Let’s talk targeted probe-and-educate (“TPE”) audits – again.
I received quite a bit of feedback on my RACMonitor article regarding Medicare TPE audits being a “Wolf in Sheep’s Clothing.” So, I decided to delve into more depth by contacting providers who reached out to me to discuss specific issues. My intent is to shed the sheep’s clothing and show the big, pointy ears, big, round eyes, and big, sharp teeth that the MACs will hear, see, and eat you through the Medicare TPE audits. So, call the Woodsman, arm yourself with a hatchet, and get ready to be prepared for TPE audits. I cannot stress enough the importance of being proactive.
The very first way to rebut a TPE audit is to challenge the reason you were selected, which includes challenging the data supporting the reason that you were chosen. A poor TPE audit can easily result in termination of your Medicare contract, so it is imperative that you are prepared and appeal adverse results. 42 C.F.R. § 424.535, “Revocation of enrollment in the Medicare program” outlines the reasons for termination. Failing the audit process – even if the results are incorrect – can result in termination of your Medicare contract. Be prepared and appeal.
In 2014, the Center for Medicare and Medicaid Services (“CMS”) began the TPE program that combines a review of a sample of claims with “education” to allegedly reduce errors in the Medicare claims submission process; however, it took years to get the program off the ground. But off the ground it is. It seems, however, that CMS pushed the TPE program off the ground and then allowed the MACs to dictate the terms. CMS claims that the results of the TPE program are favorable, basing its determination of success on the decrease in the number of claim errors after providers receive education. But providers undergoing the TPE audit process face tedious and burdensome deadlines to submit documents and to undergo the “education” process. These 45-day deadlines to submit documents are not supported by federal law or regulation; they are arbitrary deadlines. Yet, these deadlines must be met by the providers or the MACs will aver a 0% accuracy. Private payors may create and enforce arbitrary deadlines; they don’t have to follow federal Medicare regulations. But Medicare and Medicaid auditors must obey federal regulations. A quick search on Westlaw confirms that no provider has challenged the MACs’ TPE rules, at least, litigiously.
The TPE process begins by the MAC selecting a CPT/HCPC code and a provider. This selection process is a mystery. How the MACs decide to audit sleep studies versus chemotherapy administration or a 93675 versus a 93674 remains to be seen. According to one health care provider, which has undergone multiple TPE audits and has Noridian Healthcare Solutions as its MAC informed me that, at times, they may have 4 -5 TPE audits ongoing at the same time. CMS has touted that TPE audits do not overlap claims or cause the providers to undergo redundant audits. But if a provider bills numerous CPT codes, the provider can undergo multiple TPE audits concurrently, which is clearly not the intent of the TPE audits, in general. The provider has questioned ad nauseam the data analysis that alerted Noridian to assign the TPE to them in the first place. Supposedly, MACs target providers with claim activity that contractors deem as unusual. The usual TPE notification letter contains a six-month comparison table purportedly demonstrating the paid amount and number of claims for a particular CPT/HCPC code, but its accuracy is questionable. See below.
This particular provider ran its own internal reports, and regardless of how many different ways this provider re-calculated the numbers, the provider could not figure out the numbers the TPE letter was alleging they were billing. But, because of the short turnaround deadlines and harsh penalties for failing to adhere to these deadlines, this provider has been unable to challenge the MAC’s comparison table. The MACs have yet to share its algorithm or computer program used to govern (a) which provider to target; (b) what CPT code to target; and (c) how it determines the paid amount and number of claims.
Pushing back on the original data on which the MACs supposedly relied upon to initially target you is an important way to defend yourself against a TPE audit. Unmask the wolf from the beginning. If you can debunk the reason for the TPE audit in the first place, the rest of the findings of the TPE audit cannot be valid. It is the classic “fruit of the poisonous tree” argument. Yet according to a quick search on Westlaw, no provider has appealed the reason for selection yet. For example, in the above image, the MAC compared one CPT code (78452) for this particular provider for dates of services January 1, 2017, through June 30, 2017, and then compared those claims to dates July 1, 2017, through December 31, 2017. Why? How is a comparison of the first half of a year to a second end of a year even relevant to your billing compliance? Before an independent tribunal, this chart, as supposed evidence of wrongdoing, would be thrown out as ridiculous. The point is – the MACs are using similar, yet irrelevant charts as proof of alleged, aberrant billing practices.
Another way to defend yourself is to contest the auditors/surveyors background knowledge. Challenging the knowledge of the nurse reviewer(s) and questioning the denial rate in relation to your TPE denials can also be successful. I had a dentist-client who was audited by a dental hygienist. Not to undermine the intelligence of a dental hygienist, but you can understand the awkwardness of a dental hygienist questioning a dentist’s opinion of the medical necessity of a service. If the auditor/surveyor lacks the same level of education of the health care provider, an independent tribunal will defer to the more educated and experienced decisions. This same provider kept a detailed timeline of their interactions with the hygienist reviewer(s), which included a summary of the conversations. Significantly, notes of conversations with the auditor/surveyor would normally not be allowed as evidence in a Court of law due to the hearsay rules. However, contemporaneous notes of conversations written in close time proximity of the conversation fall within a hearsay exception and can be admitted.
Pushing back on the MACs and/or formally appealing the MAC’s decisions are/is extremely important in getting the correct denial rate. If your appeal is favorable, the MACs will take into your appeal results into account and will factor the appeal decision into the denial rate.
The upshot is – do not accept the sheep’s clothing. Understand that you are under target during this TPE “educational” audit. Understand how to defend yourself and do so. Call the Woodsman. Get the hatchet.
Let’s talk targeted probe-and-educate (TPE) audits. See on RACMonitor as well.
TPE audits have turned out to be “wolf audits” in sheep’s clothing. The Centers for Medicare & Medicaid Services (CMS) asserted that the intent of TPE audits is to reduce provider burden and appeals by combining medical review with provider education.
But the “education” portion is getting overlooked. Instead, the Medicare Administrative Contractors (MACs) resort to referring healthcare providers to other agencies or contractors for “other possible action,” including audit by a Recovery Audit Contractor (RAC), which can include extrapolation or referral to the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) for investigation of fraud. A TPE audit involves up to three rounds of review, conducted by a MAC. Once Congress was instructed that RAC audits are not fair, and providers complained that RAC auditors did not help with education, CMS came up with TPE audits – which, supposedly, had more of an educational aspect, and a more fair approach. But in reality, the TPE audits have created an expensive, burdensome, cyclical pattern that, again, can result in RAC audits. The implementation of TPE audits has been just as draconian and subjective as RAC audits. The penalties can be actually worse than those resulting from RAC audits, including termination from the Medicare program. In this article, I want to discuss the appeal process and why it is important to appeal at the first level of audit.
Chapter Three, Section 3.2.5 of the Medicare Program Integrity Manual (MPIM) outlines the requirements for the TPE process, which leaves much of the details within the discretion of the MAC conducting the review. The MACs are afforded too much discretion. Often, they make erroneous decisions, but providers are not pushing back. A recent one-time notification transmittal provides additional instructions to MACs on the TPE process: CMS Transmittal 2239 (Jan. 24, 2019).
Providers are selected for TPE audit based on data analysis, with CMS instructing MACs to target providers with high denial rates or claim activity that the contractor deems unusual, in comparison to peers. These audits are generally performed as a prepayment review of claims for a specific item or service, though relevant CMS instructions also allow for post-payment TPE audits.
A TPE round typically involves a review of a probe sample of between 20 and 40 claims. Providers first receive notice that they have been targeted by their MAC, followed by additional documentation requests (ADRs) for the specific claims included in the audit.
The MACs have sole discretion as to which providers to target, whether claims meet coverage requirements, what error rate is considered compliant, and when a provider should be removed from TPE. Health care providers can be exposed to future audits and penalties based merely on the MAC’s resolve, and before the provider has received due process through their right to challenge claim denials in an independent appeals process. In this way, the MACs’ misinterpretation of the rules and misapplication of coverage requirements can lead to further audits or disciplinary actions, based on an erroneous determination that is later overturned. Similarly, while the educational activities are supposedly meant to assist providers in achieving compliance, in reality, this “education” can force providers to appear to acknowledge error findings with which they may disagree – and which may ultimately be determined to be wrong. Often times, the MACs – for “educational purposes” – require the provider to sign documentation that admits alleged wrongdoing, and the provider signs these documents without legal counsel, and without the understanding that these documents can adversely affect any appeal or future audits.
The MACs have the power, based on CMS directive, to revoke billing privileges based on a determination that “the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare requirements.” 42 C.F.R. § 424.535(a)(8)(ii). This language shows that TPE audit findings can be used as a basis for a finding of abuse of billing privileges, warranting removal from participation in the Medicare program. CMS guidance also gives the MACs authority to refer providers for potential fraud investigation, based on TPE review findings. It is therefore vital that providers submit documentation in a timely fashion and build a clear record to support their claims and compliance with Medicare requirements.
TPE audits promise further education and training for an unsuccessful audit (unsuccessful according to the MAC, which may constitute a flawed opinion), but most of the training is broad in nature and offered remotely – either over the phone, via web conference, or through the mail, with documentation shared on Google Docs. Only on atypical occasions is there an on-site visit.
Why appeal? It’s expensive, tedious, time-consuming, and emotionally draining. Not only that, but many providers are complaining that the MACs inform them that the TPE audit results are not appealable (TPE audits ARE appealable).
TPE reviews and TPE audit overpayment determinations may be appealed through the Medicare appeals process. The first stage of appeal will be to request a redetermination of the overpayment by the MAC. If the redetermination decision is unfavorable, Medicare providers and suppliers may request an independent review by filing a request for reconsideration with the applicable Qualified Independent Contractor (QIC). If the reconsideration decision is unfavorable, Medicare providers and suppliers are granted the opportunity to present their case in a hearing before an administrative law judge (ALJ). While providers or suppliers who disagree with an ALJ decision may appeal to the Medicare Appeals Council and then seek judicial review in federal district court, it is crucial to obtain experienced healthcare counsel to overturn the overpayment determination during the first three levels of review.
Appealing unfavorable TPE audits results sends a message. Right now, the MACs hold the metaphoric conch shell. The Medicare appeals process allows the provider or supplier to overturn the TPE audit overpayment, and reduces the likelihood of future TPE reviews, other Medicare audits, and disciplinary actions such as suspension of Medicare payments, revocation of Medicare billing privileges, or exclusion from the Medicare program. In instances when a TPE audit identifies potential civil or criminal fraud, it is essential that the Medicare provider or supplier engage experienced healthcare counsel to appeal the Medicare overpayment as the first step in defending its billing practices, and thus mitigating the likelihood of fraud allegations (e.g., False Claims Act actions).
CMS and the MACs maintain that TPEs are in the providers’ best interest because education is included. In actuality, TPEs are wolves in sheep’s clothing, masking true repercussions in a cloak of “education.” The Medicare appeal process is a provider’s best weapon.
HIPAA mandates the privacy of private health care records. HIPAA is a serious issue, both financially and in the risk-management aspect, for health care providers. Providers need to delegate annual funds to the defense of regulatory audits proactively – before the actual adverse action occurs. Because it’s not an “if;” it’s a “when,” when you accept Medicare/caid. In the Medicare/caid world, HIPAA violations can catastrophically render a company dead for an infraction. In the current days of technical, daily advances and allegations of cybersecurity breaches, health care providers must be cognizant of cyber criminals, their intent, their modus operandi, and what personal/company information is valuable to such criminals. The HIPAA statutes are vague and lack detailed explanations as to penalties.
In 2018, the Office for Civil Rights (OCR) issued a record-breaking $28 million in fines for HIPAA violations. The number of health care providers currently under investigation by HHS, in 2019, will be another record-breaking number.
As more and more data is maintained on computer systems, the more and more accessible the information becomes to potential scammers. In 2017, the number of cyber attacks increased exponentially to 5,207. There is actually an itemization as to how many of the attacks were germane to health care; health care breaches accounted for 8.5% of all breaches. 2.3 billion health care records have been exposed. This isn’t new. In 2015, the most healthcare records ever were breached. 113 million healthcare records were exposed that year. Now, in 2019, we may witness an all-time-high.
Human error is the number 1 reason for HIPAA violations. Employees gossiping and disclosing private health care information among each other is another culprit, along with social media and lack of training.
The largest individual HIPAA settlement was reached in October 2018, when OCR fined health insurer Anthem $16 million.
The oxymoron is that the government (Medicare/caid) and private payors are pushing for collaborative health care and the sharing of health care records amongst varying providers. Yet the possible HIPAA breaches increase with collaboration.
In April 2019, HHS randomly selected 9 HIPAA-covered entities—a mix of health plans and clearinghouses—for Compliance Reviews. The CMS Division of National Standards, on behalf of HHS, has launched a volunteer Provider Pilot Program to test the compliance review process.
The Trump administration has interpreted HIPAA penalties differently than the Obama administration did. Now HHS will apply a different cumulative annual CMP limit for the four penalties tiers in the Health Information Technology for Economic and Clinical Health (HITECH) Act.
There are four tiers of HIPAA violation severity outlined in the HITECH Act, based on the violator’s level of culpability:
Under the Obama administration, the annual limit for each tier was $1.5 million.
HIPAA penalties are appealable and with the disparate amount of penalties, it is well worth the time and expense to appeal.
Shockingly, not all new rules that emerge from the Center for Medicare and Medicaid Services (CMS) are actually compliant with the law. Wait! What? How can CMS publish Final Rules that are not compliant with the law?
This was an eye-opening discovery as a “baby lawyer” back 20 years ago. The government can and does publish and create Rules that, sometimes, exceed its legal authority. Of course, the Agency must follow appropriate rule-making procedure and allow for a comment period (etc.), but CMS does not have to listen to the comments. Theoretically, CMS could publish a Final Rule mandating that all Medicare providers provide 50 hours of free services a year or that the reimbursement rate for all services is $1. Both of my examples violate multiple rules, regulations, and laws, but until an aggrieved party with standing files a lawsuit declaring the Final Rule to be invalid or Congress passes a law that renders the Rule moot, the Rule exists and can be enforced by CMS and its agents.
The Rule-change (the “Site-Neutrality Rule”), which became effective January 1, 2019, reduced Medicare reimbursements to hospitals with outpatient facilities. Medicare will pay hospitals that have outpatient facilities “off campus” at a lower rate — equivalent to what it pays independent physicians for clinic visits. This decrease in Medicare reimbursements hits hard for most hospitals across the country, but, especially, rural hospitals. For the past 10+ years, hospitals have built outpatient facilities to serve more patients, and been reimbursed a higher Medicare reimbursement rate than independent physicians because the services at the hospital’s outpatient facility were connected to an outpatient facility affiliated with a hospital. Now the Site-Neutrality Rule leaves many hospitals trying to catch their breaths after the metaphoric punch to the belly. On the other hand, independent physicians claim that they have been providing the exact, same services as the hospital-affiliated outpatient facilities for years, but have received a lower reimbursement rate. I have no opinion (I do, but my opinion is not the topic in this blog) as to whether physicians and hospitals should be reimbursed equally – this blog is not pro-physician or pro-hospital. Rather, this blog is “pro-holding CMS liable to render Rules that follow the law.” Whether the hospitals or the physicians were receiving a cut in reimbursement rates, I am in favor of the those cuts (and future cuts) abiding by the law. Interestingly, should the AHA win this case, it could set solid, helpful, legal precedent for all types of providers and all types of decreased Medicare/caid reimbursements going forward.
Because of the Site-Neutrality Rule, in 2019, hospitals’ reimbursements will drop approximately $380 million and $760 million in 2020, according to CMS.
Before CMS brags on a decrease in the Medicare budget due to a proposed or Final Rule, it should remember that there is budget neutrality requirement when it comes to Rules implemented by CMS. 42 US.C. § 1395l. Yet, here, for the Site-Neutrality Rule, according to articles and journals, CMS is boasting its Site-Neutrality Rule as saving millions upon millions of dollars for Medicare. Can we say “Budget Non-Neutrality?”
The American Hospital Association filed a lawsuit December 2018 claiming that CMS exceeded its authority by implementing the Final Rule for “site neutral” Medicare reimbursements for hospitals with outpatient facilities. The lawsuit requests an injunction to stop the decrease and an order to repay any funds withheld thus far.
The claim, which, I believe has merit, argues that the Site-Neutrality Rule exceeds CMS’s statutory authority under the Medicare Act because of the budget neutrality mandate, in part – there are other arguments, but, for the sake of this blog, I am concentrating on the budget neutrality requirement. In my humble opinion, the budget neutrality requirement is overlooked by many attorneys and providers when it comes to challenging cuts to Medicare or Medicaid reimbursement rates.
On March 22, 2019, CMS filed a Motion to Dismiss or in the alternative, a Cross Motion for Summary Judgment. On April 5, 2019, AHA (and the rest of the Plaintiffs) responded in opposition. On April 19, 2019, CMS responded to AHA’s response in opposition. The Judge has not ruled on the Motions, as of today, April 25, 2019.
Obviously, I will be keeping a close eye on the progress of this case going forward. In the meantime, more reductions in reimbursement rates are on the horizon…
Recently, CMS recently proposed three new rules that would further update the Medicare payment rates and quality reporting programs for hospices, skilled nursing facilities (SNFs), and inpatient psychiatric facilities.
Biggest RACs Changes Are Here: Learn to Avoid Denied Claims
Part II continues to explain the nuances in the changes made by CMS to its statistical sampling methodology. Originally published on RACMonitor.
The Centers for Medicare & Medicaid Services (CMS) recently made significant changes in its statistical sampling methodology for overpayment estimation. Effective Jan. 2, 2019, CMS radically changed its guidance on the use of extrapolation in audits by Recovery Audit Contractors (RACs), Medicare Administrative Contractors (MACs), Unified Program Integrity Contractors (UPICs), and the Supplemental Medical Review Contractor (SMRC).
The RAC program was created through the Medicare Modernization Act of 2003 (MMA) to identify and recover improper Medicare payments paid to healthcare providers under fee-for-service (FFS) Medicare plans. The RAC auditors review a small sample of claims, usually 150, and determine an error rate. That error rate is attributed to the universe, which is normally three years, and extrapolated to that universe. Extrapolation is similar to political polls – in that a Gallup poll will ask the opinions of 1-2 percent of the U.S. population, yet will extrapolate those opinions to the entire country.
First, I would like to address a listener’s question regarding the dollar amount’s factor in extrapolation cases. I recently wrote, “for example, if 500 claims are reviewed and one is found to be noncompliant for a total of $100, then the error rate is set at 20 percent.”
I need to explain that the math here is not “straight math.” The dollar amount of the alleged noncompliant claims factors into the extrapolation amount. If the dollar amount did not factor into the extrapolation, then a review of 500 claims with one non-compliant claim is 0.2 percent. The fact that, in my hypothetical, the one claim’s dollar amount equals $100 changes the error rate from 0.2 percent to 20 percent.
Secondly, the new rule includes provisions implementing the additional Medicare Advantage telehealth benefit added by the Bipartisan Budget Act of 2018. Prior to the new rule, audits were limited in the telehealth services they could include in their basic benefit packages because they could only cover the telehealth services available under the FFS Medicare program. Under the new rule, telehealth becomes more prominent in basic services. Telehealth is now able to be included in the basic benefit packages for any Part B benefit that the plan identifies as “clinically appropriate,” to be furnished electronically by a remote physician or practitioner.
The pre-Jan. 2, 2019 approach to extrapolation employed by RACs was inconsistent, and often statistically invalid. This often resulted in drastically overstated overpayment findings that could bankrupt a physician practice. The method of extrapolation is often a major issue in appeals, and the, new rules address many providers’ frustrations and complaints about the extrapolation process. This is not to say that the post-Jan. 2, 2019 extrapolation approach is perfect…far from it. But the more detailed guidance by CMS just provides more ways to defend against an extrapolation if the RAC auditor veers from instruction.
Thirdly, hiring an expert is a key component in debunking an extrapolation. Your attorney should have a relationship with a statistical expert. Keep in mind the following factors when choosing an expert:
- Price (more expensive is not always better, but expect the hourly rate to increase for trial testimony).
- Intelligence (his/her CV should tout a prestigious educational background).
- Report (even though he/she drafts a report, the report is not a substitute for testimony).
- Clusters (watch out for a sample that has a significant number of higher reimbursed claims. For example, if you generally use three CPT codes at an equal rate and the sample has an abnormal amount of the higher reimbursed claim, then you have an argument that the sample is an invalid example of your claims.
- Sample (the sample must be random and must not contain claims not paid by Medicaid).
- Oral skills (can he/she make statistics understandable to the average person?)
Fourthly, the new revised rule redefines the universe. In the past, suppliers have argued that some of the claims (or claim lines) included in the universe were improperly used for purposes of extrapolation. However, the pre-Jan. 2, 2019 Medicare Manual provided little to no additional guidance regarding the inclusion or exclusion of claims when conducting the statistical analysis. By contrast, the revised Medicare Manual specifically states:
“The universe includes all claim lines that meet the selection criteria. The sampling frame is the listing of sample units, derived from the universe, from which the sample is selected. However, in some cases, the universe may include items that are not utilized in the construction of the sample frame. This can happen for a number of reasons, including but not limited to:
- Some claims/claim lines are discovered to have been subject to a prior review;
- The definitions of the sample unit necessitate eliminating some claims/claim lines; or
- Some claims/claim lines are attributed to sample units for which there was no payment.”
By providing detailed criteria with which contractors should exclude certain claims from the universe or sample frame, the revised Medicare Manual will also provide suppliers another means to argue against the validity of the extrapolation.
Lastly, the revised rules explicitly instruct the auditors to retain an expert statistician when changes occur due to appeals and legal arguments.
As a challenge to an extrapolated overpayment determination works its way through the administrative appeals process, often, a certain number of claims may be reversed from the initial claim determination. When this happens, the statistical extrapolation must be revised, and the extrapolated overpayment amount must be adjusted. This requirement remains unchanged in the revised PIM; however, the Medicare contractors will now be required to consult with a statistical expert in reviewing the methodology and adjusting the extrapolated overpayment amount.
Between my first article on extrapolation, “CMS Revises and Details Extrapolation Rules,” and this follow-up, you should have a decent understanding of the revised extrapolation rules that became effective Jan. 2, 2019. But my two articles are not exhaustive. Please, click here for Change Request 10067 for the full and comprehensive revisions.
“Gov. Michelle Lujan Grisham signed into law this week a bill (SB41) that ensures service providers accused of overbilling or defrauding Medicaid can review and respond to allegations of wrongdoing before state action is taken.” – Tripp Jennings, New Mexico In Depth.
For those of you who don’t know, in 2013, the State of New Mexico, suspended the Medicaid reimbursements of 15 behavioral health care providers based on “credible allegations of fraud.” 42 CFR 455.23. The Attorney General eventually determined that no fraud existed as to ANY of the 15 behavioral health care providers. These providers constituted 87.5% of the behavioral health care providers in New Mexico, which is predominantly Medicaid and has the highest suicide rate of any state, if you consider the Native American population.
There was no due process. The providers were informed of the immediate Medicaid suspension in a group meeting without ever being told what exactly the “fraud” was that they allegedly committed. They were informed by, then assistant Attorney General, Larry Hyeck, that fraud existed and because of the ongoing investigation nothing could be divulged to those accused. Supposedly, the evidence for such “fraud” was based on an independent audit performed by Public Consulting Group (PCG). However, according to testimony from an employee of PCG at the administrative hearing of The Counseling Center (one of the 15 accused behavioral health care providers), PCG was not allowed by the Human Services Department of NM (HSD) to complete its audit. According to this employee’s testimony, it is PCG’s common practice to return to the providers which are the subject of the audit a 2nd or even 3rd time to ensure that all the relevant documents were collected and reviewed. Human error and the sheer amount of medical records involved in behavioral health care suggest that a piece of paper or two can be overlooked, especially because this audit occurred in 2013, before most of the providers had adopted electronic medical record systems. Add in the fact that PCG’s scanners were less than stellar and that the former Governor Susan Martinez, Optum’s CEO, and the HSD Secretary -at the time- had already vetted 5 Arizona companies to overtake the 15 NM behavioral health care companies – even prior to PCG’s determination – and the sum equals a pre-determined accusation of fraud. PCG’s initial report stated that no credible allegations of fraud existed. However, PCG was instructed to remove that sentence.
Almost all the providers were forced out of business. The staff were terminated or told to be employed by the new 5 AZ companies. The Medicaid recipients lost their mental health services. One company remained in business because they paid the State for fraud that they never committed. Another company held on by a very thin thread because of its developmental disability services. But the former-CEO became taxed and stepped down and many more left or were let go. The 13 other providers were financially ruined, including the largest behavioral health care provider in NM, which serviced over 700 Medicaid recipients and employed hundreds of clinical staff. It had been servicing NM’s poor and those in need of mental health services for over 30 years. Another company had been in business over 40 years (with the same CEO). The careers and live’s work were crumbled in one day and by one accusation that was eventually proven to be wrong.
No one ever foresaw this amount of abuse of discretion to occur by government agents.
Now, today, in 2019, the new Governor of NM, Gov. Michelle Lujan Grisham, signed a law introduced by Senator Mary Kay Papen, a long proponent and advocate that the 15 behavioral health care providers were unjustly accused and forced out of business, that will protect Medicaid providers in NM from ever being subjected to the unjust and arbitrary suspension of Medicaid funds and unfounded allegations of Medicaid fraud.
Even though 42 C.F.R. 455.23 requires a state to suspend Medicaid funding upon “credible allegations of fraud,” NM has taken the first step toward instituting a safeguard for Medicaid providers. Already too few health care providers accept Medicaid – and who can blame them? The low reimbursement rates are nothing compared to the regulatory scrutiny that they undergo merely for accepting Medicaid.
NM SB41 contradicts the harsh language of 42 CFR 455.23, which mandates that a State “must” suspend payments upon a credible allegation of fraud. NM SB41 provides due process for Medicaid providers accused of fraud. Which begs the question – why hasn’t anyone brought a declaratory action to determine that 42 CFR 455.23 violates due process, which happens to be a constitutional right?
Part of the due process enacted by New Mexico is that a suspension of Medicaid reimbursements should be released upon a post of a surety bond and that the posting of a surety bond shall be deemed good cause to not suspend payments during the investigation. Although the new law also states that the Medicaid reimbursement suspension must be released within 10 days of the posting of the surety bond “in the amount of the suspended payment.” After 4 administrative hearings in New Mexico, I can assure you that the provider and HSD will have two disparate views of the “amount of the suspended payment.” And by disparate, I mean REALLY disparate.
Regardless, I view this new law as a giant leap in the direction of the Constitution, which was actually enacted in 1789. So is it apropos that 230 years later NM is forced to enact a law that upholds a legal right that was written and enacted into law 230 years ago?
Thank you, Gov. Michelle Lujan Grisham, Senator Papen, Patsy Romero, and Shawn Mathis for your amazing effort on getting this legislation passed.
And – look forward to my webcast on RACMonitor on Monday, April 8, 2019, detailing how courts across the country are revising their views and granting federal injunctions stopping premature recoupments when a Medicare/caid provider is accused of an overpayment. Due process is on a come-back.
There are a lot of concerns related to “incident-to“ billing. However, for physician practices, “incident-to” billing is a money maker, which, in the world, of sub-par Medicare reimbursement rates is a minute ray of sunshine in an otherwise eclipsed land. Auditors argue that there are fraud and abuse concerns because practices ignore or are confused about the rules and bill everything “incident-to“regardless of the conditions being met. This can result in a nasty audit, as well as substantial fines, penalties, and attorneys’ fees. If you bill “incident-to,” just follow the rules…unless those rules are eliminated. Until possible elimination, keep up with the rules, which can differ depending on the auditor in the region.
Recently, people have been pushing for Medicare reform to include disallowing nurse practitioners (NPs) and physician assistants (PAs) from billing “incident-to.” Proponents of the suggested amendment claims that the recommendation would save the Medicare program money — approximately $50 to $250 million annually and just under $1 billion over 5 years.
The number of NPs who bill Medicare has more than doubled, from 52,000 to 130,000 from 2010 to 2017
What is “incident-to” billing?
In colloquialism, “incident-to” billing allows non-physician providers (NPPs) to report services “as if” they were performed by a physician. The NPP stands in the shoes of the physician. The advantage is that, under Medicare rules, covered services provided by NPPs typically are reimbursed at 85% of the fee schedule amount; whereas, services properly reported “incident-to” are reimbursed at the full fee schedule value.
In legalize, “incident-to” services under §1861(s)(2)(A) of the Social Security Act are provided by NPPs as a part of the services provided directly by the physician, but billed as if they were in fact performed by the physician. Several, legal, threshold requirements must be satisfied before billing eligibility for these services is established.
Billing using “incident-to” can be a huge money-maker for providers. If billed incorrectly, it can also be a provider’s financial downfall.
“Incident-to” billing can only apply to established patients. Not new patients. Not consults. The other non-negotiable factor is that the physician who is supervising must be on-site. Not a phone call away. Not grabbing a burger at a local eatery. On-site. Although with hospitals, the cafeteria is a viable option. I foresee, in the future, telehealth and Skype may change this on-site requirement. The incident-to rules also require that the services be part of a patient’s normal course of treatment. The rules require that the physician remains actively involved in the patient’s course of treatment. There must be direct supervision. Direct supervision = on-site. The following services cannot be billed as “incident-to:”
- new patient visits
- visits in which an established patient is seen for a new problem
- visits in which the treatment provided or prescribed is not a part of the treatment plan established by a physician
- services provided in the hospital or ambulatory surgery center.
Do not confuse “incident-to” with Medicare patients versus Medicaid patients. MediCAID’s regulations for the coverage of MD services vary significantly than Medicare’s rules and requires direct contact with the patient with exceptions.
Here is a question that I often get: “When billing “incident-to,” do you bill “incident to” the physician who is physically on-site that day or the physician who is overseeing that patient’s care? Both physicians are in the same group and it is billed under the Group NPI, but not sure which physician to reference for “incident-to.”
Answer: Bill under the MD who is on-site. This was addressed by the Center for Medicare and Medicaid Services (CMS) in the 2016 Physician Fee Schedule Final Rule.
The Medicare Benefit Policy Manual addresses the “incident-to” rules for each provider type and in any scenario:
- Section 60 contains policies for services furnished incident to physicians’ services in the physician’s office.
- Chapter 6, section 20.5 enumerates the policies for therapeutic services furnished “incident-to” physicians’ services in the hospital outpatient setting.
- Section 80 states the policies for diagnostic tests in the physician’s office
- Chapter 6, section 20.4 lists the policies for diagnostic tests furnished in the hospital outpatient setting.
Drug Administration under “incident-to”
“The Medicare program provides limited benefits for outpatient prescription drugs. The program covers drugs that are furnished “incident to” a physician’s service provided that the drugs are not usually self-administered by the patients who take them.” Medicare Benefit Policy Manual, 50.2. Injectable drugs, including intravenously administered drugs, are typically eligible for inclusion under the “incident-to” benefit.
The Medicare Administrative Contracts (MACs) (or – auditors) must fully explain the process they will use to determine whether a drug is usually self-administered and thus does not meet the “incident-to” benefit category. The MACs must publish a list of the injectable drugs that are subject to the self-administered exclusion. If there is discrepancy amongst the MACs, a lawsuit could help.
In order to meet all the general requirements for coverage under the “incident-to” provision, an FDA approved drug or biological must:
- Be of a form that is not usually self-administered;
- Must be furnished by a physician; and
- Must be administered by the physician, or by auxiliary personnel employed by the physician and under the physician’s personal supervision
The charge, if any, for the drug or biological must be included in the physician’s bill, and the cost of the drug or biological must represent an expense to the physician.
“Incident-to” billing is subject to elimination. The difference in billing “incident-to” is a 100% reimbursement rate versus an 85% reimbursement rate. That 15% difference cannot be passed onto the Medicare recipients.
While “incident-to” billing continues to be allowed, it is imperative to keep up with the ever changing rules.
The ADR rule went into effect Jan. 1, 2019. Original blog post published March 6, 2019, on RACMonitor.
The Centers for Medicare & Medicaid Services (CMS) has updated its criteria for additional document requests (ADRs). If your ADR “cycle” is less than 1, CMS will round it up to 1.
What is an ADR cycle?
When a claim is selected for medical review, an ADR is generated requesting medical documentation be submitted to ensure payment is appropriate. Documentation must be received by CGS (A Celerian Group Company) within 45 calendar days for review and payment determination. Any selected and submitted claim can create an ADR. In other words, a provider is asked to prove that the service was rendered and that the billing was compliant.
It is imperative to understand that you, as the provider, check the Fiscal Intermediary Standard System (FISS) status/location S B6001. Providers are encouraged to use FISS Option 12 (Claim Inquiry) to check for ADRs at least once per week. You will not receive any other form of notification for an ADR.
To make matters even more confusing, there are two different types of ADRs: medical review (reason code 39700) and non-medical review (reason code 39701).
An ADR may be sent by CGS, Zone Program Integrity Contractors (ZPICs), Recovery Audit Contractors (RACs), Supplemental Medical Review Contractors (SMRCs), the Comprehensive Error Rate Testing (CERT) contractor, etc. When a claim is selected for review or when additional documentation is needed to complete the claim, an ADR letter is generated requesting that documentation and/or medical records be submitted.
The ADR process is essentially a type of prepayment review.
A baseline annual ADR limit is established for each provider based on the number of Medicare claims paid in the previous 12-month period that are associated with the provider’s six-digit CMS Certification Number (CCN) and the provider’s National Provider Identifier (NPI) number. Using the baseline annual ADR limit, an ADR cycle limit is also established.
After three 45-day ADR cycles, CMS will calculate (or recalculate) a provider’s denial rate, which will then be used to identify a provider’s corresponding “adjusted” ADR limit. Auditors may choose to either conduct reviews of a provider based on their adjusted ADR limit (with a shorter lookback period) or their baseline annual ADR limit (with a longer lookback period).
The baseline, annual ADR limit is one-half of one percent of the provider’s total number of paid Medicare service types for which the provider had reimbursed Medicare claims.
Effective Jan. 1, 2019, providers whose ADR cycle limit is less than 1, even though their annual ADR limit is greater than 1, will have their ADR cycle limit round up to 1 additional documentation request per 45 days, until their annual ADR limit has been reached.
For example, say Provider ABC billed and was paid for 400 Medicare claims in a previous 12-month period. The provider’s baseline annual ADR limit would be 400 multiplied by 0.005, which is two. The ADR cycle limit would be 2/8, which is less than one. Therefore, Provider ABC’s ADR cycle limit will be set at one additional documentation request per 45 days, until their annual ADR limit, which in this example is two, has been reached. In other words, Provider ABC can receive one additional documentation request for two of the eight ADR cycles, per year.
ADR letters are sent on a 45-day cycle. The baseline annual ADR limit is divided by eight to establish the ADR cycle limit, which is the maximum number of claims that can be included in a single 45-day period. Although auditors may go more than 45 days between record requests, in no case shall they make requests more frequently than every 45 days.
And that is the update on ADRs. Remember, the rule changed Jan. 1, 2019.
So many memos, so little time. Federal prosecutors receive guidance on how to prosecute. Maybe “guidance” is too loose a term. There is a manual to follow, and memos are just guidance until the memos are incorporated into what is known as the Justice Manual. Memos are not as binding as the Justice Manual, but memos are persuasive. For the last 22 years, the Justice Manual has not been revised to reflect the many, many memos that have been drafted to direct prosecutors on how to proceed. Until recently…
Justice Manual Revised
The Justice Manual, which is the manual that instructs federal prosecutors how to proceed in cases of Medicare and Medicaid fraud, has been revised for the first time since 1997. The Justice Manual provides internal Department of Justice (DOJ) rules.
The DOJ has new policies for detecting Medicare and Medicaid fraud and abuse. Some of these policies are just addendums to old policies. Or formal acceptance to old memos. Remember the Yates Memo? The Yates Memo directed prosecutors to indict executives, individually, of fraudulent companies instead of just going after the company.
The Yates Memo has now been codified into the Justice Manual.
Then came the Granston Memo – In a January 10, 2018, memo (the “Granston Memo”), the DOJ directed its prosecutors to more seriously consider dismissing meritless False Claims Act (“FCA”) cases brought by whistleblowers. It lists 7 (non-exhaustive) criteria for determining whether the DOJ should dismiss a qui tam lawsuit. The reasoning behind the Granston Memo is that whistleblower lawsuits have risen over 600 cases per year, but the government’s involvement has not mirrored the raise. This may indicate that many of the whistleblower lawsuits are frivolous and filed for the purpose of financial gain, even if the money is not warranted. Remember qui tam relators (people who bring lawsuits against those who mishandle tax dollars, are rewarded monetarily for their efforts…and, usually, the reward is not a de minimus amount. In turn, people are incentivized to identify fraud and abuse against the government. At least, according to the Granston Memo, the financial incentive works too well and frivolous lawsuits are too prevalent.
The Granston Memo has also been codified into the Justice Manual.
Talk about an oxymoron…the Yates Memo instructs prosecutors to pursue claims against more people, especially those in the executive positions for acts of the company. The Granston Memo instructs prosecutors to more readily dismiss frivolous FCA allegations. “You’re a wigwam. You’re a teepee. Calm down, you’re just two tents (too tense).” – a horrible joke that my husband often quips. But this horrible quote is apropos to describe the mixed messages from DOJ regarding Medicare and Medicaid fraud and abuse.
The Brand Memo, yet another memo that we saw come out of CMS, instructs prosecutors not to use noncompliance as subject to future DOJ enforcement actions. In other words, agency guidance does not cannot create binding legal requirements. Going forward, the DOJ will not enforce recommendations found in agency guidance documents in civil actions. Relatedly, DOJ will not use noncompliance with agency guidance to “presumptively or conclusively” establish violations of applicable law or regulations in affirmative civil enforcement cases.
The Brand Memo was not incorporated into the Justice Manual. It also was not repudiated.
Medicare/caid Audit Targets Broadened
Going forward, traditional health care providers will not be the only targets – Medicare Advantage plan, EHR companies, and private equity owners – will all be audited and reviewed for fraud and abuse. Expect more audits with wider nets to catch non-provider targets to increase now that the Yates Memo was codified into the Justice Manual.
Anti-Kickback Statute, Stark Law, and HIPAA Narrowed
The Stark Law (42 U.S.C. 1395nn) and the Anti-Kickback Statute (42 U.S.C. §1320a‑7b(b)) exist to minimize unneeded or over-utilization of health-care services payable by the federal government. Stark Law and the Anti-Kickback regulations criminalize, impose civil monetary penalties, or impose other legal sanctions (such as termination from Medicare) against health care providers and other individuals who violate these laws. These laws are esoteric (which is one reason that I have a job) and require careful navigation by specialized legal counsel. Accidental missteps, even minute documentation errors, can lead to harsh and expensive results.
In a health care world in which collaboration among providers is being pushed and recommended, the Anti-Kickback, Stark, and HIPAA laws are antiquated and fail to recognize the current world. Existing federal health-care fraud and abuse laws create a “silo effect” that requires mapping and separating financial interests of health-care providers in order to ensure that patient referrals cannot be tainted by self-interest. Under Stark, a strict liability law, physicians cannot make a referral for the provision of “designated health services” to an entity with which they have a financial relationship (unless one of approximately 30 exceptions applies). In other words, for example, a hospital cannot refer patients to the home health care company that the hospital owns.
Going forward – and this has not happened yet – regulators and the Department will begin to claw back some of the more strict requirements of the Stark, Anti-Kickback, and HIPAA regulations to decrease the “silo effect” and allow providers to collaborate more on an individual’s whole health method. I had an example of this changing of the tide recently with my broken leg debacle. See blog. After an emergency surgery on my leg by an orthopedic surgeon because of a contracted infection in my wound, my primary care physician (PCP) called to check on me. My PCP had nothing to do with my leg surgery, or, to my knowledge, was never informed of it. But because of new technology that allows patient’s records to be accessed by multiple providers in various health care systems or practices, my PCP was informed of my surgery and added it to my chart. This never could have happened 20 years ago. But this sharing of medical records with other providers could have serious HIPAA implications if some restrictions of HIPAA are not removed.
In sum, if you haven’t had the pleasure of reading the Justice Manual in a while, now would be an appropriate time to do so since it has been revised for the first time in 22 years. This blog does not enumerate all the revisions to the Justice Manual. So it is important that you are familiar with the changes…or know someone who is.
What in the health care is going on in Detroit??
Hospitals in Detroit, MI may lose Medicare funding, which would be financially devastating to the hospitals. Is hospital care in Detroit at risk of going defunct? Sometimes, I think, we lose sight of how important our local hospitals are to our communities.
The Center for Medicare and Medicaid Services (CMS) notified DMC Harper University Hospital and Detroit Receiving Hospital that they may lose Medicare funding because they are allegedly not in compliance with “physical environment regulations.”
42 C.F.R. § 483.90 “Physical environment” states “The facility must be designed, constructed, equipped, and maintained to protect the health and safety of residents, personnel and the public.”
CMS will give the hospitals time to submit corrective action plan, but if the plans of correction are not accepted by CMS, Medicare will terminate the hospitals’ participation by April 15, 2019 (tax day – a bad omen?).
The two hospitals failed fire safety and infection control. Section 483.90 instructs providers to ensure fire safety by installing appropriate and required alarm systems. Providers are forbidden to have certain flammable goods in the hallways. It requires sprinkler systems to be installed. It requires emergency generators to be installed on the premises. Could you imagine the liability if Hurricane ABC destroys the area and Provider XYZ loses power, which causes Grandma Moses to stop breathing because her oxygen tube no longer disseminate oxygen? Think of the artwork we would have lost! Ok, that was a bad example because there are no hurricanes in Detroit.
Another important criterion of the physical environment regulations is infection control, which, according to the letters from CMS, is the criterion that the two hospitals allegedly have failed. Each hospital underwent a survey on Oct. 18th when the alleged deficiencies were discovered.
“We have determined that the deficiencies are significant and limit your hospital’s capacity to render adequate care and ensure the health and safety of your patients,” stated the Jan. 15 letters to the hospitals from CMS. CMS informed the hospitals they had until Jan. 25 to submit a plan of correction. It is unclear whether the hospitals submitted these plans. Hopefully, both hospitals have a legal team that did draft and submit the plans of correction.
Michigan is a state in which if Medicare funds are terminated, then Michigan will terminate Medicaid funds automatically. So termination of Medicare funding can be catastrophic. Concurrently, Scott Steiner, chief of Detroit Receiving Hospital, is resigning (shocker).
Detroit must have something in the water when it comes to health care issues in the news because, also in Detroit, a police task force Monday removed 26 fetuses from a Detroit Medical Center (DMC) morgue, all of which were allegedly mishandled by Perry Funeral Home. Twenty of the bodies taken from the DMC cooler had dates-of-birth listed from 1998 and earlier, with six dating to the 1970s. The earliest date of birth of a discovered fetus was Aug. 11, 1971.
State authorities are looking into another case of dozens of infant remains allegedly hidden for years in a DMC hospital. News articles do not mention the DMC hospital’s name, but one cannot help but wonder whether the two incidents – (1) Detroit hospitals failing infection control specifications; and (2) decomposing bodies found in a hospital – are intertwined.
Detroit has to be winning a record here with health care issues – Medicare audit failures in hospitals, possible loss of Medicare contracts, possible suspension of Medicaid reimbursements, and, apparently decomposing fetuses in funeral homes and hospitals.