Category Archives: Medicare RAC
The Centers for Medicare & Medicaid Services (CMS) announced that they have modified the additional documentation request (ADR) limits for the Medicare Fee-for-Service Recovery Audit Contractor (RAC) program for suppliers. ADRs are the about of documents that a RAC auditor can demand from you. This is a win for DME providers.
Currently, the RAC’s methodology is based on a total claim number by NPI without consideration for the number of claims in a particular product category. This means that suppliers can receive large volumes of RAC audits for a product category in which they do minimal business.
These new limits will be set by CMS on a regular basis to establish the maximum number of medical records that may be requested by a RAC, per 45-day period. These changes will be effective beginning April 1, 2022.
Each limit will be based on a given supplier’s volume of Medicare claims paid within a previous 12-month period, in a particular HCPCS policy group (The policy groups are available on the PDAC website). Limits will be based on the supplier’s Tax Identification Number (TIN). Limits will be set at 10% of all paid claims, by policy group, paid within a previous 12-month period, divided into eight periods (45 days). If you get more than the allowed ADRs, call them out. These limits are created to lessen the burden on providers.
Although a RAC may go more than 45 days between record requests, in no case shall a RAC make requests more frequently than every 45 days. Limits are based on paid claims, irrespective of individual lines, although credit/replacement pairs shall be considered a single claim.
- Supplier A had 1,253 claims paid with HCPCS codes in the “surgical dressings” policy group, within a previous 12-month period. The supplier’s ADR limit would be (1,253 * 0.1) / 8 = 15.6625, or 16 ADRs, per 45 days, for claims with HCPCS codes in the “surgical dressings” policy group.
- Supplier B had 955 claims paid with HCPCS codes in the “glucose monitor” policy group, within a previous 12-month period. The supplier’s ADR limit would be (955 * 0.1) / 8 = 11.9375 or 12 ADRs, per 45 days, for claims with HCPCS codes in the “glucose monitor” policy group.
CMS reserves the right to give a RAC permission to exceed these ADR limits. But that would be in instances of potential fraud.
Hospitals across the nation are seeing lower profits, and it’s all because of a sudden, tsunami of Medicare and Medicaid provider audits. Whether it be RAC, MAC, UPIC, or Program Integrity, hospital audits are rampant. Billing errors, especially ‘supposed bundling,’ are causing a high rate of insurance claims denials, hurting the finances of hospitals and providers.
A recent report from American Hospital Association (AHA) found “Under an optimistic scenario, hospitals would lose $53 billion in revenue this year. Under a more pessimistic scenario, hospitals would lose $122 billion thanks to a $64 billion decline in outpatient revenue”*
The “Health Care Auditing and Revenue Integrity—2021 Benchmarking and Trends Report” is an insider’s look at billing and claims issues but reveals insights into health care costs trends and why administrative issues continue to play an outsize role in the nation’s high costs in this area. The data used covers 900+ facilities, 50,000 providers, 1500 coders, and 700 auditors – what could go wrong?
According to the report,
- 40% of COVID-19-related charges were denied and 40% of professional outpatient audits for COVID-19 and 20% of hospital inpatient audits failed.
- Undercoding poses a significant revenue risk, with audits indicating the average value of underpayment is $3,200 for a hospital claim and $64 for a professional claim.
- Overcoding remains problematic, with Medicare Advantage plans and payers under scrutiny for expensive inpatient medical necessity claims, drug charges, and clinical documentation to justify the final reimbursement.
- Missing modifiers resulted in an average denied amount of $900 for hospital outpatient claims, $690 for inpatient claims, and $170 for professional claims.
- 33% of charges submitted with hierarchical condition category (HCC) codes were initially denied by payers, highlighting increased scrutiny of complex inpatient stays and higher financial risk exposure to hospitals.
The top fields being audited were diagnoses, present on admission indicator, diagnosis position, CPT/HCPCS coding, units billed, and date of service. The average outcome from the audits was 70.5% satisfactory. So, as a whole, they got a ‘C’.
While this report did not in it of itself lead to any alleged overpayments and recoupments, guess who else is reading this audit and salivating like Pavlov’s dogs? The RACs, MACs, UPICs, and all other alphabet soup auditors. The 900 facilities and 50,000 health care providers need to be prepared for audits with consequences. Get those legal defenses ready!!!!
2020 was an odd year for recovery audit contractor (“RAC”) and Medicare Administrative Contractors (“MAC”) audits. Well, it was an odd year for everyone. After trying five virtual trials, each one with up to 23 witnesses, it seems that, slowly but surely, we are getting back to normalcy. A tell-tale sign of fresh normalcy is an in-person defense of health care regulatory audits. I am defending a RAC audit of pediatric facility in Georgia in a couple weeks and the clerk of court said – “The hearing is in person.” Well, that’s new. Even when we specifically requested a virtual trial, we were denied with the explanation that GA is open now. The virtual trials are cheaper and more convenient; clients don’t have to pay for hotels and airlines.
In-person hearings are back – at least in most states. We have similar players and new restrictions.
On March 16, 2021, CMS announced that it will temporarily restrict audits to March 1, 2020, and before. Medicare audits are not yet dipping its metaphoric toes into the shark infested waters of auditing claims with dates of service (“DOS”) March 1 – today. This leaves a year and half time period untouched. Once the temporary hold is lifted, audits of 2020 DOS will be abound. March 26, 2021, CMS awarded Performant Recovery, Inc., the incumbent, the new RAC Region 1 contract.
RAC’s review claims on a post-payment and/or pre-payment basis. (FYI – You would rather a post payment review rather than a pre – I promise).
The RACs were created to detect fraud, waste, and abuse (“FWA”) by reviewing medical records. Any health care provider – not matter how big or small – are subject to audits at the whim of the government. CMS, RACs, MCOs, MACs, TPEs, UPICs, and every other auditing company can implement actions that will prevent future improper payments, as well. As we all know, RACs are paid on a contingency basis. Approximately, 13%. When the RACs were first created, the RACs were compensated based on accusations of overpayments, not the amounts that were truly owed after an independent tribunal. As any human could surmise, the contingency payment creates an overzealousness that can only be demonstrated by my favorite case in my 21 years – in New Mexico against Public Consulting Group (“PCG”). A behavioral health care (“BH”) provider was accused of over $12 million overpayment. After we presented before the administrative law judge (“ALJ”) in NM Administrative Court, the ALJ determined that we owed $896.35. The 99.23% reduction was because of the following:
- Faulty Extrapolation: NM HSD’s contractor PCG reviewed approximately 150 claims out of 15,000 claims between 2009 and 2013. Once the error rate was defined as high as 92%, the base error equaled $9,812.08; however the extrapolated amount equaled over $12 million. Our expert statistician rebutted the error rate being so high. Once the extrapolation is thrown out, we are now dealing with much more reasonable amounts – only $9k
- Attack the Clinical Denials: The underlying, alleged overpayment of $9,812.08 was based on 150 claims. We walked through the 150 claims that PCG claimed were denials and proved PCG wrong. Examples of their errors include denials based on lack of staff credentialing, when in reality, the auditor could not read the signature. Other denials were erroneously denied based the application of the wrong policy year.
The upshot is that we convinced the judge that PCG was wrong in almost every denial PCG made. In the end, the Judge found we owed $896.35, not $12 million. Little bit of a difference! We appealed.
I have good news and bad news today. I have chosen to begin with the good news. The ALJ backlog will soon be no more. Yes, the 4-6 years waiting period between the second and third level will, by sometime in 2021, be back to 90 days, with is the statutory requirement. What precipitated this drastic improvement? Money. This past year, CMS’ budget increased exponentially, mostly due to the Medicare appeals backlog. OMHA was given enough dough to hire 70 additional ALJs and to open six additional locations. That brings the number of ALJs ruling over provider Medicare appeals to over 100. OMHA now has the capability to hear and render decisions for approximately 300,000 appeals per year. This number is drastically higher than the number of Medicare appeals being filed. The backlog will soon be nonexistent. This is fantastic for all providers because, while CMS will continue to recoup the alleged overpayment after the 2nd level, the providers will be able to have its case adjudicated by an ALJ much speedier.
Now the bad news. Remember when the RAC program was first implemented and the RACs were zealously auditing, which is the reason that the backlog exists in the first place. RACs were given free rein to audit whichever types of service providers they chose to target. Once the backlog was out of hand, CMS restricted the RACs. They only allowed a 3 year lookback period when other auditors can go back 6 years, like the SMRC audits. CMS also mandated that the RACs slow down their number of audits and put other restrictions on RACs. Now that OMHA has the capacity to adjudicate 300,000 Medicare appeals per year, expect that those reins that have been holding the RACs back will by 2021 or 2022 be fully loosened for a full gallop.
Switching gears: Two of the lesser known audits that are exclusive to the CMS are the Supplemental Medical Review Contractor (“SMRC”) and the Targeted Probe and Educate (“TPE”) audits. Exclusivity to CMS just means that Medicare claims are reviewed, not Medicaid.
The SMRCs, in particular, create confusion. We have seen DME SMRC audits on ventilator claims, which are extremely document intensive. You can imagine the high amounts of money at issue because, for ventilators, many people require them for long periods of time. Sometimes there can 3000 claim lines for a ventilator claim. These SMRC audits are not extrapolated, but the amount in controversy is still high. SMRCs normally request the documents for 20-40 claims. It is a one-time review. It’s a post payment review audit. It doesn’t sound that bad until you receive the request for documents of 20-40 claims, all of which contain 3000 claim lines and you have 45 days to comply.
Lastly, in a rare act, CMS has inquired as whether provider prefer TPE audits or continue with post payment review audits for the remainder of the pandemic. If you have a strong opinion one way or the other, be sure to contact CMS.
Hello! And beware the Ides of March, which is today! I am going to write today about the state of audits today. When I say Medicare and Medicaid audits, I mean, RACs, MACs, ZPICs, UPICs, CERTs, TPEs, and OIG investigations from credible allegations of fraud. Without question, the new Biden administration will be concentrating even more on fraud, waste, and abuse germane to Medicare and Medicaid. This means that auditing companies, like Public Consulting Group (“PCG”) and National Government Services (“NGS”) will be busy trying to line their pockets with Medicare dollars. As for the Ides, it is especially troubling in March, especially if you are Julius Caesar. “Et tu, Brute?”
One of the government’s most powerful tool is the federal government’s zealous use of 42 CFR 455.23, which states that “The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.” (emphasis added). That word – “must” – was revised from “may” in 2011, part of the Affordable Care Act (“ACA”).
A “credible allegation” is defined as an indicia of reliability, which is a low bar. Very low.
Remember back in 2013 when Ed Roche and I were reporting on the New Mexico behavioral health care cluster? To remind you, the State of NM accused 15 BH health care providers, which constituted 87.5% of the BH providers in NM, of credible allegations of fraud after the assistant AG, at the time, Larry Heyeck, had just published a legal article re “Credible Allegations of Fraud.” See blog and blog. Unsurprisingly, the suicide rate and substance abuse skyrocketed. There was even a documentary “The Shake-Up” about the catastrophic events in NM set off by the findings of PCG.
I was the lawyer for the three, largest entities and litigated four administrative appeals. If you recall, for Teambuilders, PCG claimed it owed over $12 million. After litigation, an ALJ decided that Teambuilders owed $836.35. Hilariously, we appealed. While at the time, PCG’s accusations put the company out of business, it has re-opened its doors finally – 8 years later. This is how devastating a regulatory audit can be. But congratulations, Teambuilders, for re-opening.
Federal law mandates that during the appeal of a Medicare audit at the first two levels: the redetermination and reconsideration, that no recoupment occur. However, after the 2nd level and you appeal to the ALJ level, the third level, the government can and will recoup unless you present before a judge and obtain an injunction.
Always expect bumps along the road. I have two chiropractor clients in Indiana. They both received notices of alleged overpayments. They are running a parallel appeal. Whatever we do for one we have to do for the other. You would think that their attorneys’ fees would be similar. But for one company, NGS has preemptively tried to recoup THREE times. We have had to contact NGS’ attorney multiple times to stop the withholds. It’s a computer glitch supposedly. Or it’s the Ides of March!
Happy 55th Medicare! Pres. Biden’s health care policies differ starkly from former Pres. Trump’s. I will discuss some of the key differences. The newest $1.9 trillion COVID bill passed February 27th. President Biden is sending a clear message for health care providers: His agenda includes expanding government-run, health insurance and increase oversight on it. In 2021, Medicare is celebrating its 55th year of providing health insurance. The program was first signed into law in 1965 and began offering coverage in 1966. That first year, 19 million Americans enrolled in Medicare for their health care coverage. As of 2019, more than 61 million Americans were enrolled in the program.
Along with multiple Executive Orders, Pres. Biden is clearly broadening the Affordable Care Act (“ACA”), Medicaid and Medicare programs. Indicating an emphasis on oversight, President Biden chose former California Attorney General Xavier Becerra to lead HHS. Becerra was a prosecutor and plans to bring his prosecutorial efforts to the nation’s health care. President Biden used executive action to reopen enrollment in ACA marketplaces, a step in his broader agenda to bolster the Act with a new optional government health plan.
For example, one of my personal, favorite issues that Pres. Biden will address is parity for Medicare coverage for medically necessary, oral health care. In fact, Medicare coverage extends to the treatment of all microbial infections except for those originating from the teeth or periodontium. There is simply no medical justification for this exclusion, especially in light of the broad agreement among health care providers that such care is integral to the medical management of numerous diseases and medical conditions.
The Biden administration has taken steps to roll back a controversial Trump-era rule that requires Medicaid beneficiaries to work in order to receive coverage. Two weeks ago, CMS sent letters to several states that received approval for a Section 1115 waiver – for Medicaid. CMS said it was beginning a process to determine whether to withdraw the approval. States that received a letter include Arizona, Arkansas, Georgia, Indiana, Nebraska, Ohio, South Carolina, Utah, and Wisconsin. The work requirement waivers that HHS approved at the end of the previous administration’s term may not survive the new presidency.
Post Payment Reviews—Recovery Audit Contractor (“RAC”) audits will increase during the Biden administration. The RAC program was created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. As we all know, the RACs are responsible for identifying Medicare overpayments and underpayments and for highlighting common billing errors, trends, and other Medicare payment issues. In addition to collecting overpayments, the data generated from RAC audits allows CMS to make changes to prevent improper payments in the future. The RACs are paid on a contingency fee basis and, therefore, only receive payment when recovery is made. This creates overzealous auditors and, many times, inaccurate findings. In 2010, the Obama administration directed federal agencies to increase the use of auditing programs such as the RACs to help protect the integrity of the Medicare program. The RAC program is relatively low cost and high value for CMS. It is likely that the health care industry will see growth in this area under the Biden administration. To that end, the expansion of audits will not only be RAC auditors, but will include increased oversight by MACs, CERTs, UPICs, etc.
Telehealth audits will be a focus for Pres. Biden. With increased use of telehealth due to COVID, comes increased telehealth fraud, allegedly. On September 30, 2020, the inter-agency National Health Care Take Down Initiative announced that it charged hundreds of defendants ostensibly responsible for—among other things—$4.5 billion in false and fraudulent claims relating to telehealth advertisements and services. Unfortunately for telehealth, bad actors are prevalent and will spur on more and more oversight.
Both government-initiated litigation and qui tam suits appear set for continued growth in 2021. Health care fraud and abuse dominated 2020 federal False Claims Act (“FCA”) recoveries, with almost 85 percent of FCA proceeds derived from HHS. The increase of health care enforcement payouts reflects how important government paid health insurance is in America. Becerra’s incoming team is, in any case, expected to generally ramp up law enforcement activities—both to punish health care fraud and abuse and as an exercise of HHS’s policy-making authorities.
With more than $1 billion of FCA payouts in 2020 derived from federal Anti-Kickback Statute (“AKS”) settlements alone, HHS’s heavy reliance on the FCA because it is a strong statute with “big teeth,” i.e., penalties are harsh. For these same reasons, prosecutors and qui tam relators will likely continue to focus their efforts on AKS enforcement in the Biden administration, despite the recent regulatory carveouts from the AKS and an emerging legal challenge from drug manufacturers.
The individual mandate is back in. The last administration got rid of the individual mandate when former Pres. Trump signed the GOP tax bill into law in 2017. Pres. Biden will bring back the penalty for not being covered under health insurance under his plan. Since the individual mandate currently is not federal law, a Biden campaign official said that he would use a combination of Executive Orders to undo the changes.
In an effort to lower the skyrocketing costs of prescription drugs, Pres. Biden’s plan would repeal existing law that currently bans Medicare from negotiating lower prices with drug manufacturers. He would also limit price increases for all brand, biotech and generic drugs and launch prices for drugs that do not have competition.
Consumers would also be able to buy cheaper priced prescription drugs from other countries, which could help mobilize competition. And Biden would terminate their advertising tax break in an effort to also help lower costs.
In all, the Biden administration is expected to expand health care, medical, oral, and telehealth, while simultaneously policing health care providers for aberrant billing practices. My advice for providers: Be cognizant of your billing practices. You have an opportunity with this administration to increase revenue from government-paid services but do so compliantly.
Who knows that – regardless your innocence –the government can and will recoup your funds preemptively at the third level of Medicare appeals. This flies in the face of the elements of due process. However, courts have ruled that the redetermination and the reconsideration levels afford the providers enough due process, which entails notice and an opportunity to be heard. I am here to tell you – that is horse manure. The first two levels of a Medicare appeal are hoops to jump through in order to get to an independent tribunal – the administrative law judge (“ALJ”). The odds of winning at the 1st or 2nd level Medicare appeal is next to zilch, although often you can get the alleged amount reduced. The first level is before the same entity that found you owe the money. Auditors are normally not keen on overturning themselves. The second level is little better. The first time that you present to an independent tribunal is at the third level.
Between 2009 and 2014, the number of ALJ appeals increased more than 1,200 percent. And the government recoups all alleged overpayments before you ever get before an ALJ.
In a recent case, Sahara Health Care, Inc. v. Azar, 975 F.3d 523 (5th Cir. 2020), a home health care provider brought an action against Secretary of Department of Health and Human Services (“HHS”) and Administrator for the Centers for Medicare and Medicaid Services (“CMS”), asserting that its statutory and due process rights were violated and that defendants acted ultra vires by recouping approximately $2.4 million in Medicare overpayments without providing a timely ALJ hearing. HHS moved to dismiss, and the provider moved to amend, for a temporary restraining order (“TRO”) and preliminary injunction, and for an expedited hearing.
The case was thrown out, concluding that adequate process had been provided and that defendants had not exceeded statutory authority, and denied provider’s motion for injunctive relief and to amend. The provider appealed and lost again.
What’s the law?
Congress prohibited HHS from recouping payments during the first two stages of administrative review. 42 U.S.C. § 1395ff(f)(2)(A).
If repayment of an overpayment would constitute an “extreme hardship, as determined by the Secretary,” the agency “shall enter into a plan with the provider” for repayment “over a period of at least 60 months but … not longer than 5 years.” 42 U.S.C. § 1395ddd(f)(1)(A). That hardship safety valve has some exceptions that work against insolvent providers. If “the Secretary has reason to believe that the provider of services or supplier may file for bankruptcy or otherwise cease to do business or discontinue participation” in the Medicare program, then the extended repayment plan is off the table. 42 U.S.C. § 1395ddd(f)(1)(C)(i). A provider that ultimately succeeds in overturning an overpayment determination receives the wrongfully recouped payments with interest. 42 U.S.C. § 1395ddd(f)(2)(B). The government’s interest rate is high. If you do have to pay back the alleged overpayment prematurely, the silver lining is that you may receive extra money for your troubles.
The years-long back log, however, may dwindle. The agency has received a funding increase, and currently expects to clear the backlog by 2022. In fact, the Secretary is under a Mandamus Order requiring such a timetable.
A caveat regarding this grim news. This was in the Fifth Circuit. Other Courts disagree. The Fourth Circuit has held that providers do have property interests in Medicare reimbursements owed for services rendered, which is the correct holding. Of course, you have a property interest in your own money. An allegation of wrongdoing does not erase that property interest. The Fourth Circuit agrees with me.
The RACs are on attack! The “COVID Pause Button” on RAC audits has been lifted. The COVID Pause Button has been lifted since August 2020. But never have I ever seen CMS spew out so many new RAC topics in one month of a new year. Happy 2021.
Recovery audit contractors (“RACs”) will soon be auditing positron emission tomography (PET) scans for initial treatment strategy in oncologic conditions for compliance with medical necessity and documentation requirements.
Positron emission tomography (“PET”) scans detect early signs of cancer, heart disease and brain disorders. An injectable radioactive tracer detects diseased cells. A combination PET-CT scan produces 3D images for a more accurate diagnosis.
According to CMS’ RAC audit topics, “(PET) for Initial Treatment Strategy in Oncologic Conditions: Medical Necessity and Documentation Requirements,” will be reviewed as of January 5, 2021. The PET scan audits will be for outpatient hospital and professional service reviews. CMS added additional 2021 audit targets to the approved list:
- Air Ambulance: Medical Necessity and Documentation Requirements,. This complex review will be examining rotatory wing (helicopter) aircraft claims to determine if air ambulance transport was reasonable and medically necessary as well as whether or not documentation requirements have been met.
- Hospice Continuous Home Care: Medical Necessity and Documentation Requirements, and
- Ambulance Transport Subject to SNF Consolidated Billing.
Upcoming HHS secretary Xavier Becerra plans to get his new tenure underway quickly.
In False Claims Act (“FCA”) news, Medicare audits of P-Stim have ramped up across the country. A Spinal Clinic in Texas agreed to pay $330,898 to settle FCA allegations for allegedly billing Medicare improperly for electro-acupuncture device neurostimulators. CMS claims that “Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.”
Finally, is your staff getting medical records to consumers requesting their records quickly enough? Right to access to health records is yet another potential risk for all providers, especially hospitals due to their size. A hospital system agreed to pay $200,000 to settle potential violations of the HIPAA Privacy Rule’s right of access standard. This is HHS Office for Civil Rights’ 14th settlement under its Right of Access Initiative. The first person alleged that she requested medical records in December 2017 and did not receive them until May 2018. In the second complaint, the person asked for an electronic copy of his records in September 2019, and they were not sent until February 2020.
Beware of slow document production as slow document production can lead to penalties. And be on the lookout for the next RAC Report.
Remember, never accept the results of a Medicare or Medicaid audit. It is always too high. Believe me, after 21 years of my legal practice, I have yet to agree with the findings if a Tentative notice of Overpayment by any governmental contracted auditor, whether it is PCG, NGS, the MACs, MCOs, or Program Integrity – in any of our 50 States. That is quite a statement about the general, quality of work of auditors. Remember Teambuilders? How did $12 million become $896.35? See blog.
1 CMS, “0200-Air Ambulance: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/35Jx1co.
2 CMS, “0201-Hospice Continuous Home Care: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/3oRUyiY.
3 CMS, “0202- Ambulance Transport Subject to SNF Consolidated Billing,” proposed RAC topic, January 5, 2021, http://go.cms.gov/2LOMEbw.
Reporting the use of PRFs will be an ongoing issue due to the fraud and abuse implications of misusing PRFs.
The federal Provider Relief Fund (PRF) was created under the provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed to address the economic harm suffered by healthcare providers that have incurred (or will incur) additional expenses and have lost (or will lose) significant revenue as a result of the COVID-19 pandemic. PRF payments have been made from either the “general distribution” tranche or via various “targeted distributions.” PRF payment amounts and whether the providers complied with the terms and conditions will be a hotly contested topic in Recovery Audit Contractor (RAC) and Medicare Administrative Contractor (MAC) audits for years to come. If Centers for Medicare & Medicaid Services (CMS) auditors put out a monthly magazine, like Time, PRF would be on the cover. This will be the hot topic of RAC audits, come Jan. 1, 2021.
The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) will audit Medicare payments made to hospitals for COVID-19 discharges that qualified for the 20-percent add-on payment under the CARES Act, according to a new item on the agency’s work plan.
To use the PRF funding from either the general or targeted distributions, providers must attest to receiving the funds and agree to all terms and conditions. However, what constitutes a “healthcare-related expense” or how to calculate “lost revenue” is not clearly defined. Similarly, how you net healthcare-related expenses toward lost revenue is also vague and undefined. On Nov. 2, HHS issued a clarification to post-payment reporting guidance for PRF funds.
The current guidance, issued Oct. 22, includes a two-step process for providers to report their use of PRF payments. The guidance specifically cites:
- Healthcare-related expenses attributable to COVID that another source has not reimbursed and is not obligated to reimburse, which may include general and administrative (G&A) or “healthcare-related operating expenses;” and
- PRF payment amounts not fully expended on healthcare-related expenses attributable to coronavirus are then applied to lost revenues associated with patient care, net of the healthcare-related expenses attributable to coronavirus calculated under the first step. Recipients may apply PRF payments toward lost revenue, up to the amount of the difference between their 2019 and 2020 actual patient care revenue.
HHS’s newest clarification came from its response to a FAQ, in which it said that healthcare-related expenses are no longer netted against the patient care lost revenue amount cited in the second portion. HHS indicated that a revised notice would be posted to remove the “net of the healthcare-related expenses” language in the guidance. Of course, as of now, we have no guidance regarding when this clarification is to be put into place officially. Yet another moving target for auditors.
Anticipate audits of the use of your PRF payments. CMS is choosing a sample of hospitals across the country that have received PRF payments to verify that such expenditures were for healthcare-related expenses. For each audit, OIG will obtain data and interview HHS/PRF program officials to understand how PRF payments were calculated, and then review actual PRF payments for compliance with CARES Act requirements. OIG will also review whether HHS’s controls over PRF payments ensured that payments were calculated correctly and disbursed to eligible providers.
Audits will also focus on how providers initially applied to receive PRFs, including calculations utilized and how COVID-19 patients are defined. When each hospital ceased netting expenses against lost revenue will now be another hot topic.
Balance billing is another area of interest. The terms and conditions require providers that accept the PRFs not to collect out-of-pocket payments from patients for all care for a presumptive or actual case of COVID-19 that exceeded what they would pay an in-network provider.
More havoc may ensue with any purchases or sales transactions that occur in the next year or so. Providers will need to know how to navigate compliance risks associated with any accepted or transferred PRFs. Tracking and reporting use of the PRFs will also be an ongoing issue due to the fraud and abuse implications of misusing PRFs, and there is limited guidance regarding how use will be audited. Many questions remain unanswered. Many terms remain undefined.
Programming Note: Knicole Emanuel, Esq. is a permanent panelist on Monitor Mondays. Listen to her RAC Report every Monday at 10 a.m. EST.