daily life of daily operations. Your recourse is that you have to ask the very entity you have a dispute with to provide you with a copy. We’ve seen providers in situations like this, and sometimes the other entity complies immediately. Other times they say it will take 30 days, or 60 days, and you are already on your heels. Without a copy of that contract, you and your attorney may not know what your first step towards resolution will be. Worse if you are on a time limit you don’t know exists.

So, what do you do to avoid this kind of situation? You need to have a document retention policy. Know how long you are required to keep documents, Create an important document archive in a secure location that you update every time you execute a business related document. And make a copy to be kept in a separate, secure location. Then make another copy. It used to be this could be a notebook, a folder, or a file box in your CEO’s office, manager’s office, or with another person trusted with corporate responsibility. A copy could be kept at the CEO’s home in a locked file cabinet. And it still could be. There’s nothing wrong with keeping a hard copy archive, but this is the digital era.

Because we are in the digital era, you should absolutely keep your archive backed up to the cloud. Cloud data services can be cheap, and will pay enormous dividends if you suffer a catastrophic document loss. But, you have to preserve them first. Don’t let them get misplaced. Much like your important family documents, your important business documents are vital pieces of information. You may not need them every day, but the day you do need them, you want to have them quickly and easily available. They are that important. You don’t want to find yourself at an inopportune moment chasing paper.  

Some helpful links include the following:

https://www.uschamber.com/co/start/strategy/how-long-to-keep-business-document

https://www.uschamber.com/co/run/technology/cloud-storage-security

Knicole here. Sorry for the duplicative links. I don’t know how to delete them.

Post-COVID Medicare/caid Rules Matter!

How many times have we panelists talked about COVID and COVID exceptions to the regulatory rules? How many times have we warned providers that the exceptions will expire at the end of public health emergency (“PHE”)? Well, it’s coming. The COVID PHE is still in effect for America, but some States have lifted their PHE status. NC’s state of emergency expired August 15, 2022. In Montana, the state of emergency ended June 30, 2021.

What does that mean? When America’s PHE expires, so does also all the exceptions. When your particular State’s PHE ends, so do the PHE exceptions your particular State allowed. This is imperative to ALL Medicare and Medicaid audits by whatever alphabet soup is knocking on your door. As well you know, auditors don’t always get it right. Add in confusion due to COVID exceptions…which apply in which State and which expired?

 Last week, CMS released fact sheets summarizing the current status of Medicare and Medicaid COVID waivers and exceptions by provider type. The fact sheets include information about which waivers and flexibilities have already been terminated, have been made permanent or will end at the end of the COVID-19 public health emergency. Unless specifically stated, all exceptions expire at the end of PHE, which is in the process of winding down.

 I decided to review a fact sheet to determine how useful it was. I chose for provider type – hospitals. The fact sheet is entitled, “Hospitals and CAH (including swing beds, DPUs), ASCs and CMHCs.” It is 28 pages. The fact sheets are must reads for all providers. When you play chess the rules matter. When you accept Medicare and/or Medicaid, the rules matter. And these fact sheets are the rules.

The fact sheets cover telehealth and reimbursement rates. The hospital fact sheet covers hospitals without walls, off-site patient screening, paperwork requirements, physical environment requirements, which waivers will or will not expire at the end of PHE, and much more. I would say these fact sheets, for whichever type of provider you are – are mandatory reads. The fact sheets may not be absolutely encompassing, but they are summaries for you, all in one spot, organized for ease of reading. Thank you, CMS, for gathering this info and putting it all in one spot.

The Importance of the Differences in SMRCs, RACs, and QIOs

The Centers for Medicare & Medicaid Services (“CMS”) has modified the additional documentation request (“ADR”) limits for the Medicare Fee-for-Service Recovery Audit Contractor (“RAC”) program for suppliers. Yet, one of our listeners informed me that CMS has found a “work around” from the RAC ADR limits. She said, “There is the nationwide Supplemental Medical Review Contractor (“SMRC”) audits and now nationwide Quality Improvement Organizations (“QIO”) contract audits. These contracts came about after the Congressional limits on number of audits by the RAC.” Dr. Hirsh retorted, “But SMRC and QIO are not paid contingency fee. So, they are “different” audits. RACs are evil; SMRC and QIO have a few redeeming qualities.” I completely agree with Dr. Hirsh. But her point is well taken – SMRCs and QIOs follow different rules than RACs, so of course the SMRCs and QIOs have distinct ADR limits.

This is similar to the lookback periods. The lookback period varies depending on the acronym: RAC, MAC, or UPIC. RACs’ lookback period is 3 years, yet other acronyms get longer periods. I think what Dr. Hirsh is saying is right, because RACs are paid by contingency instead of a contracted rate, we have to limit the RACs authority because they are already incentivized the find problems., plus they are allowed to extrapolate. The RACs already have too much leash.

So, what are the RAC ADR limits?

Well, interestingly they just changed in April 2022. These limits will be set by CMS on a regular basis to establish the maximum number of medical records that may be requested by a RAC, per 45-day period. Each limit will be based on a given supplier’s volume of Medicare claims paid within a previous 12-month period, in a particular Healthcare Common Procedure Coding System (HCPCS) policy group. The policy groups are available on the pricing, coding analysis, and coding (PDAC), website. Limits will be based on the supplier’s Tax Identification Number (TIN). Limits will be set at 10% of all paid claims, by policy group, paid within a previous 12-month period, divided into eight periods (45 days). Although a RAC may go more than 45 days between record requests, in no case shall a RAC make requests more frequently than every 45 days. Limits are based on paid claims, irrespective of individual lines, although credit/replacement pairs shall be considered a single claim.

I wanted to go into the SMRCs and QIOs’ ADR limits to see whether they are are following THEIR rules, but I’m out of time for today. I’ll research the SMRCs and QIOs ADR limits for next week and I will have an answer for you.

OIG Audited CMS, and CMS Failed!

Apparently, CMS also must undergo audits and it did, but I am not sure I believe the results. But that would be par for the course; I generally don’t find any audit results to be accurate. OIG audited CMS. OIG tried to verify that CMS actually collected all the funds from alleged Medicare overpayments. According to the audit, OIG was able to verify that verify that CMS had collected $120 million of the $498 million in overpayments. CMS told auditors that it has collected $272 million but auditors said the agency failed to properly document the recovery of $152 million.

            Without question, when there is a Medicare alleged overpayment and the provider appeals, you have 5 levels of appeal. The first two levels, redetermination and reconsideration, are basically rubber stamp approval of the original decision. But after the 2nd level, rubber stamp and before you go to the third level, recoupment begins of the alleged amount owed, even though you haven’t completed litigation AND you may receive a decision at the third level that the money is not owed. Nonetheless, the recoupment begins.

            In my experience, I have never had an instance that CMS forgot to prematurely recoup. I’m sure if there were instances of CMS forgetting to prematurely recoup the provider were ecstatic. Elated. But they were also probably nervous as heck, because we all know that, eventually, the government gets its money.

            In fact, one of the recommendations from CMS’ audit, was that OIG suggested that CMS revise 42 CFR §405.980, which is the federal regulation that allows for reopening initial determinations, redeterminations, reconsiderations, decisions, and reviews. The regulation already allows QICs, ALJs, the contractor – anyone who makes decisions about Medicare audits – the ability to reopen a decision already made. There are time frames for doing so.

            For example, “A party may request that a contractor reopen its initial determination or redetermination within 1 year from the date of the initial determination or redetermination for any reason.” 42 CFR 405.980(c)(1). Although I’ve never understood this section. Why would a party request its audit to be reopened instead of just appealing to the next level? I doubt reopening an initial determination would yield better results. But really the purpose of §405.980 is that the government can choose to reopen a decision and, later on, after you think you won your case and owe nothing, this regulation allows them to change their mind.

            This just goes to show you, the laws are written in favor of the government. It truly is a David and Goliath battle.

Senators Question RAC Audits!

I have presented on RACMonitor, I think, for 3 years. I’d have to ask Chuck Buck to be exact. Over the last three years, I have tried my best to get the message out – RAC Auditors do not know what they are doing. Always appeal the decisions. – I feel like on my blog and on RACMonitor I have screamed this message until I was blue in the face.

Apparently, a couple Senators have taken notice. Or their constituents complained enough. Senators Tim Scott and Rick Scott drafted a letter to the Comptroller of America. A comptroller is a “controller” of financial affairs for the Country. The comptroller is the police of our tax dollars.

A few months ago, Senators Tim and Rick Scott wrote the U.S. Comptroller and complained about RAC auditors.

It was a letter that was short and sweet. It asked three questions.

It asked:

  1. How have states used the Medicaid RAC program to address strategic program integrity needs, including audits of managed care, and what are the lessons learned?
  2. What steps do the states and the Centers for Medicare & Medicaid Services (CMS) take to coordinate state Medicaid RAC program audits and other program integrity efforts? This includes existing Medicaid integrity programs such as the Unified Program Integrity Contractors, Payment Error Rate Measurement program, state auditors and Medicaid Fraud Control Units.
  3. How do states and CMS oversee the Medicaid RAC program and what mechanisms are in place to appropriately refer suspected cases of fraud?

As for the first question, RACs do address strategic PI needs – the very reason for their existence is to detect supposed fraud, waste, and abuse (“FWA”) by Medicaid providers. I’d like to hear the Comptroller’s answer.

As for the second question, they asked whether the States and CMS coordinate State Medicaid RAC audits. I don’t really care if the States and CMS coordinate State Medicaid RAC audits. So, I don’t care whether I hear the Comptroller’s answer to this.

The third question – “how do States and CMS oversee the Medicaid RAC program and what mechanisms are in place to detect FWA by Medicaid providers?” –  I want to know that answer! I can tell the Comptroller the answer. The RAC Auditors are not supervised or overseen. If they were, they would audit differently; not try to find errors in every single audit conducted.

Maybe it’s time to get our Senators involved. While we’re at it, let’s talk about the Medicare provider appeal process, which is broken.

A New Associate Joins Practus’ Health Care Team: Ryan Hargrave!!

Attorney Ryan Hargrave joined the Practus Health Care Litigation team on June 1, 2022.  Ryan comes from a career of litigation in the State of North Carolina.  He began his career in 2016 as a Prosecutor for the State of North Carolina, Guilford County.  There he gained valuable experience from which he used as he moved to defending clients.  He served as the Lead Trial Attorney at Triad Legal Group before joining Graystar Legal as the Senior Associate Attorney.  

Ryan obtained his undergraduate degree at Presbyterian College in Clinton, SC., where he received a B.A. in Political Science and a minor in Biology.  Ryan has always had a keen interest in health care which has followed him throughout his career.  He is locally known as the “Drug Lawyer” for his focus in the defense of drug-related crimes.  He has a reputable proficiency in Cannabis Law, Criminal Law, and Civil Law across State and Federal Courts.  Ryan has extensive trial experience that he brings to the Health Care Litigation team at Practus.  

Ryan lives in North Carolina with his family, spending his time working out, making financial investments, and beginning his non-profit business, “Colored Money”.  His non-profit will focus on teaching young boys and girls the value of money as a vehicle to achieve wealth, making smart investments, and how to achieve financial freedom.  He is a big Georgia football fan and even has an English Bulldog that could serve as the team’s mascot.

Note from me:

I expect Ryan to dovetail and expand my Medicare and Medicaid regulatory compliance practice because his litigation experience will directly help me in litigation natters, but, also, his criminal litigation experience will also allow us to represent more White Collar Crime clients, including Medicare and Medicaid fraud accusations, False Claims Act, Stark, and Anti-Kickback alleged violations.

We are happy that he is here!

CMS Rulings Are Not Law; Yet Followed By ALJs

Lack of medical necessity is one of the leading reasons for denials during RAC, MAC, TPE, and UPIC audits. However, case law dictates that the treating physician should be allowed deference with the decision that medical necessity exists because the Medicare and/or Medicaid auditor never had the privilege to see the recipient.

However, recent ALJ decisions have gone against case law. How is that possible? CMS creates “Rules” – I say that in air quotes – these Rules are not promulgated, but are binding on anyone under CMS’ umbrella. Guess what? That includes the ALJs for Medicare appeals. As an example, the “treating physician” Rule is law based on case law. Juxtapose, CMS’ Ruling 93-l. It states that no presumptive weight should be assigned to a treating physician’s medical opinion in determining the medical necessity of inpatient hospital and skilled nursing facility services. The Ruling adds parenthetically that the Ruling does not “by omission or implication” endorse the application of the treating physician rule to services not addressed in the Ruling. So, we get a decision from an ALJ that dismisses the treating physician rule.

The ALJ decision actually said: Accordingly, I find that the treating physician rule, standing alone, provides no basis for coverage.

This ALJ went against the law but followed CMS Rulings.

CMS Rulings, however, are not binding. CMS Rulings aren’t even law. Yet the CMS Rulings, according to CMS, are binding onto the entities that are under the CMS umbrella. This means that the Medicare appeals process, which include the redeterminations, the reconsiderations, the ALJ decisions, and the Medicare Appeals Councils’ decisions are all dictated by these non-law, CMS Rulings, which fly in the face of actual law. ALJs uphold extrapolations based on CMS Rulings because they have to. But once you get to a federal district court judge, who are not bound by CMS, non-law, rulings, you get a real Judge’s decision, and most extrapolations are thrown out if the error rate is under 50%.

Basically, if you are a Medicare provider, you have to jump through the hoops of 4 levels of appeals that is not dictated by law, but by an administration that is rewarded for taking money from providers on the pretense of FWA. Most providers do not have the financial means to make it to the 5th level of appeal. So, CMS wins by default.

Folks, create a legal fund for your provider entity. You have got to appeal and be able to afford it. That is the only way that we can change the disproportionately unfair Medicare appeal process that providers must endure now.

CMS Rulings Can Devastate a Provider, But Should It?

If you could light a torch to a Molotov Cocktail and a bunch of newspapers, you could not make a bigger explosion in my head than a recent Decision from a Medicare administrative law judge (“ALJ”). The extrapolation was upheld, despite an expert statistician citing its shortcomings, based on a CMS Ruling, which is neither law nor precedent. The Decision reminded me of the new Firestarter movie because everything is up in flames. Drew Barrymore would be proud.

I find it very lazy of the government to rely on sampling and extrapolations, especially in light that no witness testifies to its accuracy.

Because this ALJ relied so heavily on CMS Rulings, I wanted to do a little detective work as to whether CMS Rulings are binding or even law. First, I logged onto Westlaw to search for “CMS Ruling” in any case in any jurisdiction in America. Nothing. Not one case ever mentioned “CMS Ruling.” Ever. (Nor did my law school).

What Is a CMS Ruling?

A CMS Ruling is defined as, “decisions of the Administrator that serve as precedent final opinions and orders and statements of policy and interpretation. They provide clarification and interpretation of complex or ambiguous provisions of the law or regulations relating to Medicare, Medicaid, Utilization and Quality Control Peer Review, private health insurance, and related matters.”

But Are CMS Rulings Law?

No. CMS Rulings are not law. CMS Rulings are not binding on district court judges because district court judges are not part of HHS or CMS. However, the Medicare ALJs are considered part of HHS and CMS; thus the CMS Rulings are binding on Medicare ALJs.

This creates a dichotomy between the “real law” and agency rules. When you read CMS Ruling 86-1, it reads as if there two parties with oppositive views, both presented their arguments, and the Administrator makes a ruling. But the Administrator is not a Judge, but the Ruling reads like a court case. CMS Rulings are not binding on:

  1. The Supreme Court
  2. Appellate Courts
  3. The real world outside of CMS
  4. District Courts
  5. The Department of Transportation
  6. Civil Jurisprudence
  7. The Department of Education
  8. Etc. – You get the point.

So why are Medicare providers held subject to penalties based on CMS Rulings, when after the providers appeal their case to district court, that “rule” that was subjected against them (saying they owe $7 million) is rendered moot? Can we say – not fair, equitable, Constitutional, and flies in the face of due process?

The future does not look bright for providers going forward in defending overzealous, erroneous, and misplaced audits. These audits aren’t even backed up by witnesses – seriously, at the ALJ Medicare appeals, there is no statistician testifying to verify the results. Yet some of the ALJs are still upholding these audits.

In the “court case,” which resulted in CMS Ruling 86-1, the provider argued that:

  1. There is no legal authority in the Medicare statute or regulations for HCFA or its intermediaries to determine overpayments by projecting the findings of a sample of specific claims onto a universe of unspecified beneficiaries and claims.
  2. Section 1879 of the Social Security Act, 42 U.S.C. 1395pp, contemplates that medical necessity and custodial care coverage determinations will be made only by means of a case-by-case review.
  3. When sampling is used, providers are not able to bill individual beneficiaries not in the sample group for the services determined to be noncovered.
  4. Use of a sampling procedure violates the rights of providers to appeal adverse determinations.
  5. The use of sampling and extrapolation to determine overpayments deprives the provider of due process.

The CMS Ruling 86-1 was decided by Mr. Henry R. Desmarais, Acting Administrator, Health Care Financing Administration in 1986.

Think it should be upheld?

Medicare Investigations for False Claims Act Violations

Whenever you receive correspondence with letterhead from the Department of Justice, Attorney General’s office, you know it’s important and you better take note.

DOJ, AG

A Civil or Criminal Investigative Demand is serious. Getting any communication from the U.S. Department of Justice can be a bit unnerving. That’s particularly true for Medicare and Medicaid providers receiving a Civil Investigative Demand (“CID”) for documents and testimony.  

A CID is a tool used by the Justice Department (“DOJ”) to investigate potential violations of the False Claims Act (“FCA”). See blog. The DOJ can issue a CID whenever the DOJ has “reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation.” The bottom line is that the DOJ uses CIDs to obtain documents and identify potential witnesses so they can bring FCA suits against the recipient or others.

What is the False Claims Act anyway?

It’s a broad statute that punishes many things, one of which is making false statements to the government in connection with a claim for payment from the government. The DOJ often uses CIDs to investigate medical providers who seek payment from Medicare and Medicaid. 

Just because the Investigative Demand is labeled “civil” does not mean that the investigation is only civil; it could take a turn towards criminal. In other words, something sparked the DOJ’s attention, but, perhaps there were no allegations of criminal action, the investigation could start and the investigator could uncover something they consider criminal. An investigation earmarked as civil can turn criminal with the uncovering of one document.

On the other hand, the investigator could review all the documents and conclude that there is not even a civil violation. Very rarely, do the investigators contact you to tell you that the investigation is over and no violation was found. Most of the time, you are put on notice that you are being investigated, then hear nothing from the investigator in perpetuity.

Recently, I had an investigator inform me that the review of. my client was complete, and the file was being closed. But that’s the only time in 22 years that I was informed that nothing noncompliant was found. Usually, time just passes.

If you are found to have violated the FCA, the government can triple the amount of penalties, so the numbers get very high very quickly.

The Justice Department obtained more than $5.6 billion in settlements and judgments from civil cases involving fraud and false claims against the government in the fiscal year ending Sept. 30, 2021. This is the second largest annual total in False Claims Act history, and the largest since 2014. Settlement and judgments since 1986, when Congress substantially strengthened the civil False Claims Act, now total more than $70 billion.

A much lesser known provision of the FCA is the reverse one. Not to blow everyones’ minds, but there is also a “reverse false claims” provision of the False Claims Act.  The reverse false claims provision permits the government or relators to pursue defendants who are alleged to have hidden or reduced an obligation to pay the government through false statements, or who have violated the 60-day payment rule’s obligation to return “identified overpayments.”   These claims typically have been raised in the context of cost reporting, Medicare Part C, or related to alleged failures to fulfill obligations under the 60-day payment rule.  The government and relators have increasingly relied on the reverse false claims provision to support stand-alone claims or have used it in conjunction with affirmative false claims.  However, because the reverse false claims provision is very lightly used compared to affirmative false claims provisions, there is a dearth of case law defining it or exploring its parameters.   The case law that does exist is primarily from district courts and, as the survey of case law contained herein illustrates, there is little guidance from the Circuit Courts or the U.S. Supreme Court.

Intent or deliberate disregard is required to prove the false claims act – reverse and regular.

Failure to respond to a CID completely could warrant criminal contempt. This is especially important to note, as civil investigate demand sounds much less important than a subpoena. But a CID is, in essence, a subpoena. Immediately, implement a “legal hold” upon receipt of the CID, and don’t forget to avoid producing privileged documents.

After the investigation is complete, if there are violations of the FCA uncovered, you will receive correspondence that states in “all-caps” and bold font:

Rule 408 FOR SETTLEMENT PURPOSES ONLY 

FRE 408 prohibits the use of settlement negotiations as evidence. After reviewing the offer, get with your legal counsel to discuss next steps.

DME Providers Get Repose in RAC Audits

The Centers for Medicare & Medicaid Services (CMS) announced that they have modified the additional documentation request (ADR) limits for the Medicare Fee-for-Service Recovery Audit Contractor (RAC) program for suppliers. ADRs are the about of documents that a RAC auditor can demand from you. This is a win for DME providers.

Currently, the RAC’s methodology is based on a total claim number by NPI without consideration for the number of claims in a particular product category. This means that suppliers can receive large volumes of RAC audits for a product category in which they do minimal business.

These new limits will be set by CMS on a regular basis to establish the maximum number of medical records that may be requested by a RAC, per 45-day period. These changes will be effective beginning April 1, 2022

Each limit will be based on a given supplier’s volume of Medicare claims paid within a previous 12-month period, in a particular HCPCS policy group (The policy groups are available on the PDAC website). Limits will be based on the supplier’s Tax Identification Number (TIN). Limits will be set at 10% of all paid claims, by policy group, paid within a previous 12-month period, divided into eight periods (45 days). If you get more than the allowed ADRs, call them out. These limits are created to lessen the burden on providers.

Although a RAC may go more than 45 days between record requests, in no case shall a RAC make requests more frequently than every 45 days. Limits are based on paid claims, irrespective of individual lines, although credit/replacement pairs shall be considered a single claim.

            For example:

  • Supplier A had 1,253 claims paid with HCPCS codes in the “surgical dressings” policy group, within a previous 12-month period. The supplier’s ADR limit would be (1,253 * 0.1) / 8 = 15.6625, or 16 ADRs, per 45 days, for claims with HCPCS codes in the “surgical dressings” policy group.
  • Supplier B had 955 claims paid with HCPCS codes in the “glucose monitor” policy group, within a previous 12-month period. The supplier’s ADR limit would be (955 * 0.1) / 8 = 11.9375 or 12 ADRs, per 45 days, for claims with HCPCS codes in the “glucose monitor” policy group.

CMS reserves the right to give a RAC permission to exceed these ADR limits. But that would be in instances of potential fraud.