Category Archives: Medicare Administrative Contractor

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.

 

 

Inconsequential Medicare Audits Could Morph into a Whopper of a Whale

Emergency room physicians or health care providers are a discrete breed – whales in a sea of fish. Emergency room doctors have – for the most part – been overlooked by the RAC auditors or TPE, ZPIC, or MAC auditors. Maybe it’s because, even RAC auditors have children or spouses that need ER services from time to time. Maybe it’s because ER doctors use so many different billers. Normally, an ER doctor doesn’t know which of his or her patients are Medicaid or Medicare. When someone is suffering from a a broken leg or heart attack, the ER doctor is not going to stop care to inquire whether the patient is insured and by whom. But should they? Should ER doctors have to ask patients their insurer? If the answer includes any sort of explanation that care differs depending on whether someone is covered by Medicare or Medicaid or has private insurance, then, sadly, the answer may be yes.

ER doctors travel to separate emergency rooms, which are owned by various and distinct entities, and rely on individual billing companies. They do not normally work at only one hospital. Thus, they do not always have the same billers. We all know that not all billers are created equal. Some are endowed with a higher understanding of billing idiosyncrasies than others.

For example, for CPT codes 99281-99285 – Hospital emergency department services are not payable for the same calendar date as critical care services when provided by the same physician or physician group with the same specialty to the same patient. 

We all know that all hospitals do not hire and implement the same billing computer software programs. The old adage – “you get what you pay for” – may be more true than we think. Recent articles purport that “the move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care.” – Think a comment like that would red-flag ER doctors services by RAC, MAC and ZPIC auditors? The white whale may as well shoot a water spray 30 feet into the air.

Will auditing entities begin to watch ER billing more closely? And what are the consequences? When non-emergency health care providers are terminated by Medicare, Medicaid, or a MAC or MCO’s network, there is no emergency – by definition. Juxtapose, the need for ER health care providers. ER rooms cannot function with a shortage of  physicians and health care providers. Even more disturbing is if the termination is unwarranted and seemingly inconsequential – only affecting under 4 surgeries per month – but acts as the catalyst for termination of Medicare, Medicaid, and private payors across the board.

I have a client named Dr. Ishmael. His big fish became the MAC Palmetto – very suddenly. Like many ER docs, he rotates ERs. He provides services for Medicare, Medicaid, private pay, uninsured – it doesn’t matter to him, he is an ER doctor. He gets a letter from one MAC. In this case, it was Palmetto. Interestingly enough, Palmetto is his smallest insurance payor. Maybe 2 surgeries a month are covered by Palmetto. 90% of his services are provided to Medicaid patients. Not by his choice, but by demographics and circumstance. The letter from Palmetto states that he is being excluded from Palmetto’s Medicare network, effective in 10 days. He will also be placed on the CMS preclusion list in 4 months.

We appeal through Palmetto, as required. But, in the meantime, four other MACs, State Medicaid and BCBS terminate Dr. Ishmael’s billing privileges for Medicare and Medicaid based on Palmetto’s decision. Remember, we are appealing Palmetto’s decision as we believe it is erroneous. But because of Palmetto’s possibly incorrect decision to terminate Dr. Ishmael’s Medicare billing privileges, all of a sudden, 100% of Dr. Ishmael’s services are nonbillable and nonreimburseable…without Dr. Ishmael or the hospital ever getting the opportunity to review and defend against the otherwise innocuous termination decision.

Here, the hospital executives, along with legal counsel, schedule meetings with Dr. Ishmael. “They need him,” they say. “He is important,” they say. But he is not on the next month’s rotation. Or the next.

They say: “Come and see if ye can swerve me. Swerve me? ye cannot swerve me, else ye swerve yourselves! man has ye there. Swerve me?”

Billing audits on ER docs for Medicare/caid compliance are distinctive processes, separate from other providers’ audits. Most providers know the insurance of the patient to whom they are rendering services. Most providers use one biller and practice at one site. ER docs have no control over the choice of their billers. Not to mention, the questions arises, who gets to appeal on behalf the ER provider? Doesn’t the hospital reap the benefit of the reimbursements?

But one seemingly paltry, almost, minnow-like, audit by a cameo auditor can disrupt an entire career for an ER doc. It is imperative to act fast to appeal in the case of an ER doc.  But balance speed of the appeal with the importance of preparing all legal arguments. Most MACs or other auditing entities inform other payors quickly of your exclusion or termination but require you to put forth all arguments in your appeal or you could waive those defenses. I argue against that, but the allegations can exist nonetheless.

The moral of the story is ER docs need to appeal and appeal fast when billing privileges are restricted, even if the particular payor only constitutes 4 surgeries a month. As Herman Melville said: “I know not all that may be coming, but be it what it will, I’ll go to it laughing.” 

Sometimes, however, it is not a laughing matter. It is an appealable matter.

Inconsequential Medicare Audits Could Morph into a Whopper of a Whale

Emergency room physicians or health care providers are a discrete breed – whales in a sea of fish. Emergency room doctors have – for the most part – been overlooked by the RAC auditors or TPE, ZPIC, or MAC auditors. Maybe it’s because, even RAC auditors have children or spouses that need ER services from time to time. Maybe it’s because ER doctors use so many different billers. Normally, an ER doctor doesn’t know which of his or her patients are Medicaid or Medicare. When someone is suffering from a a broken leg or heart attack, the ER doctor is not going to stop care to inquire whether the patient is insured and by whom. But should they? Should ER doctors have to ask patients their insurer? If the answer includes any sort of explanation that care differs depending on whether someone is covered by Medicare or Medicaid or has private insurance, then, sadly, the answer may be yes.

ER doctors travel to separate emergency rooms, which are owned by various and distinct entities, and rely on individual billing companies. They do not normally work at only one hospital. Thus, they do not always have the same billers. We all know that not all billers are created equal. Some are endowed with a higher understanding of billing idiosyncrasies than others.

For example, for CPT codes 99281-99285 – Hospital emergency department services are not payable for the same calendar date as critical care services when provided by the same physician or physician group with the same specialty to the same patient. 

We all know that all hospitals do not hire and implement the same billing computer software programs. The old adage – “you get what you pay for” – may be more true than we think. Recent articles purport that “the move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care.” – Think a comment like that would red-flag ER doctors services by RAC, MAC and ZPIC auditors? The white whale may as well shoot a water spray 30 feet into the air.

Will auditing entities begin to watch ER billing more closely? And what are the consequences? When non-emergency health care providers are terminated by Medicare, Medicaid, or a MAC or MCO’s network, there is no emergency – by definition. Juxtapose, the need for ER health care providers. ER rooms cannot function with a shortage of  physicians and health care providers. Even more disturbing is if the termination is unwarranted and seemingly inconsequential – only affecting under 4 surgeries per month – but acts as the catalyst for termination of Medicare, Medicaid, and private payors across the board.

I have a client named Dr. Ishmael. His big fish became the MAC Palmetto – very suddenly. Like many ER docs, he rotates ERs. He provides services for Medicare, Medicaid, private pay, uninsured – it doesn’t matter to him, he is an ER doctor. He gets a letter from one MAC. In this case, it was Palmetto. Interestingly enough, Palmetto is his smallest insurance payor. Maybe 2 surgeries a month are covered by Palmetto. 90% of his services are provided to Medicaid patients. Not by his choice, but by demographics and circumstance. The letter from Palmetto states that he is being excluded from Palmetto’s Medicare network, effective in 10 days. He will also be placed on the CMS preclusion list in 4 months.

We appeal through Palmetto, as required. But, in the meantime, four other MACs, State Medicaid and BCBS terminate Dr. Ishmael’s billing privileges for Medicare and Medicaid based on Palmetto’s decision. Remember, we are appealing Palmetto’s decision as we believe it is erroneous. But because of Palmetto’s possibly incorrect decision to terminate Dr. Ishmael’s Medicare billing privileges, all of a sudden, 100% of Dr. Ishmael’s services are nonbillable and nonreimburseable…without Dr. Ishmael or the hospital ever getting the opportunity to review and defend against the otherwise innocuous termination decision.

Here, the hospital executives, along with legal counsel, schedule meetings with Dr. Ishmael. “They need him,” they say. “He is important,” they say. But he is not on the next month’s rotation. Or the next.

They say: “Come and see if ye can swerve me. Swerve me? ye cannot swerve me, else ye swerve yourselves! man has ye there. Swerve me?”

Billing audits on ER docs for Medicare/caid compliance are distinctive processes, separate from other providers’ audits. Most providers know the insurance of the patient to whom they are rendering services. Most providers use one biller and practice at one site. ER docs have no control over the choice of their billers. Not to mention, the questions arises, who gets to appeal on behalf the ER provider? Doesn’t the hospital reap the benefit of the reimbursements?

But one seemingly paltry, almost, minnow-like, audit by a cameo auditor can disrupt an entire career for an ER doc. It is imperative to act fast to appeal in the case of an ER doc.  But balance speed of the appeal with the importance of preparing all legal arguments. Most MACs or other auditing entities inform other payors quickly of your exclusion or termination but require you to put forth all arguments in your appeal or you could waive those defenses. I argue against that, but the allegations can exist nonetheless.

The moral of the story is ER docs need to appeal and appeal fast when billing privileges are restricted, even if the particular payor only constitutes 4 surgeries a month. As Herman Melville said: “I know not all that may be coming, but be it what it will, I’ll go to it laughing.” 

Sometimes, however, it is not a laughing matter. It is an appealable matter.

Are ALJ Appointed Properly, per the Constitution?

A sneaky and under-publicized matter, which will affect every one of you reading this, slid into common law last year with a very recent case, dated Jan. 9, 2020, upholding and expanding the findings of a 2018 case, Lucia v. SEC, 138 S. Ct. 2044 (U.S. 2018). In Lucia, the Supreme Court upheld the plain language of the U.S. Constitution’s Appointments Clause.

The Appointments Clause prescribes the exclusive means of appointing “officers.” Only the President, a court of law, or a head of department can do so. See Art. II, § 2, cl. 2.

In Lucia, the sole issue was whether an administrative law judge (ALJ) can be appointed by someone other than the President or a department head under Article II, §2, cl. 2 of the U.S. Constitution, or whether ALJs simply federal employees. The Lucia court held that ALJs must be appointed by the President or the department head; this is a non-delegable duty. The most recent case, Sara White Dove-Ridgeway v. Nancy Berrryhill, 2020 WL 109034, (D.Ct.DE, Jan. 9, 2020), upheld and expanded Lucia.

ALJs are appointed. In many states, ALJs are direct employees of a single state agency. In other words, in many states, about half, the payroll check that an ALJ receives bears the emblem of the department of health for that state. I have litigated in administrative courts in approximately 33 states, and have seen my share of surprises. In one case, many years ago, LinkedIn informed me that my appointed ALJ was actually a professional photographer by trade.

Lucia, however, determined that ALJs at the Securities and Exchange Commission (SEC) were “officers of the United States,” subject to the Appointment Clause of the Constitution, which requires officers to be appointed by the president, the heads of departments, or the courts. The court’s decision raised concern at the U.S. Department of Health and Human Services (HHS) because its ALJs had not been appointed by the secretary, but rather by lower agency officials.

The court also held that relief should be granted to “one who makes a timely challenge to the constitutional validity of the appointment of an officer who adjudicates his case.” Whether that relief is monetary, in the form of attorneys’ fees reimbursed or out-of-pocket costs, it is unclear.

In July 2018, President Trump’s Executive Order 13843 excepted ALJs from the competitive service, so agency heads, like HHS Secretary Alex Azar, could directly select the best candidates through a process that would ensure the merit-based appointment of individuals with the specific experience and expertise needed by the selecting agencies.

The executive order also accepted all previously appointed ALJs. So there became a pre-July 16, 2018, challenge and a post-July 16, 2018, based on Trump’s Executive Order. Post-July 16, 2018, appointees had to be appointed by the President or department head. But the argument could be made that ALJs appointed pre-July 16, 2018, were grandfathered into the more lax standards. In Dove-Ridgway, Social Security benefits were at issue. On July 5, 2017, ALJ Jack S. Pena found a plaintiff not disabled. On Jan. 7, 2019, the plaintiff filed an appeal of the ALJ’s decision, seeking judicial review from the district court. In what seems to be the fastest decision ever to emerge from a court of law, two days later, a ruling was rendered. The District Court found that even though at the time of the administrative decision, Lucia and Trump’s Executive Order had not been issued, the court still held that the ALJ needed to have been appointed constitutionally. It ordered a remand for a rehearing before a different, constitutionally appointed ALJ, despite the fact that Trump had accepted all previously appointed ALJs.

In this firsthand, post-Jan. 9, 2020, era, we have an additional defense against Medicare or Medicaid audits or alleged overpayments in our arsenal: was the ALJ appointed properly, per the U.S. Constitution?

Programming Note: Listen to Knicole Emanuel’s live reports on Monitor Monday, 10-10:30 a.m. EST.

As seen on RACMonitor.

RAC Audits Will Be Targeting Telehealth

Consults by telephone are becoming more and more prevalent. It only makes sense. In an age in which the population has surged, the ratio of physicians to patients has grown more disparate, and the aging and disabled community continues to increase, telehealth is a viable, logical, and convenient resource. I can tell you that when I have to go to a doctor appointment, my whole day is off-kilter. You have to get dressed, drive there, sit in the waiting room, wait for the doctor in the patient room, talk to your doctor, check-out, drive back to work/home and, usually, have a hour-long telephone call with your insurance company. Doctor visits can take up a whole day.

Enter telehealth.

Telehealth allows a patient who needs to see a health care provider to present to a health care provider over the telephone. No getting dressed, driving, or waiting.

According to a FAIR Health White Paper report, “the use of non-hospital-based provider-to-patient telehealth increased 1,393% from 2014 to 2018, from 0.007% to 0.104% of all medical claim lines. There was a 624% increase in claim lines related to any type of telehealth, from 0.0192% to 0.1394% of all medical claim lines. Non-hospital-based provider-to-patient telehealth accounted for 84% of all telehealth claim lines in 2018.”

According to the numbers in the report, the use of telehealth increased in urban areas, rather than rural areas, at a much greater percentage, which, personally, I found surprising, at first. But when you consider the number of people living in urban areas rather than rural areas, the disparate percentages make sense.

Not surprising, 82% of telehealth claims were associated with individuals aged 51+.

Private insurances are jumping on the band wagon, but, more importantly, government insurers are already on the wagon. And the wagon is gaining a wagon train; CMS is expanding the use of telehealth even as you read this.

On April 5, 2019, the Centers for Medicare & Medicaid Services (CMS) finalized policies that increased plan choices and benefits, including allowing Medicare Advantage plans to include additional telehealth benefits. Before this year, Medicare recipients could only receive certain telehealth services if they live in rural areas. Now Medicare will pay for telehealth across the country…all from your house.

On July 29, 2019, CMS took the first steps toward welcoming opioid treatment programs (OTPs) into the Medicare program and expanding Medicare coverage of opioid use disorder (OUD) treatment services provided by both OTPs and physician practices. CMS is proposing the use of telehealth for opioid services. More specifically, CMS is proposing telehealth substance abuse counseling, telehealth individual/group therapy.

Enter RAC, ZPIC, UPIC, TPE, MAC, and MFCU audits.

Where there is Medicare money to be made or fraud to be had there are the auditors. The alphabet soup.

In April 2019, one of the largest healthcare fraud rings in U.S. history, involving telemedicine companies was busted. At an alleged amount of $1.2 billion. Durable medical equipments (DME) were also targeted, but this blog focuses on telehealth.

Allegedly, the telehealth companies would inform Medicare beneficiaries that they, for example, qualified for a brace. Using telehealth, the physicians wrote prescriptions for braces. DME would file the claim and pay the telehealth provider and the physician.

The government argued that you have to be seen in-person to determine your need for a brace.

It is important to note that the above-referenced scheme was performed prior to the most recent expansion of telehealth.

With this most recent expansion of telehealth, expect the auditors to be drooling.

RAC Audits: Alternatives to Litigation

Understanding why there’s a need for auditing the auditors.

I frequently encounter complaints by healthcare providers that when they are undergoing Recovery Audit Contractor (RAC), Medicare Administrative Contractor (MAC), and, more recently, the Targeted Probe-and-Educate (TPE) audits, the auditors are getting it wrong. That’s as in, during a RAC audit, the auditor finds claims noncompliant, for example, for not having medical necessity – but the provider knows unequivocally that the determination is dead wrong. So the question that I get from the providers is whether they have any legal recourse against the RAC or MAC finding noncompliance, besides going through the tedious administrative action, which we all know can take upwards of 5-7 years before reaching the third administrative level.

To which, now, upon a recent discovery in one of my cases, I would have responded that the only other option for relief would be obtaining a preliminary injunction in federal court. To prove a preliminary injunction in federal court, you must prove: a) a likelihood of success on the merits; and b) that irreparable harm would be incurred without the injunction; i.e., that your company would be financially devastated, or even threatened with extinction.

The conundrum of being on the brink of financial ruin is that you cannot afford a legal defense if you are about to lose everything.

This past month, I had a completely different legal strategy, with a different result. I am not saying that this result would be reached by all healthcare providers that disagree with the results of their RAC or MAC or TPE audit, but I now believe that in certain extreme circumstances, this alternative route could work, as it did in my case.

When this particular client hired me, I quickly realized that the impact of the MAC’s decision to rescind the client’s Medicare contract was going to do more than the average catastrophic outcomes resulting from a rescission of a Medicare contract. First, this provider was the only provider in the area with the ability to perform certain surgeries. Secondly, his practice consisted of 90 percent of Medicare. An immediate suspension of Medicare would have been devastating to his practice. Thirdly, the consequence of these Medicaid patients not undergoing this particular and highly specialized surgery was dire. This trifecta sparked a situation in which, I believed, that even a Centers for Medicare & Medicaid Services (CMS) employee (who probably truly believed that the negative findings cited by the RAC or MAC were accurate) may be swayed by the exigent circumstances.

I contacted opposing counsel, who was the attorney for CMS. Prior to this situation, I had automatically assumed that non-litigious strategies would never work. Opposing counsel listened to the facts. She asked that I draft a detailed explanation as to the circumstances. Now, concurrently, I also drafted this provider’s Medicare appeal, because we did not want to lose the right to appeal. The letter was definitely detailed and took a lot of time to create.

In the end, CMS surprised me and we got the Medicare contract termination overturned within months, not years, and without expensive litigation.

(Originally published on RACMonitor)

Medicare TPE Audits: A Wolf in Sheep’s Clothing

Let’s talk targeted probe-and-educate (TPE) audits. See on RACMonitor as well.

TPE audits have turned out to be “wolf audits” in sheep’s clothing. The Centers for Medicare & Medicaid Services (CMS) asserted that the intent of TPE audits is to reduce provider burden and appeals by combining medical review with provider education.

But the “education” portion is getting overlooked. Instead, the Medicare Administrative Contractors (MACs) resort to referring healthcare providers to other agencies or contractors for “other possible action,” including audit by a Recovery Audit Contractor (RAC), which can include extrapolation or referral to the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) for investigation of fraud. A TPE audit involves up to three rounds of review, conducted by a MAC. Once Congress was instructed that RAC audits are not fair, and providers complained that RAC auditors did not help with education, CMS came up with TPE audits – which, supposedly, had more of an educational aspect, and a more fair approach. But in reality, the TPE audits have created an expensive, burdensome, cyclical pattern that, again, can result in RAC audits. The implementation of TPE audits has been just as draconian and subjective as RAC audits. The penalties can be actually worse than those resulting from RAC audits, including termination from the Medicare program. In this article, I want to discuss the appeal process and why it is important to appeal at the first level of audit.

Chapter Three, Section 3.2.5 of the Medicare Program Integrity Manual (MPIM) outlines the requirements for the TPE process, which leaves much of the details within the discretion of the MAC conducting the review. The MACs are afforded too much discretion. Often, they make erroneous decisions, but providers are not pushing back. A recent one-time notification transmittal provides additional instructions to MACs on the TPE process: CMS Transmittal 2239 (Jan. 24, 2019).

Providers are selected for TPE audit based on data analysis, with CMS instructing MACs to target providers with high denial rates or claim activity that the contractor deems unusual, in comparison to peers. These audits are generally performed as a prepayment review of claims for a specific item or service, though relevant CMS instructions also allow for post-payment TPE audits.

A TPE round typically involves a review of a probe sample of between 20 and 40 claims. Providers first receive notice that they have been targeted by their MAC, followed by additional documentation requests (ADRs) for the specific claims included in the audit.

TPE Audits

The MACs have sole discretion as to which providers to target, whether claims meet coverage requirements, what error rate is considered compliant, and when a provider should be removed from TPE. Health care providers can be exposed to future audits and penalties based merely on the MAC’s resolve, and before the provider has received due process through their right to challenge claim denials in an independent appeals process. In this way, the MACs’ misinterpretation of the rules and misapplication of coverage requirements can lead to further audits or disciplinary actions, based on an erroneous determination that is later overturned. Similarly, while the educational activities are supposedly meant to assist providers in achieving compliance, in reality, this “education” can force providers to appear to acknowledge error findings with which they may disagree – and which may ultimately be determined to be wrong. Often times, the MACs – for “educational purposes” – require the provider to sign documentation that admits alleged wrongdoing, and the provider signs these documents without legal counsel, and without the understanding that these documents can adversely affect any appeal or future audits.

The MACs have the power, based on CMS directive, to revoke billing privileges based on a determination that “the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.” 42 C.F.R. § 424.535(a)(8)(ii). This language shows that TPE audit findings can be used as a basis for a finding of abuse of billing privileges, warranting removal from participation in the Medicare program. CMS guidance also gives the MACs authority to refer providers for potential fraud investigation, based on TPE review findings. It is therefore vital that providers submit documentation in a timely fashion and build a clear record to support their claims and compliance with Medicare requirements.

TPE audits promise further education and training for an unsuccessful audit (unsuccessful according to the MAC, which may constitute a flawed opinion), but most of the training is broad in nature and offered remotely – either over the phone, via web conference, or through the mail, with documentation shared on Google Docs. Only on atypical occasions is there an on-site visit.

Why appeal? It’s expensive, tedious, time-consuming, and emotionally draining. Not only that, but many providers are complaining that the MACs inform them that the TPE audit results are not appealable (TPE audits ARE appealable).

TPE reviews and TPE audit overpayment determinations may be appealed through the Medicare appeals process. The first stage of appeal will be to request a redetermination of the overpayment by the MAC. If the redetermination decision is unfavorable, Medicare providers and suppliers may request an independent review by filing a request for reconsideration with the applicable Qualified Independent Contractor (QIC). If the reconsideration decision is unfavorable, Medicare providers and suppliers are granted the opportunity to present their case in a hearing before an administrative law judge (ALJ). While providers or suppliers who disagree with an ALJ decision may appeal to the Medicare Appeals Council and then seek judicial review in federal district court, it is crucial to obtain experienced healthcare counsel to overturn the overpayment determination during the first three levels of review.

Appealing unfavorable TPE audits results sends a message. Right now, the MACs hold the metaphoric conch shell. The Medicare appeals process allows the provider or supplier to overturn the TPE audit overpayment, and reduces the likelihood of future TPE reviews, other Medicare audits, and disciplinary actions such as suspension of Medicare payments, revocation of Medicare billing privileges, or exclusion from the Medicare program. In instances when a TPE audit identifies potential civil or criminal fraud, it is essential that the Medicare provider or supplier engage experienced healthcare counsel to appeal the Medicare overpayment as the first step in defending its billing practices, and thus mitigating the likelihood of fraud allegations (e.g., False Claims Act actions).

CMS and the MACs maintain that TPEs are in the providers’ best interest because education is included. In actuality, TPEs are wolves in sheep’s clothing, masking true repercussions in a cloak of “education.” The Medicare appeal process is a provider’s best weapon.

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.

Medicare Reform Proposals Include Eliminating “Incident-to” Rules

There are a lot of concerns related to “incident-to billing. However, for physician practices, “incident-to” billing is a money maker, which, in the world, of sub-par Medicare reimbursement rates is a minute ray of sunshine in an otherwise eclipsed land. Auditors argue that there are fraud and abuse concerns because practices ignore or are confused about the rules and bill everything “incident-toregardless of the conditions being met. This can result in a nasty audit, as well as substantial fines, penalties, and attorneys’ fees. If you bill “incident-to,” just follow the rules…unless those rules are eliminated. Until possible elimination, keep up with the rules, which can differ depending on the auditor in the region.

Recently, people have been pushing for Medicare reform to include disallowing nurse practitioners (NPs) and physician assistants (PAs) from billing “incident-to.” Proponents of the suggested amendment claims that the recommendation would save the Medicare program money — approximately $50 to $250 million annually and just under $1 billion over 5 years.

The number of NPs who bill Medicare has more than doubled, from 52,000 to 130,000 from 2010 to 2017

What is “incident-to” billing?

In colloquialism, “incident-to” billing allows non-physician providers (NPPs) to report services “as if” they were performed by a physician. The NPP stands in the shoes of the physician. The advantage is that, under Medicare rules, covered services provided by NPPs typically are reimbursed at 85% of the fee schedule amount; whereas, services properly reported “incident-to” are reimbursed at the full fee schedule value.

In legalize, “incident-to” services under §1861(s)(2)(A) of the Social Security Act are provided by NPPs as a part of the services provided directly by the physician, but billed as if they were in fact performed by the physician. Several, legal, threshold requirements must be satisfied before billing eligibility for these services is established.

Billing using “incident-to” can be a huge money-maker for providers. If billed incorrectly, it can also be a provider’s financial downfall.

“Incident-to” billing can only apply to established patients. Not new patients. Not consults. The other non-negotiable factor is that the physician who is supervising must be on-site. Not a phone call away. Not grabbing a burger at a local eatery. On-site. Although with hospitals, the cafeteria is a viable option. I foresee, in the future, telehealth and Skype may change this on-site requirement. The incident-to rules also require that the services be part of a patient’s normal course of treatment.  The rules require that the physician remains actively involved in the patient’s course of treatment.  There must be direct supervision.  Direct supervision = on-site. The following services cannot be billed as “incident-to:”

  • new patient visits
  • visits in which an established patient is seen for a new problem
  • visits in which the treatment provided or prescribed is not a part of the treatment plan established by a physician
  • services provided in the hospital or ambulatory surgery center.

Do not confuse “incident-to” with Medicare patients versus Medicaid patients. MediCAID’s regulations for the coverage of MD services vary significantly than Medicare’s rules and requires direct contact with the patient with exceptions.

Here is a question that I often get: “When billing “incident-to,” do you bill “incident to” the physician who is physically on-site that day or the physician who is overseeing that patient’s care? Both physicians are in the same group and it is billed under the Group NPI, but not sure which physician to reference for “incident-to.”

Answer: Bill under the MD who is on-site. This was addressed by the Center for Medicare and Medicaid Services (CMS) in the 2016 Physician Fee Schedule Final Rule.

The Medicare Benefit Policy Manual addresses the “incident-to” rules for each provider type and in any scenario:

  • Section 60 contains policies for services furnished incident to physicians’ services in the physician’s office.
  • Chapter 6, section 20.5 enumerates the policies for therapeutic services furnished “incident-to” physicians’ services in the hospital outpatient setting.
  • Section 80 states the policies for diagnostic tests in the physician’s office
  • Chapter 6, section 20.4 lists the policies for diagnostic tests furnished in the hospital outpatient setting.

Drug Administration under “incident-to”

“The Medicare program provides limited benefits for outpatient prescription drugs. The program covers drugs that are furnished “incident to” a physician’s service provided that the drugs are not usually self-administered by the patients who take them.” Medicare Benefit Policy Manual, 50.2. Injectable drugs, including intravenously administered drugs, are typically eligible for inclusion under the “incident-to” benefit.

The Medicare Administrative Contracts (MACs) (or – auditors) must fully explain the process they will use to determine whether a drug is usually self-administered and thus does not meet the “incident-to” benefit category. The MACs must publish a list of the injectable drugs that are subject to the self-administered exclusion. If there is discrepancy amongst the MACs, a lawsuit could help.

In order to meet all the general requirements for coverage under the “incident-to” provision, an FDA approved drug or biological must:

  • Be of a form that is not usually self-administered;
  • Must be furnished by a physician; and
  • Must be administered by the physician, or by auxiliary personnel employed by the physician and under the physician’s personal supervision

The charge, if any, for the drug or biological must be included in the physician’s bill, and the cost of the drug or biological must represent an expense to the physician.

Summary

“Incident-to” billing is subject to elimination. The difference in billing “incident-to” is a 100% reimbursement rate versus an 85% reimbursement rate. That 15% difference cannot be passed onto the Medicare recipients.

While “incident-to” billing continues to be allowed, it is imperative to keep up with the ever changing rules.

 

 

 

Medicare Audits: Huge Overhaul on Extrapolation Rules

Effective January 2, 2019, the Center for Medicare and Medicaid Services (CMS) radically changed its guidance on the use of extrapolation in audits by recovery audit contractors (RACs), Medicare administrative contractors (MACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SMRC).

Extrapolation is the tsunami in Medicare/caid audits. The auditor collects a small sample of claims to review for compliance. She then determines the “error rate” of the sample. For example, if 50 claims are reviewed and 10 are found to be noncompliant, then the error rate is set at 20%. That error rate is applied to the universe, which is generally a three-year time period. It is assumed that the random sample is indicative of all your billings regardless of whether you changed your billing system during that time period of the universe or maybe hired a different biller.

With extrapolated results, auditors allege millions of dollars of overpayments against health care providers…sometimes more than the provider even made during that time period. It is an overwhelming wave that many times drowns the provider and the company.

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

Well, Change Request 10067 – overhauled extrapolation in a HUGE way.

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

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

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

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

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

The identification of the claims universe was also re-defined. Even CMS admitted in the change request that, on occasion, “the universe may include items that are not utilized in the construction of the sample frame. This can happen for a number of reasons, including, but not limited to: (1) Some claims/claim lines are discovered to have been subject to a prior review, (2) The definitions of the sample unit necessitate eliminating some claims/claim lines, or (3) Some claims/claim lines are attributed to sample units for which there was no payment.”

There are many more changes to discuss, but I have been asked to appear on RACMonitor to present the details on February 19, 2019. So sign up to listen!!!