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The Reality of Prepayment Review and What To Do If You Are Tagged – You’re It!

Prepayment review is a drastic tool (more like a guillotine) that the federal and state governments via hired contractors review the documentation supporting services for Medicare and Medicaid prior to the provider receiving reimbursement. The providers who are placed on prepayment review are expected to continue to render services, even if the provider is not compensated. Prepayment review is a death sentence for most providers.

The required accuracy rating varies state to state, but, generally, a provider must meet 75% accuracy for three consecutive months.

In the governments’ defense, theoretically, prepayment review does not sound as Draconian as it is. Government officials must think, “Well, if the provider submits the correct documentation and complies with all applicable rules and regulations, it should be easy for the provider to meet the requirements and be removed from prepayment review.” However, this false reasoning only exists in a fantasy world with rainbows and gummy bears. Real life prepayment review is vastly disparate from the rainbow and gummy bears 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.

Ok, now we know that prepayment review can be a death sentence for a health care provider. How can we prepare for prepayment review and what do we do if we are placed on prepayment review?

  1. Create a separate “what if” savings account to pay for attorneys’ fees. The best defense is a good offense. You cannot prevent yourself from being placed on prepayment review – there is no rhyme or reason for such placement. If you believe that you will never get placed on prepayment review, then you should meet one of my partners. He got hit by lightning – twice! (And lived). So start saving! Legal help is a must. Have your attorney on speed dial.
  2. Self-audit. Be proactive, not reactive. Check your documents. If you use an electronic records system, review the notes that it is creating. If it appears that all the notes look the same except for the name of the recipient, fix your system. Cutting and pasting (or appearing to cut and paste) is a pitfall in audits. Review the notes of the highest reimbursement code. Most likely, the more the reimbursement rate, the more likely to get flagged.
  3. Implement an in-house policy about opening the mail and responding to document requests. This sounds self evident, but you will be surprised how many providers have multiple people getting and opening the mail. The employees see a document request and they want to be good employees – so they respond and send the documents. They make a mistake and BOOM – you are on prepayment review. Know who reviews the mail and have a policy for notifying you if a document request is received.
  4. Buck up. Prepayment review is a b*^%$. Cry, pray, meditate, exercise, get therapy, go to the spa, medicate…whatever you need to do to alleviate stress – do it.
  5. Do not think you can get off prepayment review alone and without help. You will need help. You will need bodies to stand at the copy machine. You will need legal help. Do not make the mistake of allowing the first three months pass before you contact an attorney. Contact your attorney immediately.

Medicare/caid Fraud, Tattletails, and How To Self Disclose

On July 13, 2017, Attorney General Jeff Sessions and Department of Health and Human Services (HHS) Secretary Tom Price, M.D., announced the Department of Justice’s (DOJ) biggest-ever health care fraud takedown. 412 health care providers were charged with health care fraud. In total, allegedly, the 412 providers schemed and received $1.3 billion in false billings to Medicare, Medicaid, and TRICARE. Of the 412 defendants, 115 are physicians, nurses, and other licensed medical professionals. Additionally, HHS has begun the suspension process against 295 health care providers’ licenses.

The charges include allegations of billing for medically unnecessary treatments or services that were not really provided. The DOJ has evidence that many of the defendants had illegal kickback schemes set up. More than 120 of the defendants were charged with unlawfully or inappropriately prescribing and distributing opioids and other narcotics.

While this particular sting operation resulted from government investigations, not all health care fraud is discovered through government investigation. A great deal of fraud is uncovered through private citizens coming forward with incriminating information. These private citizens can file suit against the fraudulent parties on behalf of the government; these are known as qui tam suits.

Being a whistleblower goes against what most of us are taught as children. We are taught not to be a tattletail. I have vivid memories from elementary school of other kids acting out, but I would remain silent and not inform the teacher. But in the health care world, tattletails are becoming much more common – and they make money for blowing that metaphoric whistle.

What is a qui tam lawsuit?

Qui tam is Latin for “who as well.” Qui tam lawsuits are a type of civil lawsuit whistleblowers (tattletails) bring under the False Claims Act, a law that rewards whistleblowers if their qui tam cases recover funds for the government. Qui tam cases are a powerful weapon against Medicare and Medicaid fraud. In other words, if an employee at a health care facility witnesses any type of health care fraud, even if the alleged fraud is unknown to the provider, that employee can hire an attorney to file a qui tam lawsuit to recover money on behalf of the government. The government investigates the allegations of fraud and decides whether it will join the lawsuit. Health care entities found guilty in a qui tam lawsuit will be liable to government for three times the government’s losses, plus penalties.

The whistleblower is rewarded for bringing these lawsuits. If the government intervenes in the case and recovers funds through a settlement or a trial, the whistleblower is entitled to 15% – 25% of the recovery. If the government doesn’t intervene in the case and it is pursued by the whistleblower team, the whistleblower reward is between 25% – 30% of the recovery.

These recoveries are not low numbers. On June 22, 2017, a physician and rehabilitative specialist agreed to pay $1.4 million to resolve allegations they violated the False Claims Act by billing federal health care programs for medically unreasonable and unnecessary ultrasound guidance used with routine lab blood draws, and with Botox and trigger point injections. If a whistleblower had brought this lawsuit, he/she would have been awarded $210,000 – 420,000.

On June 16, 2017, a Pennsylvania-based skilled nursing facility operator agreed to pay roughly $53.6 million to settle charges that it and its subsidiaries violated the False Claims Act by causing the submission of false claims to government health care programs for medically unnecessary therapy and hospice services. The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by 7 former employees of the company. The whistleblower award – $8,040,000 – 16,080,000.

There are currently two, large qui tam cases against United Health Group (UHG) pending in the Central District of California. The cases are: U.S. ex rel. Benjamin Poehling v. UnitedHealth Group, Inc. and U.S. ex rel. Swoben v. Secure Horizons, et al. Both cases were brought by James Swoben, who was an employee and Benjamin Poehling, who was the former finance director of a UHG group that managed the insurer’s Medicare Advantage Plans. On May 2, 2027, the U.S. government joined the Poehling lawsuit.

The charges include allegations that UHG:

  • Submitted invalid codes to the Center for Medicare and Medicaid Services (CMS) that it knew of or should have known that the codes were invalid – some of the dates of services at issue in the case are older than 2008.
  • Intentionally avoided learning that some diagnoses codes or categories of codes submitted to their plans by providers were invalid, despite acknowledging in 2010 that it should evaluate the results of its blind chart reviews to find codes that need to be deleted.
  • Failed to follow up on and prevent the submissions of invalid codes or submit deletion for invalid codes.
  • Attested to CMS each year that the data they submitted was true and accurate while knowing it was not.

UHG would not be in this expensive, litigious pickle had it conducted a self audit and followed the mandatory disclosure requirements.

What are the mandatory disclosure requirements? Glad you asked…

Section 6402(a) of the Affordable Care Act (ACA) creates an express obligation for health care providers to report and return overpayments of Medicare and Medicaid. The disclosure must be made by 60 days days after the date that the overpayment was identified or the date any corresponding cost report is due, if applicable. Identification is defined as the point in which the provider has determined or should have determined through the exercise of due diligence that an overpayment exists. CMS expects the provider to proactively investigate any credible information of a potential overpayment. The consequences of failing to proactively investigate can be seen by the UHG  lawsuits above-mentioned. Apparently, UHG had some documents dated in 2010 that indicated it should review codes and delete the invalid codes, but, allegedly, failed to do so.

How do you self disclose?

According to CMS:

“Beginning June 1, 2017, providers of services and suppliers must use the forms included in the OMB-approved collection instrument entitled CMS Voluntary Self-Referral Disclosure Protocol (SRDP) in order to utilize the SRDP. For disclosures of noncompliant financial relationships with more than one physician, the disclosing entity must submit a separate Physician Information Form for each physician. The CMS Voluntary Self-Referral Disclosure Protocol document contains one Physician Information Form.”

Do You Pay Your Billing Agent a Percentage of Claims? You May Be in Violation of Federal law!

The Office of Inspector General (OIG) recently disseminated hundreds of recoupment letters to providers in New York who had percentage-based contracts with billing agents. OIG is seeking recoupment for services spanning a five-year period, plus 9% interest. See example redacted letter from OIG.

oig letter

42 CFR 447.10 prohibits the re-assignment of provider claims and applies only to Medicaid. It is recommended that you pay your billing agent a flat fee or on a time basis.

North Carolina Medical Society also discourages fee splitting. On the NCMS website, the Society warns that “Except in instances permitted by law (N.C. Gen. Stat. § 55B-14(c)), it is the position of the Board that a licensee cannot share revenue on a percentage basis with a non-licensee. To do so is fee splitting and is grounds for disciplinary action.”

Not all States prohibit fee splitting, and if Medicare or Medicaid is not involved, then we look to state law. But if Medicare or Medicaid is involved, then federal law matters. Some States prohibit fee splitting for doctors, chiropractors, and hospitals, while other states do not prohibit fee splitting for massage therapists. So it is important to know your State’s laws.

Lawyers also have fee-splitting prohibitions. To split fees with a nonlawyer constitutes the practice of law without a license (and probably multiple other ethical concerns).

Physicians, group practices and management services organizations should continue to carefully examine their current and proposed arrangements to ensure compliance with the fee-splitting prohibition applicable to your State. If you are unsure, consult an attorney.

OIG may have started these audits in New York, but, as New York State says “Excelsior” – ever upward – we can be sure that OIG will continue across the country.

House Bill 403: A Potential Upheaval of Medicaid!

Is this the end of the managed care organizations (MCOs)?

If the Senate’s proposed committee substitute (PCS) to House Bill 403 (HB 403) passes the answer is yes. The Senate’s PCS to House Bill 403 was just favorably reported out of the Senate Health Care Committee on June 15, 2017. The next step for the bill to advance will be approval by the Senate Rules Committee. Click here to watch its progress.

As my readers are well aware, I am not a proponent for the MCOs. I think the MCOs are run by overpaid executives, who pay themselves too high of bonuses, hire charter flights, throw fancy holiday parties, and send themselves and their families on expensive retreats – to the detriment of Medicaid recipients’ services and Medicaid providers’ reimbursement rates. See blog. And blog.

Over the last couple days, my email has been inundated by people abhorred with HB 403 – urging the Senators to retain the original HB 403, instead of the PCS version. As with all legislation, there are good and bad components. I went back and re-read these emails, and I realized multiple authors sat on an MCO Board. Of course MCO Board members will be against HB 403! Instead of hopping up and down “for” or “against” HB 403, I propose a (somewhat) objective review of the proposed legislation in this blog.

While I do not agree with everything found in HB 403, I certainly believe it is a step in the right direction. The MCOs have not been successful. Medically necessary behavioral health care services have been reduced or terminated, quality health care providers have been terminated from catchment areas, and our tax dollars have been misused.

However, I do have concern about how quickly the MCOs would be dissolved and the new PHPs would be put into effect. There is no real transition period, which could provide safety nets to ensure continuity of services. We all remember when NCTracks was implemented in 2013 and MMIS was removed on the same day. There was no overlap – and the results were catastrophic.

The following bullet points are the main issues found in HB 403, as currently written.

  • Effective date – MCOs dissolve immediately (This could be dangerous if not done properly)

Past legislation enacted a transition time to dissolve the MCOs. Session Law 2015-245, as amended by Session Law 2016-121, provided that the MCOs would be dissolved in four years, allowing the State to implement a new system slowly instead of yanking the tablecloth from the table with hopes of the plates, glasses, and silverware not tumbling to the ground.

According to HB 403, “on the date when Medicaid capitated contracts with Prepaid Health Plans (PHPs) begin, as required by S.L. 2015-245, all of the following shall occur:…(2) The LME/MCOs shall be dissolved.”

Session Law 2015-245 states the following timeline: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly
with the LME/MCOs in the same manner as currently utilized.”

HB 403 revises Session Law 2015-245’s timeline by the following: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly with the LME/MCOs in the same manner as currently utilized.

Instead of a 4-year transition period, the day the PHP contracts are effective, the MCOs no longer exist. Poof!! Maybe Edward Bulwer-Lytton was right when he stated, “The pen is mightier than the sword.”

Again, I am not opposed to dissolving the MCOs for behavioral health care; I just want whatever transition to be reasonable and safe for Medicaid recipients and providers.

With the MCOs erased from existence, what system will be put in place? According to HB 403, PHPs shall manage all behavioral health care now managed by MCOs and all the remaining assets (i.e., all those millions sitting in the savings accounts of the MCOs) will be transferred to DHHS in order to fund the contracts with the PHPs and any liabilities of the MCOs. (And what prevents or does not prevent an MCO simply saying, “Well, now we will act as a PHP?”).

What is a PHP? HB 403 defines PHPs as an entity, which may be a commercial plan or provider-led entity with a PHP license from the Department of Insurance and will operate a capitated contract for the delivery of services. “Services covered by PHP:

  1. Physical health services
  2. Prescription drugs
  3. Long-term care services
  4. Behavioral health services

The capitated contracts shall not cover:

  1. Behavioral health
  2. Dentist services
  3. The fabrication of eyeglasses…”

It would appear that dentists will also be managed by PHPs. As currently written, HB 403 also sets no less than three and no more than five contracts between DHHS and the PHPs should be implemented.

Don’t we need a Waiver from the Center for Medicare and Medicaid Services (CMS)?

Yes. We need a Waiver. 42 CFR 410.10(e) states that “[t]he Medicaid agency may not delegate, to other than its own officials, the authority to supervise the plan or to develop or issue policies, rules, and regulations on program matters.” In order to “Waive” this clause, we must get permission from CMS. We had to get permission from CMS when we created the MCO model. The same is true for a new PHP model.

Technically, HB 403 is mandating DHHS to implement a PHP model before we have permission from the federal government. HB 403 does instruct DHHS to submit a demonstration waiver application. Still, there is always concern and hesitancy surrounding implementation of a Medicaid program without the blessing of CMS.

  • The provider network (This is awesome)

HB 403 requires that all contracts between PHPs and DHHS have a clause that requires PHPs to not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates.

  • PHPs use of money (Also good)

Clearly, the General Assembly drafted HB 403 out of anger toward the MCOs. HB 403 implements more supervision over the new entities. It also disallows use of money on alcohol, first-class airfare, charter flights, holiday parties or similar social gatherings, and retreats, which, we all know these are precisely the activities that State Auditor Beth Wood found occurring, at least, at Cardinal. See Audit Report.

HB 403 also mandates that the Office of State Human Resources revise and update the job descriptions for the area directors and set limitations on salaries. No more “$1.2 million in CEO salaries paid without proper authorization.”

  • Provider contracts with the PHPs (No choice is never good)

It appears that HB 403 will not allow providers to choose which PHP to join. DHHS is to create the regions for the PHPs and every county must be assigned to a PHP. Depending on how these PHPs are created, we could be looking at a similar situation that we have now with the MCOs. If the State is going to force you to contract with a PHP to provide Medicaid services, I would want the ability to choose the PHP.

In conclusion, HB 403 will re-shape our entire Medicaid program, if passed. It will abolish the MCO system, apply to almost all Medicaid services (both physical and mental), open the provider network, limit spending on inappropriate items, and assign counties to a PHP.

Boy, what I would give to be a fly on the wall in all the MCO’s boardrooms (during the closed sessions).

Gordon & Rees Ranked Among 50 Largest U.S. Law Firms by Law360

Here’s a little unabashed, yet well-deserved honor my firm recently obtained. Number 48!! Go Team G&RSM! #Medicaidatty #Medicareatty

Gordon Rees Scully Mansukhani now ranks as the 48th largest law firm in the United States per Law360 in its annual rankings of the 400 largest law firms in the nation. The firm attained this distinction by moving up five spots from the prior year’s rankings and 23 positions from the 2015 list, and currently comprises some 733 attorneys and 304 partners throughout the U.S.

“This distinction represents an important milestone for the firm,” commented Firmwide Managing Partner Dion N. Cominos. “We continue to have good fortune in growing our platform with outstanding lawyers; most importantly, however, the growth has not occurred for its own sake but instead to allow us to best service our clients on a national stage.”

During the last three years, the firm has expanded its U.S. headcount by more than 26 percent and, since 2000, Gordon & Rees has added more than 30 new offices, and now has a major outpost in eight of the 10 largest cities in the United States. In 2017 alone, the firm has opened five new offices: Cincinnati and Columbus, Ohio; Oklahoma City, Oklahoma; Salt Lake City, Utah; and Milwaukee, Wisconsin.

Gordon & Rees is a national litigation and business transactions firm with more than 700 lawyers in 43 offices across the United States. Our lawyers provide full service representation to public and private companies ranging from the Fortune 500 to start-ups. Founded in 1974, Gordon & Rees is recognized among the fastest growing and largest law firms in the country and continues to climb the ranks of both The Am Law 200 and The National Law Journal.”

EHR: What’s In YOUR Contract? Legal Issues You Need to Know.

Electronic health records or EHR have metamorphosed health care. Choosing a vendor can be daunting and the prices fluctuate greatly. As a provider, you probably determine your EHR platform on which vendor’s program creates the best service notes… or which creates the most foolproof way of tracking time… or which program is the cheapest.

But…what’s in YOUR contract can be legally deadly.

Regardless how you choose your EHR vendor, you need to keep the following legal issues in mind when it comes to EHR and the law:

Regulatory and Clinical Coverage Policy Compliance

Most likely, your EHR vendor does not have a legal degree. Yet, you are buying a product and assuming that the EHR program complies with applicable regulations, rules, and clinical coverage policies – whichever are applicable to your type of service. Well, guess what? These regulations, rules, and clinical coverage policies are not stagnant. They are amended, revised, and re-written more than my chickens lay eggs, but a little less often, because my chickens lay eggs every day.

Think about it – The Division of Medical Assistance (DMA) publishes a monthly Medicaid Bulletin. Every month DMA provides more insight, more explanations, more rules that providers will be held accountable to follow.

Does your EHR program update every month?

You need to review your contract and determine whether the vendor is responsible for regulatory compliance or whether you are. If you are, should you put so much faith in the EHR program?

Document Accessibility

You are required to maintain your records (depending on your type of service) anywhere from 5-10 years. Let’s say that you sign a four year contract with EHR Vendor X. The four years expires, and you hire a new EHR vendor. You are audited. But Vendor X does not allow you access to the records because you no longer have a contract with them – not their problem!

You need to ensure that your EHR contract allows you access to your documents (because they are your documents) even in the event of the contract expiring or getting terminated. The excuse that “I don’t have access to that” does not equal a legal defense.

Indemnification

This is otherwise known as the “Blame Game.” If there is a problem with regulatory compliance, as in, the EHR records do not follow the regulations, then you need to know whether the EHR vendor will take responsibility and pay, or help pay, for attorneys’ fees to defend yourself.

Like it or not, the EHR vendor does not undergo audits by the state and federal government. The EHR vendor does not undergo post and pre-payment reviews for regulatory compliance. You do. It is your NPI number that is held accountable for regulatory compliance.

You need to check whether there is an indemnification clause in the EHR contract. In other words, if you are accused of an overpayment because of a mistake on the part of the vendor, will the vendor cover your defense? My guess is that there is no indemnification clause.

HIPAA Compliance

HIPAA laws require that you minimize the access to private health information (PHI) and prevent dissemination. With hard copies, this was easy. You could just lock up the documents. With EHR, it becomes trickier. Obviously, you have access to the PHI as the provider. But who can access your EHR on the vendor-side? Assuming that the vendor has an IT team in case of computer issues, you have to consider to what exactly does that team have access.

I recently attended a legal continuing education class on data breach and HIPAA compliance for health care. One of the speakers was a Special Agent with the FBI. This gentleman prosecutes data breaches for a living. He said that hackers will pay over $500 per private medical document. Health care companies experienced a 72% increase in cyberattacks between 2013 and 2014. Stolen health care information is 10 times more valuable than your credit card information.

Zombie Apocalypse

Obviously, I am exaggerating here. I do not believe that The Walking Dead is real and in our future. But here is my point – You are held accountable for maintaining your medical records, even in the face of an act of God or terrorism.

Example: It was 1996. Provider Dentist did not have EHR; he had hard copies. Hurricane Fran flooded Provider Dentist’s office, ruining all medical records. When Provider Dentist was audited, the government did not accept the whole “there was a hurricane” excuse. Dentist was liable for sever penalties and recoupments.

Fast forward to 2017 and EHR – Think a mass computer shutdown won’t happen? Just ask Delta about its August 2016 computer shutdown that took four days and cancelled over 2000 flights. Or Medstar Health, which operates 10 hospitals and more than 250 outpatient facilities, when in March 2016, a computer virus shut down its emails and…you guessed it…its EHR database.

So, what’s in YOUR contract?

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?

damned

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.

Warning: Medicare/caid Billing Confusion May Lead to Jail Time

All health care providers are under serious scrutiny, that is, if they take Medicaid. In Atlanta, GA, a dentist, Dr. Oluwatoyin Solarin was sentenced to a year and six months for filing false claims worth nearly $1 million. She pled guilty, and, I would assume, she had an attorney who recommended that she plead guilty. But were her claims actually false? Did she hire a criminal attorney or a Medicaid attorney? Because the answers could be the difference between being behind bars and freedom.

Dr. Solarin was accused of billing for and receiving payments for dental claims while she was not at the office. U.S. Attorney John Horn stated that “Solarin cheated the Medicaid program by submitting fraudulent claims, even billing the government for procedures she allegedly performed at the same time she was out of the country.”

I receive phone calls all the time from people who are under investigation for Medicare/caid fraud. What spurred on this particular blog was a phone call from (let’s call him) Dr. Jake, a dentist. He, similar to Dr. Solarin, was under investigation for Medicaid fraud by the federal government. By the time Dr. Jake called me, his investigation was well on its way, and his Medicaid reimbursements had been suspended due to credible allegations of fraud for almost a year. He was accused of billing for and receiving payments for dental services while he was on vacation…or sick…or otherwise indisposed. He hired one of the top criminal attorneys, who advised him to take a plea deal for a suspended jail sentence and monetary recompense.

But, wait, he says to me. I didn’t do anything wrong. Why should I have to admit to a felony charge and be punished for doing nothing wrong?

I said, let me guess, Jake. You were the rendering dentist – as in, your NPI number was on the billed claim – but you hired a temporary dentist to stand in your place while you were on vacation, sick, or otherwise indisposed?

How did you know? Jake asks.

Because I understand Medicaid billing.

When my car breaks down, I go to a mechanic, not a podiatrist. The same is true for health care providers undergoing investigation for Medicare/caid fraud – you need a Medicare/caid expert. A criminal attorney,most likely, will not understand the Medicare/caid policy on locum tenens. Or the legal limitations of Medicaid suspensions and the administrative route to get the suspension lifted. Or the good cause exception to suspensions.

Don’t get me wrong, I am not advocating that, when under criminal, health care fraud investigation, you should not hire a criminal attorney. Absolutely, you will want a criminal attorney. But you will also want a Medicare/caid attorney.

What is Locum tenens? It is a Latin phrase that means temporary substitute. Physicians and dentists hire locum tenens when they go on vacation or if they fall ill. It is similar to a substitute teacher. Some days I would love to hire a locum tenens for me. When a doctor or dentist hires a temporary substitute, usually that substitute is paid by the hour or by the services rendered. If the payor is Medicare or Medicaid, the substitute is not expected to submit the billing and wait to be reimbursed. The substitute is paid for the day(s) work, and the practice/physician/dentist bills Medicare/caid, which is reimbursed. For billing purposes, this could create a claim with the rendering NPI number as Dr. Jake, while Dr. Sub Sally actually rendered the service, because Dr. Jake was in the Bahamas. It would almost look like Dr. Jake were billing for services billing the government for procedures he allegedly performed at the same time he was out of the country.

Going back to Dr. Jake…had Dr. Jake hired a Medicare/caid attorney a year ago, when his suspension was first implemented, he may have be getting reimbursed by Medicaid this whole past year – just by asking for a good cause exception or by filing an injunction lifting the suspension. His Medicaid/care attorney could have enlightened the investigators on locum tenens, and, perhaps, the charges would have been dropped, once the billing was understood.

Going back to Dr. Solarin who pled guilty to accusations of billing for services while out of the country…what if it were just a locum tenens problem?

Knicole Emanuel Interviewed on Recent Success: Behavioral Health Care Service Still Locked in Overbilling Dispute with State

Last Thursday, I was interviewed by a reporter from New Mexico regarding our Teambuilders win, in which an administrative judge has found that Teambuilders owes only $896 for billing errors. Here is a copy of an article published in the Santa Fe New Mexican, written by Justin Horwath:

Source: Behavioral health care service still locked in overbilling dispute with state

The true tragedy is that these companies, including Teambuilders, should not have been put out of business based on false allegations of fraud. Not only was Teambuilders cleared of fraud, but, even the ALJ agreed with us that Teambuilders does not owe $12 million – but a small, nominal amount ($896.35). Instead of having the opportunity to pay the $896.35 and without due process of law, Teambuilders was destroyed – because of allegations.

All Medicare/Caid Health Care Professionals: Start Contracting with Qualified Translators to Comply with Section 1557 of the ACA!!

Being a health care professional who accepts Medicare and/ or Medicaid can sometimes feel like you are Sisyphus pushing the massive boulder up a hill, only to watch it roll down, over and over, with the same sequence continuing for eternity. Similarly, sometimes it can feel as though the government is the princess sleeping on 20 mattresses and you are the pea that is so small and insignificant, yet so annoying and disruptive to her sleep.

Well, effective immediately – that boulder has enlarged. And the princess has become even more sensitive.

boulder

On May 18, 2016, the Department of Health and Human Services (HHS) published a Final Rule to implement Section 1557 of the Affordable Care Act (ACA). Section 1557 of the ACA has been on the books since the ACA’s inception in 2010. However, not until 6 years later, did HSD finally implement regulations regarding Section 1557. 81 Fed. Reg. 31376.

The Final Rule became effective July 18, 2016. You are expected to be compliant with the rule’s notice requirements, specifically the posting of a nondiscrimination notice and statement and taglines within 90 days of the Final Rule – October 16, 2016. So you better giddy-up!!

First, what is Section 1557?

Section 1557 of the ACA provides that an individual shall not, on the basis of race, color, national origin, sex, age, or disability, be

  • excluded from participation in,
  • denied the benefits of, or
  • subjected to discrimination under

all health programs and activities that receive federal financial assistance through HHS, including Medicaid, most Medicare, student health plans, Basic Health Program, and CHIP funds; meaningful use payments (which sunset in 2018); the advance premium tax credits; and many other programs.

Section 1557 is extremely broad in scope. Because it is a federal regulation, it applies to all states and health care providers in all specialties, regardless the size of the practice and regardless the percentage of Medicare/caid the agency accepts.

HHS estimates that Section 1557 applies to approximately 900,000 physicians. HHS also estimates that the rule will cover 133,343 facilities, such as hospitals, home health agencies and nursing homes; 445,657 clinical laboratories; 1300 community health centers; 40 health professional training programs; Medicaid agencies in each state; and, at least, 180 insurers that offer qualified health plans.

So now that we understand Section 1557 is already effective and that it applies to almost all health care providers who accept Medicare/caid, what exactly is the burden placed on the providers? Not discriminating does not seem so hard a burden.

Section 1557 requires much more than simply not discriminating against your clients.

Section 1557 mandates that you will provide appropriate aids and services without charge and in a timely manner, including qualified interpreters, for people with disabilities and that you will provide language assistance including translated documents and oral interpretation free of charge and in a timely manner.

In other words, you have to provide written materials to your clients in their spoken language. To ease the burden of translating materials, you can find a sample notice and taglines for 64 languages on HHS’ website. See here. The other requirement is that you provide, for no cost to the client, a translator in a timely manner for your client’s spoken language.

In other words, you must have qualified translators “on call” for the most common 15, non-English languages in your state. You cannot rely on friends, family, or staff. You also cannot allow the child of your client to act as the interpreter. The clients in need of the interpreters are not expected to provide their own translators – the burden is on the provider. The language assistance must be provided in a “timely  manner. “Further, these “on call” translators must be “qualified,” as defined by the ACA.

I remember an English teacher in high school telling the class that there were two languages in North Carolina: English and bad English. Even if that were true back in 19XX, it is not true now.

Here is a chart depicting the number of non-English speakers in North Carolina in 1980 versus 2009-2011:

languages

As you can see, North Carolina has become infinitely more diverse in the last three decades.

And translators aren’t free. According to Costhelper Small Business,

Typical costs:
  • Interpreting may take place in person, over the phone or via video phone.
  • In-person interpreters typically cost $50-$145 per hour. For example, American Language Services offers interpreters starting at $100 per hour (or $125 for sign language) and a two-hour minimum is required.
  • Phone interpreters typically cost $1.25-$3 per minute. Language Translation, Inc. offers a flat fee of $1.88 per minute for phone interpreting, for example.
  • Video interpreters typically range from $1.75 to $7 per minute. For instance, LifeLinks offers video interpreting from $2.25 per minute for any language and $2.95 for sign language. A 15-minute minimum is common for phone or video interpreting.

It seems likely that telehealth may be the best option for health care providers considering the cost of in-person translations. Of course, you need to calculate the cost of the telehealth equipment and the savings you project over time to determine whether the investment in telehealth equipment is financially smart.

In addition to agencies having access to qualified translators, agencies with over 15 employees must designate a single employee who will be responsible for Section 1557 compliance and to adopt a grievance procedure for clients. Sometimes this may mean hiring a new employee to comply.

The Office of Civil Rights (“OCR”) at HHS is the enforcer of Section 1557. OCR has been enforcing Section 1557 since its inception in 2010 – to an extent.

However, expect a whole new policing of Section 1557 now that we have the Final Rule from HHS.