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“Reverse RAC Audits”: Increase Revenue by Protecting Your Consumers

Today I want to talk about two ways to increase revenue merely by ensuring that your patients’ rights are met. We talk about providers being audited for their claims being regulatory compliant, but how about self-audits to increase your revenue? I like these kind of audits! I am calling these audits “Reverse RAC audits”. Let’s bring money in instead of reimbursements recouped.

You can protect yourself as a provider and increase revenue by remembering and litigating on behalf of your consumers’ rights. Plus, your patients will be eternally grateful for your advocacy. It is a win/win. The following are two, distinct ways to increase revenue and protect your consumers’ rights:

  1. Ensuring freedom of choice of provider; and
  2. Appealing denials on behalf of your consumers.

Freedom of choice of provider.

In a federal case in Indiana, we won an injunction based on the patients’ rights to access to care.

42 CFR § 431.51 – Free choice of providers states that “(b) State plan requirements. A State plan must provide as follows…:

(1)  A beneficiary may obtain Medicaid services from any institution, agency, pharmacy, person, or organization that is –

(i) Qualified to furnish the services; and

(ii) Willing to furnish them to that particular beneficiary.

In Bader v. Wernert, MD, we successfully obtained an injunction enjoining the State of Indiana from terminating a health care facility. We sued on behalf of a geneticist – Dr. Bader – whose facility’s contract was terminated from the Medicaid program for cause. We sued Dr. Wernert in his official capacity as Secretary of the Indiana Family and Social Services Administration. Through litigation, we saved the facility’s Medicaid contract from being terminated based on the rights of the consumers. The consumers’ rights can come to the aid of the provider.

Keep in mind that some States’ Waivers for Medicaid include exceptions and limitations to the qualified and willing provider standard. There are also limits to waiving the freedom of choice of provider, as well.

Appealing consumers’ denials.

This is kind of a reverse RAC Audit. This is an easy way to increase revenue.

Under 42 CFR § 405.910 – Appointed representatives, a provider of services may appeal on behalf of the consumers. If you appeal on behalf of your consumers, the obvious benefit is that you could get reimbursed for the services rendered that were denied. You cannot charge a fee for the service; however, so please keep this in mind.

One of my clients currently has hired my team appealing all denials that are still viable under the statute of limitations. There are literally hundreds of denials.

Over the past few years, they had hundreds of consumers’ coverage get denied for one reason or the other. Allegedly not medically necessary or provider’s trainings weren’t conveyed to the auditors. In other words, most of the denials are egregiously wrong. Others are closer to call. Regardless these funds were all a huge lump of accounts’ receivables that was weighing down the accounting books.

Now, with the help of my team, little by little, claim by claim, we are chipping away at that accounts’ receivables. The receivables are decreasing just by appealing the consumers’ denials.

RAC Audit Update: Renewed Focus on the Two-Midnight Rule

In RAC news, on June 1, 2021, Cotiviti acquired HMS RAC region 4. Don’t be surprised if you see Cotiviti’s logo on RAC audits where you would have seen HMS. This change will have no impact in the day-to-day contract administration and audit timelines under CMS’ guidance. You will continue to follow the guidance in the alleged, improper payment notification letter for submission of medical documentation and discussion period request. In March 2021, CMS awarded Performant an 8.5 year contract to serve as the Region 1 RAC. 

There really cannot be any deviations regardless the name of the RAC Auditor because this area is so regulated. Providers always have appeal rights regardless Medicare/caid RAC audits. Or any other type of audit. Medicaid RAC provider appeals are found in 42 CFR 455.512. Whereas Medicare provider redeterminations and the 5 levels of appeal are found in 42 CFR Subpart I. The reason that RAC audits are spoken about so often is that the Code of Federal Regulations applies different rules for RAC audits versus MAC, TPE, UPIC, or other audits. The biggest difference is that RAC auditors are limited to a 3 year look back period according to 42 CFR 455.508. Other auditors do not have that same limitation and can look back for longer periods of time. Of course, whenever “credible allegations of fraud” is involved, the lookback period can be for 10 years.

The federal regulations also allow States to request exceptions from the Medicaid RAC program. CMS mandates every State to participate in the RAC program. But there is a federal reg §455.516 that allows exceptions. To my knowledge, no State has requested exceptions out of the RAC Audit program.

RAC auditors have announced a renewed focus on the two-midnight rule for hospitals. Again. This may seem like a rerun and it is. You recall around 2012, RACs began noticing high rates of error with respect to patient status in certain short-stay Medicare claims submitted for inpatient hospital services. CMS and the RACs indicated the inpatient care setting was medically unnecessary, and the claims should have been billed as outpatient instead. Remember, for stays under 2 midnights, inpatient status may be used in rare and unusual exceptions and may be payable under Medicare Part A on a case-by-case basis.

Provider Medicaid Contract Termination Reversed in Court!

First and foremost, important, health care news:

The Medicare Administrative Contractors (MACs) have full authority to renew post-payments reviews of dates of service (DOS) during the COVID pandemic. The COVID pause is entirely off. It is going to be a mess to wade through the thousands of exceptions. RAC audits of COVID DOS will be, at best, placing a finger on a piece of mercury. I hope that the auditors remember that everyone was scrambling to do their best during the past year and a half. In the upcoming weeks, I will keep you posted.

I am especially excited today. Last week, I won a permanent injunction for a health care facility that but for this injunction, the facility would be closed, its 300 staff unemployed, and its 600 Medicare and Medicaid consumers without access to their mental health and substance abuse providers, their primary care physicians, and the Suboxone clinic. The Judge’s clerk emailed us on Friday. The email was terse although the clerk signified that the email was important by clicking the little, red, exclamation point. It simply stated: After speaking with Judge X, she is dismissing the government’s MTD and granting Petitioner’s permanent injunction. Petitioner’s counsel can send a proposed decision within 10 days. Such a simple email affected so many lives!

We hear Ellen Fink-Samnick MSW, ACSW, LCSW, CCM, CRP, speak about social determinants of health (SDoH) on RACMonitor. Well, this company is minority-owned and the mass percentage of staff and consumers are minorities.

Why was this company on the brink of closing down? The managed care organization (MCO) terminated the company’s Medicaid contract. Medicaid comprised the majority of its revenue. The MCO’s reason was that the company violated 42 CFR §455.106, which states:

“Information that must be disclosed. Before the Medicaid agency enters into or renews a provider agreement, or at any time upon written request by the Medicaid agency, the provider must disclose to the Medicaid agency the identity of any person who:

(1) Has ownership or control interest in the provider, or is an agent or managing employee of the provider; and

(2) Has been convicted of a criminal offense related to that person‘s involvement in any program under Medicare, Medicaid, or the title XX services program since the inception of those programs.”

The former CEO – for years – he relied on professional tax accountants for the company’s taxes and his own personal family’s taxes. His wife, who is a physician, relied on her husband to do their personal taxes as one of his “honey-do” tasks. CEO relied on a sub-par accountant for a couple years and pled guilty to failing to pay personal taxes for two years. The plea ended up in the newspaper and the MCO terminated the facility.

We argued that the company, as an entity, was bigger than just the CEO. Quickly, we filed for a TRO to keep the company open. Concurrently, we transitioned the company from the CEO to Dr. wife. Dr became CEO in a seamless transition. A long-time executive stepped up as HR management.

Yet, according to testimony, the MCO terminated the company’s contract when the newspaper published the article about CEO’s guilty plea. The article was published in a local paper on April 9 and the termination notice was sent out April 19th. It was a quick decision.

We argued that 42 CFR §455.106 didn’t apply because CEO’s guilty plea was:

  1. Personal and not related to Medicare or Medicaid; and
  2. Not a conviction but a voluntary plea agreement.

The Judge agreed. We won the TRO for immediate relief. After a four-day hearing and 22 witnesses for Petitioner, we won the preliminary injunction. At this point, the MCO hired outside counsel with our tax dollars, which I did bring up in the final hearing on the merits.

New outside counsel was super excited to be involved. He immediately propounded a ton of discovery asking for things that he already had and for criminal documents that we had no access to because, by law, the government has possession of and CEO never had. Well, new lawyer was really excited, so he filed motions to compel us to produce these unobtainable documents. He filed for sanctions. We filed for sanctions back.

It grew more litigious as the final hearing on the merits approached.

Finally, we presented our case for a permanent injunction, emphasizing the importance of the company and the smooth transition to the new, Dr. CEO. We won! Because we won, the company is open and providing medically necessary services to our most needy population.

And…I get to draft the proposed decision.

Post-COVID (ish) RAC Audits – Temporary Restrictions

2020 was an odd year for recovery audit contractor (“RAC”) and Medicare Administrative Contractors (“MAC”) audits. Well, it was an odd year for everyone. After trying five virtual trials, each one with up to 23 witnesses, it seems that, slowly but surely, we are getting back to normalcy. A tell-tale sign of fresh normalcy is an in-person defense of health care regulatory audits. I am defending a RAC audit of pediatric facility in Georgia in a couple weeks and the clerk of court said – “The hearing is in person.” Well, that’s new. Even when we specifically requested a virtual trial, we were denied with the explanation that GA is open now. The virtual trials are cheaper and more convenient; clients don’t have to pay for hotels and airlines.

In-person hearings are back – at least in most states. We have similar players and new restrictions.

On March 16, 2021, CMS announced that it will temporarily restrict audits to March 1, 2020, and before. Medicare audits are not yet dipping its metaphoric toes into the shark infested waters of auditing claims with dates of service (“DOS”) March 1 – today. This leaves a year and half time period untouched. Once the temporary hold is lifted, audits of 2020 DOS will be abound. March 26, 2021, CMS awarded Performant Recovery, Inc., the incumbent, the new RAC Region 1 contract.

RAC’s review claims on a post-payment and/or pre-payment basis. (FYI – You would rather a post payment review rather than a pre – I promise).

The RACs were created to detect fraud, waste, and abuse (“FWA”) by reviewing medical records. Any health care provider – not matter how big or small –  are subject to audits at the whim of the government. CMS, RACs, MCOs, MACs, TPEs, UPICs, and every other auditing company can implement actions that will prevent future improper payments, as well. As we all know, RACs are paid on a contingency basis. Approximately, 13%. When the RACs were first created, the RACs were compensated based on accusations of overpayments, not the amounts that were truly owed after an independent tribunal. As any human could surmise, the contingency payment creates an overzealousness that can only be demonstrated by my favorite case in my 21 years – in New Mexico against Public Consulting Group (“PCG”). A behavioral health care (“BH”) provider was accused of over $12 million overpayment. After we presented before the administrative law judge (“ALJ”) in NM Administrative Court, the ALJ determined that we owed $896.35. The 99.23% reduction was because of the following:

  1. Faulty Extrapolation: NM HSD’s contractor PCG reviewed approximately 150 claims out of 15,000 claims between 2009 and 2013. Once the error rate was defined as high as 92%, the base error equaled $9,812.08; however the extrapolated amount equaled over $12 million. Our expert statistician rebutted the error rate being so high.  Once the extrapolation is thrown out, we are now dealing with much more reasonable amounts – only $9k
  • Attack the Clinical Denials: The underlying, alleged overpayment of $9,812.08 was based on 150 claims. We walked through the 150 claims that PCG claimed were denials and proved PCG wrong. Examples of their errors include denials based on lack of staff credentialing, when in reality, the auditor could not read the signature. Other denials were erroneously denied based the application of the wrong policy year.

The upshot is that we convinced the judge that PCG was wrong in almost every denial PCG made. In the end, the Judge found we owed $896.35, not $12 million. Little bit of a difference! We appealed.

To Disclose or Not to Disclose: The Answer Could Terminate Your Medicaid Contract

Changes of ownership of a facility can spur RAC, MAC, and MCO audits. In fact, federal regulations require disclosure of changes of ownership within 35 days after any change of ownership. 42 CFR 455.104. The regulations require disclosure, but there is no guidance regarding acceptance of said change of ownership. In other words what if your company undergoes a change in ownership and the MCO or MAC terminates the participation agreement because they don’t appreciate who the new owner is. The federal regulations also require disclosure of any convictions related to Medicaid. 42 CFR 455.106. In the particular case I am discussing, the MCO audited this company 10-15 times over two years. There seemed to be a personal vendetta, for whatever reason, against the company from higher-ups at the MCO.

Managed care can be tricky because, by definition, it removes the management of Medicaid and Medicare from the government agencies into these quasi-private/quasi-governmental agencies. I still think that managed care violates 42 CFR 410(e), the single state agency requirement that states that “The 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.” Despite my personal opinion, managed care is definitely the trend. To date, 40 States have managed care organizations (MCOs) to manage Medicaid.

This company is a behavioral health care provider, which provides substance abuse services, SAIOP, SACOT, PSR, OPT, urine tests; they run a Suboxone clinic, a laboratory, and a pharmacy. It also provides free/charitable transportation services to get the consumers to the facility without receiving any money in return. The CEO was accused of personal, tax fraud. He and his wife never submitted their own taxes; they relied on professionals. One, below-stellar accountant performed the companies’ taxes and the CEO’s personal taxes a few years ago. I am no tax expert, but apparently the problem was that he took no salary for two years while the facility was bringing in little profit. His wife is a physician, so they were able to sustain on one income. A lot of confusion later and multiple tax and criminal attorneys, CEO pled guilty to a personal tax plea. It is a Martha Stewart mistake, not a Bernie Madoff. The guilty plea was not germane to Medicaid.

Once the CEO pleads guilty to the personal plea, the newspaper publishes a story. The MCO first terminates the contract based on 42 CFR 455.106, which requires disclosure if – and the exact wording is important – “Has been convicted of a criminal offense related to that person’s involvement in any program under Medicare, Medicaid, or the Title XX services program since the inception of those programs.” This guilty plea was not related to Medicaid so the termination was erroneous.

Concurrently, in light of the CEO’s plea, he steps down and his wife who is also a medical physician steps in to transition as CEO to keep the company going. Obviously, a company is bigger than its CEO’s personal transgressions. 200 staff and hundreds of consumers relied on its viability as a company.

Once we argued that the personal guilty plea was not related to Medicaid, the MCO added the additional reason for termination – failing to disclose a change in ownership. A double whammy!

We were able to successfully file a preliminary injunction arguing that irreparable harm would ensue if the termination were upheld. We also argued that the terminations were erroneous. The Judge agreed in this case agreeing that a company is indeed bigger than its CEO’s transgressions.

We always think about audits involving medical records. But audits can also involve audits of corporate disclosures or nondisclosures of managerial issues. Audits of provider executive teams can be deadly to any company.

Terminations of provider agreements are always tricky because, most often, the MCO or MAC will argue that it can terminate the Medicaid/care contract at will. I disagree, first and foremost. See blog, “Property Rights.”

If a facility is terminated for cause, that reason better be accurate!

In this case, the CEO had no duty to disclose his personal, guilty plea per the regulations. Secondly, the MCOs’ assertion that it had no notice of the transfer of ownership was equally as disingenuous. The facility had been open and honest regarding the transition of the company to a new CEO. While no formal notice was ever provided, there was clear communication about the transition to/from the MCO.

Thus, we were successful in obtaining an injunction; thereby keeping the company viable.

Medicare Appeal Backlog Dissolves and SMRC Audits Escalate

I have good news and bad news today. I have chosen to begin with the good news. The ALJ backlog will soon be no more. Yes, the 4-6 years waiting period between the second and third level will, by sometime in 2021, be back to 90 days, with is the statutory requirement. What precipitated this drastic improvement? Money. This past year, CMS’ budget increased exponentially, mostly due to the Medicare appeals backlog. OMHA was given enough dough to hire 70 additional ALJs and to open six additional locations. That brings the number of ALJs ruling over provider Medicare appeals to over 100. OMHA now has the capability to hear and render decisions for approximately 300,000 appeals per year. This number is drastically higher than the number of Medicare appeals being filed. The backlog will soon be nonexistent. This is fantastic for all providers because, while CMS will continue to recoup the alleged overpayment after the 2nd level, the providers will be able to have its case adjudicated by an ALJ much speedier.

Now the bad news. Remember when the RAC program was first implemented and the RACs were zealously auditing, which is the reason that the backlog exists in the first place. RACs were given free rein to audit whichever types of service providers they chose to target. Once the backlog was out of hand, CMS restricted the RACs. They only allowed a 3 year lookback period when other auditors can go back 6 years, like the SMRC audits. CMS also mandated that the RACs slow down their number of audits and put other restrictions on RACs. Now that OMHA has the capacity to adjudicate 300,000 Medicare appeals per year, expect that those reins that have been holding the RACs back will by 2021 or 2022 be fully loosened for a full gallop.

Switching gears: Two of the lesser known audits that are exclusive to the CMS are the Supplemental Medical Review Contractor (“SMRC”) and the Targeted Probe and Educate (“TPE”) audits. Exclusivity to CMS just means that Medicare claims are reviewed, not Medicaid.

The SMRCs, in particular, create confusion. We have seen DME SMRC audits on ventilator claims, which are extremely document intensive. You can imagine the high amounts of money at issue because, for ventilators, many people require them for long periods of time. Sometimes there can 3000 claim lines for a ventilator claim. These SMRC audits are not extrapolated, but the amount in controversy is still high. SMRCs normally request the documents for 20-40 claims. It is a one-time review. It’s a post payment review audit. It doesn’t sound that bad until you receive the request for documents of 20-40 claims, all of which contain 3000 claim lines and you have 45 days to comply.

Lastly, in a rare act, CMS has inquired as whether provider prefer TPE audits or continue with post payment review audits for the remainder of the pandemic. If you have a strong opinion one way or the other, be sure to contact CMS.

Medicare Auditors Fail to Follow the Jimmo Settlement

Auditors are not lawyers. Some auditors do not even possess the clinical background of the services they are auditing. In this blog, I am concentrating on the lack of legal licenses. Because the standards to which auditors need to hold providers to are not only found in the Medicare Provider Manuals, regulations, NCDs and LCDs. Oh, no… To add even more spice to the spice cabinet, common law court cases also create and amend Medicare and Medicaid policies.

For example, the Jimmo v. Selebius settlement agreement dictates the standards for skilled nursing and skilled therapy in skilled nursing facilities, home health, and outpatient therapy settings and importantly holds that coverage does not turn on the presence or absence of a beneficiary’s potential for improvement.

The Jimmo settlement dictates that:

“Specifically, in accordance with the settlement agreement, the manual revisions clarify that coverage of skilled nursing and skilled therapy services in the skilled nursing facility (SNF), home health (HH), and outpatient therapy (OPT) settings “…does not turn on the presence or absence of a beneficiary’s potential for improvement, but rather on the beneficiary’s need for skilled care.” Skilled care may be necessary to improve a patient’s current condition, to maintain the patient’s current condition, or to prevent or slow further deterioration of the patient’s condition.”

This Jimmo standard – not requiring a potential for improvement – is essential for diseases that are lifelong and debilitating, like Multiple Sclerosis (“MS”). For beneficiaries suffering from MS, skilled therapy is essential to prevent regression.

I have reviewed numerous audits by UPICs, in particular, which have failed to follow the Jimmo settlement standard and denied 100% of my provider-client’s claims. 100%. All for failure to demonstrate potential for improvement for MS patients. It’s ludicrous until you stop and remember that auditors are not lawyers. This Jimmo standard is found in a settlement agreement from January 2013. While we will win on appeal, it costs providers money valuable money when auditors apply the wrong standards.

The amounts in controversy are generally high due to extrapolations, which is when the UPIC samples a low number of claims, determines an error rate and extrapolates that error rate across the universe. When the error rate is falsely 100%, the extrapolation tends to be high.

While an expectation of improvement could be a reasonable criterion to consider when evaluating, for example, a claim in which the goal of treatment is restoring a prior capability, Medicare policy has long recognized that there may also be specific instances where no improvement is expected but skilled care is, nevertheless, required in order to prevent or slow deterioration and maintain a beneficiary at the maximum practicable level of function. For example, in the regulations at 42 CFR 409.32(c), the level of care criteria for SNF coverage specify that the “. . . restoration potential of a patient is not the deciding factor in determining whether skilled services are needed. Even if full recovery or medical improvement is not possible, a patient may need skilled services to prevent further deterioration or preserve current capabilities.” The auditors should understand this and be trained on the proper standards. The Medicare statute and regulations have never supported the imposition of an “Improvement Standard” rule-of-thumb in determining whether skilled care is required to prevent or slow deterioration in a patient’s condition.

When you are audited by an auditor whether it be a RAC, MAC or UPIC, make sure the auditors are applying the correct standards. Remember, the auditors aren’t attorneys or doctors.

Beware the Ides of March! And Medicare Provider Audits!

Hello! And beware the Ides of March, which is today! I am going to write today about the state of audits today. When I say Medicare and Medicaid audits, I mean, RACs, MACs, ZPICs, UPICs, CERTs, TPEs, and OIG investigations from credible allegations of fraud. Without question, the new Biden administration will be concentrating even more on fraud, waste, and abuse germane to Medicare and Medicaid. This means that auditing companies, like Public Consulting Group (“PCG”) and National Government Services (“NGS”) will be busy trying to line their pockets with Medicare dollars. As for the Ides, it is especially troubling in March, especially if you are Julius Caesar. “Et tu, Brute?”

One of the government’s most powerful tool is the federal government’s zealous use of 42 CFR 455.23, which states that “The State Medicaid agency must suspend all Medicaid payments to a provider after the agency determines there is a credible allegation of fraud for which an investigation is pending under the Medicaid program against an individual or entity unless the agency has good cause to not suspend payments or to suspend payment only in part.” (emphasis added). That word – “must” – was revised from “may” in 2011, part of the Affordable Care Act (“ACA”).

A “credible allegation” is defined as an indicia of reliability, which is a low bar. Very low.

Remember back in 2013 when Ed Roche and I were reporting on the New Mexico behavioral health care cluster? To remind you, the State of NM accused 15 BH health care providers, which constituted 87.5% of the BH providers in NM, of credible allegations of fraud after the assistant AG, at the time, Larry Heyeck, had just published a legal article re “Credible Allegations of Fraud.” See blog and blog. Unsurprisingly, the suicide rate and substance abuse skyrocketed. There was even a documentary “The Shake-Up” about the catastrophic events in NM set off by the findings of PCG.

This is another example of a PCG allegation of overpayment over $700k, which was reduced to $336.84.

I was the lawyer for the three, largest entities and litigated four administrative appeals. If you recall, for Teambuilders, PCG claimed it owed over $12 million. After litigation, an ALJ decided that Teambuilders owed $836.35. Hilariously, we appealed. While at the time, PCG’s accusations put the company out of business, it has re-opened its doors finally – 8 years later. This is how devastating a regulatory audit can be. But congratulations, Teambuilders, for re-opening.

Federal law mandates that during the appeal of a Medicare audit at the first two levels: the redetermination and reconsideration, that no recoupment occur. However, after the 2nd level and you appeal to the ALJ level, the third level, the government can and will recoup unless you present before a judge and obtain an injunction.

Always expect bumps along the road. I have two chiropractor clients in Indiana. They both received notices of alleged overpayments. They are running a parallel appeal. Whatever we do for one we have to do for the other. You would think that their attorneys’ fees would be similar. But for one company, NGS has preemptively tried to recoup THREE times. We have had to contact NGS’ attorney multiple times to stop the withholds. It’s a computer glitch supposedly. Or it’s the Ides of March!

RAC Report: PET Scans, Helicopter Transportation, and Hospice, Oh My!

The RACs are on attack! The “COVID Pause Button” on RAC audits has been lifted. The COVID Pause Button has been lifted since August 2020. But never have I ever seen CMS spew out so many new RAC topics in one month of a new year. Happy 2021.

Recovery audit contractors (“RACs”) will soon be auditing positron emission tomography (PET) scans for initial treatment strategy in oncologic conditions for compliance with medical necessity and documentation requirements.

Positron emission tomography (“PET”) scans detect early signs of cancer, heart disease and brain disorders. An injectable radioactive tracer detects diseased cells. A combination PET-CT scan produces 3D images for a more accurate diagnosis.

According to CMS’ RAC audit topics, “(PET) for Initial Treatment Strategy in Oncologic Conditions: Medical Necessity and Documentation Requirements,” will be reviewed as of January 5, 2021. The PET scan audits will be for outpatient hospital and professional service reviews. CMS added additional 2021 audit targets to the approved list:

  1. Air Ambulance: Medical Necessity and Documentation Requirements,[1]. This complex review will be examining rotatory wing (helicopter) aircraft claims to determine if air ambulance transport was reasonable and medically necessary as well as whether or not documentation requirements have been met.
  2. Hospice Continuous Home Care: Medical Necessity and Documentation Requirements,[2] and
  3. Ambulance Transport Subject to SNF Consolidated Billing.[3]

Upcoming HHS secretary Xavier Becerra plans to get his new tenure underway quickly.

In False Claims Act (“FCA”) news, Medicare audits of P-Stim have ramped up across the country. A Spinal Clinic in Texas agreed to pay $330,898 to settle FCA allegations for allegedly billing Medicare improperly for electro-acupuncture device neurostimulators. CMS claims that “Medicare does not reimburse for acupuncture or for acupuncture devices such as P-Stim, nor does Medicare reimburse for P-Stim as a neurostimulator or as implantation of neurostimulator electrodes.”

Finally, is your staff getting medical records to consumers requesting their records quickly enough? Right to access to health records is yet another potential risk for all providers, especially hospitals due to their size. A hospital system agreed to pay $200,000 to settle potential violations of the HIPAA Privacy Rule’s right of access standard. This is HHS Office for Civil Rights’ 14th settlement under its Right of Access Initiative. The first person alleged that she requested medical records in December 2017 and did not receive them until May 2018. In the second complaint, the person asked for an electronic copy of his records in September 2019, and they were not sent until February 2020.

Beware of slow document production as slow document production can lead to penalties. And be on the lookout for the next RAC Report.

Remember, never accept the results of a Medicare or Medicaid audit. It is always too high. Believe me, after 21 years of my legal practice, I have yet to agree with the findings if a Tentative notice of Overpayment by any governmental contracted auditor, whether it is PCG, NGS, the MACs, MCOs, or Program Integrity – in any of our 50 States. That is quite a statement about the general, quality of work of auditors. Remember Teambuilders? How did $12 million become $896.35? See blog.

1  CMS, “0200-Air Ambulance: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/35Jx1co.
2 CMS, “0201-Hospice Continuous Home Care: Medical Necessity and Documentation Requirements,” proposed RAC topic, January 5, 2021, http://go.cms.gov/3oRUyiY.
3 CMS, “0202- Ambulance Transport Subject to SNF Consolidated Billing,” proposed RAC topic, January 5, 2021, http://go.cms.gov/2LOMEbw.

Provider Relief Funds: The Hottest RAC Audit Subject

Reporting the use of PRFs will be an ongoing issue due to the fraud and abuse implications of misusing PRFs.

The federal Provider Relief Fund (PRF) was created under the provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed to address the economic harm suffered by healthcare providers that have incurred (or will incur) additional expenses and have lost (or will lose) significant revenue as a result of the COVID-19 pandemic. PRF payments have been made from either the “general distribution” tranche or via various “targeted distributions.” PRF payment amounts and whether the providers complied with the terms and conditions will be a hotly contested topic in Recovery Audit Contractor (RAC) and Medicare Administrative Contractor (MAC) audits for years to come. If Centers for Medicare & Medicaid Services (CMS) auditors put out a monthly magazine, like Time, PRF would be on the cover. This will be the hot topic of RAC audits, come Jan. 1, 2021.

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) will audit Medicare payments made to hospitals for COVID-19 discharges that qualified for the 20-percent add-on payment under the CARES Act, according to a new item on the agency’s work plan.

To use the PRF funding from either the general or targeted distributions, providers must attest to receiving the funds and agree to all terms and conditions. However, what constitutes a “healthcare-related expense” or how to calculate “lost revenue” is not clearly defined. Similarly, how you net healthcare-related expenses toward lost revenue is also vague and undefined. On Nov. 2, HHS issued a clarification to post-payment reporting guidance for PRF funds.

The current guidance, issued Oct. 22, includes a two-step process for providers to report their use of PRF payments. The guidance specifically cites:

  • Healthcare-related expenses attributable to COVID that another source has not reimbursed and is not obligated to reimburse, which may include general and administrative (G&A) or “healthcare-related operating expenses;” and
  • PRF payment amounts not fully expended on healthcare-related expenses attributable to coronavirus are then applied to lost revenues associated with patient care, net of the healthcare-related expenses attributable to coronavirus calculated under the first step. Recipients may apply PRF payments toward lost revenue, up to the amount of the difference between their 2019 and 2020 actual patient care revenue.

HHS’s newest clarification came from its response to a FAQ, in which it said that healthcare-related expenses are no longer netted against the patient care lost revenue amount cited in the second portion. HHS indicated that a revised notice would be posted to remove the “net of the healthcare-related expenses” language in the guidance. Of course, as of now, we have no guidance regarding when this clarification is to be put into place officially. Yet another moving target for auditors.

Anticipate audits of the use of your PRF payments. CMS is choosing a sample of hospitals across the country that have received PRF payments to verify that such expenditures were for healthcare-related expenses. For each audit, OIG will obtain data and interview HHS/PRF program officials to understand how PRF payments were calculated, and then review actual PRF payments for compliance with CARES Act requirements. OIG will also review whether HHS’s controls over PRF payments ensured that payments were calculated correctly and disbursed to eligible providers.

Audits will also focus on how providers initially applied to receive PRFs, including calculations utilized and how COVID-19 patients are defined. When each hospital ceased netting expenses against lost revenue will now be another hot topic.

Balance billing is another area of interest. The terms and conditions require providers that accept the PRFs not to collect out-of-pocket payments from patients for all care for a presumptive or actual case of COVID-19 that exceeded what they would pay an in-network provider.

More havoc may ensue with any purchases or sales transactions that occur in the next year or so. Providers will need to know how to navigate compliance risks associated with any accepted or transferred PRFs. Tracking and reporting use of the PRFs will also be an ongoing issue due to the fraud and abuse implications of misusing PRFs, and there is limited guidance regarding how use will be audited. Many questions remain unanswered. Many terms remain undefined.

Programming Note: Knicole Emanuel, Esq. is a permanent panelist on Monitor Mondays. Listen to her RAC Report every Monday at 10 a.m. EST.