Category Archives: Medicaid Audits

Medicare Auditors Fail to Follow the Jimmo Settlement

Auditors are not lawyers. Some auditors do not even possess the clinical background of the services they are auditing. In this blog, I am concentrating on the lack of legal licenses. Because the standards to which auditors need to hold providers to are not only found in the Medicare Provider Manuals, regulations, NCDs and LCDs. Oh, no… To add even more spice to the spice cabinet, common law court cases also create and amend Medicare and Medicaid policies.

For example, the Jimmo v. Selebius settlement agreement dictates the standards for skilled nursing and skilled therapy in skilled nursing facilities, home health, and outpatient therapy settings and importantly holds that coverage does not turn on the presence or absence of a beneficiary’s potential for improvement.

The Jimmo settlement dictates that:

“Specifically, in accordance with the settlement agreement, the manual revisions clarify that coverage of skilled nursing and skilled therapy services in the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) settings “…does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care.” Skilled care may be necessary to improve a patient’s current condition, to maintain the patient’s current condition, or to prevent or slow further deterioration of the patient’s condition.”

This Jimmo standard – not requiring a potential for improvement – is essential for diseases that are lifelong and debilitating, like Multiple Sclerosis (“MS”). For beneficiaries suffering from MS, skilled therapy is essential to prevent regression.

I have reviewed numerous audits by UPICs, in particular, which have failed to follow the Jimmo settlement standard and denied 100% of my provider-client’s claims. 100%. All for failure to demonstrate potential for improvement for MS patients. It’s ludicrous until you stop and remember that auditors are not lawyers. This Jimmo standard is found in a settlement agreement from January 2013. While we will win on appeal, it costs providers money valuable money when auditors apply the wrong standards.

The amounts in controversy are generally high due to extrapolations, which is when the UPIC samples a low number of claims, determines an error rate and extrapolates that error rate across the universe. When the error rate is falsely 100%, the extrapolation tends to be high.

While an expectation of improvement could be a reasonable criterion to consider when evaluating, for example, a claim in which the goal of treatment is restoring a prior capability, Medicare policy has long recognized that there may also be specific instances where no improvement is expected but skilled care is, nevertheless, required in order to prevent or slow deterioration and maintain a beneficiary at the maximum practicable level of function. For example, in the regulations at 42 CFR 409.32(c), the level of care criteria for SNF coverage specify that the “. . . restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.” The auditors should understand this and be trained on the proper standards. The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition.

When you are audited by an auditor whether it be a RAC, MAC or UPIC, make sure the auditors are applying the correct standards. Remember, the auditors aren’t attorneys or doctors.

Medicaid Fraud Control Units Performed Poorly During the Pandemic: Expect MFCU Oversight to Increase

OIG just published its annual survey of how well or poor MFCUs across the country performed in 2020, during the ongoing COVID pandemic. Each State has its own Medicaid Fraud Control Unit (“MFCU”) to prosecute criminal and civil fraud in its respective State. I promise you, you do not want MFCU to be calling or subpoena-ing you unexpectedly. The MFCUs reported that the pandemic created significant challenges for staff, operations, and court proceedings, which led to lower case outcomes in FY 2020. But during this past “lower than expected” recovery year, the MFCUs still recovered over $1 billion from health care providers. It was a 48% drop.

2020 MFCU Statistics at a Glance

As MFCUs initially moved to a telework environment, some staff reported experiencing challenges conducting work because of limitations with computer equipment and network infrastructure. Field work was also limited. To help protect staff and members of the public from the pandemic, MFCUs reported curtailing some in-person field work, such as interviews of witnesses and suspects. These activities were further limited because of an initial lack of personal protective equipment that was needed in order to conduct similar activities in nursing homes and other facilities. Basically, COVID made for a bad recovery year by the MFCUs. Courts were closed for a while as well, slowing the prosecutorial process.

The report further demonstrated how lucrative the MFCU agencies are, despite the pandemic. For every $1 dollar spent on the administration of a MFCU, the MFCUs rake in $3.36. In 2020, the MFCUs excluded 928 individuals or entities. There were 786 civil settlements and judgments; the vast majority of judgments were pharmaceutical manufacturers. Convictions decreased drastically from 1,564 in 2019 to 1,017 convictions in 2020.  Interestingly, looking at the types of providers convicted or penalized, the vast majority were personal care services attendants and agencies. Five times higher than the next highest provider type – nurses: LPN, RNs, NPs, and PAs.

And the award goes to Maine’s MFCU – The Maine MFCU received the Inspector General’s Award for Excellence in Fighting Fraud, Waste, and Abuse for its high number of case outcomes across a mix of case types.

OIG also established the desired performance indicators for 2021. OIG expects the MFCUs to maintain an indictment rate of 19% and a conviction rate of 89.1%.

The OIG Report Foreshadows 2021 MFCU Actions:

  1. Hospice: Expect audits. $0 was recovered in 2020.
  2. Fraud convictions increased for cardiologists and emergency medicine. Expect these areas to be more highly scrutinized, especially given all the COVID exceptions and rule amendments last year.
  3. Expect a MFCU rally. The pandemic may not be over, but with increased vaccines and after a down year, MFCUs will be bulls in the upcoming year as opposed to last year’s forced, lamb-like actions due to the pandemic.

While Medicare is strictly a federal program, Medicaid is funded with federal and State tax dollars. Therefore, each State’s regulations germane to Medicaid can vary. Medicaid fraud can be prosecuted as a federal or a State crime.

Beware the Ides of March! And Medicare Provider Audits!

Hello! And beware the Ides of March, which is today! I am going to write today about the state of audits today. When I say Medicare and Medicaid audits, I mean, RACs, MACs, ZPICs, UPICs, CERTs, TPEs, and OIG investigations from credible allegations of fraud. Without question, the new Biden administration will be concentrating even more on fraud, waste, and abuse germane to Medicare and Medicaid. This means that auditing companies, like Public Consulting Group (“PCG”) and National Government Services (“NGS”) will be busy trying to line their pockets with Medicare dollars. As for the Ides, it is especially troubling in March, especially if you are Julius Caesar. “Et tu, Brute?”

One of the government’s most powerful tool is the federal government’s zealous use of 42 CFR 455.23, which states that “The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.” (emphasis added). That word – “must” – was revised from “may” in 2011, part of the Affordable Care Act (“ACA”).

A “credible allegation” is defined as an indicia of reliability, which is a low bar. Very low.

Remember back in 2013 when Ed Roche and I were reporting on the New Mexico behavioral health care cluster? To remind you, the State of NM accused 15 BH health care providers, which constituted 87.5% of the BH providers in NM, of credible allegations of fraud after the assistant AG, at the time, Larry Heyeck, had just published a legal article re “Credible Allegations of Fraud.” See blog and blog. Unsurprisingly, the suicide rate and substance abuse skyrocketed. There was even a documentary “The Shake-Up” about the catastrophic events in NM set off by the findings of PCG.

This is another example of a PCG allegation of overpayment over $700k, which was reduced to $336.84.

I was the lawyer for the three, largest entities and litigated four administrative appeals. If you recall, for Teambuilders, PCG claimed it owed over $12 million. After litigation, an ALJ decided that Teambuilders owed $836.35. Hilariously, we appealed. While at the time, PCG’s accusations put the company out of business, it has re-opened its doors finally – 8 years later. This is how devastating a regulatory audit can be. But congratulations, Teambuilders, for re-opening.

Federal law mandates that during the appeal of a Medicare audit at the first two levels: the redetermination and reconsideration, that no recoupment occur. However, after the 2nd level and you appeal to the ALJ level, the third level, the government can and will recoup unless you present before a judge and obtain an injunction.

Always expect bumps along the road. I have two chiropractor clients in Indiana. They both received notices of alleged overpayments. They are running a parallel appeal. Whatever we do for one we have to do for the other. You would think that their attorneys’ fees would be similar. But for one company, NGS has preemptively tried to recoup THREE times. We have had to contact NGS’ attorney multiple times to stop the withholds. It’s a computer glitch supposedly. Or it’s the Ides of March!

More Covered Health Care Services and More Policing under the Biden Administration!

Happy 55th Medicare! Pres. Biden’s health care policies differ starkly from former Pres. Trump’s. I will discuss some of the key differences. The newest $1.9 trillion COVID bill passed February 27th. President Biden is sending a clear message for health care providers: His agenda includes expanding government-run, health insurance and increase oversight on it. In 2021, Medicare is celebrating its 55th year of providing health insurance. The program was first signed into law in 1965 and began offering coverage in 1966. That first year, 19 million Americans enrolled in Medicare for their health care coverage. As of 2019, more than 61 million Americans were enrolled in the program.

Along with multiple Executive Orders, Pres. Biden is clearly broadening the Affordable Care Act (“ACA”), Medicaid and Medicare programs. Indicating an emphasis on oversight, President Biden chose former California Attorney General Xavier Becerra to lead HHS. Becerra was a prosecutor and plans to bring his prosecutorial efforts to the nation’s health care. President Biden used executive action to reopen enrollment in ACA marketplaces, a step in his broader agenda to bolster the Act with a new optional government health plan.

For example, one of my personal, favorite issues that Pres. Biden will address is parity for Medicare coverage for medically necessary, oral health care. In fact, Medicare coverage extends to the treatment of all microbial infections except for those originating from the teeth or periodontium. There is simply no medical justification for this exclusion, especially in light of the broad agreement among health care providers that such care is integral to the medical management of numerous diseases and medical conditions.

The Biden administration has taken steps to roll back a controversial Trump-era rule that requires Medicaid beneficiaries to work in order to receive coverage. Two weeks ago, CMS sent letters to several states that received approval for a Section 1115 waiver – for Medicaid. CMS said it was beginning a process to determine whether to withdraw the approval. States that received a letter include Arizona, Arkansas, Georgia, Indiana, Nebraska, Ohio, South Carolina, Utah, and Wisconsin. The work requirement waivers that HHS approved at the end of the previous administration’s term may not survive the new presidency.

Post Payment Reviews—Recovery Audit Contractor (“RAC”) audits will increase during the Biden administration. The RAC program was created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. As we all know, the RACs are responsible for identifying Medicare overpayments and underpayments and for highlighting common billing errors, trends, and other Medicare payment issues. In addition to collecting overpayments, the data generated from RAC audits allows CMS to make changes to prevent improper payments in the future. The RACs are paid on a contingency fee basis and, therefore, only receive payment when recovery is made. This creates overzealous auditors and, many times, inaccurate findings. In 2010, the Obama administration directed federal agencies to increase the use of auditing programs such as the RACs to help protect the integrity of the Medicare program. The RAC program is relatively low cost and high value for CMS. It is likely that the health care industry will see growth in this area under the Biden administration. To that end, the expansion of audits will not only be RAC auditors, but will include increased oversight by MACs, CERTs, UPICs, etc.

Telehealth audits will be a focus for Pres. Biden. With increased use of telehealth due to COVID, comes increased telehealth fraud, allegedly. On September 30, 2020, the inter-agency National Health Care Take Down Initiative announced that it charged hundreds of defendants ostensibly responsible for—among other things—$4.5 billion in false and fraudulent claims relating to telehealth advertisements and services. Unfortunately for telehealth, bad actors are prevalent and will spur on more and more oversight.

Both government-initiated litigation and qui tam suits appear set for continued growth in 2021. Health care fraud and abuse dominated 2020 federal False Claims Act (“FCA”) recoveries, with almost 85 percent of FCA proceeds derived from HHS. The increase of health care enforcement payouts reflects how important government paid health insurance is in America. Becerra’s incoming team is, in any case, expected to generally ramp up law enforcement activities—both to punish health care fraud and abuse and as an exercise of HHS’s policy-making authorities.

With more than $1 billion of FCA payouts in 2020 derived from federal Anti-Kickback Statute (“AKS”) settlements alone, HHS’s heavy reliance on the FCA because it is a strong statute with “big teeth,” i.e., penalties are harsh. For these same reasons, prosecutors and qui tam relators will likely continue to focus their efforts on AKS enforcement in the Biden administration, despite the recent regulatory carveouts from the AKS and an emerging legal challenge from drug manufacturers.

The individual mandate is back in. The last administration got rid of the individual mandate when former Pres. Trump signed the GOP tax bill into law in 2017. Pres. Biden will bring back the penalty for not being covered under health insurance under his plan. Since the individual mandate currently is not federal law, a Biden campaign official said that he would use a combination of Executive Orders to undo the changes.

In an effort to lower the skyrocketing costs of prescription drugs, Pres. Biden’s plan would repeal existing law that currently bans Medicare from negotiating lower prices with drug manufacturers. He would also limit price increases for all brand, biotech and generic drugs and launch prices for drugs that do not have competition.

Consumers would also be able to buy cheaper priced prescription drugs from other countries, which could help mobilize competition. And Biden would terminate their advertising tax break in an effort to also help lower costs.

In all, the Biden administration is expected to expand health care, medical, oral, and telehealth, while simultaneously policing health care providers for aberrant billing practices. My advice for providers: Be cognizant of your billing practices. You have an opportunity with this administration to increase revenue from government-paid services but do so compliantly.

Premature Recoupment of Medicare Reimbursements Defies Due Process!

Who knows that – regardless your innocence –the government can and will recoup your funds preemptively at the third level of Medicare appeals. This flies in the face of the elements of due process. However, courts have ruled that the redetermination and the reconsideration levels afford the providers enough due process, which entails notice and an opportunity to be heard. I am here to tell you – that is horse manure. The first two levels of a Medicare appeal are hoops to jump through in order to get to an independent tribunal – the administrative law judge (“ALJ”). The odds of winning at the 1st or 2nd level Medicare appeal is next to zilch, although often you can get the alleged amount reduced. The first level is before the same entity that found you owe the money. Auditors are normally not keen on overturning themselves. The second level is little better. The first time that you present to an independent tribunal is at the third level.

Between 2009 and 2014, the number of ALJ appeals increased more than 1,200 percent. And the government recoups all alleged overpayments before you ever get before an ALJ.

In a recent case, Sahara Health Care, Inc. v. Azar, 975 F.3d 523 (5th Cir. 2020), a home health care provider brought an action against Secretary of Department of Health and Human Services (“HHS”) and Administrator for the Centers for Medicare and Medicaid Services (“CMS”), asserting that its statutory and due process rights were violated and that defendants acted ultra vires by recouping approximately $2.4 million in Medicare overpayments without providing a timely ALJ hearing. HHS moved to dismiss, and the provider moved to amend, for a temporary restraining order (“TRO”) and preliminary injunction, and for an expedited hearing.

The case was thrown out, concluding that adequate process had been provided and that defendants had not exceeded statutory authority, and denied provider’s motion for injunctive relief and to amend. The provider appealed and lost again.

What’s the law?

Congress prohibited HHS from recouping payments during the first two stages of administrative review. 42 U.S.C. § 1395ff(f)(2)(A).

If repayment of an overpayment would constitute an “extreme hardship, as determined by the Secretary,” the agency “shall enter into a plan with the provider” for repayment “over a period of at least 60 months but … not longer than 5 years.” 42 U.S.C. § 1395ddd(f)(1)(A). That hardship safety valve has some exceptions that work against insolvent providers. If “the Secretary has reason to believe that the provider of services or supplier may file for bankruptcy or otherwise cease to do business or discontinue participation” in the Medicare program, then the extended repayment plan is off the table. 42 U.S.C. § 1395ddd(f)(1)(C)(i). A provider that ultimately succeeds in overturning an overpayment determination receives the wrongfully recouped payments with interest. 42 U.S.C. § 1395ddd(f)(2)(B). The government’s interest rate is high. If you do have to pay back the alleged overpayment prematurely, the silver lining is that you may receive extra money for your troubles.

The years-long back log, however, may dwindle. The agency has received a funding increase, and currently expects to clear the backlog by 2022. In fact, the Secretary is under a Mandamus Order requiring such a timetable. 

A caveat regarding this grim news. This was in the Fifth Circuit. Other Courts disagree. The Fourth Circuit has held that providers do have property interests in Medicare reimbursements owed for services rendered, which is the correct holding. Of course, you have a property interest in your own money. An allegation of wrongdoing does not erase that property interest. The Fourth Circuit agrees with me.

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.

RAC Audits Expected During the COVID Pandemic

Even though the public health emergency (“PHE”) for the COVID pandemic is scheduled to expire July 24, 2020, all evidence indicates that the PHE will be renewed. I cannot imagine a scenario in which the PHE is not extended, especially with the sudden uptick of COVID.

Center for Medicare and Medicaid Services (CMS) has given guidance that the voluminous number of exceptions that CMS has granted during this period of the PHE may be extended to Dec. 1, 2020. However, there is no indication of the RAC, and MAC audits being suspended until December 2020. In fact, we expect the audits to begin again any day. There will be confusion when audits resume and COVID exceptions are revoked on a rolling basis.

Remember the emergency-room physician whom I spoke about on the June 29 on Monitor Mondays? The physician whose Medicare enrollment was revoked due to a computer error or an error on the part of CMS. What normally would have been an easy fix, because of COVID, became more difficult. Because of COVID, he was unable to work for three months. He is back up and running now. The point is that COVID really messed up so many aspects of our lives.

The extension of PHE, technically, has no bearing on RAC and MAC audits coming back. Word on the street is that RAC and MAC audits are returning August 2020.

This month, July 2020, CMS released, “Coronavirus Disease 2019 (COVID-19) Provider Burden Relief Frequently Asked Questions (FAQs).” (herein afterward referred as “CMS July 2020 FAQs”).

The question was posed to CMS: “Is CMS suspending most Medicare-Fee-for-Service (FFS) medical review during the PHE for the COVID-19 pandemic? The answer is, according to CMS, “As states reopen, and given the importance of medical review activities to CMS’ program integrity efforts, CMS expects to discontinue exercising enforcement discretion beginning on Aug. 3, 2020, regardless of the status of the public health emergency. If selected for review, providers should discuss with their contractor any COVID-19-related hardships they are experiencing that could affect audit response timeliness. CMS notes that all reviews will be conducted in accordance with statutory and regulatory provisions, as well as related billing and coding requirements. Waivers and flexibilities in place at the time of the dates of service of any claims potentially selected for review will also be applied.” See CMS July 2020 FAQs.

Monday, July 13, 2020, we began our fourth “COVID-virtual trial.” The Judges with whom I have had interaction have taken a hard stance to not “force” someone to appear in person. It appears, at least to me, that virtual trials are the wave of the future. This is the guidance that conveys to me that RAC and MAC audits will begin again in August. Virtual audits may even be the best thing that ever happened to RAC and MAC audits. Maybe now the auditors will actually read the documents that the provider gives them.

Another specific issue addressed in the CMS’ July 2020 FAQs is that given the nature of the pandemic and the inability to collect signatures during this time, CMS will not be enforcing the signature requirement. Typically, Part B drugs and certain Durable Medical Equipment (DME) covered by Medicare require proof of delivery and/or a beneficiary’s signature. Suppliers should document in the medical record the appropriate date of delivery and that a signature was not able to be obtained because of COVID-19. This exception may or may not extend until Dec. 31, 2020.

The upshot is that no one really knows how the next few months will unfold in the healthcare industry. Some hospitals and healthcare systems are going under due to COVID. Big and small hospital systems are in financial despair. A RAC or MAC audit hitting in the wake of the COVID pandemic could cripple most providers. I will reiterate my recommendation: In the re-arranged words of Roosevelt, “Speak loudly, and carry a big stick.”

Programming Note: Knicole Emanuel is a permanent panelist on Monitor Mondays. Listen to her live reporting every Monday at 10 a.m. EST.

Update on Medicare/Medicaid Audits in the Wake of COVID-19

Published in Today’s Wound Clinic:

When I was asked to draft an article for Today’s Wound Clinic, it was approximately two weeks ago. I was asked to write about the current state of Medicare and Medicaid audits. Specifically, I was asked to provide a legal analysis about CMS suspending audits un-related to COVID-19. In the month of April, we have seen the spike of COVID-19, which has overturned our everyday world. We have been instructed by President Trump to “stay home” and “social distance” to decrease the spread of the virus. This “stay at home” instruction is unprecedented and has uprooted many of our most reliable and commonplace businesses, such as hairdressers, bowling alleys, and tattoo parlors.

Here is the answer: The current state of Medicare/Medicaid audits, at the moment, is dictated by COVID-19.

We can divide the post-COVID-19 audit rules into 3 categories:

  1. Those exceptions published by CMS to apply to all health care providers
  2. Those special, verbal exceptions given directly to an individual provider that were not published by CMS
  3. Effective immediately, new guidelines that CMS will follow until CMS believes it no longer needs to follow (by its own choice, of course).

An example of an “effective immediately” guideline is our current state of Medicare/Medicaid audits in the wake of COVID-19. CMS has not suspended all Medicare/Medicaid regulatory audits. But CMS has suspended most audits.

Effective immediately, survey activity is limited to the following (in Priority Order):

  • All immediate jeopardy complaints (cases that represents a situation in which entity noncompliance has placed the health and safety of recipients in its care at risk for serious injury, serious harm, serious impairment or death or harm) and allegations of abuse and neglect;
  • Complaints alleging infection control concerns, including facilities with potential COVID-19 or other respiratory illnesses;
  • Statutorily required recertification surveys (Nursing Home, Home Health, Hospice, and ICF/IID facilities);
  • Any re-visits necessary to resolve current enforcement actions;
  • Initial certifications;
  • Surveys of facilities/hospitals that have a history of infection control deficiencies at the immediate jeopardy level in the last three years;
  • Surveys of facilities/hospitals/dialysis centers that have a history of infection control deficiencies at lower levels than immediate jeopardy.

See CMS QSO-20-12-ALL. You can see that these “effective immediately” guidelines are usually published on CMS letterhead. The “effective immediately” guidelines explain why CMS is taking the stated action, the stated action, and that the action is temporary and due to COVID-19.

Here are a few recent “effective immediately” guidelines due to COVID-19:

  • On April 27, 2020, CMS said it would no longer expedite Medicare payments to doctors and be more stringent about accelerating the payments to hospitals as Congressional relief aimed at providers reaches $175 billion.
  • The agency is not accepting any new applications for the loans from Part B suppliers, including doctors, non-physician practitioners and durable medical equipment suppliers. CMS will continue to process pending and new requests from Part A providers, including hospitals, but be stricter with application approvals.
  • CMS expanded the Accelerated and Advance Payment Programs in late March as the pandemic continued to gain strength in the U.S. Since then, the agency has approved over 21,000 applications making up $59.6 billion in accelerated payments to Part A providers and almost 24,000 applications making up $40.4 billion in payments for Part B suppliers.

The $2.2 trillion Coronavirus Aid, Relief, and Economic Security stimulus package passed by Congress in March benchmarked $100 billion in funds for hospitals. On Friday, President Donald Trump signed legislation with a second round of emergency funding, called the Paycheck Protection Program and Health Care Enhancement Act, that allocates another $75 billion for providers — roughly three-quarters of what major provider trade associations requested.

An initial $30 billion from the fund was distributed between April 10 and April 17 based on Medicare fee-for-service revenue, sparking criticism that put facilities with a smaller proportion of Medicare business, such as children’s and disproportionate share hospitals, at a disadvantage. HHS on Friday began releasing an additional $20 billion in CARES payments to providers based on their 2018 net patient revenue, with more funding to roll out “soon,” the agency said, including $10 billion for hard-hit areas like New York.

How RAC/MAC auditors are compensated dictates their actions and/or aggressiveness.

RAC Auditors are paid by contingency. They are usually compensated approximately 13%, depending on the State. Imagine what 13% is of 1 million. It is $130,000 – more than most people make in a year. If you do not believe that 13% contingency is enough to incentivize a company, which, in turn, incentivize the employees, then you are sorely mistaken.

RACs were established through a demonstration program under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), piloted between 2005 and 2008, and were later made permanent under the Tax Relief and Health Care Act of 2006, which required CMS to establish Recovery Auditors for all states before 2010.

MACs are not compensated by contingency, per se. CMS decided to structure the MAC contracts with 1-year base performance periods and four, optional, 1-year performance periods at the time. The MMA required that these contracts be recompeted at least once every 5 years. The recent enactment of the Medicare Access and CHIP Reauthorization Act of 2015 amended this requirement to authorize a maximum 10-year performance period before MAC contracts must be recompeted. The amendment, which applies to MAC contracts in effect at the time of enactment or entered into on or after enactment, would permit CMS to modify existing MAC contracts or enter into future MAC contracts for 1-year base performance periods and nine optional 1-year performance periods. See Pub. L. No. 114-10, § 509(a)- (b) (April 16, 2015). Therefore, while MACs are not compensated on contingency, MACs are compensated on performance. The less a MAC spends, the more services a MAC allows, the strict oversight a MCA ensues on its providers…all these “performance-based” measures may not be a contingency compensation relationship, but it’s pretty close. Saved money becomes profit for MACs.

Medicare and Medicaid auditors love rules. Even if the rules that auditors are instructed to follow really are not required by actual law. It goes without saying that auditors are not lawyers. Auditors are not trained to decipher whether statutes, regulations or policy are superseded by federal statutes and regulations. The fact is that, more times than one would hope, the auditors are wrong in their assessments that a claim should be denied, not out of malice, but because of a basic misunderstanding of what the law actually requires.

I have all kinds of stories about auditors claiming money is owed, when, really it was not owed because the RAC/MAC auditor failed to follow the actual, correct procedure or misconstrued a regulation. For example, I had a durable medical equipment provider, DME ABC, who was informed by the NSC Supplier Audit and Compliance Unit of Palmetto GBA that it owed $1,075,548.64. Palmetto is one of the MACs for Medicare – durable medical equipment. There was no demand letter. The alleged overpayment amount came to fruition in a telephone conference between the CEO of the company and an employee of Palmetto. Let’s call her Nancy. Nancy told CEO that company owed $1,075,548.64 based on an alleged violation of 42 C.F.R. § 424.58,

Even more disconcerting, was the fact that Palmetto claimed that its alleged, oral overpayment against DME ABC arose from a normal, reoccurring validation process pursuant to 42 C.F.R. §424.57, approved by CMS and in accordance with the requirements of 42 C.F.R. §424.58. No formal letter was necessary was Palmetto’s retort. Not correct; a formal demand letter is always required.

In this case, Palmetto began to backtrack once we pointed out that Palmetto nor Nancy ever sent a formal demand letter with any reconsideration review appeal rights or administrative appeal rights. We knew this was procedurally incorrect because federal law dictates that you receive a formal demand letter with appeal rights and notice of how many days you have to appeal. But out of fear of retribution, DME ABC was willing to write a check without pushing back. Obviously, we did not do so.

I tell this story as an example of how intimidating, scary, and overwhelming auditors can be. If someone off the street asked you for a million dollars, you would laugh them off your doorstep, right? After you tell them to don a mask and maintain social distancing.

But in the new-age world of COVID-19, rules have been broken. This behavior would not be acceptable pre-COVID-19. But this provider honestly was going to pay.

The Trump Administration is issuing an unprecedented array of temporary regulatory waivers and new rules to equip the American healthcare system with maximum flexibility to respond to the 2019 Novel Coronavirus (COVID-19) pandemic.

Pre-COVID-19 if you were to state “paperwork over patients,” everyone in the industry would agree. There would be snickers and eyes rolling, because no one wanted paperwork to be over patients. But it was. Now the mantra has flipped upside down – now the mantra is: Patients over Paperwork.

Post-COVID-19, if documents are lost or misplaced, or otherwise unusable, DME MACs have the flexibility to waive replacements requirements under Medicare such that the face-to-face requirement, a new physician’s order, and new medical necessity documentation are not required. Suppliers must still include a narrative description on the claim explaining the reason why the equipment must be replaced and are reminded to maintain documentation indicating that the DMEPOS was lost, destroyed, irreparably damaged or otherwise rendered unusable or unavailable as a result of the emergency.

Post-COVID-19, CMS is pausing the national Medicare Prior Authorization program for certain DMEPOS items. CMS is not requiring accreditation for newly enrolling DMEPOS and extending any expiring supplier accreditation for a 90-day time period. CMS is waiving signature and proof of delivery requirements for Part B drugs and Durable Medical Equipment when a signature cannot be obtained because of the inability to collect signatures. Suppliers should document in the medical record the appropriate date of delivery and that a signature was not able to be obtained because of COVID-19.

Post-COVID-19, in order to increase cash flow to providers impacted by COVID-19, CMS has expanded the current Accelerated and Advance Payment Program. An accelerated/advance payment is a payment intended to provide necessary funds when there is a disruption in claims submission and/or claims processing. CMS may provide accelerated or advance payments during the period of the public health emergency to any two Medicare providers/suppliers who submits a request to the appropriate MAC and meets the required qualifications. The process of obtaining the funds is a MAC-by-MAC process. Each MAC will work to review requests and issue payments within seven calendar days of receiving the request. Traditionally repayment of these advance/accelerated payments begins at 90 days, however for the purposes of the COVID-19 pandemic, CMS has extended the repayment of these accelerated/advance payments to begin 120 days after the date of issuance of the payment. Providers can get more information on this process here: www.cms.gov/files/document/Accelerated-and-Advanced-Payments-Fact-Sheet.pdf

The Future of Medicare/Medicaid Audits

The beauty of predicting the future is that no one can ever tell you that you are wrong. These are my predictions:

Auditors will deny claims for not having prior authorizations. Auditors will deny claims because the supplier accreditation expired after the 90-day time period. Auditors will deny claims because the percentage of face-to-face time was not met as described per CPT codes.

Obviously, these would be erroneous denials if the denials are within the dates that the COVID-19 pandemic occurred. The problem will be that the auditors will not be able to keep up with all the exceptions, not because the auditors are acting out of malice or dislikes providers. They will be simply trying to do their job. They will simply not be able to take into consideration all the exceptions that were given during the virus. Because, while we do have many written exceptions, if you call CMS with a personal and individualized problem, CMS will, most likely, grant you a needed exception. As long as the exception has the best interest of the consumer at heart. However, this personalized exception will not be written on CMS’s website. In five years, when you undergo a MAC or RAC audit, you better have proof that you received that exception. It will not be enough proof for you to state that you were given the exception over the phone.

So how can you protect yourself from future, erroneous audits?

Write everything down. When you speak to CMS, document concurrently the date, time, name of the person to whom you are speaking, the summary of your conversation, the COVID-19 regulatory exception, sign it and date it.

It is a hearsay exception. Writing down everything does not magically transform your note into the truth. However, writing down everything concurrently does magically allow that note that you wrote to be allowed in a court of law as an exhibit. Had you not written the note contemporaneously with the conversation that you had with CMS, then the attorney on the other side of the case would move to exclude your handwritten or typed note as hearsay.

Hearsay is defined as a statement that (1) the declarant does not make while testifying at the current trial or hearing; and (2) a party offers in evidence to prove the truth of the matter asserted in a statement. There are too many hearsay exceptions to name in this article.

Just know, for purposes of this article, that any health care provider who is relying on an exception to a normally required regulatory mandate – regardless what it is – either be able to: (1) cite the written exception that was published by CMS to the public; or (2) produce the written or typed contemporaneously written note that you wrote to memorialize the conversation.

Knicole Emanuel Appears on the Hospital Finance Podcast – Suspension of Audits

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To listen, please click here.

Highlights of this episode include:

  • Background on why CMS will forego all audits unrelated to the coronavirus.
  • What types of audits will CMS continue during the coronavirus pandemic?
  • What providers need to know about complying with current audits, such as TPE audits.
  • How providers can protect themselves by documenting exceptions such as two-day admissions.
  • And more…

Mike Passanante: Hi, this is Mike Passanante and welcome back to the award-winning Hospital Finance Podcast®.

As a result of the COVID-19 crisis, the government has suspended most auditing activities for providers. To sort out what that means for hospitals, I’m joined by Knicole Emanuel. Knicole is an attorney at Potomac Law Group in Raleigh, North Carolina, where she concentrates on Medicare and Medicaid regulatory compliance litigation. Knicole, welcome to the show.

Knicole Emanuel: Thank you and thank you for having me.

Mike: Knicole, the government announced that it is suspending survey activities. Practically what does that mean for providers?

Knicole: Well, so right now because of the Coronavirus, CMS has decided to forego audits that are unrelated to the coronavirus. So actually effective April 3, 2020. The only audits that will be conducted will be those audits that are germane to all immediate Jeopardy complaints. Those kind of cases that represent a situation in which an entities non-compliance has placed the health and safety of recipients in its care at risk for serious injury. So we’re talking about potential serious injury or serious harm.

Another audit that’s going to continue would be complaints alleging infection control concerns because that would obviously be impacted by the coronavirus. Any sort of statutorily required recertification surveys are going to be conducted. I would assume that they’re going to be conducted telephonically. They’re not going to be going on-site and revisits necessary to resolve current enforcement actions. That’s important because when this Coronavirus all came about, there were hundreds and hundreds and hundreds, perhaps thousands upon thousands of healthcare providers already in the middle of TPE audits or RAC audits or MAC audit. And they’d already had on-site visits, they’d already had maybe perhaps a lower accuracy rating. And they’re going to be stuck in this cycle of being stuck in the audit until they can get a resurvey because with this coronavirus the penalties that they’re enduring, whether it’s a suspension of admission, or whether it’s a monetary penalty. These penalties are being administered even if they cannot have a secondary or a revisit of the audit to get them off of the penalty that they’re currently on. So it’s really important that people who are in the middle of audit and when all this came down to get them off of the audit cycle so they can go back to providing care.

Mike: So essentially, there are a number of activities that are suspended. But it’s important for providers to know that there is a subset of activities that will continue even during this period.

Knicole: Correct. But they’re all going to be activities that are of the utmost importance. The items that take lower priority are going to be pushed down.

Mike: Okay, and you mentioned the TPE audits a second ago. So that’s the targeted probe and education. Are they going to continue during this time period as far as you know?

Knicole: Well, so as far as I know, they are not going to continue as in they’re not going to start new TPE audit. Now the question then becomes, “Well, I received a document request a month ago for a TPE audit. Do I need to comply now?” And the conservative safe answer is to go ahead and keep complying with these document requests. Although the deadlines for these document requests, those are going to be extended. I’m sure you’ll be able to get extensions for trying to comply with those. And in reality, if you contact the people who are conducting the audit, you may find that the entire audit in general is put on pause. But don’t assume it’s put on pause. Try to make sure you comply, unless you find out it’s on pause. And if you get something over the email or over a phone that says that your TPE audit is paused currently, follow up with an email and get it in writing. Because future audit, they’re not going to remember that your particular audit was with pause during the coronavirus.

Mike: That’s great advice, Knicole. Do you have any other recommendations for providers as they’re navigating through this time?

Knicole: Yes, I do. There are a number of providers right now that are asking for exceptions, and I can give examples. So for example, in the hospital setting, there are hospitals that are asking for waivers for the inpatient admission standards or the two-day admission, or the moon rules. All those kind of things are asking for exceptions, and a lot of the hospital, A lot of the providers are getting the exceptions they need to allow people to have to stay longer in their hospitals because they have nowhere to discharge them. They can’t go back to their nursing homes where the coronavirus may or may not be. And so, because they’re getting all these exceptions, five years from now when you’re undergoing an audit, no one is going to remember that you had this exception that this particular consumer can stay in my hospital for two extra days or five extra days. And five years from now, you may get audited and say, “Well, you got to recoup all this money because you let them stay in for too long of a time.” When in reality, you are given an exception, write all the exceptions down. Keep one place, keep a computer program, keep a hard copy, whatever you want to do, and notebook, if that you want to get down to not having any technology involved. But keep track of all of these exceptions that you get as little as they may be because if you’re getting an exception for one person, and that one person can stay longer than the two-day allowance for the outpatient stays, and you multiply that by, okay, well, now you’ve got to take that exception and extrapolate it again, 200 people over the course of a year, that’s a lot of money we’re talking about. So you need to make sure you keep track of all the exceptions, no matter how small. And keep track of them somewhere that you’re not going to lose them. If your attrition rate is high with executives, you need to make sure that the next people in line had that knowledge so that in future audit, you can explain that you did not abide by the regulations for good reason. You had an exception, but no one’s keeping track of all these exceptions.

Mike: And so, it’s great advice, Knicole. And I know you’ve got a great blog of your own that people can follow. If people wanted to read more about what’s going on here on that blog or get in touch with you, how can they do that?

Knicole: Well, you’re more than welcome to go onto my blog, which is Medicare and Medicaid law. It is at medicaidlawnc.com. You can also contact me at any time. I’m at Potomac Law Group. I help providers across the country and not only in North Carolina, but in 33 states. And so, I am pretty well versed on all the exceptions that I’m seeing. It’s really fast-paced right now. It’s scary. It’s surreal. But it is really important to make sure that everything is written down because in the future– I mean, that old saying that old adage for nurses, if it’s not written, it doesn’t exist, is really going to matter in the future years.

Mike: Knicole, thanks for adding some clarity around this very complex issue. We appreciate you coming back to the show today.

Knicole: Absolutely. Thank you.

Suspension of Audits During the Coronavirus?

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Effective immediately, survey activity is limited to the following (in Priority Order):

  • All immediate jeopardy complaints (cases that represents a situation in which entity noncompliance has placed the health and safety of recipients in its care at risk for serious injury, serious harm, serious impairment or death or harm) and allegations of abuse and neglect;
  • Complaints alleging infection control concerns, including facilities with potential COVID-19 or other respiratory illnesses;
  • Statutorily required recertification surveys (Nursing Home, Home Health, Hospice, and ICF/IID facilities);
  • Any re-visits necessary to resolve current enforcement actions;
  • Initial certifications;
  • Surveys of facilities/hospitals that have a history of infection control deficiencies at the immediate jeopardy level in the last three years;
  • Surveys of facilities/hospitals/dialysis centers that have a history of infection control deficiencies at lower levels than immediate jeopardy.

See CMS QSO-20-12-ALL.

Obviously, there are so many questions. Providers across the country are asking whether they need to comply with document requests. Are TPE audits continuing? Do they need to comply with ongoing ADRs?

Every bulletin that CMS publishes instigates more detailed and complex questions. With all these relaxed guidelines, won’t RACs, etc. have a field day when this is all over? Of course they will.

General Recommendations:

  • Be proactive.
  • Document everything.
  • Deadlines will be extended.
  • Exceptions will be made.
  • Keep all email correspondence.
  • Maintain copies of everything that you submit. (Do not rely on electronic computer software programs).
  • Keep track of CMS updates.

Email me questions, and I will try to respond.

Also, feel free to reach out to the government: QSOG_EmergencyPrep@cms.hhs.gov.

Effective date: 30 days from the memo, which equals April 3, 2020.