Category Archives: Medicare Audits

E/M Codes and When You Should NOT Fire Your Attorney!

Lately, I have been inundated with Medicare and Medicaid health care providers getting audited for E/M codes. I know Dr. Hirsh has spoken often about the perils of e/m codes. The thing about e/m codes is that everyone uses them. Hospitals, family physicians, urgent care centers, specialists, like cardiologists. Obviously, for a specialist, like cardiology, the higher level codes will be more common. A 99214 will be common compared to a generalist like a primary care physician, where a 99213 may be more common.

Here’s a little secret: the difference between a 99214 and 99213 is subjective. It’s so subjective that I have seen auditors who are hired by private companies to audit on behalf of CMS and are financially incentivized to find fault find 100% error rates. Who finds a 100% error rate? Not one claim out of 150 was compliant. Then, I come in and hire the best independent auditors or coders. There are generally two companies that I always use. The independent auditors are so good. Most importantly, they come in and find a much more probable error rate of almost zero.

Hiring an independent, expert coder to ensure that the RAC, MAC, UPIC, or TPE audits accurately is always part of my defense.

Recently, I learned what I should have known a long time ago, but is essential for our listeners to know. If your medical malpractice is with The Doctors Company, for free, you get $25k of – what TDC calls – Medi-Guard or regulatory compliance protection. In other words, you get audited by a UPIC and are informed that you owe an alleged $5 million, extrapolated, of course, you get $25k to pay an attorney for defense. Sadly, $25k will not come close to paying your whole defense, but it’s a start. No one scoffs at “free” money.

When accused of an alleged overpayment, placed on prepayment review, or accused of a credible allegation of fraud, your reimbursements could be in imminent danger of being suspended or recouped. It is imperative for the health care provider to stay apprised of what penalties they are facing. You want to know: “best case scenario and worst case scenario.”

And, providers, be cognizant of the gravity of your situation. Infringement of the false claims act can result in high penalties or jail, depending on the circumstances and the provider’s attorney. I had a client, who is an M.D. psychiatrist. She asked me what is the worst penalty possible. I am blunt and honest, apparently to a fault. I didn’t miss a beat. “Jail,” I said. She was horrified, called her insurance company, and requested a new attorney. TDC refused to fire me, so the doctor said that she will draft the self-disclosure herself. She also said that she submitted the falsified documents to the UPIC, so she was confident that the UPIC would not notice, but see below, time stamps are a bitch.

When I told the doctor that we needed to self-disclose to OIG because she had some Medicare claims, she screamed, “No! No! NO!” It was a video call and my sound wasn’t up loud, and I just watch her on the screen with her face all contorted and her mouth getting really big, then contract, then get really big, then contract, then get really big and then even bigger. The expert certified coder was present for the call, and he called me afterward asking me: “What was that?” And his wife, who overheard, said, “OMG. I would have lashed out.” I kept my cool. Honestly, I just felt bad for her because I can see the writing on the wall.

Obviously, a new attorney is not going to change the outcome. She falsified 17 dates of service because she wanted the service notes to be “perfect.” Well, providers, there is no such thing as perfect and changing diagnoses and CPT codes and adding details to the notes that, supposedly, you remember from a month ago is not ok.

I did feel bad for her for leaving me. I could have gotten her off without any penalties.

You see, English is not her first language. She misinterpreted an email from the UPIC and thought it said that you can fix any errors before submitting the documents. She fabricated 17 claims before I was hired instructed her to stop. I had a solid defense prepared. I was going to hire an independent auditor to audit her 147 claims with the 17 falsified claims. I would have hoped for a low error rate. Then, I would have conducted a self-audit and self-disclosed the fabrications to the UPIC with the explanation that it was a nonintentional harmless error that we are admitting. Self-disclosure can, sometimes, save you from penalties! However, if she doesn’t self-disclose, she will be caught. Unbeknownst to her, on page 6 of the service notes, it is time and date stamped. It revealed on what day she changed the data and what data she changed. Those of you who would also terminate your attorney because you think you can get by with the fraud without anyone noticing, think hard about whether you would like to suffer the worst penalty – jail – or have your attorney be honest and upfront and get you off without penalties by following the rules and self-disclosing any problems uncovered.

I have no idea what will happen to the doctor, but had she stayed with me, she would have escaped without penalty. When not to fire your attorney!

Ding Dong! PHE Is Dead!!!

The federal Public Health Emergency (PHE) for COVID-19, declared under Section 319 of the Public Health Service (PHS) Act, is expiring at the end of the day on May 11, 2023, today! This is huge. There have been thousands of exceptions and waivers due to COVID throughout the last 2 1/2 years. But on the end of the day on May 11, 2023…POOF….

Most exceptions or waivers will immediately cease.

The Department claims it has been working closely with partners—including Governors; state, local, Tribal, and territorial agencies; industry; and advocates—to ensure an orderly transition out of the COVID PHE.

Yesterday, HHS released a Fact Sheet. It is quite extensive, as it should be considering the amount of regulatory compliance changes that will happen overnight!

Since January 2021, COVID deaths have declined by 95% and hospitalizations are down nearly 91%.

There are some flexibilities and actions that will not be affected on May 11.

Access to COVID vaccinations and certain treatments, such as Paxlovid and Lagevrio, will generally not be affected. 

At the end of the PHE on May 11, Americans will continue to be able to access COVID vaccines at no cost, just as they have during the COVID PHE. People will also continue to be able to access COVID treatments just as they have during the COVID PHE.

At some point, the federal government will no longer purchase or distribute COVID vaccines and treatments, payment, coverage, and access may change.

On April 18, 2023, HHS announced the “HHS Bridge Access Program for COVID-19 Vaccines and Treatments.” to maintain broad access to vaccines and treatments for uninsured Americans after the transition to the traditional health care market. For those with most types of private insurance, COVID vaccines recommended by the Advisory Committee on Immunization Practices (ACIP) are a preventive health service and will be fully covered without a co-pay when provided by an in-network provider. Currently, COVID vaccinations are covered under Medicare Part B without cost sharing, and this will continue. Medicare Advantage plans must also cover COVID vaccinations in-network without cost sharing, and this will continue. Medicaid will continue to cover COVID vaccinations without a co-pay or cost sharing through September 30, 2024, and will generally cover ACIP-recommended vaccines for most beneficiaries thereafter.

After the transition to the traditional health care market, out-of-pocket expenses for certain treatments, such as Paxlovid and Lagevrio, may change, depending on an individual’s health care coverage, similar to costs that one may experience for other covered drugs. Medicaid programs will continue to cover COVID treatments without cost sharing through September 30, 2024. After that, coverage and cost sharing may vary by state.

Major telehealth flexibilities will not be affected. The vast majority of current Medicare telehealth flexibilities that people with Medicare—particularly those in rural areas and others who struggle to find access to care—have come to rely upon throughout the PHE, will remain in place through December 2024. Plus, States already have significant flexibility with respect to covering and paying for Medicaid services delivered via telehealth. This flexibility was available prior to the COVID PHE and will continue to be available after the COVID PHE ends.

What will be affected by the end of the COVID-19 PHE:

Many COVID PHE flexibilities and policies have already been made permanent or otherwise extended for some time, with others expiring after May 11.

Certain Medicare and Medicaid waivers and broad flexibilities for health care providers are no longer necessary and will end. During the COVID PHE, CMS used a combination of emergency authority waivers, regulations, and sub-regulatory guidance to ensure and expand access to care and to give health care providers the flexibilities needed to help keep people safe. States, hospitals, nursing homes, and others are currently operating under hundreds of these waivers that affect care delivery and payment and that are integrated into patient care and provider systems. Many of these waivers and flexibilities were necessary to expand facility capacity for the health care system and to allow the health care system to weather the heightened strain created by COVID-19; given the current state of COVID-19, this excess capacity is no longer necessary.

For Medicaid, some additional COVID PHE waivers and flexibilities will end on May 11, while others will remain in place for six months following the end of the COVID PHE. But many of the Medicaid waivers and flexibilities, including those that support home and community-based services, are available for states to continue beyond the COVID PHE, if they choose to do so. For example, States have used COVID PHE-related flexibilities to increase the number of individuals served under a waiver, expand provider qualifications, and other flexibilities. Many of these options may be extended beyond the PHE.

Coverage for COVID-19 testing will change.

State Medicaid programs must provide coverage without cost sharing for COVID testing until the last day of the first calendar quarter that begins one year after the last day of the PHE. That means with the PHE ending on May 11, 2023, this mandatory coverage will end on September 30, 2024, after which coverage may vary by state.

The requirement for private insurance companies to cover COVID tests without cost sharing, both for OTC and laboratory tests, will end at the expiration of the PHE.

Certain COVID data reporting and surveillance will change. CDC COVID data surveillance has been a cornerstone of our response, and during the PHE, HHS had the authority to require lab test reporting for COVID. At the end of the COVID-19 PHE, HHS will no longer have this express authority to require this data from labs, which will affect the reporting of negative test results and impact the ability to calculate percent positivity for COVID tests in some jurisdictions. Hospital data reporting will continue as required by the CMS conditions of participation through April 30, 2024, but reporting will be reduced from the current daily reporting to weekly.

FDA’s ability to detect shortages of critical devices related to COVID-19 will be more limited. While FDA will still maintain its authority to detect and address other potential medical product shortages, it is seeking congressional authorization to extend the requirement for device manufacturers to notify FDA of interruptions and discontinuances of critical devices outside of a PHE which will strengthen the ability of FDA to help prevent or mitigate device shortages.

Public Readiness and Emergency Preparedness (PREP) Act liability protections will be amended. On April 14, 2023, HHS Secretary Becerra mailed all the governors announcing his intention to amend the PREP Act declaration to extend certain important protections that will continue to facilitate access to convenient and timely COVID vaccines, treatments, and tests for individuals.

More changes are occurring than what I can write in one, little blogpost. Know that auditors will be knocking on your doors, asking for dates of service during the PHE. Be sure to research the policies and exceptions that were pertinent during those DOS. This is imperative for defending yourself against auditors knocking on your doors.

And, as always, lawyer-up fast!

And just like the Wicked With of the West, DING DONG! The PHE is dead.

Medicare Extrapolation Under 50% Error Rate? No Extrapolation ALLOWED!

Earlier this year, I reported on the new extrapolation rules for all audits, including RAC, UPIC, TPE, CERT, etc. You know, that alphabet soup. The biggest change was that no extrapolation may be run if the error rate is under 50%. This was an exciting and unexpected new protection for health care providers. Now I have seen it in action and want to tell you about it.

A client of mine, an internal medicine facility in Alabama, received a notice of overpayment for over $3 million. This is the first case in which I saw the 50% error rate rule in action. Normally, I always tell clients that the first two levels of appeals are rubber-stamps. In other words, don’t expect to win. The QIC and the entity that conducted the audit saying you owe money are not going to overturn themselves. However, in this case, we were “partially favorable” at the QIC level. “Partially favorable” normally means mostly unfavorable. However, the partially favorable decision took the error rate from over 50% to under 50%. We re-grouped. Obviously, we were going to appeal because the new extrapolation was still over $1 million. However, before our ALJ hearing, we received correspondence from Palmetto that said our overpayment was $0. Confused, we wrote to the ALJ pointing out that Palmetto said our balance was zero. The Judge wrote back saying that, certainly, the money has already been recouped and the practice would get a refund if he reversed the denials.” “Ok,” we said and attended a telephonic hearing. We were unsuccessful at the hearing, and the ALJ upheld an alleged overpayment of over $1 million. We argued that the extrapolation should be thrown out due to the error rate being under 50%. The Judge still ruled against us, saying that CMS has the right to extrapolate, and the courts have upheld CMS’ ability to extrapolate. Ok, but what about the NEW RULE?

Later, we contacted Palmetto to confirm what the zero-balance meant. The letter read as if we did not owe anything, yet we had an ALJ decision mandating us to pay over a $1million. There was serious juxtaposition. After many hours of chasing answers on hold with multiple telephone answerers of Palmetto, we learned that, apparently, because the error rate dropped below 50% after the QIC level, Palmetto “wrote off” the nominal balance. Since an extrapolation was no longer allowed, the miniscule amount that Palmetto thought we owed wasn’t enough to pursue. However, the letter sent to us from Palmetto did not explain, “hey, we are writing off your overpayment because the error rate fell below 50%.” No, it was vague. We didn’t even know if it were true.

It took us reaching out to Palmetto and getting an email confirmation that Palmetto had written off the alleged overpayment due to the error rate dropping. Even the ALJ misinterpreted the letter, which tells me that Palmetto should revise its notices of write offs.

If Palmetto unilaterally dismisses or writes off any balance that is allegedly owed, the letter should explicitly explain this. Because providers and attorneys are not accustomed to receiving correspondence from a MAC, CMS, Palmetto, or any other auditing entity with GOOD NEWS. If we get GOOD NEWS from an auditing entity, that correspondence should be explicit.

Regardless, this was a huge win for me and my client, who was positively ecstatic with the outcome. Tune in next week, during which I will tell a story of how we battled successfully a qui tam action against a facility of 9 specialists due to a disgruntled employee who tried to blow the whistle on my specialists and their facility…falsely!  

Watch AND Listen to RACMonitor Mondays!!

Now you can WATCH and listen to Monitor Monday!

We went to video! Click the link to watch!

We present live every Monday, so be sure and join us. You can ask real live questions of the panelists!

https://www.linkedin.com/video/event/urn:li:ugcPost:7052380196447948800/

Preparing for Post-PHE Medicare and Medicaid Audits

Hello and happy RACMonitor Monday! As the nation forges ahead in the wake of the COVID-19 pandemic, the audits continue after that brief hiatus in March 2020. Recovery Audit Contractors (RACs), UPICs, and other auditors are dutifully reviewing claims on a post-payment basis. However, since COVID, there is a staffing shortage, which have many provider facilities scrambling on a normal basis. Throw in an audit of 150 claims and you’ve got serious souff-laying.

Yes, audit preparation has changed since COVID. Now you have more to do to prepare. Audits create more work when you have less staff. Well, suck it up sippy-cup because post-PHE audits are here.

The most important pre-audit preparation is knowing the COVID exceptions germane to your health care services. During PHE over the last two years, there has been a firehose of regulatory exceptions. You need to use these exceptions to your advantage because, let’s face it, the exceptions made regulatory compliance easier. For the period of time during which the exceptions applied, you didn’t have to get some signatures, meet face-to-face, have supervision, or what not. The dates during which these exceptions apply is also pertinent. I suggest creating a folder for all the COVID exceptions that apply to your facility. While I would like to assume that whatever lawyer that you hire, because, yes, you need to hire a lawyer, would know all the COVID exceptions – or, at least, know to research them, you never know. It only benefits you to be prepared.

Any medical provider that submits claims to a government program may be subject to a Medicare or Medicaid audit. Just because you have been audited in the past, doesn’t change the fact that you may be audited again in the future. RAC audits are not one-time or intermittent reviews and can be triggered by anything from an innocent documentation error to outright fraud. I get that questions a lot: This is my 3rd audit. At what point is this harassment. I’ve never researched the answer to that question, but I would venture that auditors get tons of latitude. So, don’t be that provider that is low-hanging fruit and simply pays post-payment reviews.

While reduced staff, high patient loads or other challenges may be bogging down your team, it’s important to remember that timeliness is crucial for CMS audit responses.

Locating the corresponding medical records and information can be a hassle at the best of times, but there are a few key things your organization can do to better prepare for a RAC Audit:

According to CMS, 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 will also be applied if they were in place on the dates of service for any claims potentially selected for review.

Ensure that the auditor has the appropriate contact information for requesting audit-related documentation. With so many changes to hospitals teams, it’s important to make sure that auditors’ requests for medical records are actually making it to the correct person or team in a timely manner.

Provide your internal audit review teams with proper access to data and other software tools like those used to ensure timely electronic audit responses. With a mix of teams working from home and in the office, it’s a good idea to make sure that teams handling Additional Documentation Requests (ADRs) and audit responses have the necessary access to the data they will need to respond to requests.

Review and document any changes to your audit review team processes.

Meet with your teams to ensure they fully understand the processes and are poised to respond within the required timeframes.

Successfully completing these audits in a timely manner is made much easier when the above processes and steps are in place.

Dueling Ophthalmologists: Accusations of Violations of the False Claims Act for Refusal to Hire?

Today I have a story about dueling ophthalmologists. And, yes, I wrote “dueling,” as in fighting. This is a true story that the 6th Circuit heard about the False Claims Act (“FCA”). With the Appellate Circuit Courts split regarding the issue I will be discussing in this blog, I foresee the U.S. Supreme Court taking an appeal of this case for a final review if the losing ophthalmologist appeals. So, be on the watch. Because this case is defining what the FCA statute does not….remuneration.

Issue: Does renumeration cover (1) just payments and transfers of value; or (2) any act that may be valuable to another?

The case was published March 28, 2023, from the 6th Circuit. United States ex rel. Martin v. Hathaway, No. 22-1463, 2023 WL 2661358 (6th Cir. Mar. 28, 2023). In a rural part of Michigan, there was an ophthalmology group consisting of two physicians, the owner of the practice, Dr. Hathaway, and one employee physician, Dr. Martin. Dr. Martin overheard Dr. Hathaway negotiating a sale to a larger practice, and began to question her employment path. The sale fell through, but she had begun negotiations with the local hospital to become the hospital’s sole ophthalmologist. Well, Drs. Hathaway and Martin were the only ophthalmologists in this area, and Dr. Hathaway knew that if Dr. Martin went in-house to the local hospital Oaklawn that his business would suffer because his now-employee would become a competitor.

The hospital gave her a pending offer. Dr. Hathaway was infuriated. He told the hospital that if it hired Dr. Martin that he would move all his surgeries to another hospital. He even told the local hospital’s CEO that if the Board approved the hiring of Dr. Martin, it would be the “death knell” of his practice because the hospital’s future patients referrals would go to Dr. Martin and not him.

Dr. Hathaway pled with the CEO. It would be a lose-lose if you hire Dr. Martin, he said. It will cost hundreds of thousands of dollars to set up an internal ophthalmology line, while it would force Dr. Hathaway to pull his cases and go elsewhere.

Perhaps due to Dr. Hathaway’s threats, the Board elected to not hire Dr. Martin.

Dr. Martin did not take the rejection well.

She sued Dr. Hathaway, South Michigan, and Oaklawn in a qui tam action under the False Claims Act and Michigan’s False Claims Act. She accused Dr. Hathaway and Oaklawn Hospital of engaging in an illegal fraudulent scheme under the Anti-kickback Statute (“AKS”) and that claims for Medicare and Medicaid reimbursement resulting from the kickbacks violated the False Claims Act.

The definition of remuneration was at stake. The statute does not define renumeration. Does renumeration cover just payments and transfers of value or any act that may be valuable to another. The 6th Circuit held that renumeration only cover payments and other transfers of value.

The Complaint’s main theory of remuneration turns on the Oaklawn Board’s refusal to hire Dr. Martin in return for Dr. Hathaways general commitment to continue sending surgery referrals for his patients to Oaklawn.

You may recall that the FCA uses the word “payment,” whereas the AKS uses the word “remuneration,” which prompts the question whether remuneration means something broader.

The Court held, “no” – money and value needs to be defined as just that…money and value.

Dr. Hathaway gave Oaklawn no payment, no value. Dr. Martin lost in this case, but if she appeals, like I said, I foresee the US Supreme Court to weigh in.

Defending Medicare Providers Against FCA or Qui Tam Lawsuits

As a health care partner at Nelson Mullins, I’ve seen my fair share of False Claims Act (FCA) and Qui Tam actions against health care providers. It’s not uncommon for practices to receive unwarranted accusations of false claims, especially when it comes to billing Medicare. But fear not, my friends, for I’m here to provide some guidance on how to defend yourself. These cases are long and tedious, so it is important to maintain a bit of humor throughout the process – that and hire a really good attorney.

First things first, let’s talk about the False Claims Act. This federal law imposes liability on individuals and companies that defraud the government by submitting false claims for payment. Essentially, if you submit a claim for reimbursement from Medicare that you know is false, you could be on the hook for some serious penalties. However, the government has to prove that you had actual knowledge that the claim was false, which can be a tough burden to meet.

Now, let’s talk about Qui Tam actions. These are lawsuits brought by private individuals, also known as “whistleblowers,” on behalf of the government. The whistleblower stands to receive a percentage of any damages recovered by the government, so there’s a financial incentive for them to pursue these cases. Qui Tam actions can be especially tricky because the whistleblower doesn’t have to prove that you had actual knowledge that the claim was false – they just have to show that you submitted a false claim.

So, what can you do to defend yourself against these accusations? Well, for starters, make sure that you’re submitting accurate claims to Medicare. Seems obvious, right? But you’d be surprised at how many practices make mistakes when it comes to billing. Double-check your codes, make sure you’re only billing for services that were actually provided, and make sure your documentation supports the services you’re billing for.

If you do find yourself facing an FCA or Qui Tam action, don’t panic. You have the right to defend yourself, and there are plenty of strategies that can be employed to fight back. For example, you could argue that the government hasn’t met its burden of proof, or that the whistleblower doesn’t have enough evidence to support their claim. And don’t forget about the power of humor – a well-timed joke can go a long way in disarming your accusers. Obviously, I am kidding. The investigators have no humor.

In all seriousness, though, these cases can be incredibly complex and time-consuming, so it’s important to have experienced legal counsel on your side. At Nelson Mullins, we’ve represented numerous health care providers in FCA and Qui Tam actions, and we have the knowledge and expertise to help you navigate these challenges.

So, to sum it up: be accurate in your billing, be prepared to defend yourself, and don’t be afraid to use a little humor to lighten the mood. And if all else fails, just remember the wise words of Mark Twain: “Humor is the great thing, the saving thing after all. The minute it crops up, all our hardnesses yield, all our irritations and resentments flit away, and a sunny spirit takes their place.”

#FalseClaimsAct #Medicare #QuiTam #HealthcareLaw #NelsonMullins #DefendYourself #AccuracyIsKey #HumorIsTheBestMedicine #MarkTwainQuotes

The Horror Story of 99214 and Insurance to Assist

99214. Is that Jean Valjean’s number? No. It is an E/M code of moderate complexity. Few CPT codes cause goosebumps, chilly air, and a pit in your stomach besides 99214. As I said, 99214 is an E/M code of moderate level of complexity. For a low complexity visit, the code decreases to 99213. Even lower is a 99212, which is considered a straightforward visit. The code goes as high as a 99215, which denotes high complexity. Generally, physicians are good at spotting the 99215s and 99212s; the lowest and highest complexities seem simple to spot. However, the middle complexity codes are a bit subjective. Auditors frequently find 99214s that the auditor thinks should have been a 99213. I am talking about the RACs, MACs, TPEs, UPICs, and other contractors paid with our tax dollars on behalf of CMS. I recently had a BCBS audit, which found that an urgent care center had a 97% error rate. Out of 30 claims, only one claim was considered 99214; 29 claims should have been down coded to a 99213, according to BCBS. Well, my urgent care center disagreed and hired an independent auditor to review the same claims that were audited. The independent audit resulted in vastly different results. According to the independent audit, only 4 of the 30 claims should have been down coded to 99213.

One should ask, how could two separate auditors audit the same documents and issue such disparate results? One reason is that the difference between 99213 and 99214 is subjective. However, subjectiveness was not the only reason for two polar opposite results.

You see, before 2021, facilities had the choice to follow either the 1995 guidelines or the 1997 guidelines for these CPT codes. And, there is a difference between the two guidelines. Instead of choosing either the 1995 or 1997 guidelines, BCBS applied both the 1997 and 1995 guidelines, which falsely created a more stringent criteria for a 99214.

The urgent care center had been verbose about the fact that they use the 1995 guidelines, not the 1997 guidelines. When the independent contractor audited the records, it used the 1995 guidelines only.

All in all, for an accusation of owing $180k, it cost the urgent care center almost $100k to defend itself against what was obviously a faulty audit. So, I’m thinking why in the world is there insurance for physicians for making a mistake in surgery – medical malpractice, but no insurance for False Claims allegations. I mean, med mal allegations mean there is a victim. But you can be accused of false claims unexpectantly and your practice is changed forever.

Recently, I learned of an insurance company that insures doctors and facilities if they are accused of billing Medicare or Medicaid for false claims. Unlike med mal, an accusation of false claims does not yield a victim (unless you see our tax dollars as people); however, an accusation of billing a False Claim can cost a doctor, facility, a hospital hundreds of thousands of dollars. Which, knowing all things are relative, is pennies on the dollar of the penalties under the FCA.

The company’s name is Curi. That is C-U-R-I. Personally, I had never heard of this company. I googled it after I was placed on the panel. This is an insurance company that pays for attorneys’ fees if you are accused of false claims or an overpayment. Personally, I think every listener should procure this insurance directly after RACMonitor. After 23 years of litigating, I have realized the worst part about defending yourself against accusations that you owe the government money is the huge price tag associated with it.

When I presented this story on RACMonitor, David Glaser made a comment about my segment that I would be remiss to omit. SOME med mal insurance policies cover the legal fees for attorneys for regulatory audits. Please review your policy to see whether your insurance company covers the attorneys’ fees for defense of regulatory audits before purchasing more insurance.

Risk Adjustment Audits Are Here!!! Watch Out MAOs!

Risk adjustment is hugely important in Medicare Advantage (MA). Risk adjustment is intended to financially adjust taking into account the underlying severity of beneficiaries’ health conditions and appropriately compensate private insurers with vastly varying expectations for expenditures. In each year, plans receive higher payments in direct proportion to documented risk: A 5 percent increase in documented risk leads to a 5 percent increase in payment. Yet, because MAO have considerable control over the documentation, it is common for insurers to erroneously document patient risk and receive inflated payments from CMS, at least according to several CMS and OIG Reports.

Enter Risk Adjustment Data Validation (RADV) audits.

These are the main corrective action for overpayments made to Medicare Advantage organizations (MAO) when there is a lack of documentation in the medical record to support the diagnoses reported for risk adjustment

CMS has conducted contract-level RADV audits by selecting about 30 contracts for audit annually (roughly 5 percent of MA contracts). CMS then selects samples from each contract of up to 201 beneficiaries divided into three equal strata (low, average, and high risk). Auditors then comb through each beneficiary’s medical records to determine whether diagnoses that the MA plan submitted are supported by documentation in the medical record. From this process, auditors can calculate an error rate for the sample, which can then be extrapolated to the rest of the contract. For instance, if auditors determine that an insurer overcoded a sample’s risk by 5 percent, auditors could infer that plans under that contract were overpaid by 5 percent. Historically, however, CMS has only sought to collect the overpayments identified for the sample of audited beneficiaries. Not any more!

A CMS Final Rule, published February 1, 2023, addresses extrapolation, CMS’ decision to not apply a fee-for-service (FFS Adjuster) in RADV audits, and the payment years in which these policies will apply. Once it goes into effect on April 3, 2023, CMS estimates it will result in the recoupment of $4.7 billion in overpayments from MA insurers over the next decade.

As for extrapolations, CMS will not extrapolate RADV audit findings for PY 2011-2017 and will begin collection of extrapolated overpayment findings for any CMS and OIG audits conducted in PY 2018 and any subsequent payment year.

The improper payment measurements conducted each year by CMS that are included in the HHS Agency Financial Report, as well as audits conducted by the HHS-OIG, have demonstrated that the MA program is at high risk of improper payments. In fiscal year (FY) 2021 (based on calendar year 2019 payments), OIG calculated that CMS made over $15 billion in Part C overpayments, a figure representing nearly 7 percent of total Part C payments.

The HHS-OIG has also released several reports over the past few years that demonstrate a high risk of improper payments in the MA program.

Looking forward – Expect more MAO audits.

P.S. I will be presenting a webinar on Monday, March 20, 2023, via the Assent platform regarding:

FTC ELIMINATING NON-COMPETE AGREEMENTS HOW THAT WILL AFFECT HOSPITALS AND LTC
DATE : MARCH 20, 2023 | EST : 01:00 PM | PST : 10:00 AM | DURATION : 60 MINUTES

Feel free to sign up and listen!!

PRF Audits: If You Did Not Report or Use Properly, You May Have a Recoupment!

Hello, my blog readers. Over the last two weeks, I have joined Nelson Mullins in the Raleigh office, attended Nelson Mullins’ healthcare retreat in Charlotte, and attended the Long Term and Post-Acute Care Law and Compliance conference in New Orleans, LA. It has been quite a whirlwind! I also appeared on RACMonitor, as I do every Monitor Monday.

Joining Nelson Mullins has been fantastic. There is a deep bench of health care attorneys, so now I am able to offer my clients all legal services they may need.

Today I am writing about provider relief funds (“PRF”) audits because, folks, PRF audits are HERE. If providers failed to report their PRF or used the funds for non-allowable items having nothing to do with COVID, HHS and OIG may recoup the funds.

An allowable expense under the PRF must be used to prevent, prepare for, and respond to coronavirus. PRF recipients must follow their basis of accounting (e.g., cash, accrual, or modified accrual) to determine expenses. The cited expenses, as well as losses, must not have been reimbursed from other sources and other sources must not be obligated to reimburse them.

Many providers were recipients of provider relief funds or PRF during the COVID pandemic. If providers received these funds there were reporting requirements and use requirements. Now audits are being conducted to ensure the funds’ proper use and reporting. Audits are being rolled out on two different fronts: (1) HHS; and (2) HRSA – or Health Resources Services Administration.

On Feb. 25, 2022, the American Institute of Certified Public Accountants’ (AICPA) Government Audit Quality Center (GAQC) provided long-awaited guidance to for-profit healthcare organizations that are subject to the Provider Relief Fund (PRF) audit requirements. The guidance came in the form of a practice aid entitled HHS Audit Requirements for For-Profit Entities with Awards from the Provider Relief Fund Program and Other HHS Programs. Its goal is to provide clarity to for-profit healthcare entities that expend $750,000 or more in federal awards in a given reporting period, which includes the PRF and other federal awards included in the Assistance Listing but excludes Paycheck Protection Program funds. Based on the practice aid, here is a summary of audit options available to for-profit entities to meet the audit compliance requirements of the U.S. DHHS.

  • Uniform Guidance Audits
    • Single Audit – A single audit requires an audit of both the financial statements under Generally Accepted Government Auditing Standards (GAGAS) and a compliance audit under Uniform Guidance. The compliance audit requires testing compliance with any major program(s) as defined by Uniform Guidance as well as obtaining an understanding of internal control over compliance and testing the internal control over compliance for each major program identified. The results are two auditor’s reports: one on the financial statements and one on compliance and internal controls over compliance. This option is necessary if federal regulations require a financial statement audit. This option is available to entities with funding from multiple programs from any federal agency.
    • Program-Specific Audit – The program-specific audit is similar to the single audit except that it removes the financial statement audit requirement. Therefore, tests of compliance, an understanding of internal control over compliance, and testing internal control over compliance are required for this engagement. A schedule of a specific element of a financial statement would be prepared. The results are two auditor’s reports: one on the schedule of a specific element of a financial statement (the PRF funding) and one on compliance and internal controls over compliance. This option is only available if the entity has funding under one HHS program, such as the PRF.
  • Financial-Related Audit Under GAGAS – A financial-related audit under GAGAS requires an audit to be conducted on only one schedule of a specific element of the financial statements. This option is only available if all federal funds expended during the period were from HHS programs. The schedule (the HHS Schedule) would include all federal awards from HHS, including the PRF. It does not require an audit of the financial statements or any testing of internal controls over compliance. It does require compliance testing, but no opinion on compliance is issued. The result is an auditor’s report only on the HHS Schedule.

There are 4 reporting periods per year that will be audited. Reporting for the 2023 4th period is going on now. Providers who received a PRF (General or Targeted) exceeding $10,000 in the aggregate, from July 1, 2021, to December 31, 2021, are required to report on their use of funds during RP4. The deadline to submit a report is March 31, 2023.

There is an appeal process if you receive a Final Repayment Notice. Once you receive a Final Repayment Notice, you have 60 days to either pay or appeal.

  1. Providers who do not take one of these actions within 60 days of HRSA’s Final Repayment Notice may be referred by HRSA to the HHS Program Support Center (PSC) for the initiation of debt collection activities.
  2. PSC, in coordination with the U.S. Department of Treasury, will issue formal debt collection letters to all providers that HRSA refers for debt collection. At this point, PSC and Treasury will take over all debt collection communications with referred providers. Debt collection activities may include accrual of interest, penalties, and recovery of funds by offsetting other Federal payments allocated to the entity.

HRSA cannot establish payment plans for outstanding debts. Once the repayment amount has been referred to PSC and becomes official debt, providers can apply for repayment plans directly with PSC.