Category Archives: Tips to Avoid Medicaid Recoupment
Goodbye, 2020: New Resolutions for Health Care Providers
By Ashley Thomson. (Knicole Emanuel‘s law partner. See below for a bio).
As 2020 ends and we look forward to starting a new chapter in 2021, we offer you this little nugget of advice—a resolution that sounds deceptively easy—read your mail. Yes, friends you heard it here first. . . the best thing you can do to protect yourself, your business, your patients, and your loved ones is to read the dang mail. Email, text messages, real mail, carrier pigeon or messages in a bottle. READ THEM!
2020 brought us a lot of curve balls and unexpected events but some of those events could have been avoided had mail been opened and read.
CMS and its third party contractors hold a lot of power in the healthcare world and can cause your practice to come crashing down by hitting send or putting a forever stamp on a letter. A regular practice of reading your mail can avoid that CMS avalanche of doom. 
You may be reading this and thinking, you’ve got to be crazy I always read my mail. Or perhaps you are thinking, this is the easiest new year’s resolution yet—all I have to do is read the mail.
Don’t be too hasty with your self-confidence. This is a hard practice to establish and an even harder one to maintain.
First, you have to actually read the mail. All of the mail. Even the mail you think will contain bad news. Constitutional due process requires only notice NOT successful notice. If successful notice were required, “then people could evade knowledge, and avoid responsibility for their conduct, by burning notices on receipt—or just leaving them unopened.” See Ho v. Donovan, 569 F.3d 677, 680 (7th Cir. 2009). “Conscious avoidance of information is a form of knowledge.” Id.
Second, you need a policy or procedure regarding the opening and reading of mail. One client we worked with did not have a system for logging mail once it was received in the office. Mail was lost. Deadlines were missed. Payments from the largest payer were suspended. The cost – too much to print.
It’s like that old Mastercard ad, yes, I’m talking to those of you out there who were around in the late 90s.
The cost of establishing a policy for logging in mail. . . zero.
The cost of reading mail. . . zero.
The cost of neglecting your mail, missing deadlines, and losing your practice. . . priceless.
So, as this year ends and you contemplate ways to improve your practice in 2021, please, please, please take our advice and READ YOUR MAIL.
It’s not just CMS that has holds the mailbox power. Just ask the City of North Charleston, SC. A motorist’s emailed complaint to the city over injuries sustained in an accident was not forwarded to the insurance carrier resulting in a multi-million dollar default judgement against the city. See Campbell v. City of North Charleston, 431 S.C. 454,459 (SC Ct. App. 2020) (holding that “the failure to forward an email did not amount to good cause shown for failure to timely file an answer).
 For those of you who have no idea what we are talking about see https://www.aaaa.org/timeline-event/mastercard-mccann-erickson-campaign-never-got-old-priceless/
Click for past blogs with other helpful tips to avoid Medicare and Medicaid recoupments. medicaidlaw-nc.wordpress.com – Tip #2. 4. 6.
Ashley Thomson brings 20 years of extensive in-house, hospital counsel and law firm experience to our team. Well-versed in a variety of disciplines, her emphasis is in health care, insurance and compliance, specifically medical malpractice, employment, healthcare and privacy law compliance and defense, including matters involving HIPAA. Ashley has also been heavily involved in risk management, patient safety, corporate governance, contract and policy drafting, negotiations and healthcare management. Prior to joining Practus, Ashley served as Associate General Counsel for Truman Medical Center (TMC) where she oversaw litigation, managed all aspects of their corporate compliance matters, including governmental audits and investigations, cybersecurity issues, HIPAA enforcement, 340B compliance and provider-based billing. As their Staff Litigation Counsel, she defended and litigated medical malpractice and general liability matters on behalf of the hospital, its employees, physician group and residents. Prior to joining TMC, Ashley was an Associate Attorney for Husch Blackwell.
Ashley is an outdoors woman at heart. When she’s not working, she’s hiking, walking, working in her yard, or playing with her kids. She’s also an avid reader and a football fan especially when she’s watching her favorite team, the Kansas City Chiefs!
CMS Revises and Details Extrapolation Rules: Part II
Biggest RACs Changes Are Here: Learn to Avoid Denied Claims
See Part I: Medicare Audits: Huge Overhaul on Extrapolation Rules
Part II continues to explain the nuances in the changes made by CMS to its statistical sampling methodology. Originally published on RACMonitor.
The Centers for Medicare & Medicaid Services (CMS) recently made significant changes in its statistical sampling methodology for overpayment estimation. Effective Jan. 2, 2019, 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).
The RAC program was created through the Medicare Modernization Act of 2003 (MMA) to identify and recover improper Medicare payments paid to healthcare providers under fee-for-service (FFS) Medicare plans. The RAC auditors review a small sample of claims, usually 150, and determine an error rate. That error rate is attributed to the universe, which is normally three years, and extrapolated to that universe. Extrapolation is similar to political polls – in that a Gallup poll will ask the opinions of 1-2 percent of the U.S. population, yet will extrapolate those opinions to the entire country.
First, I would like to address a listener’s question regarding the dollar amount’s factor in extrapolation cases. I recently wrote, “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.”
I need to explain that the math here is not “straight math.” The dollar amount of the alleged noncompliant claims factors into the extrapolation amount. If the dollar amount did not factor into the extrapolation, then a review of 500 claims with one non-compliant claim is 0.2 percent. The fact that, in my hypothetical, the one claim’s dollar amount equals $100 changes the error rate from 0.2 percent to 20 percent.
Secondly, the new rule includes provisions implementing the additional Medicare Advantage telehealth benefit added by the Bipartisan Budget Act of 2018. Prior to the new rule, audits were limited in the telehealth services they could include in their basic benefit packages because they could only cover the telehealth services available under the FFS Medicare program. Under the new rule, telehealth becomes more prominent in basic services. Telehealth is now able to be included in the basic benefit packages for any Part B benefit that the plan identifies as “clinically appropriate,” to be furnished electronically by a remote physician or practitioner.
The pre-Jan. 2, 2019 approach to extrapolation employed by RACs was inconsistent, and often statistically invalid. This often resulted in drastically overstated overpayment findings that could bankrupt a physician practice. The method of extrapolation is often a major issue in appeals, and the, new rules address many providers’ frustrations and complaints about the extrapolation process. This is not to say that the post-Jan. 2, 2019 extrapolation approach is perfect…far from it. But the more detailed guidance by CMS just provides more ways to defend against an extrapolation if the RAC auditor veers from instruction.
Thirdly, hiring an expert is a key component in debunking an extrapolation. Your attorney should have a relationship with a statistical expert. Keep in mind the following factors when choosing an expert:
- Price (more expensive is not always better, but expect the hourly rate to increase for trial testimony).
- Intelligence (his/her CV should tout a prestigious educational background).
- Report (even though he/she drafts a report, the report is not a substitute for testimony).
- Clusters (watch out for a sample that has a significant number of higher reimbursed claims. For example, if you generally use three CPT codes at an equal rate and the sample has an abnormal amount of the higher reimbursed claim, then you have an argument that the sample is an invalid example of your claims.
- Sample (the sample must be random and must not contain claims not paid by Medicaid).
- Oral skills (can he/she make statistics understandable to the average person?)
Fourthly, the new revised rule redefines the universe. In the past, suppliers have argued that some of the claims (or claim lines) included in the universe were improperly used for purposes of extrapolation. However, the pre-Jan. 2, 2019 Medicare Manual provided little to no additional guidance regarding the inclusion or exclusion of claims when conducting the statistical analysis. By contrast, the revised Medicare Manual specifically states:
“The universe includes all claim lines that meet the selection criteria. The sampling frame is the listing of sample units, derived from the universe, from which the sample is selected. However, in some cases, 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:
- Some claims/claim lines are discovered to have been subject to a prior review;
- The definitions of the sample unit necessitate eliminating some claims/claim lines; or
- Some claims/claim lines are attributed to sample units for which there was no payment.”
By providing detailed criteria with which contractors should exclude certain claims from the universe or sample frame, the revised Medicare Manual will also provide suppliers another means to argue against the validity of the extrapolation.
Lastly, the revised rules explicitly instruct the auditors to retain an expert statistician when changes occur due to appeals and legal arguments.
As a challenge to an extrapolated overpayment determination works its way through the administrative appeals process, often, a certain number of claims may be reversed from the initial claim determination. When this happens, the statistical extrapolation must be revised, and the extrapolated overpayment amount must be adjusted. This requirement remains unchanged in the revised PIM; however, the Medicare contractors will now be required to consult with a statistical expert in reviewing the methodology and adjusting the extrapolated overpayment amount.
Between my first article on extrapolation, “CMS Revises and Details Extrapolation Rules,” and this follow-up, you should have a decent understanding of the revised extrapolation rules that became effective Jan. 2, 2019. But my two articles are not exhaustive. Please, click here for Change Request 10067 for the full and comprehensive revisions.
Tightrope Walking: Correcting Errors in Health Care Documents After the Fact
People screw up. We are human; hence the term, “human error.”
But how to handle said mistakes in health care records after the fact, which could be the target in a Medicare/caid audit?
This is a very important, yet extremely “fine-lined” topic. Imagine a tightrope walker. If you fall off one way, you fall to the abyss of accusations of fraud. You fall off the other way and you fall into the ocean of the False Claims Act. Fixing document errors post date of service (DOS) is a fine line with catastrophic consequences on both sides.
In NC, our administrative code provides guidance.
“SECTION .1400 – SERVICE RECORDS
10A NCAC 13J .1401 REQUIREMENT
(a) The agency shall develop and implement written policies governing content and handling of client records.
(b) The agency shall maintain a client record for each client. Each page of the client record shall have the client’s name. All entries in the record shall reflect the actual date of entry. When agency staff make additional, late, or out of sequence entries into the client record, the documentation shall include the following applicable notations: addendum, late entry, or entry out of sequence, and the date of the entry. A system for maintaining originals and copies shall be described in the agency policies and procedures.
(c) The agency shall assure that originals of client records are kept confidential and secure on the licensed premises unless in accordance with Rule .0905 of this Subchapter, or subpoenaed by a court of legal jurisdiction, or to conduct an evaluation as required in Rule .1004 of this Subchapter.
(d) If a record is removed to conduct an evaluation, the record shall be returned to the agency premises within five working days. The agency shall maintain a sign out log that includes to whom the record was released, client’s name and date removed. Only authorized staff or other persons authorized by law may remove the record for these purposes.
(e) A copy of the client record for each client must be readily available to the appropriate health professional(s) providing services or managing the delivery of such services.
(f) Client records shall be retained for a period of not less than five years from the date of the most recent discharge of the client, unless the client is a minor in which case the record must be retained until three years after the client’s 18th birthday. When an agency ceases operation, the Department shall be notified in writing where the records will be stored for the required retention period.”
What NOT to do:
- Erase notations and write the revision
- Add a check mark that was not previously there
- Forge a staff’s initials
- Back date the revision
When it comes to alteration of medical records for Medicare/caid patients after the DOS, you are walking on a tightrope. Catastrophe is below, not a net. So tiptoe carefully.
Call an attorney with specific questions.
Medicaid Self-Auditing: Avoid the Remedy Worse Than the Disease
One of the best proactive measures to protect yourself from a Medicaid audit (all this goes for all types of providers… hospitals, psychiatrists, dentists…) is to conduct a self-audit. Without question. That way you can identify potential issues and fix them; thereby, in the long run, limiting your liability to a recoupment. But…TAKE HEED!
If you are going to self-audit, then fix any errors found. Do not find errors and do nothing. If you neglect to fix the errors found in a self-audit, then the penalty for not fixing a known error COULD be harsher than never knowing the errors.
Remember the fable, “The Hawk, the Kite, and the Pigeons?”
THE PIGEONS, terrified by the appearance of a Kite, called upon the Hawk to defend them. He at once consented. When they had admitted him into the cote, they found that he made more havoc and slew a larger number of them in a single day, than the Kite could possibly pounce upon in a whole year.
Avoid a remedy that is worse than the disease.
I am definitely not comparing the Division of Medical Assistance (DMA) to a kite. Maybe Aesop should have used two, equally, scary animals, but, in Aesop’s defense, I’m sure that the pigeons were terrified of the kite.
As for the pigeons…A Wisconsin-based medical clinic conducted an internal audit of 25 claims per physician. Good job! Be proactive!
However, the clinic discovered that 2 physicians were up-coding over 10% of their claims. As required, the clinic returned overpayments for those specific, up-coded claims. So, obviously, whoever conducted this self-audit on the Wisconsin clinic informed the 2 physicians that their abhorrent billing practices were discovered and that they should immediate cease all up-coding, right? Or, at the very least, continued to monitor these 2 physicians’ billings, right?
The clinic conducted no more self-audits on those 2 physicians. In fact, the clinic stopped conducting self-audits all together. Furthermore, the clinic allowed those 2 physicians to continue billing without supervision. Ugh!
As expected, a former employee filed a whistleblower lawsuit against the clinic. The lawsuit is pending, so we have no way of knowing the extent of whatever penalty this clinic may suffer. But, the warning is out! If a practice is billing Medicaid incorrectly, discovers the errors, and fails to take corrective action it COULD be considered fraud.
If you want to read the whole article click here.
The moral of the story? Avoid a remedy that is worse than the disease.
Tip #11 to Avoid Medicaid Recoupment
I realized that it had been a while since I added a “Tip to Avoid Medicaid Recoupment.” So I decided to remedy that. But this one is a little drastic, and hopefully, not too many providers will adhere to this tip. (And, if you have a sense of humor, this is a bit sarcastic).
Tip #11: Do not accept Medicaid clients.
Obviously, you realize that I do NOT actually want health care providers to stop accepting Medicaid to stop.
But, in my line of work, I see A LOT of Tentative Notices of Overpayment and A LOT of Prepayment Reviews, and A LOT of Medicaid contract terminations or rescissions.
I’ve tried to evaluate the reasons cited by the Department of Health and Human Services (DHHS) and its auditing agents that these millions of documents are noncompliant. I’ve come to a preliminary opinion that the problem is not the documentation of the health care providers. 99.8% of the time the providers have rendered the services, provided quality service, and received proper reimbursement. The problem is either (a) the intelligence of the auditors; or (b) the instructions given to the auditors. The Recoupment Audit Companies (RACs), like Carolinas Center for Medical Excellence (CCME), Public Consulting Group (PCG), and HP Enterprises (HP) are on a rampage to audit as many providers as possible, recoupment as much monies as possible, and, I guess, throw a huge Christmas party at the end of the year celebrating the health care providers they have put out of business and the Medicaid recipients with no health care. But, hey, they will be able to spring for Dom Perignon.
On a serious note, my point of all this is that I would LOVE to say, “Hey, providers, if you do this, then you will not under a recoupment audit.”
But the RACs’ auditing procedures are arbitrary, not founded in policy, and sometimes as unpredictable as New England weather.
So there is no “one thing” that can prevent you from a RAC Medicaid audit.
The audit could be spurred on by a disgruntled employee calling DMA and accusing you of Medicaid fraud without merit. Maybe CCME has a list of all the health care providers who accept Medicaid and each day 10 employees get to throw darts at the list, which determines which providers get audited. Maybe DMA has the world’s biggest raffle ticket drum.
Maybe instead of “Tips for Avoiding Medicaid Recoupment,” I should start a series of blogs entitled, “Crazy Reason No. 1 That CCME or PCG Found Noncompliance.”
I will think about it.
In the meantime, if you truly want to avoid a Medicaid recoupment, stop accepting Medicaid.
Tips #9 and 10 for Avoiding Medicaid Recoupment
The most common statements I hear from health care providers when they are going through Medicaid audits is “I did not know THAT was required,” or “No one told us that we had to do THAT,” or, my personal favorite, “I called DMA and they told me we were doing THAT correctly.”
First, if you call DMA, document the conversation in writing. Get the DMA representative’s name, title, and summarize the phone call in a safe place. Then write a letter to DMA summarizing the information you received.
Write something like this: “Per our phone conversation [DATE], you stated that [insert explanation, i.e., you stated that electronic signatures complied with NC Medicaid policy, if I take the following steps…]”
If you take this precaution, filing a note of the conversation and following-up with a letter, the you ensure that DMA cannot, later, deny the conversation. Remember, with oral conversations, no one remembers the conversation exactly the same.
All health care providers, I venture to guess, at some point, needs to call DMA and ask a question. If so, follow Tip #9. But if you find that you or your employees often have questions, BE PROACTIVE.
Do not wait until the Medicaid audit to say, “I did not know THAT was required.”
How to be proactive? EDUCATE! Yourself and all your employees!
One of two ways:
1. Go on the DHHS website and find out when the State is giving educational seminars on Medicaid rules. And go to as many seminars as possible. While there, ask numerous questions;
2. Contact a Medicaid attorney (This is not an advertisement for myself, although I have done this for providers, but, please, research other Medicaid attorneys.) and have the Medicaid attorney come to your main office and give a presentation on Medicaid rules. If you go this route, make sure the Medicaid attorney understands what type of Medicaid services you provide, even better, tell the Medicaid attorney your specific concerns regarding your practice.
The upside about attending DHHS seminars is that the seminars are free. The upside of hiring a Medicaid attorney to come to your office, he or she can physically review some of your practices’ documentation for possible common mistakes.
Regardless, whatever you decide, do not do nothing until you received the Tentative Notice of Overpayment. It’s too late then. Be proactive in education.
Tip #8: Avoiding Medicaid Recoupments
After talking with the Office of Administrative Hearings (OAH) today and learning that, in the past 30 days, there have been 15,000 Medicaid appeals filed, I realized how important these Tips to Avoid Medicaid Recoupment may be. Granted, I am sure most of those Medicaid appeals are Medicaid recipients appealing denials of services, but, still, that is a lot of appeals!!
Tip #8: Always keep every revised version of whichever DMA Clinical Policy applies to your practice.
For example, if you provide orthodontia services to Medicaid recipients, then you should have every version of Clinical Policy 4B, starting when you started providing orthodontia services until the present.
If you have not this, never fear, you can go to The WayBack Machine, a website that keeps an archive of certain websites, including the material found on the website at different time periods. The WayBack Machine has archived the NC DMA websites over time.
Keeping every revised version of the applicable Clinical Policy will help health care providers avoid Medicaid recoupments, IF, and only IF, each time a new revised version is published, go through both the replaced version and the newly updated version page by page. Compare the old version to the new version. Find every word that was changed or sentence that was added, or additional criteria added. Highlight, on the new version, all the additional words. On the new version, mark where words or sentences have been deleted.
Doing this exercise will do two things: (1) the health care provider will be intimately knowledgable about the Clinical Policy (which is always helpful); and (2) the health care provider will know which sections or criteria were most important to the State. Wherever a change occurred, it is due to something. Usually you can figure it out. For example, if the new version of Clinical Policy 4B requires an additional criterion of the Medicaid recipient, in order to receive braces, to demonstrate a mental health diagnosis caused by crooked teeth (I’m making this up), then one could deduce that too many Medicaid recipients received braces in the past and that the State is trying to make it more difficult to receive braces.
Highlighting the changes in the new policies will help health care providers proactively avoiding Medicaid recoupments because the health care provider will understand each new criterion or hoop to jump through for the upcoming Medicaid claims.
However, doing this exercise will also help the health care provider who has received an audit and received the Tentative Notice of Overpayment claiming the provider owes money to the State. This is how: The Medicaid audits are auditing claims from 2009-2010 (usually). The Clinical Policies have changed immensely over the years. Many policies are more stringent now than in the past. The people conducting the Medicaid audits, often, in my experience, audit the health care provider with the current Clinical Policy in place now, not the Clinical Policy from the applicable time period. This results in incorrect audits and incorrect results.
Know the policies. Know the changes to the policies. Avoid Medicaid recoupments.