Category Archives: Regulatory Audits

CMS Overlooks a Settlement Agreement from 2013 : A 2021 Provider Must Defend!

Today I am talking about a settlement agreement between CMS and the skilled nursing community, which, apparently, CMS conveniently forgot about – just recently. The Jimmo settlement agreement re-defines medical necessity for skilled nursing, especially for terminally, debilitating diseases, such as multiple sclerosis (“MS”). According to CMS/the MAC auditor, my client, who serves 100%, MS patients on Medicare owes over half a million dollars. The alleged overpayment and audit findings are in violation of the Jimmo Settlement and must cease.

My client received correspondence dated February 25, 2021, regarding CMS Inquiry #2349 that re-alleged an overpayment in the amount of $578,564.45, but the audit is in violation of the Jimmo Settlement with CMS. One basis for the claims denials is that “There is doc that the pt. has a dx of MS with no doc of recent exacerbation or change in function status.” After the first level of appeal, on June 8, 2021, the denial reason was as follows:

“The initial evaluation did not document there was an ACUTE exacerbation of this chronic condition that would support the need for skilled services.” This basis is in violation of the Jimmo Settlement. See below excerpt from the Jimmo Settlement.

In January 2013, the Centers for Medicare & Medicaid Services (“CMS”) settled a lawsuit, and the “Jimmo” Settlement Agreement was approved by the Court. Jimmo v. Sebelius, No. 5:11-CV17 (D. Vt., 1/24/2013). The Jimmo Settlement Agreement clarified that, provided all other coverage criteria are met, the Medicare program covers skilled nursing care and skilled therapy services under Medicare’s skilled nursing facility, home health, and outpatient therapy benefits when a beneficiary needs skilled care in order to maintain function or to prevent or slow decline or deterioration. Specifically, the Jimmo Settlement Agreement required Medicare Manual revisions to restate a “maintenance coverage standard” for both skilled nursing and therapy services under these benefits. The Jimmo Settlement Agreement dictates that:

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

In the case of Jimmo v. Sebelius, which resulted in the Jimmo Settlement Agreement, the Center for Medicare Advocacy (“CMA”) alleged that Medicare claims involving skilled care were being inappropriately denied by contractors based on a rule-of-thumb-“Improvement Standard”— under which a claim would be summarily denied due to a beneficiary’s lack of restoration potential, even though the beneficiary did in fact require a covered level of skilled care in order to prevent or slow further deterioration in his or her clinical condition. In the Jimmo lawsuit, CMS denied establishing an improper rule-of-thumb “Improvement Standard.”

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

A beneficiary’s lack of restoration potential cannot serve as the basis for denying coverage, without regard to an individualized assessment of the beneficiary’s medical condition and the reasonableness and necessity of the treatment, care, or services in question. Conversely, coverage in this context would not be available in a situation where the beneficiary’s care needs can be addressed safely and effectively through the use of nonskilled personnel. Thus, such coverage depends not on the beneficiary’s restoration potential, but on whether skilled care is required, along with the underlying reasonableness and necessity of the services themselves.

Any Medicare coverage or appeals decisions concerning skilled care coverage must reflect this basic principle. In this context, it is also essential and has always been required that claims for skilled care coverage include sufficient documentation to substantiate clearly that skilled care is required, that it is provided, and that the services themselves are reasonable and necessary, thereby facilitating accurate and appropriate claims adjudication.

The Jimmo Settlement Agreement includes language specifying that “Nothing in this Settlement Agreement modifies, contracts, or expands the existing eligibility requirements for receiving Medicare coverage. Id. The Jimmo Settlement Agreement clarifies that when skilled services are required in order to provide care that is reasonable and necessary to prevent or slow further deterioration, coverage cannot be denied based on the absence of potential for improvement or restoration.

100% of my client’s consumers suffer from MS. MS is a chronic condition that facilitates a consistent decline over a long period of time. 90% of those with MS do not suffer from acute exacerbations after approximately 5 years of their initial diagnosis. They move into a new phase of their disease called secondary progressive where there are no exacerbations but a slow, consistent decline is now the clinical presentation. According to the Jimmo Settlement, there is no requirement that a provider demonstrate recent exacerbation or change of function. This has been litigated and settled. My client’s Medicare audit is in violation of the Jimmo Settlement and must cease, yet the audit must still be defended.

My client’s documents clearly demonstrate that its consumers who all suffer from MS, qualify for skilled therapy based on the Jimmo Settlement Agreement and their physicians’ recommendations. The Jimmo Settlement clearly states that if the therapist determines that skilled nursing is necessary to stop further decline, then, under the Jimmo Settlement, skilled nursing is appropriate.

Now my client is having to defend itself against erroneous allegations that are clearly in violation of the Jimmo Settlement, which is adversely affecting the company financially. It’s amazing that in 2021, my client is defending a right given in a settlement agreement from 2013. Stay proactive!

Provider Medicaid Contract Termination Reversed in Court!

First and foremost, important, health care news:

The Medicare Administrative Contractors (MACs) have full authority to renew post-payments reviews of dates of service (DOS) during the COVID pandemic. The COVID pause is entirely off. It is going to be a mess to wade through the thousands of exceptions. RAC audits of COVID DOS will be, at best, placing a finger on a piece of mercury. I hope that the auditors remember that everyone was scrambling to do their best during the past year and a half. In the upcoming weeks, I will keep you posted.

I am especially excited today. Last week, I won a permanent injunction for a health care facility that but for this injunction, the facility would be closed, its 300 staff unemployed, and its 600 Medicare and Medicaid consumers without access to their mental health and substance abuse providers, their primary care physicians, and the Suboxone clinic. The Judge’s clerk emailed us on Friday. The email was terse although the clerk signified that the email was important by clicking the little, red, exclamation point. It simply stated: After speaking with Judge X, she is dismissing the government’s MTD and granting Petitioner’s permanent injunction. Petitioner’s counsel can send a proposed decision within 10 days. Such a simple email affected so many lives!

We hear Ellen Fink-Samnick MSW, ACSW, LCSW, CCM, CRP, speak about social determinants of health (SDoH) on RACMonitor. Well, this company is minority-owned and the mass percentage of staff and consumers are minorities.

Why was this company on the brink of closing down? The managed care organization (MCO) terminated the company’s Medicaid contract. Medicaid comprised the majority of its revenue. The MCO’s reason was that the company violated 42 CFR §455.106, which states:

“Information that must be disclosed. Before the Medicaid agency enters into or renews a provider agreement, or at any time upon written request by the Medicaid agency, the provider must disclose to the Medicaid agency the identity of any person who:

(1) Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and

(2) Has been convicted of a criminal offense related to that person‘s involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs.”

The former CEO – for years – he relied on professional tax accountants for the company’s taxes and his own personal family’s taxes. His wife, who is a physician, relied on her husband to do their personal taxes as one of his “honey-do” tasks. CEO relied on a sub-par accountant for a couple years and pled guilty to failing to pay personal taxes for two years. The plea ended up in the newspaper and the MCO terminated the facility.

We argued that the company, as an entity, was bigger than just the CEO. Quickly, we filed for a TRO to keep the company open. Concurrently, we transitioned the company from the CEO to Dr. wife. Dr became CEO in a seamless transition. A long-time executive stepped up as HR management.

Yet, according to testimony, the MCO terminated the company’s contract when the newspaper published the article about CEO’s guilty plea. The article was published in a local paper on April 9 and the termination notice was sent out April 19th. It was a quick decision.

We argued that 42 CFR §455.106 didn’t apply because CEO’s guilty plea was:

  1. Personal and not related to Medicare or Medicaid; and
  2. Not a conviction but a voluntary plea agreement.

The Judge agreed. We won the TRO for immediate relief. After a four-day hearing and 22 witnesses for Petitioner, we won the preliminary injunction. At this point, the MCO hired outside counsel with our tax dollars, which I did bring up in the final hearing on the merits.

New outside counsel was super excited to be involved. He immediately propounded a ton of discovery asking for things that he already had and for criminal documents that we had no access to because, by law, the government has possession of and CEO never had. Well, new lawyer was really excited, so he filed motions to compel us to produce these unobtainable documents. He filed for sanctions. We filed for sanctions back.

It grew more litigious as the final hearing on the merits approached.

Finally, we presented our case for a permanent injunction, emphasizing the importance of the company and the smooth transition to the new, Dr. CEO. We won! Because we won, the company is open and providing medically necessary services to our most needy population.

And…I get to draft the proposed decision.

Knicole Emanuel Interviewed by “Ask the Attorney” and Alex Said, “I Love You!”

Beware the Ides of March! And Medicare Provider Audits!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Premature Recoupment of Medicare Reimbursements Defies Due Process!

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

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

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

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

What’s the law?

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

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

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

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

RAC Report: PET Scans, Helicopter Transportation, and Hospice, Oh My!

The RACs are on attack! The “COVID Pause Button” on RAC audits has been lifted. The COVID Pause Button has been lifted since August 2020. But never have I ever seen CMS spew out so many new RAC topics in one month of a new year. Happy 2021.

Recovery audit contractors (“RACs”) will soon be auditing positron emission tomography (PET) scans for initial treatment strategy in oncologic conditions for compliance with medical necessity and documentation requirements.

Positron emission tomography (“PET”) scans detect early signs of cancer, heart disease and brain disorders. An injectable radioactive tracer detects diseased cells. A combination PET-CT scan produces 3D images for a more accurate diagnosis.

According to CMS’ RAC audit topics, “(PET) for Initial Treatment Strategy in Oncologic Conditions: Medical Necessity and Documentation Requirements,” will be reviewed as of January 5, 2021. The PET scan audits will be for outpatient hospital and professional service reviews. CMS added additional 2021 audit targets to the approved list:

  1. Air Ambulance: Medical Necessity and Documentation Requirements,[1]. This complex review will be examining rotatory wing (helicopter) aircraft claims to determine if air ambulance transport was reasonable and medically necessary as well as whether or not documentation requirements have been met.
  2. Hospice Continuous Home Care: Medical Necessity and Documentation Requirements,[2] and
  3. Ambulance Transport Subject to SNF Consolidated Billing.[3]

Upcoming HHS secretary Xavier Becerra plans to get his new tenure underway quickly.

In False Claims Act (“FCA”) news, Medicare audits of P-Stim have ramped up across the country. A Spinal Clinic in Texas agreed to pay $330,898 to settle FCA allegations for allegedly billing Medicare improperly for electro-acupuncture device neurostimulators. CMS claims that “Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.”

Finally, is your staff getting medical records to consumers requesting their records quickly enough? Right to access to health records is yet another potential risk for all providers, especially hospitals due to their size. A hospital system agreed to pay $200,000 to settle potential violations of the HIPAA Privacy Rule’s right of access standard. This is HHS Office for Civil Rights’ 14th settlement under its Right of Access Initiative. The first person alleged that she requested medical records in December 2017 and did not receive them until May 2018. In the second complaint, the person asked for an electronic copy of his records in September 2019, and they were not sent until February 2020.

Beware of slow document production as slow document production can lead to penalties. And be on the lookout for the next RAC Report.

Remember, never accept the results of a Medicare or Medicaid audit. It is always too high. Believe me, after 21 years of my legal practice, I have yet to agree with the findings if a Tentative notice of Overpayment by any governmental contracted auditor, whether it is PCG, NGS, the MACs, MCOs, or Program Integrity – in any of our 50 States. That is quite a statement about the general, quality of work of auditors. Remember Teambuilders? How did $12 million become $896.35? See blog.

1  CMS, “0200-Air Ambulance: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/35Jx1co.
2 CMS, “0201-Hospice Continuous Home Care: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/3oRUyiY.
3 CMS, “0202- Ambulance Transport Subject to SNF Consolidated Billing,” proposed RAC topic, January 5, 2021, http://go.cms.gov/2LOMEbw.

KNICOLE EMANUEL TO HOST JANUARY WEBCAST ON PRFS AND RAC AUDITS

For healthcare providers looking to avoid any of the traps stemming from PRF (Provider Relief Funds) compliance, RACmonitor is inviting you to sign up for Knicole Emanuel’s upcoming webcast on January 21st, 2021. It is titled: COVID-19 Provider Relief Funds: How to Avoid Audits.  You can visit RACmonitor download the order form for the webcast to save yourself a spot. 

Webcast Description: 

If your facility accepted Provider Relief Funds (PRFs) as a consequence of the coronavirus pandemic, you need to be aware of the myriad of rules and regulations that are associated with this funding or else face penalties and takebacks. A word of caution: expect to be audited. In Medicare and Medicaid, regulatory audits are as certain as death and taxes. That is why your facility needs to arm itself with the knowledge of how to address documentation requests from the government, especially while the Public Health Emergency (PHE) is in effect.

This exclusive RACmonitor webcast, led by healthcare attorney Knicole Emanuel, discusses the PRF rules that providers must follow and how to prove that funds were appropriately used. There are strict regulations dictating why, how, and how much PRFs can be spent due to the catastrophic, financial impact of COVID-19. Register now to learn how to avoid penalties and takebacks related to PRFs.

Learning Objectives:

  • Rules and regulations relative to receiving and spending funds provided by the COVID-19 PRF
  • Exceptions to COVID-19 PRF and relevant effective dates
  • PRF documentation and reporting requirements
  • The importance of the legal dates of PHE
  • How to prove your facility’s use of funds is germane to COVID-19

Who Should Attend:

  • CFOs
  • RAC and appeals specialists
  • RAC coordinators
  • Compliance officers
  • Directors and managers

About Knicole C. Emanuel, Esq.

Healthcare industry expert and Practus partner, Knicole Emanuel, is a regular contributor to the healthcare industry podcast, Monitor Mondays, by RACmonitor. For more than 20 years, Knicole Emanuel has maintained a health care litigation practice, concentrating on Medicare and Medicaid litigation, health care regulatory compliance, administrative law and regulatory law. Knicole has tried over 2,000 administrative cases in over 30 states and has appeared before multiple states’ medical boards. 

She has successfully obtained federal injunctions in numerous states. This allowed health care providers to remain in business despite the state or federal laws allegations of health care fraud, abhorrent billings, and data mining. A wealth of knowledge in her industry, Knicole frequently lectures across the country on health care law. This includes the impact of the Affordable Care Act and regulatory compliance for providers, including physicians, home health and hospice, dentists, chiropractors, hospitals and durable medical equipment providers.

Provider Relief Funds: The Hottest RAC Audit Subject

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.

Fairness in Medicare: Post Payment Review in the Courts of Equity

As children, we say things are or are not fair. But what is fair? In law, fairness is “tried” in the courts of equity rather than law. Equitable estoppel and the defense of laches are arguments made in the courts of equity. Is it fair if you’ve been billing Medicare for services that you were told by CMS was billable and reimburse-able – for years – then, unexpectantly, CMS says, “Hey, providers, what you were told was reimburse-able, actually is not. In fact, providers, even though you relied on our own guidance, we will cease and desist from paying you going forward AND…we are now going back three years to retroactively collect the money that we should never have paid you…”

How is this fair? Yet, many of you have probably encountered RAC or MAC audits and a post payment review. What I described is a post payment review. Let me give you an example of a nationwide, claw-back by CMS to providers.

On January 29, 2020, CMS announced that beginning March 1, 2020, MACs will reject claims for HCPCS code L8679 submitted without an appropriate HCPCS/CPT surgical procedure code. Claims for HCPCS code L8679 billed with an appropriate HCPCS/CPT surgical code will be suspended for medical review to verify that coverage, coding, and billing rules have been met.

At least according to the announcement, it sounded like CMS instructed the MACs to stop reimbursing L8679 going forward, but I read nothing about going back in time to recoup.

In the last few months, my team has been approached by chiropractors and holistic medical providers who received correspondence from a UPIC and their MACs that they owe hundreds of thousands of dollars for L8679 going back three years prior to CMS’ 2020 announcement to cease using the code.

In this particular instance, many of the providers who had been using the L8679 code did so under the direct guidance of CMS, MACs, and other agents over the years. It becomes a fairness question. Should CMS be able to recoup for claims paid for services rendered when CMS had informed the providers it was the correct code for years?

Another factor to consider is that many of these providers are victims of an intentional scheme to sell devices with the false advice that the devices are covered by Medicare. Litigation has already been filed against the company. In a case filed December 6, 2019, in US District Court of the Eastern District of PA, Neurosurgical Care LLC sued Mark Kaiser and his current company, Doc Solutions LLC, claiming that Kaiser’s company falsely marketed the device as being covered by Medicare. Stivax is a “non-narcotic and minimally invasive form of neurostimulation” which is represented as “one of the only FDA approved microchip controlled microstimulation devices for treating back, joint and arthritic pain.”

Recall that, over the years, CMS paid for these approved procedures with no problem. This situation begins to leave the realm of the courts of law and into the court of equity. It becomes an equitable issue. Is there fairness in Medicare?

There may not be fairness, but there is an administrative appeal process for health care providers! Use it! Request redeterminations!