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Warning: Auditors Will Target SNF Patient Conditions, Not Services and Time Rendered

Oct. 1, 2019 marks the beginning of a new era of billing for skilled nursing facilities (SNFs).

Say goodbye to RUG-IV, and hello to the Patient-Driven Payment Model (PDPM).

This is a daunting task, not for the faint of heart. Under PDPM, reimbursement for Medicare Part A patients in SNFs will be driven by patient condition, rather than by therapy minutes provided. Documentation is crucial to a successful Recovery Audit Contractor (RAC) audit.

In the past, therapy documentation has been the focus of RAC audits. Now, nursing documentation is front and center. Do not try to maximize case mix index (CMI). But remember, certain documentation can easily lead to higher reimbursement. For example, if you document when a patient is morbidly obese, suffering from diabetes, and taking intravenous medication, this can lead to three times the reimbursement over the first three days. This article will explore the intricacies of RAC audits and how to maximize reimbursement while successfully maneuvering through the process.

Here is the million-dollar question: how will PDPM affect your business?

The answer is four-fold, for the purposes of this article, although this list is not exhaustive.

  1. Managing care: Unlike RUG-IV, which incentivizes ultra-high volumes of therapy to capture maximum payment, PDPM requires you to carefully manage how you deliver services in order to provide the right level of care for each patient. This begs the question of whether you’re getting paid to over-deliver services (or practice “defensive medicine”), or you’re getting audits and recoupments for under-delivering due to poor patient outcomes. For this reason, it can seem like you are getting pulled in two directions.
  2. Financial: PDPM is designed to be budget-neutral. Your reimbursements will decrease. SNFs will be able to offset the loss in therapy reimbursement with higher reimbursement for services already being provided.
  3. Staffing: There is less demand for therapists in a SNF setting. But you will be able to retain the best therapy sources.
  4. Billing: Under PDPM, you will bill using the Health Insurance Prospective Payment System (HIPPS) code that is generated from assessments with ARD. You will still be using a five-digit code, as you did with RUG-IV. But the characters signify different things. For example, under RUG-IV, the first three characters represented the patient’s RUG classification, and the last two were an assessment indicator. With PDPM, the first character represents the patient’s physical therapy (PT) and occupational therapy (OT) component. The second is the patient’s speech language therapy (SLP) component. The third is the nursing component classification. The fourth is the NTA component classification, while the fifth is an AI code.

The upshot to this is that different clinical categories can result in significant reimbursement differences. For example, consider the major joint replacement or spinal surgery clinical category. That clinical category is a major medical service, which can translate to a $42-a-day increase in reimbursement. For a 20-day stay, that clinical category would increase reimbursement by $840. You want to pick up on this type of surgery.

I received a question after a recent program segment asking whether swing beds will be affected by PDPM. In most hospitals, the answer is yes. The exception is critical access hospitals (CAHs), which will remain cost-based for their swing beds.

Final Rule: “Accordingly, all non-CAH swing-bed rural hospitals have now come under the SNF PPS. Therefore, all rates and wage indexes outlined in earlier sections of this final rule for the SNF PPS also apply to all non-CAH swing- bed rural hospitals.”

The latest changes in the MDS for swing-bed rural hospitals appear on the SNF PPS website at: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/SNFPPS/index.html

Programming Note:

Listen to healthcare attorney Knicole Emanuel every Monday on Monitor Monday, 10-10:30 a.m. EST.

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.

Look into My Crystal Ball: Who Is Going to Be Audited by the Government in 2017?

Happy New Year, readers!!! A whole new year means a whole new investigation plan for the government…

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) publishes what is called a “Work Plan” every year, usually around November of each year. 2017 was no different. These Work Plans offer rare insight into the upcoming plans of Medicare investigations, which is important to all health care providers who accept Medicare and Medicaid.

For those of you who do not know, OIG is an agency of the federal government that is charged with protecting the integrity of HHS, basically, investigating Medicare and Medicaid fraud, waste, and abuse.

So let me look into my crystal ball and let you know which health care professionals may be audited by the federal government…

crystal-ball

The 2017 Work Plan contains a multitude of new and revised topics related to durable medical equipment (DME), hospitals, nursing homes, hospice, laboratories.

For providers who accept Medicare Parts A and B, the following are areas of interest for 2017:

  • Hyperbaric oxygen therapy services: provider reimbursement
  • Inpatient psychiatric facilities: outlier payments
  • Skilled nursing facilities: reimbursements
  • Inpatient rehabilitation hospital patients not suited for intensive therapy
  • Skilled nursing facilities: adverse event planning
  • Skilled nursing facilities: unreported incidents of abuse and neglect
  • Hospice: Medicare compliance
  • DME at nursing facilities
  • Hospice home care: frequency of on-site nurse visits to assess quality of care and services
  • Clinical Diagnostic Laboratories: Medicare payments
  • Chronic pain management: Medicare payments
  • Ambulance services: Compliance with Medicare

For providers who accept Medicare Parts C and D, the following are areas of interest for 2017:

  • Medicare Part C payments for individuals after the date of death
  • Denied care in Medicare Advantage
  • Compounded topical drugs: questionable billing
  • Rebates related to drugs dispensed by 340B pharmacies

For providers who accept Medicaid, the following are areas of interest for 2017:

  • States’ MCO Medicaid drug claims
  • Personal Care Services: compliance with Medicaid
  • Medicaid managed care organizations (MCO): compliance with hold harmless requirement
  • Hospice: compliance with Medicaid
  • Medicaid overpayment reporting and collections: all providers
  • Medicaid-only provider types: states’ risk assignments
  • Accountable care

Caveat: The above-referenced areas of interest represent the published list. Do not think that if your service type is not included on the list that you are safe from government audits. If we have learned nothing else over the past years, we do know that the government can audit anyone anytime.

If you are audited, contact an attorney as soon as you receive notice of the audit. Because regardless the outcome of an audit – you have appeal rights!!! And remember, government auditors are more wrong than right (in my experience).

CMS Clarifying Medicare Overpayment Rules: The Bar Is Raised (Yet Again) for Health Care Providers

Have you ever watched athletes compete in the high jump? Each time an athlete is successful in pole vaulting over the bar, the bar gets raised…again…and again…until the athlete can no longer vault over the bar. Similarly, the Center for Medicare and Medicaid Services (CMS) continue to raise the bar on health care providers who accept Medicare and Medicaid.

In February, CMS finalized the rule requiring providers to proactively investigate themselves and report any overpayments to CMS for Medicare Part A and B. (The Rule for Medicare Parts C and D were finalized in 2014, and the Rule for Medicaid has not yet been promulgated). The Rule makes it very clear that CMS expects providers and suppliers to enact robust self auditing policies.

We all know that the Affordable Care Act (ACA) was intended to be self-funding. Who is funding it? Doctors, psychiatrists, home care agencies, hospitals, long term care facilities, dentists…anyone who accepts Medicare and Medicaid. The self-funding portion of the ACA is strict; it is infallible, and its fraud, waste, and abuse (FWA) detection tools…oh, how wide that net is cast!

Subsection 1128J(d) was added to Section 6402 of the ACA, which requires that providers report overpayments to CMS “by the later of – (A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.”

Identification of an overpayment is when the person has, or reasonably should have through the exercise of reasonable diligence, determined that the person received an overpayment. Overpayment includes referrals or those referrals that violate the Anti-Kickback statute.

CMS allows providers to extrapolate their findings, but what provider in their right mind would do so?

There is a six-year look back period, so you don’t have to report overpayments for claims older than six years.

You can get an extension of the 60-day deadline if:

• Office of Inspector General (OIG) acknowledges receipt of a submission to the OIG Self-Disclosure Protocol
• OIG acknowledges receipt of a submission to the OIG Voluntary Self-Referral Protocol
• Provider requests an extension under 42 CFR §401.603

My recommendation? Strap on your pole vaulting shoes and get to jumping!

Medicare RAC Audits Are Spreading in 2016

By now, however unwanted, health care providers are intimately acquainted with RAC audits. If you are one of the lucky providers who has not had the pleasure of undergoing a RAC audit and accept Medicare/caid, then you should go buy lottery tickets.

For Medicare providers, the RAC audits have been targeted to only Parts A and B. However, the Center for Medicare and Medicaid Services (CMS) proposes to expand the RAC audits to Medicare Advantage. CMS has published the proposal and seeks comments by February 1, 2016.

I am reminded of the Bubonic Plague from the 14th century.

As these Medicare audits continue to spread nationwide, to more CPT codes, and to more health care services, providers are warned to wash your hands. It is the best way to prevent acquiring a Medicare audit.

So far, there is no indication when the RAC audits for Medicare Advantage will begin. However, remember that RAC auditors are financially incentivized to audit and find errors. Thus, those RAC auditors will be chomping at the bit to get going.

Wouldn’t you if you were  compensated 9-13% of amount found to be owed back to the state?

More to come…