Category Archives: CMS
The federal 340B Drug Pricing Program allows qualifying hospitals and clinics that treat low-income and uninsured patients to buy outpatient prescription drugs at a discount of 25 percent to 50 percent. The program is intended to help safety-net health care providers stretch their financial resources to reach more financially vulnerable patients and deliver comprehensive services.
The 340B Drug Pricing Program has spiked in use. It has become more and more popular over the years.
In 2020, there were 8,100 provider sites (including both hospitals and pharmacies), but that number rose to 50,000 by 2020. New data released in August 2022 by the Health Resources and Services Administration suggest discounted purchases under the 340B program reached $44 billion in 2021, about 16% more than in 2020. Drug companies are concerned.
On November 30, 2022, the 340B Drug Pricing Program; Administrative Dispute Resolution Notice of Proposed Rulemaking (NPRM) was published in the Federal Register. Section 340B(d)(3) of the Public Health Service Act requires the establishment of an Administrative Dispute Resolution (ADR) process for certain disputes under the 340B Program. Under the statute, the ADR process is designed to resolve:
- Claims by covered entities that they have been overcharged for covered outpatient drugs by manufacturers; and
- Claims by manufacturers, after the manufacturer has conducted an audit of a covered entity, that a covered entity has violated the prohibition on diversion or duplicate discounts.
This NPRM proposes new requirements and more efficient procedures to make the 340B Program’s ADR process more accessible and efficient, including ensuring that ADR panels hearing disputes are comprised of subject matter experts on the 340B Program, and establishing an independent HRSA reconsideration process. The NPRM will be open for public comment through January 30, 2023. Please refer to the Federal Register (PDF – 315 KB) publication for instructions about how to submit comments.
The question is how does the new proposed rule mesh with the Inflation Reduction Act of 2022? If you recall, the Inflation Reduction Act of 2022 (IRA) allows Medicare to negotiate drug rates. It has been suggested that the following 10 medications will be the first 10 negotiated:
Does the IRA and 340B conflict? How can you negotiate prices of a drug if the drug is already discounted?
“On January 5, 2023, the Federal Trade Commission released a Notice of Proposed Rulemaking (NPRM) to prohibit employers from imposing noncompete clauses on workers. True to their name, noncompetes block people from working for a competing employer, or starting a competing business, after their employment ends. Evidence shows that noncompete clauses bind about one in five American workers, approximately 30 million people. By preventing workers across the labor force from pursuing better opportunities that offer higher pay or better working conditions, and by preventing employers from hiring qualified workers bound by these contracts, noncompetes hurt workers and harm competition.” Link.
Physician noncompete contracts are a common but sometimes contentious issue, as they have the potential to disrupt the physician-patient relationship and remove physicians — who are already in short supply — from the workforce.
Eliminating noncompete agreements will evolve health care.
The Commission invites the public to submit comments on this proposed rule. The FTC will review the comments and may make changes, in a final rule, based on the comments and on the FTC’s further analysis of this issue. Comments will be due 60 days after the Federal Register publishes the proposed rule. You have until Match 6th to comment.
Providers who contract with Medicare Advantage Organizations (“MAO”) need to know that even though the MAO is a private company, because it manages federal Medicare money, the Medicare regulations are applicable – and, possibly, not the contract that you were forced to sign. When any entity accepts the responsibility of getting tax dollars – a firehose of tax dollars, no less – prepaid – then that entity answers to all tax payers for their actions and that entity must follow the Medicare regulations.
Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by MAOs that must follow rules set by Medicare. Most Medicare Advantage Plans include drug coverage (Part D). Health care providers can contract to be in the plan’s network. MAOs include BCBS, Humana, Anthem, UnitedHealthcare, Cigna, and Aetna.
Just for an example, I pulled up the provider agreement for BCBS. Section 6.2 allows termination by either party with 60 days notice; this is the “termination at will” clause. Theoretically, BCBS or any MAO could terminate contracts with small providers and decide to contract only with larger providers. Or contract with only African-American providers. Or contract with only female-owned companies. Or contract with the providers that the CEO likes. I disagree with a termination at will clause that allows a company with so much Medicare money at its fingertips the authority to only contract with whom it wants or likes. In fact, I believe a termination at will clause violates the law.
The Courts are split on this issue. See blog.
42 CFR Section 422, et al, outlines the regulations for Medicare Advantage.
According to CMS, in order for a MAO to “Suspend, Terminate, or Not-renew Physician Contracts” specific requirements for an MA organization that operates a coordinated care plan or network MSA plan providing benefits through contracting physicians and that suspends, terminates, or non-renews a physician’s contract are as follows:
- The MA organization must give the affected physician written notice of the reasons for the action, including, if relevant, the standards and profiling data used to evaluate the physician and the numbers and mix of physicians needed by the MA organization.
- The MA organization must allow the physician to appeal the action, and give the physician written notice of his/her right to a hearing and the process and timing for requesting a hearing.
- The MA organization must ensure that the majority of the hearing panel members are peers of the affected physician.
42 CFR 422.202(c) and (d) and preamble of February 17, 1999, rule.
In sum, MAOs are required to provide appeal rights for any Medicare contract that is terminated. But, doesn’t that contradict with a “termination at will” clause?
Right now, CMS allows physicians to pick to follow the 1995 or 1997 guidelines for determining whether an evaluation and management (“e/m”) visit qualifies for a 99214 versus a 99213. The biggest difference between the two policies is that the 1995 guideline allows you to check by systems, rather than individual organs. Starting January 1, 2023, there are a lot of revisions, including a 2021 guidance that will be used. But, for dates of service before 2021, physicians can pick between 1995 and 1997 guidance.
Why is this an issue?
If you are a family practitioner and get audited by Medicare, Medicaid, or private pay, you better be sure that your auditor audits with the right policy.
According to CPT, 99214 is indicated for an “office or other outpatient visit for the evaluation and management of an established patient, which requires at least two of these three key components: a detailed history, a detailed examination and medical decision making of moderate complexity.”
Think 99214 in any of the following situations:
- If the patient has a new complaint with a potential for significant morbidity if untreated or misdiagnosed,
- If the patient has three or more old problems,
- If the patient has a new problem that requires a prescription,
- If the patient has three stable problems that require medication refills, or one stable problem and one inadequately controlled problem that requires medication refills or adjustments.
The above is simplified and shorthand, so read the 1995 and 1997 guidance carefully.
An insurance company audited a client of mine and clearly used the 1997 guidance. On the audit report, the 1997 guidance was checked as being used. In fact, according to the audit report, the auditors used BOTH the 1997 and 1995 guidance, which, logically, would make a harder, more stringent standard for a 99214 than using one policy.
Now the insurance company claims my client owes money. However, if the insurance company merely applied the 1995 guidance only, then, we believe, that he wouldn’t owe a dime. Now he has to hire me, defend himself to the insurance company, and possibly litigate if the insurance company stands its ground.
Sadly, the above story is not an anomaly. I see auditors misapply policies by using the wrong years all the time, almost daily. Always appeal. Never roll over.
Sometimes it is a smart decision to hire an independent expert to verify that the physician is right, and the auditors are wrong. If the audit is extrapolated, then it is wise to hire an expert statistician. See blog. And blog. The extrapolation rules were recently revised…well, in the last two or three years, so be sure you know the rules, as well. See blog.
Today, I am going to write about a hospital in Tennessee that underwent an audit, and the MAC determined that the hospital owed over $5 million. The hospital challenged both the OIG contractor’s sampling methodology and its determinations on specific claims by requesting a hearing before an ALJ. The District Court decision was published in September 2022. The reason that I want to make you aware of this case, is because there have been numerous Medicare provider appeals unsuccessfully challenging the extrapolation, and the ALJs upholding the extrapolations. In this case, the ALJ found the extrapolation in error, the Council reversed the ALJ on its own motion, and the district court reaffirmed the ALJ, saying the extrapolation was faulty. Whenever good case law is published, we want to analyze the Court’s reasoning so we, as attorneys, can replicate the winning arguments.
One of the main reasons that the district court agreed that the extrapolation was faulty was because no testimony supporting the OIG contractor’s extrapolation process or the implementation of its statistical sampling methodology were submitted to that hearing on June 11, 2020, and the contractor did not appear. It’s the mundane scene with an ALJ level appeal and the auditor failing to appear to prove the audit’s veracity. See blog.
In addition to finding that additional claims satisfied Medicare coverage & payment requirements, the ALJ also found that OIG’s statistical extrapolation process did not comply with § 1893 of the Social Security Act, nor with the MPIM’s guidance on statistical extrapolation.
The ALJ held that HHS policy requires that the OIG’s audit must be able to be recreated and that as the audit’s sampling frame utilized data from outside of the audit, the audit could not be recreated.
The Council subsequently reviewed the ALJ’s decision on its own motion and reversed that decision in part, finding that the ALJ’s determination that the sampling process was invalid was an error of law. The Council then concluded that the OIG contractor’s statistical extrapolation met all applicable Medicare legal and regulatory requirements.
The hospital appealed to the federal district court. The district court’s review consists of determining whether, in light of the record as a whole, the Secretary’s determination is supported by “substantial evidence.”
According to the Court, the hospital amply demonstrated that the Council did not have the authority to overturn the decision of the ALJ on own-motion review. Accordingly, the hospital’s Motion for Summary Judgement was GRANTED and the extrapolation was thrown out.
Some nursing homes are facing tougher penalties, including the loss of federal funding. In an effort to increase quality of care in nursing homes, the Biden administration implemented revisions to the Special Focus Facility (“SFF”) program, which targets the “worst” nursing homes in each State. Nursing homes are selected for the program by the “single State agency” using a point system based on the number and severity of deficiencies cited during their past 3 inspections.
CMS released a revised SFF Program policy memo QS0-23-01-NH and these revisions are meant to increase: (A) the requirements for “graduation” of the SFF program; and (B) the enforcement for facilities that do not demonstrate improvement. A high-level overview of key changes made in the revised memo are as follows:
- Staffing levels is a consideration for SFF selection: CMS has directed states to consider a facility’s staffing level when selecting facilities for the SFF program. CMS recommends if a State is considering two candidates with a similar compliance history, it should select the facility with lower staffing ratios/rating as the SFF.
- Criteria for Graduation of the Program Escalated: CMS has added a threshold that prevents a facility from exiting based on the total number of deficiencies cited. To graduate from the program, facilities must complete two consecutive standard health surveys, with no intervening complaint, LSC, or EP surveys with 13 or more total deficiencies, or any deficiencies cited at scope and severity of “F” or higher.
- Involuntary Termination Enforced: SFFs with deficiencies cited at immediate Jeopardy (“IJ”) on any two surveys (standard health, complaint, LSC, or EP) while in the SFF program, will now be considered for discretionary termination.
- Enforcement Actions Increased: CMS will impose immediate sanctions on an SFF that fails to achieve and maintain significant improvement in correcting deficiencies on the first and each subsequent standard health, complaint and LSC/EP survey after a facility becomes an SFF. Enforcement sanctions will be of increasing severity for SFFs demonstrating continued noncompliance and failure to demonstrate good faith efforts to improve performance.
- Sustainable Improvements Incentivized: CMS will closely monitor graduates from the SFF program for a period of three years to ensure improvements are sustained. For SFFs that graduate but continue to demonstrate poor compliance identified on any survey (e.g., actual harm, substandard quality of care, or IJ deficiencies), CMS may use its authority to impose enhanced enforcement options, up to, and including discretionary termination from the Medicare and/or Medicaid programs.
It is imperative to note that your past alleged violations will work against you. This means that if you are cited with a deficiency, it is of the utmost importance, if you disagree with the assessment, to appeal the alleged deficiency. If you merely pay the penalty and roll over like an old dog, your lack of appealing can aid toward your demise. You are basically being held to a giant, bell curve against the other nursing homes in your State.
Once in the SFF program, nursing homes are inspected at least every six months rather than annually. State inspectors apply progressive enforcement—penalties, fines, withholding of payments—until the facilities significantly improve or are terminated from Medicaid and/or Medicare.
Nationally, 88 nursing homes participate in the SFF program, about 0.5% of all nursing homes. It is mandatory if chosen.
The facilities with the most points in a state then become candidates for the SFF program. The number of nursing homes on the candidate list is based on five candidates for each SFF slot, with a minimum candidate pool of five nursing homes and a maximum of 30 per State. State Agencies (“SAs”) use this list to select nursing homes to fill the SFF slot(s) in their State. Additionally, since a facility’s staffing (staffing levels and turnover) is very important to residents’ care, CMS recommends that SAs consider a facility’s staffing information when selecting SFFs from the SFF candidate list. See the list of current candidates in Table D, current as of December 7, 2022. For example, NC has 10 facilities on the proposed list for participation in the SFF program. Each State is allotted a number of SFFs the State may allot. See below.
Once a State selects a facility as an SFF, the SA, on CMS’s behalf, conducts a full, onsite inspection of all Medicare health and safety requirements every six months, and recommends progressive enforcement (e.g., civil money penalty, denial of Medicare payment, etc.) until the nursing home either: (1) graduates from the SFF program; or (2) is terminated from the Medicare and/or Medicaid program(s). While in the SFF program, CMS expects facilities to take meaningful actions to address the underlying and systemic issues leading to poor quality.
Once an SFF graduates or is terminated, each SA then selects a new SFF from a monthly list of candidates. CMS also informs candidate nursing homes of their inclusion on the SFF candidate list in the monthly preview of the Five-Star Quality Rating System. The facility will graduate from the SFF program once it has had two consecutive standard health surveys with 12 or fewer deficiencies cited at S/S of “E” or less on each survey (these surveys must have occurred after the facility has been selected as an SFF). To avoid situations where a facility remains an SFF for a prolonged period of time, CMS is establishing criteria that could result in the facility’s termination from the Medicare and/or Medicaid programs. SFFs with deficiencies cited at Immediate Jeopardy on any two surveys while in the SFF program, will be considered for discretionary termination.
While the initial SFF designation is not appealable, the facility does have some appeal rights. Federal regulations allow for dispute resolution and to appeal a finding of noncompliance determined under an SFF survey that results in an enforcement remedy.
If you find yourself on the SFF list, you must hire a lawyer with expertise. Your lawyer should be able to help you “graduate” from the SFF list without termination or closure. Your lawyer can help negotiate Systems Improvement Agreements (“SIAs”) with SAs and CMS to provide additional time for nursing homes to improve their internal systems and the quality of care they provide.
I hope everyone had a fantastic Thanksgiving and are now moving toward the Christmas or Hanukkah holiday. As I discussed last week, CMS and its contracted auditors are turning their watchdog eyes toward nursing homes, critical access hospitals (“CAHs”), and acute care hospitals (“ACHs”). You can hear more on this topic on Thursday, December 8th at 1:30 when I present the RACMonitor webinar, “Warning for Acute Care Hospitals: You Are a Target for Overpayment Audits.”
October 2022, OIG published a new audit project entitled, “Potentially Preventable Hospitalizations of Medicare-Eligible Skilled Nursing Facility Residents.”
Residents of nursing homes and long-term care facilities are frequently transferred to an Emergency Department as an inpatient when they need acute medical care. A proportion of these transfers may be considered inappropriate and may be avoidable, says OIG.
OIG identified nursing facilities with high rates of Medicaid resident transfers to hospitals for urinary tract infections (“UTIs”). OIG describes UTIs as being “often preventable and treatable in the nursing facility setting without requiring hospitalization.” A 2019 OIG audit found that nursing facilities often did not provide UTI detection and prevention services in accordance with resident’s individualized plan of care, which increases the chances for infection and hospitalization. Each resident should have their own prevention policy for whatever they are prone to get. My Grandma, for example, is prone to UTIs, so her personal POC should have prevention measures for trying to avoid contracting a UTI, such as drinking cranberry juice and routine cleansing. In addition to UTIs, OIG noted that previous CMS studies found that five conditions were related to 78% of the resident transfers to hospitals: pneumonia, congestive heart failure, UTIs, dehydration, and chronic obstructive pulmonary disease/asthma. OIG added a sixth condition citing that sepsis is considered a preventable condition when the underlying cause of sepsis is preventable. In my humble opinion, the only condition listed as preventable that is actually preventable is dehydration.
OIG’s new audit project involved a review of Medicare and Medicaid claims related to inpatient hospitalizations of nursing home residents with any of the six conditions noted previously. The audit will focus on whether the nursing homes being audited provided services to residents in accordance with the residents’ care plans and related professional standards (or whether the nursing homes caused preventable inpatient admissions due to non-compliance with care plans and professional standards).
What can you do to prepare for these upcoming audits? Review your facilities’ policies, procedures, and practices germane to the identification of the 6 conditions OIG flagged as preventable. Ensure that your policies and procedures lay out definitive steps to prevent or try to prevent these afflictions. Educate and train your staff of detection, prevention, treatment, and care planning related to the six conditions. Collect and analyze data of trends of frequency and cause of inpatient hospitalizations and determine whether these inpatient hospitalizations could have been prevented and how.
In summary, be prepared for audits of inpatient hospitalizations with explanations of attempted prevention. You cannot prevent all afflictions, but you can have policies in place to try. As always, it’s the thought that counts, as long as, it’s written down.
Today I want to talk about upcoming Medicare audits targeted toward Acute Care Hospitals.
In September 2022, OIG reported that “Medicare Part B Overpaid Critical Access Hospitals and Docs for Same Services.” OIG Reports are blinking signs that flash the future Medicare audits to come. This is a brief blog so be sure to tune in on December 8th for the RACMonitor webinar: Warning for Acute Care Hospitals: You’re a Target for Overpayment Audits. I will be presenting on this topic in much more depth. It is a 60-minute webinar.
For OIG’s report regarding the ACHs, OIG audited 40,026 Medicare Part B claims, with half submitted by critical access hospitals and the rest submitted by health care practitioners for the same services provided to beneficiaries on the same dates of service (“DOS”). OIG studied claims from March 1, 2018, to Feb. 28, 2021, and found almost 100% noncompliance, which constituted almost $1million in overpayments to providers.
According to the OIG Report, CMS didn’t have a system to edit claims to prevent and detect any duplicate claims, as in the services billed by an acute hospital and by a physician elsewhere. Even if the physician reassigned his/her rights to reimbursement to the ACH.
As you know, a critical access hospital cannot bill Part B for any outpatient services delivered by a health care practitioner unless that provider reassigns the claim to the facility, which then bills Part B. However, OIG’s audit found that providers billed and got reimbursed for services they did perform but reassigned their billing rights to the critical access hospital.
The question is – why did the physicians get reimbursed even if they assigned their rights to reimbursement away? At some point, CMS needs to take responsibility as to the lack having a system to catch these alleged overpayments. If the physicians were reimbursed and had no reason to know that they were getting reimbursed for services that they assigned to an ACH, there is an equitable argument that CMS cannot take back money based on its own error and no intent by the physician.
On a different note, I wanted to give a shout out to ASMAC, which is the American Society of Medical Association Counsel; Attorneys Advocating for America’s Physicians. It is comprised of general counsels (GCs) of health care entities and presidents of State Medical Societies. ASMAC’s topics at conferences are cutting-edge in our industry of defending health care providers, interesting, and on-point by experts in the fields. I was to present there last week in Hawaii on extrapolations in Medicare and Medicaid provider audits. Thankfully, all their conferences are not in Hawaii; that is too far of a trip for someone on the East Coast. But you should look into the association, if ASMAC sounds like it would benefit you or you could benefit them, join.
Extrapolated audits are the worst.
These audits under sample and over extrapolate – almost to the point that some audits allege that you owe more than you were paid. How is that fair in our judicial system? I mean, our country was founded on “due process.” That means you have a right to life, liberty, and the pursuit of happiness. If the government attempts to pursue your reimbursements at all, much less a greater amount than what you received, you are required notice and a hearing.
Not to mention that OIG conducted a Report back in 2020 that identified numerous mistakes in the extrapolations. The Report stated: “CMS did not always provide sufficient guidance and oversight to ensure that these reviews were performed in a consistent manner.” I don’t know about you, but that is disconcerting to me. It also stated that “The test was associated with at least $42 million in extrapolated overpayments that were overturned in fiscal years 2017 and 2018. If CMS did not intend that the contractors use this procedure, these extrapolations should not have been overturned. Conversely, if CMS intended that contractors use this procedure, it is possible that other extrapolations should have been overturned but were not.“
I have undergone hundreds of Medicare and Medicaid audits with extrapolations. You defend against these audits twofold: 1) by hiring an expert statistician to debunk the extrapolation; and 2) by using the provider as an expert clinician to discredit the denials. However, I am always dismayed…maybe that’s not the right word…flabbergasted that no one ever shows up on the other side. It is as if CMS via whatever contractor conducted the extrapolated audit believes that their audit needs no one to prove its veracity. As if we attorneys and providers should just accept their findings as truth, and they get the benefit of NOT hiring a lawyer and NOT showing up to ALJ trials.
In the above picture, the side with the money is CMS. The empty side is the provider.
In normal trials, as you know, there are two opposing sides: a Plaintiff and a Defendant, although in administrative law it’s called a Petitioner and a Respondent. Medicaid provider appeals also have two opponents. However, in Medicare provider appeals, there is only one side: YOU. An ALJ will appear, but no auditor to defend the merits of the alleged overpayment that you, as a provider, are accused of owing.
In normal trials, if a party fails to appear, the Judge will almost automatically rule against the non-appearing party. Why isn’t it the same for Medicare provider appeals? If a Medicare provider appears to dispute an alleged audit, the Judge does not rule automatically in favor of the provider. Quite the opposite quite frankly. The CMS Rules, which apply to all venues under the purview of CMS, which includes the ALJ level and the Medicare Appeals Council level, are crafted against providers, it seems. Regardless the Rules create a procedure in which providers, not the auditors, are forced to retain counsel, which costs money, retain a statistician in cases of extrapolations, which costs money, go through years of appeals through 5 levels, all of which the CMS Rules apply. Real law doesn’t apply until the district court level, which is a 6th level – and 8 years later.
Any providers reading, who retain lobbyists, this Medicare appeal process needs to change legislatively.