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Dealer Has an Ace: Do You Take the “Insurance?” CMS Incentivizes Hospitals to Drop Appeals

Medicare appeals are at an all-time high. Back in January 2014, the Office of Medicare Hearings and Appeals (OMHA) stated that a health care provider with a Medicare appeal, may not have the case assigned to a judge for at least two years, and may wait even longer for the appeal to be heard.

Since the beginning of 2014, the Medicare appeal backlog has only grown. With the passing of the Affordable Care Act (ACA), which increased the amount of regulatory audits on providers in an attempt to partially fund the Act, more and more providers are finding themselves audited and in disagreement with the overzealous results. More and more providers are fighting the audit results and filing Medicare appeals at OMHA.

Now, because in large part of the massive backlog, the Center for Medicare and Medicaid Services (CMS) is offering hospitals an “administrative agreement mechanism.” In other words, if the hospitals agree to dismiss the appeal, CMS will agree to partial repayment for the claims at issue. Specifically, the hospital will be reimbursed for 68% of the disputed claims.
Notice the offer from CMS only pertains to hospitals. CMS has made no such offer to long-term care facilities (LTCF), which have been vocal when it comes to aggravation resulting from the Medicare appeal backlog.

For CMS’s offer, if a hospital is owed $1 million, then CMS will agree to reimburse the hospital $680,000 if the hospital dismisses the appeal.

What if the hospital has multiple appeals? CMS will only offer this meagre, olive branch if no other appeals are pending. As in, you must dismiss all lawsuits in order to receive the partial payout.

Personally, I call this a raw deal.

Think of blackjack. The purpose of blackjack is to have two cards’ sums equal 21. Only with 2 cards equaling 21 does the player receive more than the bet. You bet $100 and hit 21 with an ace and a king? You get paid $150.

“Insurance” is a side bet which you can take when the dealer’s face up card shows an ace and only pays 2:1. You bet half your bet for insurance; so if you placed a $100 blackjack bet, your insurance bet should be $50. If the dealer hits blackjack, you lose your $100 bet but get paid on the insurance. On a $50-insurance bet, you’d win $100, and lose your $100 bet. If the dealer doesn’t have a blackjack, your insurance bet is forfeited. Either way, by making an insurance bet, you lose money.. You do not have the chance to win 100% of a blackjack payout.

This is essentially what CMS is offering. You are holding an ace and CMS is holding an ace. Will you take the partial payout?

Many of these pending appeals by hospitals are a result of auditors’ determinations that a Medicare recipient was received as an inpatient instead of (as the auditor believes proper) an outpatient.

One of the reasons that I believe the 68% payout from CMS is a raw deal is because the auditors are not always right. Why take 68% when you are owed 100%?

My question is: Are these auditors M.D.s?

When I present myself at a hospital emergency room, I hope that the decision for me to be admitted as inpatient or outpatient hospital admission is a complex medical decision contemplated by my doctor based on medical necessity, not an insurance auditor. After the physician determines that a patient needs to be admitted, an auditor is second guessing a physician’s decision that was made in “real time” with multiple variables at issue.

The Social Security Act (SSA) provides numerous defenses for a provider to assert against an auditor challenging the medical necessity of a service, in this case whether the patient is admitted into the hospital as inpatient. The rendering physician’s medical decision should be upheld absent clear and convincing evidence to the contrary.

Some people suggest that the auditors’ emphasis on inpatient stays versus outpatient stays will cause hospitals to err on the side of caution and just keep patients in observation status to avoid inpatient status.

We need to prevent the hospitals from fearing to admit patients as inpatient due to overzealous audits and mistaken determinations from non-M.D.s who believe the patient should have been outpatient. I say, go all in. Do not take the “insurance.” Do not take the 68%, if you deserve 100%.

Extrapolated Medicaid Audits Continue: Be Proactive! (Or Move to West Virginia)

Extrapolated audits are no fun, unless you work for a recovery audit contractor (RAC).  You get a Tentative Notice of Overpayment (TNO) that says the auditor reviewed 100 dates of service (DOS), found an overpayment of $1,000, so you owe $1 million dollars.  Oh, and please pay within 30 days or interest will accrue…

North Carolina’s 2nd recovery audit contractor (RAC) is ramping up.  HMS had a slower start than Public Consulting Group (PCG); the Division of Medical Assistance originally announced that HMS would be conducting post-payment reviews last October 2012 in its Medicaid Bulletin.  NC’s 1st RAC, PCG came charging out the gate.  HMS has been a bit slower, but HMS is active now.

HMS is performing post-pay audits on inpatient and outpatient hospital claims, laboratory, specialized outpatient therapy, x-ray and long-term care claims reviews.

According to the December 2013 Medicaid Bulletin, the findings for the first group of automated lab reviews were released in early November 2013.  Additional lab reviews are expected to be completed and findings released by late December 2013.  The post-payment reviews are targeting excessive drug screening.

And specialized therapy service providers, you are next on the list!

How will the providers know the results of an HMS post-payment review? Same way as with PCG.  You will receive a Tentative Notice of Overpayment (TNO) in the mail with some crazy, huge extrapolated amount that you supposedly owe back to the state.

If you receive a TNO, do not panic (too much), take a deep breath and read my blog: “You Received a Tentative Notice of Overpayment, Now What?”

Or “The Exageration of the Tentative Notices of Overpayments.”

Remember, most of the post-payment reviews that I have seen have numerous auditing mistakes on the part of the auditor, such as the auditor applying the more recent clinical coverage policies rather than the clinical coverage policy that was applicable to dates of services audited.

DMA Clinical Policy 1S-4 “Cytogenetic Studies“, for example, was recently revised February 1, 2013.  Obviously, an auditor should not apply the February 1, 2013, policy to a service provided in 2012…but you would not believe how often that happens!

So what can you do to be prepared?  Well, realistically, you cannot be prepared for audit ineptness.

But you can be proactive.  Contact your insurance policy to determine whether your liability insurance covers attorneys’ fees for regulatory audits.  It is important to be proactive and determine whether your insurance company will cover attorneys’ fees prior to undergoing an audit.  Because if you find out that your liability insurance does not cover attorneys’ fees, then you can upgrade your insurance to cover attorneys’ fees.  I promise, it is way better to pay additional premiums than get hit with $25,000+ bill of attorneys’ fees.  Plus, if you wait until you are audited to determine whether your liability insurance covers attorneys’ fees and you realize it does not, then the insurance company may not allow you to upgrade your insurance.  The audit may be considered a pre-existing condition.

So…proactiveness  is imperative.  But you can always move to West Virginia…

In a survey of 18 states conducted by the National Conference of State Legislatures (NCSL) and published August 29, 2013, NCSL determined that 10 states use extrapolations with the RAC audits, 7 do not and 1 intends to use extrapolations in the future. (No idea why NCSL did not survey all 50 states).

Delaware, Maryland, New Hampshire, Pennsylvania, Vermont, West Virginia, and Wisconsin do not use extrapolations in Medicaid RAC audits.

So moving to West Virginia is an option too…

Status Update on NC Medicaid Audits

Health care providers that accept Medicaid in North Carolina are under fire.  Since North Carolina is one of 7 states undergoing massive, federally-Medicaid audits, all providers, from speech therapists to dentists to psychiatrists to hospitals to nursing homes to radiologists are ALL under fire.  Yet, many providers who are reading this are thinking, “I haven’t been audited yet. Maybe I’m safe.”  My answer? Maybe your particular service has not yet been audited.  Most providers have not yet undergone the intense scrutiny of today’s Medicaid audits by a third-party contractor, but it is only because the state has yet to get to that specific health care service.  Believe me, these audits have only just begun…

To date, the state (by and through its contracted companies) is knee-deep in audits for behavioral health providers.  Also, dentists, speech therapist (if you don’t group speech therapists in with behavioral health), and durable medical equipment providers have just been added to audit list.

According to the February 2013 NC Medicaid Bulletin, starting at the end of February/beginning of March, HMS (our 2nd RAC vendor) will perform post-pay audits on:

  • inpatient hospital claims;
  • outpatient hospital claims;
  • long-term care claims;
  • laboratory claims;
  • x-ray claims; and
  • specialized outpatient therapy claims.

As it is only May, the full consequences of these audits that were only started at the end of February are not yet known.

From the actual beginning of a post-payment audit until the Tentative Notice of Overpayment, a few months pass.  Concurrently, the Carolinas Center of Medical Excellence (CCME) is conducting prepayment reviews.

From experience, once placed on prepayment review, a health care provider will try (to no avail) to remove itself from prepayment review for 6 months before having its Medicaid contract terminated.  Usually, at the point of termination, I get called.

So, I figure, with the time period lapse for both post and prepayment audits, I have until August-ish until the providers that provide the above-referenced services need me.

I guess my message is:

Do not think for one second that because your particular type of health care service has not been audited yet, that your particular type of service is safe. The audits are coming. It’s just a matter of when.