Category Archives: Final Rulings

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.

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.

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?

Increased Medicare Reimbursements and Nursing Home Audits

HEAR YE, HEAR YE: Medicare reimbursement rate increase!!

On April 27th, CMS proposed a rule to increase Medicare fee-for-service payment rates and policies for inpatient hospitals and long-term care hospitals for fiscal year (FY) 2022. The proposed rule will update Medicare payment policies and rates for operating and capital‑related costs of acute care hospitals and for certain hospitals. The proposed increase in operating payment rates for general acute care hospitals paid under the IPPS that successfully participate in the Hospital Inpatient Quality Reporting (“IQR”) Program and are meaningful electronic health record (“EHR”) users is approximately 2.8%. This reflects the projected hospital market basket update of 2.5% reduced by a 0.2 percentage point productivity adjustment and increased by a 0.5 percentage point adjustment required by legislation.

Secondly, a sample audit of nursing homes conducted by CMS will lead to more scrutiny of nursing homes and long-term care facilities. The sample audit showed that two-thirds of Massachusetts’s nursing homes that receive federal Medicaid and Medicare funding are lagging in required annual inspections — and MA is demonstrative of the country.

237 nursing homes and long-term care facilities in the state, or 63.7% of the total, are behind on their federal health and safety inspections by at least 18 months. The national average is 51.3%.

We cannot blame COVID for everything. Those inspections lagged even before the pandemic, the data shows, but ground to a halt last year when the federal agency discontinued in-person visits to nursing homes as they were closed off to the public to help prevent spread of the COVID.

Lastly, on April 29, 2021, CMS issued a final rule to extend and make changes to the Comprehensive Care for Joint Replacement (“CJR”) model. You’ve probably heard Dr. Ron Hirsch reporting on the joint replacement model on RACMonitor. The CJR model aims to pay providers based on total episodes of care for hip and knee replacements to curb costs and improve quality. Hospitals in the model that meet spending and quality thresholds can get an additional Medicare payment. But hospitals that don’t meet targets must repay Medicare for a portion of their spending.

This final rule revises the episode definition, payment methodology, and makes other modifications to the model to adapt the CJR model to changes in practice and fee-for-service payment occurring over the past several years. The changes in practice and payment are expected to limit or reverse early evaluation results demonstrating the CJR model’s ability to achieve savings while sustaining quality. This rule provides the time needed to test modifications to the model by extending the CJR model for an additional three performance years through December 31, 2024 for certain participant hospitals.

The CJR model has proven successful according to CMS. It began in 2016. Hospitals had a “statistically significant decrease” in average payments for all hip and knee replacements relative to a control group. $61.6 million (a savings of 2% of the baseline)

RAC Report: PET Scans, Helicopter Transportation, and Hospice, Oh My!

The RACs are on attack! The “COVID Pause Button” on RAC audits has been lifted. The COVID Pause Button has been lifted since August 2020. But never have I ever seen CMS spew out so many new RAC topics in one month of a new year. Happy 2021.

Recovery audit contractors (“RACs”) will soon be auditing positron emission tomography (PET) scans for initial treatment strategy in oncologic conditions for compliance with medical necessity and documentation requirements.

Positron emission tomography (“PET”) scans detect early signs of cancer, heart disease and brain disorders. An injectable radioactive tracer detects diseased cells. A combination PET-CT scan produces 3D images for a more accurate diagnosis.

According to CMS’ RAC audit topics, “(PET) for Initial Treatment Strategy in Oncologic Conditions: Medical Necessity and Documentation Requirements,” will be reviewed as of January 5, 2021. The PET scan audits will be for outpatient hospital and professional service reviews. CMS added additional 2021 audit targets to the approved list:

  1. Air Ambulance: Medical Necessity and Documentation Requirements,[1]. This complex review will be examining rotatory wing (helicopter) aircraft claims to determine if air ambulance transport was reasonable and medically necessary as well as whether or not documentation requirements have been met.
  2. Hospice Continuous Home Care: Medical Necessity and Documentation Requirements,[2] and
  3. Ambulance Transport Subject to SNF Consolidated Billing.[3]

Upcoming HHS secretary Xavier Becerra plans to get his new tenure underway quickly.

In False Claims Act (“FCA”) news, Medicare audits of P-Stim have ramped up across the country. A Spinal Clinic in Texas agreed to pay $330,898 to settle FCA allegations for allegedly billing Medicare improperly for electro-acupuncture device neurostimulators. CMS claims that “Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.”

Finally, is your staff getting medical records to consumers requesting their records quickly enough? Right to access to health records is yet another potential risk for all providers, especially hospitals due to their size. A hospital system agreed to pay $200,000 to settle potential violations of the HIPAA Privacy Rule’s right of access standard. This is HHS Office for Civil Rights’ 14th settlement under its Right of Access Initiative. The first person alleged that she requested medical records in December 2017 and did not receive them until May 2018. In the second complaint, the person asked for an electronic copy of his records in September 2019, and they were not sent until February 2020.

Beware of slow document production as slow document production can lead to penalties. And be on the lookout for the next RAC Report.

Remember, never accept the results of a Medicare or Medicaid audit. It is always too high. Believe me, after 21 years of my legal practice, I have yet to agree with the findings if a Tentative notice of Overpayment by any governmental contracted auditor, whether it is PCG, NGS, the MACs, MCOs, or Program Integrity – in any of our 50 States. That is quite a statement about the general, quality of work of auditors. Remember Teambuilders? How did $12 million become $896.35? See blog.

1  CMS, “0200-Air Ambulance: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/35Jx1co.
2 CMS, “0201-Hospice Continuous Home Care: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/3oRUyiY.
3 CMS, “0202- Ambulance Transport Subject to SNF Consolidated Billing,” proposed RAC topic, January 5, 2021, http://go.cms.gov/2LOMEbw.

CMS Revises and Details Extrapolation Rules

Effective Jan. 2, 2019, the Centers for Medicare & Medicaid Services (CMS) radically changed its guidance on the use of extrapolation in audits by Recovery Audit Contractors (RACs), Medicare Administrative Contractors (MACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SMRC).

Extrapolation is a veritable tsunami in Medicare/Medicaid audits. The auditor collects a small sample of claims to review for compliance, then determines the “error rate” of the sample. For example, if 500 claims are reviewed and one is found to be noncompliant for a total of $100, then the error rate is set at 20 percent. That error rate is applied to the universe, which is generally a three-year time period. It is assumed that the random sample is indicative of all your billings, regardless of whether you changed your billing system during that time period or maybe hired a different biller. In order to extrapolate an error rate, contractors must use a “statistically valid random sample” and then apply that error rate on a broader universe of claims, using “statistically valid methods.”

With extrapolated results, auditors allege millions of dollars of overpayments against healthcare providers – sometimes a sum of more than the provider even made during the relevant time period. It is an overwhelming impact that can put a provider and its company out of business.

Prior to this recent change to extrapolation procedure, the Program Integrity Manual (PIM) offered little guidance regarding the proper method for extrapolation.

Prior to 2019, CMS offered broad strokes with few details. Its guidance was limited to generally identifying the steps contractors should take: “a) selecting the provider or supplier; b) selecting the period to be reviewed; c) defining the universe, the sampling unit, and the sampling frame; d) designing the sampling plan and selecting the sample; e) reviewing each of the sampling units and determining if there was an overpayment or an underpayment; and, as applicable, f) estimating the overpayment.”

Well, Change Request 10067 overhauled extrapolation in a huge way.

The first modification to the extrapolation rules is that the PIM now dictates when extrapolation should be used.

Under the new guidance, a contractor “shall use statistical sampling when it has been determined that a sustained or high level of payment error exists. The use of statistical sampling may be used after a documented educational intervention has failed to correct the payment error.” This guidance now creates a three-tier structure:

  1. Extrapolation shall be used when a sustained or high level of payment error exists.
  2. Extrapolation may be used after documented educational intervention (such as in the Targeted Probe-and-Educate (TPE) program).
  3. It follows that extrapolation should not be used if there is not a sustained or high level of payment error or evidence that documented educational intervention has failed.

“High level of payment error” is defined as 50 percent or greater. The PIM also states that the contractor may review the provider’s past noncompliance for the same or similar billing issues or a historical pattern of noncompliant billing practice. This is critical because so many times providers simply pay the alleged overpayment amount if the amount is low or moderate in order to avoid costly litigation. Now, those past times that you simply paid the alleged amounts will be held against you.

Another monumental modification to RAC audits is that the RAC auditor now must receive authorization from CMS to go forward in recovering from the provider if the alleged overpayment exceeds $500,000 or is an amount that is greater than 25 percent of the provider’s Medicare revenue received within the previous 12 months.

The identification of the claims universe was also redefined. Even CMS admitted in the change request that, on occasion, “the universe may include items that are not utilized in the construction of the sample frame. This can happen for a number of reasons, including, but not limited to: a) some claims/claim lines are discovered to have been subject to a prior review; b) the definitions of the sample unit necessitate eliminating some claims/claim lines; or c) some claims/claim lines are attributed to sample units for which there was no payment.”

How many of you have been involved in an alleged overpayment in which the auditor misplaced or lost documents? I know I have. The new rule also states that the auditors must be able to recreate the sample and maintain all documentation pertinent to the calculation of an alleged overpayment.

High-volume providers should face a lower risk of extrapolation if their audited error rate is less than 50 percent and they do not have a history of noncompliance for the same or similar billing issues, or a historical pattern of noncompliant billing practice.

Warning: Auditors Will Target SNF Patient Conditions, Not Services and Time Rendered

Oct. 1, 2019 marks the beginning of a new era of billing for skilled nursing facilities (SNFs).

Say goodbye to RUG-IV, and hello to the Patient-Driven Payment Model (PDPM).

This is a daunting task, not for the faint of heart. Under PDPM, reimbursement for Medicare Part A patients in SNFs will be driven by patient condition, rather than by therapy minutes provided. Documentation is crucial to a successful Recovery Audit Contractor (RAC) audit.

In the past, therapy documentation has been the focus of RAC audits. Now, nursing documentation is front and center. Do not try to maximize case mix index (CMI). But remember, certain documentation can easily lead to higher reimbursement. For example, if you document when a patient is morbidly obese, suffering from diabetes, and taking intravenous medication, this can lead to three times the reimbursement over the first three days. This article will explore the intricacies of RAC audits and how to maximize reimbursement while successfully maneuvering through the process.

Here is the million-dollar question: how will PDPM affect your business?

The answer is four-fold, for the purposes of this article, although this list is not exhaustive.

  1. Managing care: Unlike RUG-IV, which incentivizes ultra-high volumes of therapy to capture maximum payment, PDPM requires you to carefully manage how you deliver services in order to provide the right level of care for each patient. This begs the question of whether you’re getting paid to over-deliver services (or practice “defensive medicine”), or you’re getting audits and recoupments for under-delivering due to poor patient outcomes. For this reason, it can seem like you are getting pulled in two directions.
  2. Financial: PDPM is designed to be budget-neutral. Your reimbursements will decrease. SNFs will be able to offset the loss in therapy reimbursement with higher reimbursement for services already being provided.
  3. Staffing: There is less demand for therapists in a SNF setting. But you will be able to retain the best therapy sources.
  4. Billing: Under PDPM, you will bill using the Health Insurance Prospective Payment System (HIPPS) code that is generated from assessments with ARD. You will still be using a five-digit code, as you did with RUG-IV. But the characters signify different things. For example, under RUG-IV, the first three characters represented the patient’s RUG classification, and the last two were an assessment indicator. With PDPM, the first character represents the patient’s physical therapy (PT) and occupational therapy (OT) component. The second is the patient’s speech language therapy (SLP) component. The third is the nursing component classification. The fourth is the NTA component classification, while the fifth is an AI code.

The upshot to this is that different clinical categories can result in significant reimbursement differences. For example, consider the major joint replacement or spinal surgery clinical category. That clinical category is a major medical service, which can translate to a $42-a-day increase in reimbursement. For a 20-day stay, that clinical category would increase reimbursement by $840. You want to pick up on this type of surgery.

I received a question after a recent program segment asking whether swing beds will be affected by PDPM. In most hospitals, the answer is yes. The exception is critical access hospitals (CAHs), which will remain cost-based for their swing beds.

Final Rule: “Accordingly, all non-CAH swing-bed rural hospitals have now come under the SNF PPS. Therefore, all rates and wage indexes outlined in earlier sections of this final rule for the SNF PPS also apply to all non-CAH swing- bed rural hospitals.”

The latest changes in the MDS for swing-bed rural hospitals appear on the SNF PPS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html

Programming Note:

Listen to healthcare attorney Knicole Emanuel every Monday on Monitor Monday, 10-10:30 a.m. EST.

Medicare “Site Neutral” Reimbursements Hit Hospitals Hard, But Is It Legal?

Shockingly, not all new rules that emerge from the Center for Medicare and Medicaid Services (CMS) are actually compliant with the law. Wait! What? How can CMS publish Final Rules that are not compliant with the law?

This was an eye-opening discovery as a “baby lawyer” back 20 years ago. The government can and does publish and create Rules that, sometimes, exceed its legal authority. Of course, the Agency must follow appropriate rule-making procedure and allow for a comment period (etc.), but CMS does not have to listen to the comments. Theoretically, CMS could publish a Final Rule mandating that all Medicare providers provide 50 hours of free services a year or that the reimbursement rate for all services is $1. Both of my examples violate multiple rules, regulations, and laws, but until an aggrieved party with standing files a lawsuit declaring the Final Rule to be invalid or Congress passes a law that renders the Rule moot, the Rule exists and can be enforced by CMS and its agents.

The Rule-change (the “Site-Neutrality Rule”), which became effective January 1, 2019, reduced Medicare reimbursements to hospitals with outpatient facilities. Medicare will pay hospitals that have outpatient facilities “off campus” at a lower rate — equivalent to what it pays independent physicians for clinic visits. This decrease in Medicare reimbursements hits hard for most hospitals across the country, but, especially, rural hospitals. For the past 10+ years, hospitals have built outpatient facilities to serve more patients, and been reimbursed a higher Medicare reimbursement rate than independent physicians because the services at the hospital’s outpatient facility were connected to an outpatient facility affiliated with a hospital. Now the Site-Neutrality Rule leaves many hospitals trying to catch their breaths after the metaphoric punch to the belly. On the other hand, independent physicians claim that they have been providing the exact, same services as the hospital-affiliated outpatient facilities for years, but have received a lower reimbursement rate. I have no opinion (I do, but my opinion is not the topic in this blog) as to whether physicians and hospitals should be reimbursed equally – this blog is not pro-physician or pro-hospital. Rather, this blog is “pro-holding CMS liable to render Rules that follow the law.” Whether the hospitals or the physicians were receiving a cut in reimbursement rates, I am in favor of the those cuts (and future cuts) abiding by the law. Interestingly, should the AHA win this case, it could set solid, helpful, legal precedent for all types of providers and all types of decreased Medicare/caid reimbursements going forward.

Because of the Site-Neutrality Rule, in 2019, hospitals’ reimbursements will drop approximately $380 million and $760 million in 2020, according to CMS.

Before CMS brags on a decrease in the Medicare budget due to a proposed or Final Rule, it should remember that there is budget neutrality requirement when it comes to Rules implemented by CMS. 42 US.C. § 1395l. Yet, here, for the Site-Neutrality Rule, according to articles and journals, CMS is boasting its Site-Neutrality Rule as saving millions upon millions of dollars for Medicare. Can we say “Budget Non-Neutrality?”

The American Hospital Association filed a lawsuit December 2018 claiming that CMS exceeded its authority by implementing the Final Rule for “site neutral” Medicare reimbursements for hospitals with outpatient facilities. The lawsuit requests an injunction to stop the decrease and an order to repay any funds withheld thus far.

The claim, which, I believe has merit, argues that the Site-Neutrality Rule exceeds CMS’s statutory authority under the Medicare Act because of the budget neutrality mandate, in part – there are other arguments, but, for the sake of this blog, I am concentrating on the budget neutrality requirement. In my humble opinion, the budget neutrality requirement is overlooked by many attorneys and providers when it comes to challenging cuts to Medicare or Medicaid reimbursement rates.

On March 22, 2019, CMS filed a Motion to Dismiss or in the alternative, a Cross Motion for Summary Judgment. On April 5, 2019, AHA (and the rest of the Plaintiffs) responded in opposition. On April 19, 2019, CMS responded to AHA’s response in opposition. The Judge has not ruled on the Motions, as of today, April 25, 2019.

Obviously, I will be keeping a close eye on the progress of this case going forward. In the meantime, more reductions in reimbursement rates are on the horizon…

Recently, CMS recently proposed three new rules that would further update the Medicare payment rates and quality reporting programs for hospices, skilled nursing facilities (SNFs), and inpatient psychiatric facilities.

Stay tuned.

New Revisions to the Additional Documentation Request (ADR) Process

The ADR rule went into effect Jan. 1, 2019. Original blog post published March 6, 2019, on RACMonitor.

The Centers for Medicare & Medicaid Services (CMS) has updated its criteria for additional document requests (ADRs). If your ADR “cycle” is less than 1, CMS will round it up to 1.

What is an ADR cycle?

When a claim is selected for medical review, an ADR is generated requesting medical documentation be submitted to ensure payment is appropriate. Documentation must be received by CGS (A Celerian Group Company)  within 45 calendar days for review and payment determination. Any selected and submitted claim can create an ADR. In other words, a provider is asked to prove that the service was rendered and that the billing was compliant.

It is imperative to understand that you, as the provider, check the Fiscal Intermediary Standard System (FISS) status/location S B6001. Providers are encouraged to use FISS Option 12 (Claim Inquiry) to check for ADRs at least once per week. You will not receive any other form of notification for an ADR.

To make matters even more confusing, there are two different types of ADRs: medical review (reason code 39700) and non-medical review (reason code 39701).

An ADR may be sent by CGS, Zone Program Integrity Contractors (ZPICs), Recovery Audit Contractors (RACs), Supplemental Medical Review Contractors (SMRCs), the Comprehensive Error Rate Testing (CERT) contractor, etc. When a claim is selected for review or when additional documentation is needed to complete the claim, an ADR letter is generated requesting that documentation and/or medical records be submitted.

The ADR process is essentially a type of prepayment review.

A baseline annual ADR limit is established for each provider based on the number of Medicare claims paid in the previous 12-month period that are associated with the provider’s six-digit CMS Certification Number (CCN) and the provider’s National Provider Identifier (NPI) number. Using the baseline annual ADR limit, an ADR cycle limit is also established.

After three 45-day ADR cycles, CMS will calculate (or recalculate) a provider’s denial rate, which will then be used to identify a provider’s corresponding “adjusted” ADR limit. Auditors may choose to either conduct reviews of a provider based on their adjusted ADR limit (with a shorter lookback period) or their baseline annual ADR limit (with a longer lookback period).

The baseline, annual ADR limit is one-half of one percent of the provider’s total number of paid Medicare service types for which the provider had reimbursed Medicare claims.

Effective Jan. 1, 2019, providers whose ADR cycle limit is less than 1, even though their annual ADR limit is greater than 1, will have their ADR cycle limit round up to 1 additional documentation request per 45 days, until their annual ADR limit has been reached.

For example, say Provider ABC billed and was paid for 400 Medicare claims in a previous 12-month period. The provider’s baseline annual ADR limit would be 400 multiplied by 0.005, which is two. The ADR cycle limit would be 2/8, which is less than one. Therefore, Provider ABC’s ADR cycle limit will be set at one additional documentation request per 45 days, until their annual ADR limit, which in this example is two, has been reached. In other words, Provider ABC can receive one additional documentation request for two of the eight ADR cycles, per year.

ADR letters are sent on a 45-day cycle. The baseline annual ADR limit is divided by eight to establish the ADR cycle limit, which is the maximum number of claims that can be included in a single 45-day period. Although auditors may go more than 45 days between record requests, in no case shall they make requests more frequently than every 45 days.

And that is the update on ADRs. Remember, the rule changed Jan. 1, 2019.