Category Archives: Administrative Law Judge
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!
I hope everyone had a Merry Christmas or Happy Hanukkah! As 2023 approaches, NC Medicaid is being overhauled…again! Medicaid reform is never smooth, despite the State. NC is no different. When NC Medicaid reformed in 2013, I brought a class action lawsuit against Computer Science Corporation, which created NCTracks, and DHHS, NC’s “single state entity” charged with managing Medicaid. See blog.
The new start date for NC Medicaid Tailored Plans is April 1, 2023. Tailored Plans, originally scheduled to launch Dec. 1, 2022, will provide the same services as Standard Plans in Medicaid Managed Care and will also provide additional specialized services for individuals with significant behavioral health conditions, Intellectual/Developmental Disabilities and traumatic brain injury.
While the start of Tailored Plans will be delayed, specific new services did go live Dec. 1, 2022.
The following organizations will serve as regional Behavioral Health I/DD Tailored Plans beginning April 1, 2023:
- Alliance Healthalliancehealthplan.org
- Member phone numbers: 800-510-9132, TTY: 711 or 800-735-2962
- Member phone numbers: 800-913-6109, TTY: 888-819-5112
- Partners Health Managementpartnersbhm.org
- Member phone numbers: 888-235-4673, TTY: English: 800-735-2962, TTY: Spanish: 888-825-6570
- Sandhills Centersandhillscenter.org
- Member phone numbers: 800-256-2452, TTY: 711 or 866-518-6778
- Trillium Health Resourcestrilliumhealthresources.org
- Member phone numbers: 877-685-2415, TTY: 711
- Vaya Healthvayahealth.com
- Member phone numbers: 800-962-9003, TTY: 711
Aetna is a managed-care provider, one of eight entities who submitted proposals for Medicaid managed-care services. The Committee issued its recommendations on January 24, 2019, which identified four statewide contracts for Medicaid managed care services to be awarded. On February 4, 2019, DHHS awarded contracts to WellCare of North Carolina, Inc. (“Wellcare”), Blue Cross and Blue Shield of North Carolina (“BCBS”), AmeriHealth Caritas of North Carolina (“AmeriHealth”), and UnitedHealthcare of North Carolina, Inc. (“United Healthcare”). DHHS also awarded a regional contract to Carolina Complete Health, Inc.
However, two private insurance failed to get awarded NC contracts.
Aetna, along with the two other entities who were not awarded contracts, protested DHHS’ contract by filing contested case petitions in the Office of Administrative Hearings (“OAH”). Aetna filed its contested case petition and motion for preliminary injunction on April 16, 2019. The Administrative Law Judge (“ALJ”) denied Aetna’s motion for preliminary injunction on June 26, 2019. The ALJ consolidated all three petitions on July 26, 2019. It rose to the Court of Appeals, where it was thrown out on a technicality; i.e., failure to timely serve Defendants. Aetna Better Health of N. Carolina, Inc. v. N. Carolina Dep’t of Health & Hum. Servs., 2021-NCCOA-486, ¶ 4, 279 N.C. App. 261, 263, 866 S.E.2d 265, 267.
The Court stated, “Here, Aetna failed to timely serve DHHS or any other party within the “10 days after the petition is filed” as is mandated by N.C. Gen. Stat. § 150B-46. Prior to serving DHHS, Aetna amended its Petition on 12 October 2020 and served its amended Petition the same day. Aetna argues “the relation-back provision of Rule 15(c) allows the service of an amended pleading where the original pleading was not properly served.” What a silly and mundane reason to have their Complaint dismissed due to the oversight of an attorney or paralegal…and a great law firm at that. Just goes to show you that technical, legal mistakes are easily done. This career in law in the Medicare/Medicaid realm is not simple.
The upcoming transformation in Medicaid will probably not be smooth; it never is. But we shall see if Medicaid reform 2023 works better than 2013 reform. We can hope!
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.
Coronavirus shuts down Courts across North Carolina. As of now, Superior and District Courts remain open…for now.
*My next blog will explore the new budget and emergency measures implemented for Medicare and Medicaid. More money will be funded to both during this crisis…TBD. How is the Coronavirus impacting health care?
The following emergency directive was initiated, effective TODAY.
On 10 March 2020, Governor Roy Cooper declared a state of emergency in North Carolina in response to the emerging public health threat posed by COVID-19. Since that time, the World Health Organization has designated the COVID-19 outbreak as a global pandemic, and the North Carolina Department of Health and Human Services has urged all North Carolinians to take steps to reduce the spread of infection. Accordingly, I hereby determine and declare under N.C.G.S. § 7A-39(b)(2) that catastrophic conditions resulting from the public health threat posed by COVID-19 exist in all counties of this state. Although the superior courts and district courts remain open, two emergency directives are necessary to reduce the spread of infection.
Emergency Directive 1
I order that all superior court and district court proceedings be scheduled or rescheduled for a date no sooner than 30 days from the issuance of this order, unless: 1. the proceeding will be conducted remotely; 2. the proceeding is necessary to preserve the right to due process of law (e.g., a first appearance or bond hearing, the appointment of counsel for an indigent defendant, a probation hearing, a probable cause hearing, etc.); 3. the proceeding is for the purpose of obtaining emergency relief (e.g., a domestic violence protection order, temporary restraining order, juvenile custody order, judicial consent to juvenile medical treatment order, civil commitment order, etc.); or 4. the senior resident superior court judge, chief business court judge, or chief district court judge determines that the proceeding can be conducted under conditions that protect the health and safety of all participants. This emergency directive does not apply to any proceeding in which a jury has already been empaneled. This emergency directive does not apply to grand juries which have already been empaneled. This emergency directive does not prohibit a judge or other judicial officer from exercising any in chambers or ex parte jurisdiction conferred by law upon that judge or judicial officer, as provided by law. Additionally, I encourage the superior courts and district courts to liberally grant additional accommodations to parties, witnesses, attorneys, and others with business before the courts who are at a high risk of severe illness from COVID-19.
Emergency Directive 2
I further order that the clerks of superior court shall post a notice at the entrance to every court facility in their county directing that any person who has likely been exposed to COVID-19 should not enter the courthouse. A person who has likely been exposed to COVID-19 who has business before the courts shall contact the clerk of superior court’s office by telephone or other remote means, inform court personnel of the nature of his or her business before the court, and receive further instruction. For purposes of this order, a person who has likely been exposed to COVID-19 is defined as any person who: 1. has traveled to China, South Korea, Japan, Italy, or Iran within the previous 14 days; 2. has been directed to quarantine, isolate, or self-monitor; 3. has been diagnosed with COVID-19; or 4. resides with or has been in close contact with any person in the above mentioned categories.
* * * The directives contained in this order will take effect Monday, 16 March 2020.
This order may be extended in whole or in part for additional 30-day periods if necessary.
Issued this the 13th day of March, 2020. Cheri Beasley, Chief Justice Supreme Court of North Carolina
Last week on Monitor Mondays, Knicole Emanuel, Esq. reported on the case of Commonwealth v. Pediatric Specialist, PLLC, wherein the Recovery Audit Contractors’ (RACs’) experts were prohibited from testifying because they were paid on contingency. This means that the auditor (or the company for which they work) is paid some percentage of the overpayment findings it reports.
In this case, as in most nowadays, the overpayment estimate was based upon extrapolation, which means that the auditor extended the overpayment amount found in the sample to that of all claims within the universe from which the sample was drawn. I have written about this process before, but basically, it can turn a $1,500 overpayment on the sample into a $1.5 million overpayment demand.
The key to an effective extrapolation is that the statistical process is appropriate, proper, and accurate. In many audits, this is not the case, and so what happens is, if the provider believes that the extrapolation is not appropriate, they may choose to challenge the results in their appeal. Many times, this is when they will hire a statistician, like me, to review the statistical sampling and overpayment estimate (SSOE), including data and documentation to assist with the appeal. I have worked on hundreds of these post-audit extrapolation mitigation appeals over the years, and even though I am employed by the provider, I maintain a position as an independent fact-finder. My reports are based on facts and figures, and my opinion is based on those findings. Period.
So, what is it that allows me to remain independent? To perform my job without undue influence or bias? Is it my incredibly high ethical standards? Check! My commitment to upholding the standards of my industry? Check! Maybe my good looks? Well, not check! It is the fact that my fees are fixed, and are not contingent on the outcome. I mean, it would be great if I could do what the RACs do and cash in on the outcomes of a case, but alas, no such luck.
In one large class-action case in which I was the statistical expert, the defendant settled for $122 million. The law firm got something like a quarter or a third of that, and the class members all received some remuneration as well. Me? I got my hourly rate, and after the case was done, a bottle of Maker’s Mark whiskey as a thank you. And I’m not even sure that was appropriate, so I sent it back. I would love to be paid a percentage of what I am able to save a client in this type of appeal. I worked on a case a couple of years ago for which we were able to get the extrapolation thrown out, which reduced the payment demand from $5.9 million to $3,300. Imagine if I got paid even 2 percent of that; it would be nearly $120,000. But that can’t happen, because the moment my work product is tied to the results, I am no longer independent, nor unbiased. I don’t care how honest or ethical you are, contingency deals change the landscape – and that is as true for me, as an expert, as it is for the auditor.
In the pediatric case referenced above, the RAC that performed the audit is paid on a contingency, although I like to refer to it as a “bounty.” As such, the judge ruled, as Ms. Emanuel reported, that their experts could not testify on behalf of the RAC. Why not? Because the judge, unlike the RAC, is an independent arbiter, and having no skin in the game, is unbiased in their adjudication. But you can’t say that about the RAC. If they are being paid a “bounty” (something like 10 percent), then how in the world could they be considered independent and unbiased?
The short answer is, they can’t. And this isn’t just based on standards of statistical practice; it is steeped in common sense. Look at the appeal statistics; some 50 percent of all RAC findings are eventually reversed in favor of the provider. If that isn’t evidence of an overzealous, biased, bounty-hunting process, I don’t know what is. Basically, as Knicole reported, having their experts prohibited from testifying, the RAC was unable to contest the provider’s arguments, and the judge ruled in favor of the provider.
But, in my opinion, it should not stop here. This is one of those cases that exemplifies the “fruit of the poisonous tree” defense, meaning that if this case passes muster, then every other case for which the RAC did testify and the extrapolation held should be challenged and overturned. Heck, I wouldn’t be surprised if there was a class-action lawsuit filed on behalf of all of those affected by RAC extrapolated audits. And if there is one, I would love to be the statistical expert – but for a flat fee, of course, and not contingent upon the outcome.
And that’s the world according to Frank.
Frank Cohen is a frequent panelist with me on RACMonitor. I love his perspective on expert statistician witnesses. He drafted based off a Monitor Monday report of mine. Do not miss both Frank and me on RACMonitor, every Monday.
A sneaky and under-publicized matter, which will affect every one of you reading this, slid into common law last year with a very recent case, dated Jan. 9, 2020, upholding and expanding the findings of a 2018 case, Lucia v. SEC, 138 S. Ct. 2044 (U.S. 2018). In Lucia, the Supreme Court upheld the plain language of the U.S. Constitution’s Appointments Clause.
The Appointments Clause prescribes the exclusive means of appointing “officers.” Only the President, a court of law, or a head of department can do so. See Art. II, § 2, cl. 2.
In Lucia, the sole issue was whether an administrative law judge (ALJ) can be appointed by someone other than the President or a department head under Article II, §2, cl. 2 of the U.S. Constitution, or whether ALJs simply federal employees. The Lucia court held that ALJs must be appointed by the President or the department head; this is a non-delegable duty. The most recent case, Sara White Dove-Ridgeway v. Nancy Berrryhill, 2020 WL 109034, (D.Ct.DE, Jan. 9, 2020), upheld and expanded Lucia.
ALJs are appointed. In many states, ALJs are direct employees of a single state agency. In other words, in many states, about half, the payroll check that an ALJ receives bears the emblem of the department of health for that state. I have litigated in administrative courts in approximately 33 states, and have seen my share of surprises. In one case, many years ago, LinkedIn informed me that my appointed ALJ was actually a professional photographer by trade.
Lucia, however, determined that ALJs at the Securities and Exchange Commission (SEC) were “officers of the United States,” subject to the Appointment Clause of the Constitution, which requires officers to be appointed by the president, the heads of departments, or the courts. The court’s decision raised concern at the U.S. Department of Health and Human Services (HHS) because its ALJs had not been appointed by the secretary, but rather by lower agency officials.
The court also held that relief should be granted to “one who makes a timely challenge to the constitutional validity of the appointment of an officer who adjudicates his case.” Whether that relief is monetary, in the form of attorneys’ fees reimbursed or out-of-pocket costs, it is unclear.
In July 2018, President Trump’s Executive Order 13843 excepted ALJs from the competitive service, so agency heads, like HHS Secretary Alex Azar, could directly select the best candidates through a process that would ensure the merit-based appointment of individuals with the specific experience and expertise needed by the selecting agencies.
The executive order also accepted all previously appointed ALJs. So there became a pre-July 16, 2018, challenge and a post-July 16, 2018, based on Trump’s Executive Order. Post-July 16, 2018, appointees had to be appointed by the President or department head. But the argument could be made that ALJs appointed pre-July 16, 2018, were grandfathered into the more lax standards. In Dove-Ridgway, Social Security benefits were at issue. On July 5, 2017, ALJ Jack S. Pena found a plaintiff not disabled. On Jan. 7, 2019, the plaintiff filed an appeal of the ALJ’s decision, seeking judicial review from the district court. In what seems to be the fastest decision ever to emerge from a court of law, two days later, a ruling was rendered. The District Court found that even though at the time of the administrative decision, Lucia and Trump’s Executive Order had not been issued, the court still held that the ALJ needed to have been appointed constitutionally. It ordered a remand for a rehearing before a different, constitutionally appointed ALJ, despite the fact that Trump had accepted all previously appointed ALJs.
In this firsthand, post-Jan. 9, 2020, era, we have an additional defense against Medicare or Medicaid audits or alleged overpayments in our arsenal: was the ALJ appointed properly, per the U.S. Constitution?
Programming Note: Listen to Knicole Emanuel’s live reports on Monitor Monday, 10-10:30 a.m. EST.
As seen on RACMonitor.
Effective Jan. 2, 2019, the Centers for Medicare & Medicaid Services (CMS) radically changed its guidance on the use of extrapolation in audits by Recovery Audit Contractors (RACs), Medicare Administrative Contractors (MACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SMRC).
Extrapolation is a veritable tsunami in Medicare/Medicaid audits. The auditor collects a small sample of claims to review for compliance, then determines the “error rate” of the sample. For example, if 500 claims are reviewed and one is found to be noncompliant for a total of $100, then the error rate is set at 20 percent. That error rate is applied to the universe, which is generally a three-year time period. It is assumed that the random sample is indicative of all your billings, regardless of whether you changed your billing system during that time period or maybe hired a different biller. In order to extrapolate an error rate, contractors must use a “statistically valid random sample” and then apply that error rate on a broader universe of claims, using “statistically valid methods.”
With extrapolated results, auditors allege millions of dollars of overpayments against healthcare providers – sometimes a sum of more than the provider even made during the relevant time period. It is an overwhelming impact that can put a provider and its company out of business.
Prior to this recent change to extrapolation procedure, the Program Integrity Manual (PIM) offered little guidance regarding the proper method for extrapolation.
Prior to 2019, CMS offered broad strokes with few details. Its guidance was limited to generally identifying the steps contractors should take: “a) selecting the provider or supplier; b) selecting the period to be reviewed; c) defining the universe, the sampling unit, and the sampling frame; d) designing the sampling plan and selecting the sample; e) reviewing each of the sampling units and determining if there was an overpayment or an underpayment; and, as applicable, f) estimating the overpayment.”
Well, Change Request 10067 overhauled extrapolation in a huge way.
The first modification to the extrapolation rules is that the PIM now dictates when extrapolation should be used.
Under the new guidance, a contractor “shall use statistical sampling when it has been determined that a sustained or high level of payment error exists. The use of statistical sampling may be used after a documented educational intervention has failed to correct the payment error.” This guidance now creates a three-tier structure:
- Extrapolation shall be used when a sustained or high level of payment error exists.
- Extrapolation may be used after documented educational intervention (such as in the Targeted Probe-and-Educate (TPE) program).
- It follows that extrapolation should not be used if there is not a sustained or high level of payment error or evidence that documented educational intervention has failed.
“High level of payment error” is defined as 50 percent or greater. The PIM also states that the contractor may review the provider’s past noncompliance for the same or similar billing issues or a historical pattern of noncompliant billing practice. This is critical because so many times providers simply pay the alleged overpayment amount if the amount is low or moderate in order to avoid costly litigation. Now, those past times that you simply paid the alleged amounts will be held against you.
Another monumental modification to RAC audits is that the RAC auditor now must receive authorization from CMS to go forward in recovering from the provider if the alleged overpayment exceeds $500,000 or is an amount that is greater than 25 percent of the provider’s Medicare revenue received within the previous 12 months.
The identification of the claims universe was also redefined. Even CMS admitted in the change request that, on occasion, “the universe may include items that are not utilized in the construction of the sample frame. This can happen for a number of reasons, including, but not limited to: a) some claims/claim lines are discovered to have been subject to a prior review; b) the definitions of the sample unit necessitate eliminating some claims/claim lines; or c) some claims/claim lines are attributed to sample units for which there was no payment.”
How many of you have been involved in an alleged overpayment in which the auditor misplaced or lost documents? I know I have. The new rule also states that the auditors must be able to recreate the sample and maintain all documentation pertinent to the calculation of an alleged overpayment.
High-volume providers should face a lower risk of extrapolation if their audited error rate is less than 50 percent and they do not have a history of noncompliance for the same or similar billing issues, or a historical pattern of noncompliant billing practice.
Understanding why there’s a need for auditing the auditors.
I frequently encounter complaints by healthcare providers that when they are undergoing Recovery Audit Contractor (RAC), Medicare Administrative Contractor (MAC), and, more recently, the Targeted Probe-and-Educate (TPE) audits, the auditors are getting it wrong. That’s as in, during a RAC audit, the auditor finds claims noncompliant, for example, for not having medical necessity – but the provider knows unequivocally that the determination is dead wrong. So the question that I get from the providers is whether they have any legal recourse against the RAC or MAC finding noncompliance, besides going through the tedious administrative action, which we all know can take upwards of 5-7 years before reaching the third administrative level.
To which, now, upon a recent discovery in one of my cases, I would have responded that the only other option for relief would be obtaining a preliminary injunction in federal court. To prove a preliminary injunction in federal court, you must prove: a) a likelihood of success on the merits; and b) that irreparable harm would be incurred without the injunction; i.e., that your company would be financially devastated, or even threatened with extinction.
The conundrum of being on the brink of financial ruin is that you cannot afford a legal defense if you are about to lose everything.
This past month, I had a completely different legal strategy, with a different result. I am not saying that this result would be reached by all healthcare providers that disagree with the results of their RAC or MAC or TPE audit, but I now believe that in certain extreme circumstances, this alternative route could work, as it did in my case.
When this particular client hired me, I quickly realized that the impact of the MAC’s decision to rescind the client’s Medicare contract was going to do more than the average catastrophic outcomes resulting from a rescission of a Medicare contract. First, this provider was the only provider in the area with the ability to perform certain surgeries. Secondly, his practice consisted of 90 percent of Medicare. An immediate suspension of Medicare would have been devastating to his practice. Thirdly, the consequence of these Medicaid patients not undergoing this particular and highly specialized surgery was dire. This trifecta sparked a situation in which, I believed, that even a Centers for Medicare & Medicaid Services (CMS) employee (who probably truly believed that the negative findings cited by the RAC or MAC were accurate) may be swayed by the exigent circumstances.
I contacted opposing counsel, who was the attorney for CMS. Prior to this situation, I had automatically assumed that non-litigious strategies would never work. Opposing counsel listened to the facts. She asked that I draft a detailed explanation as to the circumstances. Now, concurrently, I also drafted this provider’s Medicare appeal, because we did not want to lose the right to appeal. The letter was definitely detailed and took a lot of time to create.
In the end, CMS surprised me and we got the Medicare contract termination overturned within months, not years, and without expensive litigation.
(Originally published on RACMonitor)
Let’s talk targeted probe-and-educate (“TPE”) audits – again.
I received quite a bit of feedback on my RACMonitor article regarding Medicare TPE audits being a “Wolf in Sheep’s Clothing.” So, I decided to delve into more depth by contacting providers who reached out to me to discuss specific issues. My intent is to shed the sheep’s clothing and show the big, pointy ears, big, round eyes, and big, sharp teeth that the MACs will hear, see, and eat you through the Medicare TPE audits. So, call the Woodsman, arm yourself with a hatchet, and get ready to be prepared for TPE audits. I cannot stress enough the importance of being proactive.
The very first way to rebut a TPE audit is to challenge the reason you were selected, which includes challenging the data supporting the reason that you were chosen. A poor TPE audit can easily result in termination of your Medicare contract, so it is imperative that you are prepared and appeal adverse results. 42 C.F.R. § 424.535, “Revocation of enrollment in the Medicare program” outlines the reasons for termination. Failing the audit process – even if the results are incorrect – can result in termination of your Medicare contract. Be prepared and appeal.
In 2014, the Center for Medicare and Medicaid Services (“CMS”) began the TPE program that combines a review of a sample of claims with “education” to allegedly reduce errors in the Medicare claims submission process; however, it took years to get the program off the ground. But off the ground it is. It seems, however, that CMS pushed the TPE program off the ground and then allowed the MACs to dictate the terms. CMS claims that the results of the TPE program are favorable, basing its determination of success on the decrease in the number of claim errors after providers receive education. But providers undergoing the TPE audit process face tedious and burdensome deadlines to submit documents and to undergo the “education” process. These 45-day deadlines to submit documents are not supported by federal law or regulation; they are arbitrary deadlines. Yet, these deadlines must be met by the providers or the MACs will aver a 0% accuracy. Private payors may create and enforce arbitrary deadlines; they don’t have to follow federal Medicare regulations. But Medicare and Medicaid auditors must obey federal regulations. A quick search on Westlaw confirms that no provider has challenged the MACs’ TPE rules, at least, litigiously.
The TPE process begins by the MAC selecting a CPT/HCPC code and a provider. This selection process is a mystery. How the MACs decide to audit sleep studies versus chemotherapy administration or a 93675 versus a 93674 remains to be seen. According to one health care provider, which has undergone multiple TPE audits and has Noridian Healthcare Solutions as its MAC informed me that, at times, they may have 4 -5 TPE audits ongoing at the same time. CMS has touted that TPE audits do not overlap claims or cause the providers to undergo redundant audits. But if a provider bills numerous CPT codes, the provider can undergo multiple TPE audits concurrently, which is clearly not the intent of the TPE audits, in general. The provider has questioned ad nauseam the data analysis that alerted Noridian to assign the TPE to them in the first place. Supposedly, MACs target providers with claim activity that contractors deem as unusual. The usual TPE notification letter contains a six-month comparison table purportedly demonstrating the paid amount and number of claims for a particular CPT/HCPC code, but its accuracy is questionable. See below.
This particular provider ran its own internal reports, and regardless of how many different ways this provider re-calculated the numbers, the provider could not figure out the numbers the TPE letter was alleging they were billing. But, because of the short turnaround deadlines and harsh penalties for failing to adhere to these deadlines, this provider has been unable to challenge the MAC’s comparison table. The MACs have yet to share its algorithm or computer program used to govern (a) which provider to target; (b) what CPT code to target; and (c) how it determines the paid amount and number of claims.
Pushing back on the original data on which the MACs supposedly relied upon to initially target you is an important way to defend yourself against a TPE audit. Unmask the wolf from the beginning. If you can debunk the reason for the TPE audit in the first place, the rest of the findings of the TPE audit cannot be valid. It is the classic “fruit of the poisonous tree” argument. Yet according to a quick search on Westlaw, no provider has appealed the reason for selection yet. For example, in the above image, the MAC compared one CPT code (78452) for this particular provider for dates of services January 1, 2017, through June 30, 2017, and then compared those claims to dates July 1, 2017, through December 31, 2017. Why? How is a comparison of the first half of a year to a second end of a year even relevant to your billing compliance? Before an independent tribunal, this chart, as supposed evidence of wrongdoing, would be thrown out as ridiculous. The point is – the MACs are using similar, yet irrelevant charts as proof of alleged, aberrant billing practices.
Another way to defend yourself is to contest the auditors/surveyors background knowledge. Challenging the knowledge of the nurse reviewer(s) and questioning the denial rate in relation to your TPE denials can also be successful. I had a dentist-client who was audited by a dental hygienist. Not to undermine the intelligence of a dental hygienist, but you can understand the awkwardness of a dental hygienist questioning a dentist’s opinion of the medical necessity of a service. If the auditor/surveyor lacks the same level of education of the health care provider, an independent tribunal will defer to the more educated and experienced decisions. This same provider kept a detailed timeline of their interactions with the hygienist reviewer(s), which included a summary of the conversations. Significantly, notes of conversations with the auditor/surveyor would normally not be allowed as evidence in a Court of law due to the hearsay rules. However, contemporaneous notes of conversations written in close time proximity of the conversation fall within a hearsay exception and can be admitted.
Pushing back on the MACs and/or formally appealing the MAC’s decisions are/is extremely important in getting the correct denial rate. If your appeal is favorable, the MACs will take into your appeal results into account and will factor the appeal decision into the denial rate.
The upshot is – do not accept the sheep’s clothing. Understand that you are under target during this TPE “educational” audit. Understand how to defend yourself and do so. Call the Woodsman. Get the hatchet.
Let’s talk targeted probe-and-educate (TPE) audits. See on RACMonitor as well.
TPE audits have turned out to be “wolf audits” in sheep’s clothing. The Centers for Medicare & Medicaid Services (CMS) asserted that the intent of TPE audits is to reduce provider burden and appeals by combining medical review with provider education.
But the “education” portion is getting overlooked. Instead, the Medicare Administrative Contractors (MACs) resort to referring healthcare providers to other agencies or contractors for “other possible action,” including audit by a Recovery Audit Contractor (RAC), which can include extrapolation or referral to the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) for investigation of fraud. A TPE audit involves up to three rounds of review, conducted by a MAC. Once Congress was instructed that RAC audits are not fair, and providers complained that RAC auditors did not help with education, CMS came up with TPE audits – which, supposedly, had more of an educational aspect, and a more fair approach. But in reality, the TPE audits have created an expensive, burdensome, cyclical pattern that, again, can result in RAC audits. The implementation of TPE audits has been just as draconian and subjective as RAC audits. The penalties can be actually worse than those resulting from RAC audits, including termination from the Medicare program. In this article, I want to discuss the appeal process and why it is important to appeal at the first level of audit.
Chapter Three, Section 3.2.5 of the Medicare Program Integrity Manual (MPIM) outlines the requirements for the TPE process, which leaves much of the details within the discretion of the MAC conducting the review. The MACs are afforded too much discretion. Often, they make erroneous decisions, but providers are not pushing back. A recent one-time notification transmittal provides additional instructions to MACs on the TPE process: CMS Transmittal 2239 (Jan. 24, 2019).
Providers are selected for TPE audit based on data analysis, with CMS instructing MACs to target providers with high denial rates or claim activity that the contractor deems unusual, in comparison to peers. These audits are generally performed as a prepayment review of claims for a specific item or service, though relevant CMS instructions also allow for post-payment TPE audits.
A TPE round typically involves a review of a probe sample of between 20 and 40 claims. Providers first receive notice that they have been targeted by their MAC, followed by additional documentation requests (ADRs) for the specific claims included in the audit.
The MACs have sole discretion as to which providers to target, whether claims meet coverage requirements, what error rate is considered compliant, and when a provider should be removed from TPE. Health care providers can be exposed to future audits and penalties based merely on the MAC’s resolve, and before the provider has received due process through their right to challenge claim denials in an independent appeals process. In this way, the MACs’ misinterpretation of the rules and misapplication of coverage requirements can lead to further audits or disciplinary actions, based on an erroneous determination that is later overturned. Similarly, while the educational activities are supposedly meant to assist providers in achieving compliance, in reality, this “education” can force providers to appear to acknowledge error findings with which they may disagree – and which may ultimately be determined to be wrong. Often times, the MACs – for “educational purposes” – require the provider to sign documentation that admits alleged wrongdoing, and the provider signs these documents without legal counsel, and without the understanding that these documents can adversely affect any appeal or future audits.
The MACs have the power, based on CMS directive, to revoke billing privileges based on a determination that “the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.” 42 C.F.R. § 424.535(a)(8)(ii). This language shows that TPE audit findings can be used as a basis for a finding of abuse of billing privileges, warranting removal from participation in the Medicare program. CMS guidance also gives the MACs authority to refer providers for potential fraud investigation, based on TPE review findings. It is therefore vital that providers submit documentation in a timely fashion and build a clear record to support their claims and compliance with Medicare requirements.
TPE audits promise further education and training for an unsuccessful audit (unsuccessful according to the MAC, which may constitute a flawed opinion), but most of the training is broad in nature and offered remotely – either over the phone, via web conference, or through the mail, with documentation shared on Google Docs. Only on atypical occasions is there an on-site visit.
Why appeal? It’s expensive, tedious, time-consuming, and emotionally draining. Not only that, but many providers are complaining that the MACs inform them that the TPE audit results are not appealable (TPE audits ARE appealable).
TPE reviews and TPE audit overpayment determinations may be appealed through the Medicare appeals process. The first stage of appeal will be to request a redetermination of the overpayment by the MAC. If the redetermination decision is unfavorable, Medicare providers and suppliers may request an independent review by filing a request for reconsideration with the applicable Qualified Independent Contractor (QIC). If the reconsideration decision is unfavorable, Medicare providers and suppliers are granted the opportunity to present their case in a hearing before an administrative law judge (ALJ). While providers or suppliers who disagree with an ALJ decision may appeal to the Medicare Appeals Council and then seek judicial review in federal district court, it is crucial to obtain experienced healthcare counsel to overturn the overpayment determination during the first three levels of review.
Appealing unfavorable TPE audits results sends a message. Right now, the MACs hold the metaphoric conch shell. The Medicare appeals process allows the provider or supplier to overturn the TPE audit overpayment, and reduces the likelihood of future TPE reviews, other Medicare audits, and disciplinary actions such as suspension of Medicare payments, revocation of Medicare billing privileges, or exclusion from the Medicare program. In instances when a TPE audit identifies potential civil or criminal fraud, it is essential that the Medicare provider or supplier engage experienced healthcare counsel to appeal the Medicare overpayment as the first step in defending its billing practices, and thus mitigating the likelihood of fraud allegations (e.g., False Claims Act actions).
CMS and the MACs maintain that TPEs are in the providers’ best interest because education is included. In actuality, TPEs are wolves in sheep’s clothing, masking true repercussions in a cloak of “education.” The Medicare appeal process is a provider’s best weapon.