Category Archives: Medicare Audits

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 The physician whose Medicare enrollment was revoked due to a computer error or an error on the part of CMS.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

D83B4E86-D9CA-462F-8C54-EDBC90DA00E8

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?

49B70E0C-5089-4D23-925D-54A09DC51563

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.

State Agencies Must Follow the State Medicare Plan! Or Else!

Accused of an alleged overpayment? Scrutinize the Department’s procedure to determine that alleged overpayment. One step out of line (in violation of any pertinent rule) by the Department and the overpayment is dismissed.

Ask yourself: Did the State follow Medicare State Plan Agreement? (The Plan germane in your State).

In a Mississippi Supreme Court case, the Mississippi Department of Medicaid (“DOM”) alleged that a hospital owed $1.2226 million in overpayments. However, the Court found that DOM failed to follow proper procedure in assessing the alleged overpayment. Since the DOM failed to follow the rules, the $1.2226 million alleged overpayment was thrown out.

The Court determined that the DOM, the single state agency charged with managing Medicare and Medicaid, must follow all pertinent rules otherwise an alleged overpayment will be thrown out.

Two cases premised on the notion that the DOM must follow all pertinent rules were decided in MS – with polar opposite endings.

  • Crossgates River Oaks Hosp. v. Mississippi Div. of Medicaid, 240 So. 3d 385, 388 (Miss. 2018); and
  • Cent. Mississippi Med. Ctr. v. Mississippi Div. of Medicaid, No. 2018-SA-01410-SCT, 2020 WL 728806, at *2–3 (Miss. Feb. 13, 2020).

In Crossgates, the hospitals prevailed because the DOM had failed to adhere to the Medicare State Plan Agreement. Applying the same legal principles in Cent. MS Med. Ctr, the DOM prevailed because the DOM adhered to the Medicaid State Plan.

It is as simple as the childhood game, “Simon Says.” Do what Simon (State Plan) says or you will be eliminated.

Crossgates

In the 2018 MS Supreme Court case, the Court found that the MS Department failed to follow the Medicare State Plan Agreement in determining an overpayment for a provider, which meant that the overpayment alleged was arbitrary. The thinking is as follows: had the Department followed the rules, then there may not be an overpayment or the alleged overpayment would be a different amount. Since the Department messed up procedurally, the provider got the whole alleged overpayment dismissed from Court. It is the “fruit of the poisonous tree” theory. See Crossgates River Oaks Hosp. v. Miss. Div. of Medicaid, 240 So. 3d 385 (Miss. 2018).

While Courts generally afford great deference to an agency’s interpretation of its regulations, once the agency violates a procedural rule, it is not entitled to that deference. The Court found that the DOM’s interpretation of Attachment 4.19–B of the State Plan was inconsistent with the relevant regulation. Crossgates River Oaks Hosp. v. Mississippi Div. of Medicaid, 240 So. 3d 385, 388 (Miss. 2018).

Throughout these proceedings, the DOM never articulated an explanation for its failure to exclude the radiology and laboratory charges or for its use of a blended rate in place of actual costs, absent altering or amending the State Plan. The clear language of the State Plan establishes that DOM’s choice to reduce payments to the Hospitals was arbitrary, capricious, and not supported by substantial evidence.

Central MS Medical Center

Juxtapose the Central Mississippi Medical Center case, which, by the way has not been released for publication. Atop the header for the case is the following warning:

“NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.”

With that caveat, the MS Supreme Court held that Medicaid State Plans that are accepted by CMS reign supreme and must be followed. In this case, the MS State Plan required the DOM to use the Medicare Notice of Program Reimbursement (NPR) to establish the final reimbursement.

According to the Supreme Court, the agency followed the rules. Thus, the agency’s adverse determination was upheld. It does not matter what the adverse determination was – you can insert any adverse determination into the equation. But the equation remains stedfast. The State must follow the State Plan in order to validate any adverse decision.

Why Auditors Can’t be Unbiased

Last week on Monitor Mondays, Knicole Emanuel, Esq. reported on the case of Commonwealth v. Pediatric Specialist, PLLC, wherein the Recovery Audit Contractors’ (RACs’) experts were prohibited from testifying because they were paid on contingency. This means that the auditor (or the company for which they work) is paid some percentage of the overpayment findings it reports.

In this case, as in most nowadays, the overpayment estimate was based upon extrapolation, which means that the auditor extended the overpayment amount found in the sample to that of all claims within the universe from which the sample was drawn. I have written about this process before, but basically, it can turn a $1,500 overpayment on the sample into a $1.5 million overpayment demand.

The key to an effective extrapolation is that the statistical process is appropriate, proper, and accurate. In many audits, this is not the case, and so what happens is, if the provider believes that the extrapolation is not appropriate, they may choose to challenge the results in their appeal. Many times, this is when they will hire a statistician, like me, to review the statistical sampling and overpayment estimate (SSOE), including data and documentation to assist with the appeal. I have worked on hundreds of these post-audit extrapolation mitigation appeals over the years, and even though I am employed by the provider, I maintain a position as an independent fact-finder.  My reports are based on facts and figures, and my opinion is based on those findings. Period.

So, what is it that allows me to remain independent? To perform my job without undue influence or bias? Is it my incredibly high ethical standards? Check! My commitment to upholding the standards of my industry? Check!  Maybe my good looks? Well, not check! It is the fact that my fees are fixed, and are not contingent on the outcome. I mean, it would be great if I could do what the RACs do and cash in on the outcomes of a case, but alas, no such luck.

In one large class-action case in which I was the statistical expert, the defendant settled for $122 million. The law firm got something like a quarter or a third of that, and the class members all received some remuneration as well. Me? I got my hourly rate, and after the case was done, a bottle of Maker’s Mark whiskey as a thank you. And I’m not even sure that was appropriate, so I sent it back. I would love to be paid a percentage of what I am able to save a client in this type of appeal. I worked on a case a couple of years ago for which we were able to get the extrapolation thrown out, which reduced the payment demand from $5.9 million to $3,300. Imagine if I got paid even 2 percent of that; it would be nearly $120,000. But that can’t happen, because the moment my work product is tied to the results, I am no longer independent, nor unbiased. I don’t care how honest or ethical you are, contingency deals change the landscape – and that is as true for me, as an expert, as it is for the auditor.

In the pediatric case referenced above, the RAC that performed the audit is paid on a contingency, although I like to refer to it as a “bounty.” As such, the judge ruled, as Ms. Emanuel reported, that their experts could not testify on behalf of the RAC. Why not? Because the judge, unlike the RAC, is an independent arbiter, and having no skin in the game, is unbiased in their adjudication. But you can’t say that about the RAC. If they are being paid a “bounty” (something like 10 percent), then how in the world could they be considered independent and unbiased?

The short answer is, they can’t. And this isn’t just based on standards of statistical practice; it is steeped in common sense. Look at the appeal statistics; some 50 percent of all RAC findings are eventually reversed in favor of the provider. If that isn’t evidence of an overzealous, biased, bounty-hunting process, I don’t know what is. Basically, as Knicole reported, having their experts prohibited from testifying, the RAC was unable to contest the provider’s arguments, and the judge ruled in favor of the provider.

But, in my opinion, it should not stop here. This is one of those cases that exemplifies the “fruit of the poisonous tree” defense, meaning that if this case passes muster, then every other case for which the RAC did testify and the extrapolation held should be challenged and overturned. Heck, I wouldn’t be surprised if there was a class-action lawsuit filed on behalf of all of those affected by RAC extrapolated audits. And if there is one, I would love to be the statistical expert – but for a flat fee, of course, and not contingent upon the outcome.

And that’s the world according to Frank.

Frank Cohen is a frequent panelist with me on RACMonitor. I love his perspective on expert statistician witnesses. He drafted based off a Monitor Monday report of mine. Do not miss both Frank and me on RACMonitor, every Monday.

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.

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.

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

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

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

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

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

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

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

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

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

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

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

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

Programming Note:

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