Blog Archives
PRF Audits: If You Did Not Report or Use Properly, You May Have a Recoupment!
Hello, my blog readers. Over the last two weeks, I have joined Nelson Mullins in the Raleigh office, attended Nelson Mullins’ healthcare retreat in Charlotte, and attended the Long Term and Post-Acute Care Law and Compliance conference in New Orleans, LA. It has been quite a whirlwind! I also appeared on RACMonitor, as I do every Monitor Monday.
Joining Nelson Mullins has been fantastic. There is a deep bench of health care attorneys, so now I am able to offer my clients all legal services they may need.
Today I am writing about provider relief funds (“PRF”) audits because, folks, PRF audits are HERE. If providers failed to report their PRF or used the funds for non-allowable items having nothing to do with COVID, HHS and OIG may recoup the funds.
An allowable expense under the PRF must be used to prevent, prepare for, and respond to coronavirus. PRF recipients must follow their basis of accounting (e.g., cash, accrual, or modified accrual) to determine expenses. The cited expenses, as well as losses, must not have been reimbursed from other sources and other sources must not be obligated to reimburse them.
Many providers were recipients of provider relief funds or PRF during the COVID pandemic. If providers received these funds there were reporting requirements and use requirements. Now audits are being conducted to ensure the funds’ proper use and reporting. Audits are being rolled out on two different fronts: (1) HHS; and (2) HRSA – or Health Resources Services Administration.
On Feb. 25, 2022, the American Institute of Certified Public Accountants’ (AICPA) Government Audit Quality Center (GAQC) provided long-awaited guidance to for-profit healthcare organizations that are subject to the Provider Relief Fund (PRF) audit requirements. The guidance came in the form of a practice aid entitled HHS Audit Requirements for For-Profit Entities with Awards from the Provider Relief Fund Program and Other HHS Programs. Its goal is to provide clarity to for-profit healthcare entities that expend $750,000 or more in federal awards in a given reporting period, which includes the PRF and other federal awards included in the Assistance Listing but excludes Paycheck Protection Program funds. Based on the practice aid, here is a summary of audit options available to for-profit entities to meet the audit compliance requirements of the U.S. DHHS.
- Uniform Guidance Audits
- Single Audit – A single audit requires an audit of both the financial statements under Generally Accepted Government Auditing Standards (GAGAS) and a compliance audit under Uniform Guidance. The compliance audit requires testing compliance with any major program(s) as defined by Uniform Guidance as well as obtaining an understanding of internal control over compliance and testing the internal control over compliance for each major program identified. The results are two auditor’s reports: one on the financial statements and one on compliance and internal controls over compliance. This option is necessary if federal regulations require a financial statement audit. This option is available to entities with funding from multiple programs from any federal agency.
- Program-Specific Audit – The program-specific audit is similar to the single audit except that it removes the financial statement audit requirement. Therefore, tests of compliance, an understanding of internal control over compliance, and testing internal control over compliance are required for this engagement. A schedule of a specific element of a financial statement would be prepared. The results are two auditor’s reports: one on the schedule of a specific element of a financial statement (the PRF funding) and one on compliance and internal controls over compliance. This option is only available if the entity has funding under one HHS program, such as the PRF.
- Financial-Related Audit Under GAGAS – A financial-related audit under GAGAS requires an audit to be conducted on only one schedule of a specific element of the financial statements. This option is only available if all federal funds expended during the period were from HHS programs. The schedule (the HHS Schedule) would include all federal awards from HHS, including the PRF. It does not require an audit of the financial statements or any testing of internal controls over compliance. It does require compliance testing, but no opinion on compliance is issued. The result is an auditor’s report only on the HHS Schedule.
There are 4 reporting periods per year that will be audited. Reporting for the 2023 4th period is going on now. Providers who received a PRF (General or Targeted) exceeding $10,000 in the aggregate, from July 1, 2021, to December 31, 2021, are required to report on their use of funds during RP4. The deadline to submit a report is March 31, 2023.
There is an appeal process if you receive a Final Repayment Notice. Once you receive a Final Repayment Notice, you have 60 days to either pay or appeal.
- Providers who do not take one of these actions within 60 days of HRSA’s Final Repayment Notice may be referred by HRSA to the HHS Program Support Center (PSC) for the initiation of debt collection activities.
- PSC, in coordination with the U.S. Department of Treasury, will issue formal debt collection letters to all providers that HRSA refers for debt collection. At this point, PSC and Treasury will take over all debt collection communications with referred providers. Debt collection activities may include accrual of interest, penalties, and recovery of funds by offsetting other Federal payments allocated to the entity.
HRSA cannot establish payment plans for outstanding debts. Once the repayment amount has been referred to PSC and becomes official debt, providers can apply for repayment plans directly with PSC.
Letter to HHS: RAC Audits “Have Absolutely No Direct Impact on the Medicare Providers” – And I Spotted Elvis!
“Recovery audits have absolutely no direct impact on the Medicare providers working hard to deliver much needed healthcare services to beneficiaries.“
And Elvis Presley is still alive! Oh, and did you know that Bill Clinton never had an affair on Hillary? (since when has her name become one word, like Prince or Beyonce?)
This sentence was written in a March 6, 2018, correspondence from The Council for Medicare Integrity to HHS Secretary Alex Azar.
“Recovery auditing has never been an impediment to the delivery of healthcare services nor is it an intrusion in the physician-patient relationship.” – Kristin Walter of The Council for Medicare Integrity. BTW, Ms. Walter, health care has a space between the two syllables.
The purpose of this letter that was sent from the The Council for Medicare Integrity to Secretary Azar was to request an increase of prepayment reviews for Medicare providers. For those of you so blessed to not know what a prepayment review, prepayment review is a review of your Medicare (or Caid) claims prior to being paid. It sounds reasonable on paper, but, in real life, prepayment review is a Draconian, unjust, and preposterous tool aimed at putting healthcare providers out of business, or if not aimed, is the unknown or accidental outcome of such a review. If placed on prepayment review, your Medicare or Medicaid reimbursements are 100% cut off. Gone. Like the girl in that movie with Ben Affleck, Gone Girl Gone, and, like the girl, not really gone because it’s alive – you provided services and are owed that money – but it’s in hiding and may ruin your life. See blog.
Even if I were wrong, which I am not, the mere process in the order of events of prepayment review is illogical. In the interest of time, I will cut-and-paste a section from a prior blog that I wrote about prepayment review:
In real-life, prepayment review:
- The auditors may use incorrect, inapplicable, subjective, and arbitrary standards.
I had a case in which the auditors were denying 100% ACTT services, which are 24-hour mental health services for those 10% of people who suffer from extreme mental illness. The reason that the auditor was denying 100% of the claims was because “lower level services were not tried and ruled out.” In this instance, we have a behavioral health care provider employing staff to render ACTT services (expensive), actually rendering the ACTT services (expensive), and getting paid zero…zilch…nada…for a reason that is not required! There is no requirement that a person receiving ACTT services try a lower level of service first. If the person qualifies for ACTT, the person should receive ACTT services. Because of this auditor’s misunderstanding of ACTT, this provider was almost put out of business.
Another example: A provider of home health was placed on prepayment review. Again, 90 – 100% of the claims were denied. In home health, program eligibility is determined by an independent assessment conducted by the Division of Medical Assistance (DMA) via Liberty, which creates an individualized plan of care. The provider submitted claims for Patient Sally, who, according to her plan, needs help dressing. The service notes demonstrated that the in-home aide helped Sally dress with a shirt and pants. But the auditor denies every claim the provider bills for Sally (which is 7 days a week) because, according to the service note, the in-home aide failed to check the box to show she/he helped put on Sally’s shoes. The auditor fails to understand that Sally is a double amputee – she has no feet.
Quis custodiet ipsos custodes – Who watches the watchmen???
- The administrative burden placed on providers undergoing prepayment review is staggering.
In many cases, a provider on prepayment review is forced to hire contract workers just to keep up with the number of document requests coming from the entity that is conducting the prepayment review. After initial document requests, there are supplemental document requests. Then every claim that is denied needs to be re-submitted or appealed. The amount of paperwork involved in prepayment review would cause an environmentalist to scream and crumple into the fetal position like “The Crying Game.”
- The accuracy ratings are inaccurate.
Because of the mistakes the auditors make in erroneously denying claims, the purported “accuracy ratings” are inaccurate. My daughter received an 86 on a test. Given that she is a straight ‘A’ student, this was odd. I asked her what she got wrong, and she had no idea. I told her to ask her teacher the next day why she received an 86. Oops. Her teacher had accidentally given my daughter an 86; the 86 was the grade of another child in the class with the same first name. In prepayment review, the accuracy ratings are the only method to be removed from prepayment, so the accuracy of the accuracy ratings is important. One mistaken, erroneously denied claim damages the ratings, and we’ve already discussed that mistakes/errors occur. You think, if a mistake is found, call up the auditing entity…talk it out. See below.
- The communication between provider and auditor do not exist.
Years ago my mom and I went to visit relatives in Switzerland. (Not dissimilar to National Lampoon’s European Vacation). They spoke German; we did not. We communicated with pictures and hand gestures. To this day, I have no idea their names. This is the relationship between the provider and the auditor.
Assuming that the provider reaches a live person on the telephone:
“Can you please explain to me why claims 1-100 failed?”
“Don’t you know the service definitions and the policies? That is your responsibility.”
“Yes, but I believe that we follow the policies. We don’t understand why these claims are denied. That’s what I’m asking.”
“Read the policy.”
“Not helpful.”
- The financial burden on the provider is devastating.
If a provider’s reimbursements are 80 – 100% reliant on Medicaid/care and those funds are frozen, the provider cannot meet payroll. Yet the provider is expected to continue to render services. A few years ago, I requested from NC DMA a list of providers on prepayment review and the details surrounding them. I was shocked at the number of providers that were placed on prepayment review and within a couple months ceased submitting claims. In reality, what happened was that those providers were forced to close their doors. They couldn’t financially support their company without getting paid.
_______________________________
Back to the current blog
_______________________________
So to have The Council for Medicare Integrity declare that prepayment review has absolutely no impact on Medicare providers is ludicrous.
Now, I will admit that the RAC (and other acronyms) prepayment and post payment review programs have successfully recovered millions of dollars of alleged overpayments. But these processes must be done right, legally. You can’t just shove an overzealous, for-profit, audit company out the door like an overweight kid in a candy store. Legal due process and legal limitations must be required – and followed.
Ms. Walter does present some interesting, yet factually questionable, statistics:
- “Over the past 5 years alone, Medicare has lost more than $200 billion taxpayer dollars to very preventable billing errors made by providers.”
Not quite sure how this was calculated. A team of compliance auditors would have had to review hundreds of thousands of medical records to determine this amount. Is she referring to money that has been recovered and the appeal process afforded to the providers has been exhausted? Or is this number how much money is being alleged has been overpaid? How exactly were these supposed billing errors “very preventable?” What does that mean? She is either saying that the health care providers could have prevented the ostensible overbillings – or – she is saying that RAC auditors could have prevented these purported overbillings by increased prepayment review. Either way … I don’t get it. It reminds me of Demi Moore in A Few Good Men, “I object.” Judge states, “Overruled.” Demi Moore pleads, “I strenuously object.” Judge states, “Still overruled.” “Very preventable billing errors,” said Ms. Walters. “Still overruled.”
- “Currently, only 0.5 percent of Medicare claims are reviewed, on a post-payment basis, for billing accuracy and adherence to program billing rules. This leaves 99.5 percent of claims immune from any checks and balances that would ensure Medicare payments are correct.”
Again, I am curious as to the mathematic calculation used. Is she including the audits performed, not only by RACs, but audits by ZPICs, CERTS, MACs, including Palmetto, Noridian and CGS, federal and state Program Integrities, State contractors, MFCUs, MICs, MCOs, PERMs, PCG, and HHS? Because I can definitely see that we need more players.
- “The contrast between Medicare review practices and private payers is startling. Despite the dire need to safeguard Medicare dollars, CMS currently allows Recovery Audit Contractors (RACs) to review fewer than 30 Medicare claim types (down from 800 claim types initially) and has scaled back to allow a review of a mere 0.5 percent of Medicare provider claims after they have been paid. Considered a basic cost of doing business, the same providers billing Medicare comply, without issue, with the more extensive claim review requirements of private health insurance companies. With Medicare however, provider groups have lobbied aggressively to keep their overpayments, putting intense pressure on CMS to block Medicare billing oversight.”
Did I wake up in the Twilight Zone? Zombies? Let’s compare Medicare/caid to private health care companies.
First, let’s talk Benjamins (or pennies in Medicare/caid). A study was conducted to compare Texas Medicare/caid reimbursement rates to private pay. Since everything is bigger in Texas, including the reimbursement rates for Medicare/caid, I figured this study is demonstrative for the country (obviously each state’s statistics would vary).
According to a 2016 study by the National Comparisons of Commercial and Medicare Fee-For-Service Payments to Hospitals:
- 96%. In 2012, average payments for commercial inpatient hospital stays were higher than Medicare fee-for-service payments for 96% of the diagnosis related groups (DRGs) analyzed.
- 14%. Between 2008 and 2012, the commercial-to-Medicare payment difference had an average increase of 14%.
- 86%. Longer hospital stays do not appear to be a factor for higher average commercial payments. During this period, 86 percent of the DRGs analyzed had commercial-to-Medicare average length-of-stay of ratios less than one.
The “basic cost of doing business” for Medicare/caid patients is not getting appropriate reimbursement rates.
The law states that the reimbursements rates should allow quality of care. Section 30(A) of the Medicare Act requires that each State “provide such methods and procedures relating to the utilization of, and the payment for, care and services available under the plan (including but not limited to utilization review plans as provided for in section 1396b(i)(4) of this title) as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under the plan at least to the extent that such care and services are available to the general population in the geographic area.” (emphasis added).
Second, billing under Medicare/caid is much more complex than billing third-party payors, which are not required to follow the over-regulated, esoteric, administrative, spaghetti sauce that mandates providers who accept Medicare and/or Medicaid (a whole bunch of independent vegetables pureed into a sauce in which the vegetables are indiscernible from the other). The regulatory burden required of providing Medicare and/or Medicaid services does not compare to the administrative and regulatory burden associated with private pay, regardless of Ms. Walter’s uncited and unreferenced claims that “the more extensive claim review requirements [are with the] private health insurance companies.” We’re talking kumquats to rack of lamb (are kumquats cheap)?
Third, let’s discuss this comment: “provider groups have lobbied aggressively.” RAC auditors, and all the other alphabet soup, are paid A LOT. Government bureaucracy often does not require the same “bid process” that a private company would need to pass. Some government contracts are awarded on a no-bid process (not ok), which does not create the best “bang for your buck for the taxpayers.”
I could go on…but, I believe that you get the point. My readers are no dummies!
I disagree with the correspondence, dated March 6, 2018, from The Council for Medicare Integrity to HHS Secretary Alex Azar is correct. However, my question is who will push back against The Council for Medicare Integrity? All those health care provider associations that “have lobbied aggressively to keep their overpayments, putting intense pressure on CMS to block Medicare billing oversight.”?
At the end of the day (literally), I questioned the motive of The Council for Medicare Integrity. Whenever you question a person’s motive, follow the money. So, I googled “who funds The Council for Medicare Integrity? Unsurprisingly, it was difficult to locate. According to The Council for Medicare Integrity’s website it provides transparency with the following FAQ:
Again, do you see why I am questioning the source of income?
According to The Council for Medicare Integrity, “The Council for Medicare Integrity is a 501(c)(6) non-profit organization. The Council’s mission is to educate policymakers and other stakeholders regarding the importance of healthcare integrity programs that help Medicare identify and correct improper payments.
As a 501(c)(6) organization, the Council files IRS Form 990s annually with the IRS as required by law. Copies of these filings and exemption application materials can be obtained by mailing your request to the Secretary at: Council for Medicare Integrity, Attention: Secretary, 9275 W. Russell Road, Suite 100, Las Vegas, Nevada 89148. In your request, please provide your name, address, contact telephone number and a list of documents requested. Hard copies are subject to a fee of $1.00 for the first page and $.20 per each subsequent page, plus postage, and must be made by check or money order, payable to the Council for Medicare Integrity. Copies will be provided within 30 days from receipt of payment. These documents are also available for public inspection without charge at the Council’s principal office during regular business hours. Please schedule an appointment by contacting the Secretary at the address above.
This website serves as an aggregator of all the verifiable key facts and data pertaining to this important healthcare issue, as well as a resource center to support the provider community in their efforts to comply with Medicare policy.”
I still question the funding (and the bias)…Maybe funded by the RACs??
“Ought Implies Can” – Court Reverses Decision Forcing HHS to Eliminate Medicare Appeal Backlog
But all is not lost… it all lies in the possibility…
A few weeks ago I blogged about Health and Human Services (HHS) possibly being held in contempt of court for violating an Order handed down on Dec. 5, 2016, by U.S. District Judge James Boasberg. See blog.
The District Court Judge granted a motion for summary judgment in favor of the American Hospital Association in AHA v. Burwell. He ordered HHS to incrementally reduce the backlog of 657,955 appeals pending before the agency’s Office of Medicare Hearings and Appeals over the next four years, reducing the backlog by 30% by the end of 2017; 60% by the end of 2018; 90% by the end of 2019; and to completely eliminate the backlog by Dec. 31, 2020.
This was a huge win for AHA – and Medicare providers across the country. Currently, when a provider appeals an adverse decision regarding Medicare, it costs an inordinate amount of attorneys’ fees, and the provider will not receive legal relief for upwards of 6 – 10 years, which can cause financial hardship, especially if the adverse action is in place during the appeal process. Yet the administrative appeal process was designed (poorly) to conclude within 1 year.
With the first deadline (the end of 2017) fast approaching and HHS publicly announcing that the reduction of 30% by the end of 2017 is impossible, questions were posed – how could the District Court hold HHS, a federal agency, in contempt?
We got the answer.
On August 11, 2017, the U.S. Appeals Court for the District of Columbia overturned the District Court; thereby lifting the requirement to reduce the Medicare appeal backlog.
Wiping tear from face.
The first paragraph of the Ruling, indicates the Court’s philosophic reasoning, starting with a quote from Immanuel Kant (not to be confused with Knicole Emanuel), CRITIQUE OF PURE REASON 548 (Norman Kemp Smith trans., Macmillan 1953) (1781) (“The action to which the ‘ought’ applies must indeed be possible under natural conditions.”)
First paragraph of the decision:
“”Ought implies can.” That is, in order for law – man-made or otherwise – to command the performance of an act, that act must be possible to perform. This lofty philosophical maxim, ordinarily relevant only to bright-eyed college freshmen, sums up our reasoning in this case.”
The Appeals Court determined that the District Court commanded the Secretary to perform an act – clear the backlog by certain deadlines – without evaluating whether performance was possible.
The Medicare backlog skyrocketed in 2011 due to the federally-required Medicare Recovery Audit Program (RAC). With the implementation of the RAC program, the number of appeals filed ballooned from 59,600 in fiscal year 2011 to more than 384,000 in fiscal year 2013. These appeals bottlenecked to the third level of appeal, which is before an administrative law judge (ALJ). As of June 2, 2017, there was a backlog of 607,402 appeals awaiting review at this level. On its current course, the backlog is projected to grow to 950,520 by the end of fiscal year 2021.
There is a way for a provider to “skip” the ALJ level and “escalate” the claim, but it comes at a cost. Several procedural rights must be forfeited.
It is important to note that the appellate decision does not state that the District Court does not have the authority to Order HHS to eliminate the appeals backlog.
It only holds that, because HHS claims that compliance is impossible, the District Court must rule on whether compliance is possible before mandating the compliance. In other words, the Appeals Court wants the lower court to make a fact-finding decision as to whether HHS is able to eliminate the backlog before ordering it to do so. The Appeals Court is instructing the lower court to put the horse in front of the cart.
The Appeals Court explicitly states that it is suspect that the Secretary of HHS has done all things possible to decrease the backlog. (“We also share the District Court’s skepticism of the Secretary’s assertion that he has done all he can to reduce RAC-related appeals.”) So do not take the Appeals Court’s reversal as a sign that HHS will win the war.
I only hope that AHA presents every possible legal argument once the case is remanded to District Court. It is imperative that AHA’s attorneys think of every possible legal misstep in this remand in order to win. Not winning could potentially create bad law, basically, asserting that the Secretary has no duty to fix this appeals backlog. Obviously, the Secretary is exactly the person who should fix the backlog in his own agency. To hold otherwise, would thwart the very reason we have a Secretary of HHS. Through its rhetoric, the Appeals Court made it clear that it, too, has severe reservations about HHS’ claim of impossibility. However, without question, AHA’s suggestion to the District Court that a timeframe be implemented to reduce the backlog is not the answer. AHA needs to brainstorm and come up with several detailed proposals. For example, does the court need to include a requirement that the Secretary devote funds to hire additional ALJs? Or mandate that the ALJs work a half day on Saturday? Or order that the appeal process be revised to make the process more efficient? Clearly, the mere demand that HHS eliminate the backlog within a certain timeframe was too vague.
From here, the case will be remanded back to the District Court with instructions to the Judge to determine whether the elimination of the Medicare appeal backlog is possible. So, for now, HHS is safe from being held in contempt. But the Secretary should take heed from the original ruling and begin taking steps in fixing this mess. It is highly likely that HHS will be facing similar deadlines again – once the District Court determines it is possible.
Class Action Lawsuit Alleges Right to Inpatient Hospital Stays: Hospitals Are Damned If They Do…and Don’t!
Hospitals – “Lend me your ears; I come to warn you, not to praise RACs. The evil that RACs do lives after them; The good is oft interred with their appeals; So let it be with lawsuits.” – Julius Caesar, with modifications by me.
A class action lawsuit is pending against U.S. Health and Human Services (HHS) alleging that the Center for Medicare and Medicaid Services (CMS) encourages (or bullies) hospitals to place patients in observation status (covered by Medicare Part B), rather than admitting them as patients (covered by Medicare Part A). The Complaint alleges that the treatments while in observation status are consistent with the treatments if the patients were admitted as inpatients; however, Medicare Part B reimbursements are lower, forcing the patient to pay more out-of-pocket expenses without recourse.
The United States District Court for the District of Connecticut refused to dismiss the class action case on February 8, 2017, giving the legal arguments within the Complaint some legal standing, at least, holding that the material facts alleged warrant investigation.
The issue of admitting patients versus keeping them in observation has been a hot topic for hospitals for years. If you recall, Recovery Audit Contractors (RACs) specifically target patient admissions. See blog and blog. RAC audits of hospital short-stays is now one of the most RAC-reviewed issues. In fiscal year 2014, RACs “recouped” from hospitals $1.2 billion in allegedly improper inpatient claims. RACs do not, however, review outpatient claims to determine whether they should have been paid as inpatient.
On May 4, 2016, CMS paused its reviews of inpatient stays to determine the appropriateness of Medicare Part A payment. On September 12, 2016, CMS resumed them, but with more stringent rules on the auditors’ part. For example, auditors cannot audit claims more than the six-month look-back period from the date of admission.
Prior to September 2016, hospitals would often have no recourse when a claim is denied because the timely filing limits will have passed. The exception was if the hospital joined the Medicare Part A/Part B rebilling demonstration project. But to join the program, hospitals would forfeit their right to appeal – leaving them with no option but to re-file the claim as an outpatient claim.
With increased scrutiny, including RAC audits, on hospital inpatient stays, the class action lawsuit, Alexander et al. v. Cochran, alleges that HHS pressures hospitals to place patients in observation rather than admitting them. The decision states that “Identical services provided to patients on observation status are covered under Medicare Part B, instead of Part A, and are therefore reimbursed at a lower rate. Allegedly, the plaintiffs lost thousands of dollars in coverage—of both hospital services and subsequent skilled nursing care—as a result of being placed on observation status during their hospital stays.” In other words, the decision to place on observation status rather than admit as an inpatient has significant financial consequences for the patient. But that decision does not affect what treatment or medical services the hospital can provide.
While official Medicare policy allows the physicians to determine the inpatient v. observation status, RAC audits come behind and question that discretion. The Medicare Policy states that “the decision to admit a patient is a complex medical judgment.” Ch. 1 § 10. By contrast, CMS considers the determination as to whether services are properly billed and paid as inpatient or outpatient to be a regulatory matter. In an effort to avoid claim denials and recoupments, plaintiffs allege that hospitals automatically place the patients in observation and rely on computer algorithms or “commercial screening tools.”
In a deposition, a RAC official admitted that if the claim being reviewed meets the “commercial screening tool” requirements, then the RAC would find the inpatient status is appropriate, as long as there is a technically valid order. No wonder hospitals are relying on these commercial screening tools more and more! It is only logical and self-preserving!
This case was originally filed in 2011, and the Court of Appeals overturned the district court’s dismissal and remanded it back to the district court for consideration of the due process claims. In this case, the Court of Appeals held that the plaintiffs could establish a protected property interest if they proved their allegation “that the Secretary—acting through CMS—has effectively established fixed and objective criteria for when to admit Medicare beneficiaries as ‘inpatients,’ and that, notwithstanding the Medicare Policy Manual’s guidance, hospitals apply these criteria when making admissions decisions, rather than relying on the judgment of their treating physicians.”
HHS argues that that the undisputed fact that a physician makes the initial patient status determination on the basis of clinical judgment is enough to demonstrate that there is no due process property interest at stake.
The court disagreed and found too many material facts in dispute to dismiss the case.
Going forward:
Significant discovery will be explored as to the extent to which hospitals rely on commercial screening tools. Also whether the commercial screening tools are applied equally to private insureds versus Medicare patients.
Significant discovery will be explored on whether the hospital’s physicians challenge changing a patient from inpatient to observation.
Significant discovery will be explored as to the extent that CMS policy influences hospital decision-making.
Hospitals need to follow this case closely. If, in fact, RAC audits and CMS policy is influencing hospitals to issue patients as observation status instead of inpatient, expect changes to come – regardless the outcome of the case.
As for inpatient hospital stays, could this lawsuit give Medicare patients the right to appeal a hospital’s decision to place the patient in observation status? A possible, future scenario is a physician places a patient in observation. The patient appeals and gets admitted. Then hospital’s claim is denied because the RAC determines that the patient should have been in observation, not inpatient. Will the hospitals be damned if they do, damned if they don’t?
In the meantime:
Hospitals and physicians at hospitals: Review your policy regarding determining inpatient versus observation status. Review specific patient files that were admitted as inpatient. Was a commercial screening tool used? Is there adequate documentation that the physician made an independent decision to admit the patient? Hold educational seminars for your physicians. Educate! And have an attorney on retainer – this issue will be litigated.
Look into My Crystal Ball: Who Is Going to Be Audited by the Government in 2017?
Happy New Year, readers!!! A whole new year means a whole new investigation plan for the government…
The Department of Health and Human Services (HHS) Office of Inspector General (OIG) publishes what is called a “Work Plan” every year, usually around November of each year. 2017 was no different. These Work Plans offer rare insight into the upcoming plans of Medicare investigations, which is important to all health care providers who accept Medicare and Medicaid.
For those of you who do not know, OIG is an agency of the federal government that is charged with protecting the integrity of HHS, basically, investigating Medicare and Medicaid fraud, waste, and abuse.
So let me look into my crystal ball and let you know which health care professionals may be audited by the federal government…
The 2017 Work Plan contains a multitude of new and revised topics related to durable medical equipment (DME), hospitals, nursing homes, hospice, laboratories.
For providers who accept Medicare Parts A and B, the following are areas of interest for 2017:
- Hyperbaric oxygen therapy services: provider reimbursement
- Inpatient psychiatric facilities: outlier payments
- Skilled nursing facilities: reimbursements
- Inpatient rehabilitation hospital patients not suited for intensive therapy
- Skilled nursing facilities: adverse event planning
- Skilled nursing facilities: unreported incidents of abuse and neglect
- Hospice: Medicare compliance
- DME at nursing facilities
- Hospice home care: frequency of on-site nurse visits to assess quality of care and services
- Clinical Diagnostic Laboratories: Medicare payments
- Chronic pain management: Medicare payments
- Ambulance services: Compliance with Medicare
For providers who accept Medicare Parts C and D, the following are areas of interest for 2017:
- Medicare Part C payments for individuals after the date of death
- Denied care in Medicare Advantage
- Compounded topical drugs: questionable billing
- Rebates related to drugs dispensed by 340B pharmacies
For providers who accept Medicaid, the following are areas of interest for 2017:
- States’ MCO Medicaid drug claims
- Personal Care Services: compliance with Medicaid
- Medicaid managed care organizations (MCO): compliance with hold harmless requirement
- Hospice: compliance with Medicaid
- Medicaid overpayment reporting and collections: all providers
- Medicaid-only provider types: states’ risk assignments
- Accountable care
Caveat: The above-referenced areas of interest represent the published list. Do not think that if your service type is not included on the list that you are safe from government audits. If we have learned nothing else over the past years, we do know that the government can audit anyone anytime.
If you are audited, contact an attorney as soon as you receive notice of the audit. Because regardless the outcome of an audit – you have appeal rights!!! And remember, government auditors are more wrong than right (in my experience).
New OIG Report, But Same, Ole Results: Medicare and Medicaid Fraud Persistent in PCS
How many times have you heard, “Third time’s a charm?”If that is true, then what is the fifth time? The sixth time?
In an October 3, 2016, advisory report, the Office of Inspector General (OIG) recommends that the Center for Medicare and Medicaid Services (CMS) heighten its scrutiny on personal care services (PCS) in states across the country. The OIG claims “that home health has long been recognized as a program area vulnerable to fraud, waste, and abuse.” Past OIG reports have focused on Medicare. This new one focuses on Medicaid.
OIG is a division of the U.S. Department of Health and Human Services (HHS) and is charged with identifying and combating waste, fraud, and abuse in the HHS’s more than 300 programs. But, evidently, OIG is not happy, happy, happy, when HHS disregards its findings, which appears to be what has happened for a number of years.
PCS are nonmedical services for people who need assistance with activities of daily living (ADLs), such as bathing, eating, and toileting. Most of the time, PCS are allowing the person to remain in his or her home, instead of being institutionalized. However, according to OIG, PCS is fraught with fraud.
PCS is an optional service for Medicaid, i.e., states can choose to cover the cost of PCS with government funds. But, on the federal level, PCS is provided, if medically necessary, in all states.
The OIG report summarizes Medicaid fraud schemes from November 2012 through August 2016. OIG goes on to say that the fraud in this report is merely replicate of Medicare fraud found in a prior reports. In other words,OIG is basically saying that it has found Medicare fraud in home health in multiple, past reports and that CMS has not followed through appropriately. In fact, this report makes over five times, in recent years, that OIG has instructed CMS to increase its regulatory oversight of Medicare/caid personal care services. How many times does it take for your spouse to ask you to take out the trash until you take out the trash? Third time’s a charm??
Mark my words…in the near future, there will be heightened investigations and increased audits on home health.
Here are some scenarios that can trigger an audit of home health:
- High percentage of episodes for which the beneficiary had no recent visits with the supervising physician;
- High percentage of episodes that were not preceded by a hospital or nursing home stay;
- High percentage of episodes with a primary diagnosis of diabetes or hypertension;
- High percentage of beneficiaries with claims from multiple home health agencies; and
- High percentage of beneficiaries with multiple home health readmissions in a short period of time.
While the above-mentioned scenarios do not prove the existence of Medicare/caid fraud, they are red flags that will wave their presence before health care investigators’ faces.
Here are the states (and cities) which will be targets:
Notice that North Carolina is not highlighted. Notice that Florida is highlighted and contained numerous “hotspots.” Certainly that has nothing to do with the abnormal number of people on Medicare…
Regardless, North Carolina will get its share of Medicare PCS audits. Especially, considering that we have the 7th most number of Medicare beneficiaries in the country – that should have gotten us highlighted per se.
Since the OIG Portfolio report issued in 2012, OIG has opened more than 200 investigations involving fraud and patient harm and neglect in the PCS program across the country. “Given the significant vulnerabilities in the PCS program, including a lack of internal controls, and that PCS fraud continues to be a persistent problem, OIG anticipates that its enforcement efforts will continue to involve PCS cases.”Report.
Fifth time is a ______?? (Sure thing).
Supreme Court Upholds Obamacare! Three Judges Dissent, Calling the Decision Absurd!
Mark this day, June 25,2015 (also my daughter’s 10th birthday) as also the birth of a new state. Our country, according to the Supreme Court’s decision in King v. Burwell, now consists of 51 states. The Health and Human Services (HHS) is now our 51st state.
Today the Supreme Court decided the King v. Burwell case.
If you recall, this case was to determine whether the plain language of the Affordable Care Act (ACA) should be upheld. According to the ACA, people were to receive tax subsidies or “premium tax credits” to subsidize certain purchases of health insurance made on Exchanges, but only those enrolled in through an Exchange established by the State under [§18031]. §36B(c)(2)(A).
See blog.
“Specifically, the question presented is whether the Act’s tax credits are available in States that have a Federal Exchange.”
“At this point, 16 States and the District of Columbia have established their own Exchanges; the other 34 States have elected to have HHS do so.”
In Justice Scalia’s words, “This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”
However, the majority disagrees.
Apparently, HHS is now our 51st state.
The upshot of the Decision is that the majority found that, despite our country’s deep-rooted, case law precedent that when a statute is unambiguous that the plain meaning of the statute prevails. Despite hundreds of years of the Supreme Court upholding statutes’ clear meanings, the Supreme Court, in this case, decided that “[i]n extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.”
Therefore, when the ACA became law, and the word “state” was used, surely, Congress meant “state and/or federal government.” Or, on the other hand, let’s just call HHS a state for the purpose of the ACA.
In Justices Scalia, Thomas, and Alito’s opinions, the decision is absurd. In the dissent they write, “The Court holds that when the Patient Protection and Affordable Care Act says “Exchange established by the State” it means “Exchange established by the State or the Federal Government.” That is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”
Medicare chief Tavenner stepping down; oversaw rocky health care rollout
News Alert: Medicare Chief Tavenner stepping down!!!!
Here is the article:
WASHINGTON — Medicare chief Marilyn Tavenner — who oversaw the rocky rollout of the president’s health care law — says she’s stepping down at the end of February.
In an email Friday to staff at the Centers for Medicare and Medicaid Services, Tavenner, a former Virginia health secretary and hospital executive, said she’s leaving with “sadness and mixed emotions.”
Tavenner survived the 2013 technology meltdown of HealthCare.gov, but was embarrassed last fall when she testified to Congress that 7.3 million people were enrolled for coverage. That turned out to be an overcount that exaggerated the total by about 400,000.
Calling Tavenner “one of our most esteemed and accomplished colleagues,” Health and Human Services Secrerary Sylvia M. Burwell said the decision to leave was Tavenner’s.
Principal deputy administrator Andy Slavitt will take over as acting administrator.
Proposed Federal Legislation Will Provide Relief to Hospitals and Medicare Patients in Need of Post-Acute Care
The Center for Medicare and Medicaid (CMS) announced that the new RAC contracts in North Carolina should be ready by the end of the year. This means that, next year, RAC audits on hospitals and other providers will significantly increase in number. Get prepared, providers!!
However, there is proposed federal legislation that could protect hospitals and Medicare patients if passed.
Hypothetical: You present yourself to a hospital. The hospital keeps you in observation for 1 day. You are then formally admitted to the hospital as an inpatient for 2 more days. Under Medicare rules, will Medicare now cover your post-acute care in a skilled nursing facility (SNF)?
Answer: No. Observation days in hospitals do not count toward the Medicare 3-day requirement.
On November 19, 2014, Congressman Kevin Brady introduced draft legislation that would allow hospital observation stays to count toward establishing Medicare eligibility for post-acute services, as well as improve and supervise the RAC program.
You are probably wondering…Why would a hospital keep me in observation for a full day without admitting me as an inpatient when hospitals are reimbursed at a significantly higher rate for inpatient versus outpatient?
Answer: To avoid RAC recoupments.
In recent years, recovery audit contractors (RACs) have been exceedingly aggressive in post payment review audits in challenging hospital claims for short, inpatient stays. The RACs are motivated by money, and all of the RACs are compensated on a contingency basis, which leads to overzealous, sometimes, inaccurate audits. Here in North Carolina, Public Consulting Group (PCG) retains 11.5% of collected audits, and Health Management Systems (HMS) retains 9.75%. See my blog: “NC Medicaid Extrapolation Audits: How Does $100 Become $100,000? Check for Clusters!”
Why have RACs targeted short-stay admissions in hospitals? As mentioned, one-day inpatient stays are paid significantly more than similar outpatient stays. Because of the financial incentives, RACs often focus audits on whether the short-stay is appropriate because this focus will yield a larger overpayment. As a result, hospitals become hesitant to admit patients as an “inpatient” status and, instead, keep the patient in outpatient observation for longer periods of time.
Keeping a person in observation status rather than admitting the person could impact the person’s health and well-being, but it will also impact whether a Medicare patient can receive post-acute care in a SNF (or, rather, whether Medicare will pay for it).
In order for a Medicare patient to receive covered, skilled nursing care after a hospital stay, Medicare requires a 3-day inpatient stay. With the onslaught of RAC audits, hospitals become leery to admit a person as an inpatient. When hospitals are tentative about admitting people, it can adversely affect a person’s post-acute care services.
To give you an idea of how overzealous these RACs are when it comes to auditing Medicare providers, there are over 800,000 pending Medicare appeals. That means that, across the country, RACs and other auditing companies have determined that over 800,000 providers and hospitals that accept Medicare were improperly overpaid for services rendered due to billing errors, etc. Over 800,000 providers and hospitals disagree with the audit results and are appealing. Now, obviously, all 800,000 appeals are hospitals appealing audits findings short-stay admissions not meeting criteria, but enough of them exist to warrant Congressman Brady’s proposed bill.
The proposed bill will significantly impact RAC audits of short-stay admissions in hospitals. But the proposed bill will also extend the current short moratorium on RAC audits on short-stay admissions in hospitals. Basically, the RACs became so overzealous and the Medicare appeals backlog became so large that Congress placed a short moratorium on RACs auditing short-stay admissions under the two-midnight rule through the end of March 2015. The proposed bill will lengthen the moratorium just in time for NC’s new RACs to begin additional hospital audits.
The moral of the story is…you get too greedy, you get nothing…
Remember “The Goose That Laid the Golden Eggs?”
A man and his wife owned a very special goose. Every day the goose would lay a golden egg, which made the couple very rich. “Just think,” said the man’s wife, “If we could have all the golden eggs that are inside the goose, we could be richer much faster.” “You’re right,” said her husband, “We wouldn’t have to wait for the goose to lay her egg every day.” So, the couple killed the goose and cut her open, only to find that she was just like every other goose. She had no golden eggs inside of her at all, and they had no more golden eggs.
Too much greed results in nothing.
Similar to the husband and wife who killed the goose who laid the golden eggs, overzealous and inaccurate audits cause Congress to propose a temporary moratorium on RACs conducting audits on short-term hospital stays until the reimbursement rates are implemented within the same proposed bill (which, in essence will lengthen the moratorium until the rates within the bill are implemented, which also includes additional methods to settle RAC disputes).
The proposed bill, entitled, “The Hospitals Improvements for Payment Act of 2014,” (HIP) would revamp the way in which short hospital stays are reimbursed and how observation days are counted toward Medicare’s 3-day rule for post-acute care; thereby alleviating these painful hospital audits for short inpatient stays. Remember my blog: “Medicare Appeals to OMHA Reaches 15,000 Per Week, Yet Decisions Take Years; Hospital Association Sues Over Medicare Backlog.”
HIP would create a new payment model called the Hospital Prospective Payment System (HPPS) that would apply to short-term hospital stays.
What is a “short stay?” According to the proposed bill, a short stay is a: (1) stay that is less than 3 days; (2) stay that has a national average length of stay less than 3 days; or (3) stay that is “among the most highly ranked discharges that have been denied for reasons of medical necessity.”
Proposed HIP would also require the Department of Health and Human Services (HHS) to establish a new base rate of payment, which will be calculated by blending the base operating rate for short stays and an equivalent base operating rate for overnight hospital outpatient services.
The draft bill would also repeal the 0.2 percent ($200 million per year) reduction that CMS implemented with the two-midnight rule, which is the standard that presumes hospital stays are reasonable if the stay covers two midnights.
The proposed bill also mandates more government supervision as to the RACs.
This proposed bill comes on the cusp of an increased amount of RAC audits in NC on hospitals. As previously discussed, our new RAC contracts will be awarded before the end of this year. So our new RACs will come in with the new year…
The moral of the story?
Expect hospital RAC audits to increase dramatically in the next year, unless this bill is passed.
