Robert Saltaformaggio and Jacob Harper Achieve Medical Reimbursement Certification

Liles Parker is pleased to announce that two of the firm’s paralegals, Robert Saltaformaggio and Jacob Harper, have passed the “Certified Medical Reimbursement Specialist” (CMRS) exam with honors. This certification, developed and administered by the American Medical Billing Association, is an important designation, demonstrating a significant understanding of all aspects of the medical coding and billing functions. The attainment of these certifications allows the Firm to offer a broader and more robust set of services to our clients.

Robert Liles, a Managing Partner of the Firm, remarked: “We support ongoing staff education and development and recognize the added value such education can bring to our clients. The CMRS certification achieved by Robert and Jake will help us to solve a lot of technical coding problems and offer better solutions to clients.” In addition, both Robert and Jake are second year law students. Robert studies at George Mason University School of Law where he focuses on trial and appellate advocacy and is the co-founder of the Health Law Society at GMU. Jake is a student at American University Washington College of Law, where he is a member of both the American University Business Law Review and the Health Law and Policy Brief. For more information on our services, please do not hesitate to contact (202) 298-8750.

The Number of ZPIC Audits Being Conducted are Increasing — Have You Taken Steps to Help Ensure that Your Claims Meet Medicare’s Coverage and Payment Requirements? Ten Steps You Can Take to Improve Your Organization’s Compliance with Medicare’s Rules and Regulations.

(July 24, 2011): Has your Texas Physician Practice, Home Health Agency, Hospice, DME Company or PT / OT / ST Clinic been audited by a Zone Program Integrity Program (ZPIC)?  If not, it may only be a matter of time.  Despite your best efforts to follow Medicare’s directives, your organization may still be identified as an “outlier” by a ZPIC and subjected to a probe review or a full-blown audit.  Should you receive a request for records from a ZPIC, being prepared — in advance of receiving a ZPIC request– can help ensure your organization’s compliance with applicable documentation, coding and billing requirements.  The following recommendations can assist with those efforts:  

Recommendation #1:   If you have not already done so, conduct a “gap” analysis and implement an effective Compliance Plan.  Despite the fact that significant strides in compliance have been made by large Medicare providers (such as hospitals and nursing homes),  it has been our observation that most physician practices and small-to-mid sized provider organizations still do not have a tailored Compliance Plan in place.   To be clear, we recognize that many providers may have copied a draft plan right off of the internet, or may have purchased a sample plan from a vendor.  While they may fully have intended to follow through with personalization of the draft document, in most of the cases we have seen, more pressing events have taken precedence and providers have not had the time or expertise to complete the project.

Providers who have not put together a Compliance Plan should immediately do so. As you have likely heard, Section 6401 of the Affordable Care Act (ACA)(generally referred to as the “Health Care Reform Act”) states, “. . . a provider of medical or other items or services or supplier within a particular industry, sector or category shall, as a condition of enrollment in the program under this Title. . .establish a compliance program.”   To be clear, at this time, the Department of Health and Human Services, Office of Inspector General (HHS-OIG) has not announced deadlines effectuating this requirement.  Nevertheless, it is merely a matter of time until all providers who choose to participate in the Medicare program will be required to have an effective Compliance Plan in place.  

Rather than wait until the last minute, Medicare providers who have not already done so should immediately take steps to implement an effective plan.  As a first step, providers should review each of the regulatory and statutory provisions related to the specific services being billed to Medicare.  Next, providers should compare their actual documentation, coding and billing practices with Medicare’s rules.  Any gaps between the applicable requirements and a provider’s actual practices must immediately be remedied. Additionally, should these gaps represent an overpayment, the Medicare provider must repay the overpayment to the government within 60 days of identification.    

Prior to conducting a gap analysis, we recommend that providers contact their legal counsel for assistance with both the internal review and with the implementation of an effective Compliance Plan.   While no Compliance Plan can prevent an audit, the implementation of an effective plan will greatly improve a provider’s likely adherence to Medicare’s rules and regulations should a ZPIC audit be initiated.  

Recommendation #2:   Don’t ignore a ZPIC’s request for documents[1]. At the outset, it is important to keep in mind that ZPICs play an important role.  In addition to  auditing records for possible overpayments, ZPICs are also responsible for identifying fraudulent providers (and potenitally fraudulent providers) and making referrals to the Centers for Medicare and Medicaid Services (CMS), the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the U.S. Department of Justice (DOJ) for further action.  Possible actions taken include, but are not limited to: 

• CMS — Administrative action such as suspension or revocation from the Medicare program.
• HHS-OIG – Administrative action such as Civil Monetary Penalty action.  HHS-OIG may also investigate and refer a provider to DOJ for possible civil litigation under the False Claims Act.  Finally, HHS-OIG may investigate and refer a provider to DOJ for criminal prosecution under the Federal Anti-Kickback Act or a host of other statutes.
• DOJ – May investigate and prosecute a provider for civil and / or criminal violations of law. 

Should you receive a request for documents from your ZPIC, in many cases it will broken into two sections.  The first section will likely be focused on business related records such as the following: 

“Business contracts or agreements with other providers, suppliers, physicians,  businesses or individuals in place during a specific period.  Additionally, any verbal agreements must be summarized in writing.

A listing of all current and former employes (employed during a specific period), along with their hire date, termination date, reason for leaving, title, qualifications, last known address, phone number.

• A list of all practice locations, along with their address and phone number.
• Leases.
• Employment agreements.
• Medical Director contracts.” 

The unstated purpose of this portion of the ZPIC’s request is likely to identify potential instances of violations of the Federal Anti-Kickback Statute, Stark and / or the False Claims Act.  Should the ZPIC identify a possible violation, it will readily refer the case to CMS, HHS-OIG and / or DOJ, depending on the nature of the potential violation.

In contrast to the first section of the ZPIC’s request, the second section of the request usually lists the patient records and dates of service to be audited by the ZPIC.  While every case is different, the number of claims requested typically ranges from 8 – 100, depending on whether the ZPIC’s request is a “probe review” or a full-blown audit.  On occasion, we have seen the number of claims sought can range from 150 – 300. 

Never ignore a ZPIC request for records.[2] Importantly, should you fail to respond to the ZPIC’s request, the contractor can recommend to the CMS that your organization be suspended[3] or from participation in the Medicare program.  Depending on the ZPIC’s concerns, the contractor can also recommend that CME pursue a revocation action against your organization.  Should you need more time to the ZPIC’s request for supporting documentation, don’t hesitate to request it. 

Recommendation #3:  Remember learning how to “drive defensively” in high school?  Your documentation practices should be approached in a similar fashion.   ZPIC auditors are excellent at identifying one or more ways in which your claims do not meet applicable coverage requirements.  While you may very well disagree with their assessments (especially in “medical necessity” determinations), in all likelihood, when you file a request for redetermination appeal (and later, a request for reconsideration appeal), you will find that your Medicare Administrative Contractor (MAC) and your Qualified Independent Contractor (QIC) agree with the ZPIC’s denial decision.  Rather than endure significant costs and stress when defending against an overpayment assessment, you need to take steps to avoid a denial in the first place. To that end, health care providers should ensure that clinical staff members are fully trained and educated regarding Medicare’s documentation, coding and billing process. 

We recognize that “perfect documentation” is neither required nor realistic to expect from your clinical staff.  Nevertheless, using published reports of other cases, you can show your clinicians that ZPICs  enforce a strict application of Medicare’s documentation and coverage requirements.  Through education and training, your clinical staff will understand why it is imperative that they review, understand and comply with: 

• Any applicable Local Coverage Determinations (LCDs).
• Any Local Medical Review Policies (LMRPs).
• The Medicare Policy Benefit Manual (MPBM).
• The Medicare Program Integrity Manual (MPIM).
• Any statutory provisions which cover the services.
• Any additional guidance issued by Medicare which would apply to these claims.    

It is important that you regularly review the government’s latest concerns and any enforcement actions which have been taken.  Additionally, you should read HHS-OIG’s reports so that you may learn from the mistakes being made by similarly situated providers.  Upon doing so, we recommend that you check the list of “risk areas” in your Compliance Plan and ensure that they reflect both general “risks” and “specific risks” which may be unique to your organization.  Is your organization still in full compliance?  If not, remedial action is likely necessary.  

Recommendation #4:  Retain experienced legal counsel to assist with your efforts. When experiencing symptoms of a cardiac problem, most patients wouldn’t turn over their care to a dermatologist.  Instead, they would seek to be evaluated and treated by a Cardiologist.  Similarly, if you have a health law problem, would it be wise to rely on advice from an attorney specializing in family law?  Ultimately, that’s your call.  While no attorney can guarantee you success — we believe that an experienced health lawyer is well situated to give you advice regarding a Medicare audit or investigation.   Having said that, it is important to recognize that the field of health law is extraordinarily broad.  Should you be audited by a ZPIC or a Recovery Audit Contractor (RAC), don’t hesitate to ask a health lawyer whether they have handled these types of cases before.  If so, how many times have they represented a provider in a ZPIC overpayment case?  When selecting a lawyer, keep in mind that the legal fees charged by an attorney can vary greatly, depending on a variety of factors.  Don’t be shy – ask how much the representation is likely to cost.  While it is often difficult to estimate legal costs due to the various factors faced when handling a ZPIC audit case, most attorneys can give you a range of expected legal fees.  Finally, be sure and ask for references.  Other providers who have been through an administrative appeal case can provide you with invaluable insights into the process.  As a final point, on numerous occasions, our firm has been retained to work with a provider’s existing legal counsel.  We are more than happy to do so and can effectively work with your counsel in a fashion which avoids duplication of efforts yet allows our experience and expertise to be applied to your case. 

Recommendation #5:  The administrative appeals process has become quite complicated in recent years.  ZPIC audits can result in alleged overpayments running into the millions of dollars. Moreover, the ZPIC’s overpayment assessment (and the associated “demand” letter sent by a MAC) isn’t usually the end of the story.  While providers often lose at the redetermination and reconsideration levels of appeal, the third level of appeal – before an Administrative Law Judge (ALJ) – is usually your single best opportunity to prevail in an administrative appeals action.  Over the years, our attorneys have argued cases in front of judges out of each of the field offices of the Office of Medicare Hearings and Appeals (OMHA).   While we may not always agree with their decisions, the ALJs in whose courts we have practiced have been professional, fair and more than willing to hear a provider’s arguments in support of payment. 

Should you choose to forego legal counsel and represent yourself in an ALJ hearing, keep in mind that even though these hearings are intended to be “non-adversarial,”  it can feel quite “adversarial“ during the actual hearing.  Furthermore, these proceedings can be quite complicated.  In most large dollar cases, representatives of the ZPIC are participating in the hearing and arguing their position before the ALJ.  ZPIC representatives can include one or more statisticians (if an extrapolation was conducted), a clinician (usually a Registered Nurse who is experienced in conducting medical reviews) and a lawyer.  In a recent Home Health Agency case we handled, this was precisely what occurred.  Frankly, few providers are experienced in presenting their case and in responding to the arguments raised by statisticians, clinicians and lawyers representing a ZPIC.  As a result, it is strongly recommended that the provider consider engaging an experienced and knowledgable attorney. 

Recommendation #6:  When reviewing your claims, you should abide by the following:  First, “If it doesn’t belong to you, give it back.”  Conversely, “If you don’t owe the money, don’t throw in the towel.”  One of the attorneys in our firm is regularly asked to speak at provider conventions around the country.  For years, he has told providers “If it doesn’t belong to you, give it back.”  This simple concept covers a lot of ground when it comes to alleged Medicare overpayments.  Similarly, if the facts and the evidence shows that the claims should have been paid,  think twice before waiving your right to appeal the denial of these claims.  From a practical standpoint, we have heard of  situations where a provider chooses to “just pay the bill” so that the case will quickly be resolved.  Several providers have commented that when dealing with small dollar assessments, it is just easier to pay the alleged overpayment rather than incur the hassle and expense of contesting the contractor’s denial decision.  Although we understand the reasoning behind such a decision, you should keep in mind that every claim which is denied by a ZPIC (and which remains denied) increases a provider’s “error rate.”  If you were a ZPIC, PSC, RAC or MAC contractor, would you choose to audit a provider with a low error rate or a high error rate?  In any event, the bottom line is fairly straight forward.  Should you find that you are not entitled to payment for one or more claims, you must  repay the money to the government as soon as possible (but no later than 60 days after an overpayment has been identified),  regardless of whether the claim is part of an ongoing or recently completed Medicare audit.  If, however, you are audited and you believe that a ZPIC has incorrectly denied one or your claims, you have the right to appeal the denial of these wrongfully denied claims.

Recommendation #7:  Carefully read a ZPIC’s denial decision letter. When you receive a denial decision letter relied upon by a ZPIC, carefully review the notice and determine whether the contractor has specifically addressed the reasons for denial associated with each of the claims at issue.  Every ZPIC is different.  Over the last few months, one of the ZPICs involved in the cases we are handling has been citing only a general reason for denial (such as “not medically necessary”).  Should the ZPIC in your case not provide sufficient information, you will find it difficult, if not impossible, to address any specific reasons your claims have been denied.   Your legal counsel may be able to get the ZPIC to provide additional specificity in connection with their denial reasons.  Alternatively, legal counsel may be able to argue that the ZPIC’s failure to provide specific reasons for denying your claims is a clear violation of your due process rights. 

Recommendation #8:  Don’t forget – shortly after the “demand letter” is sent, any payments you may be expecting may be recouped by your Medicare Administrative Contractor (MAC).   A demand letter from your MAC usually follows a few days  after you receive a ZPIC’s denial decision letter.  While you have 120 days to file a request for redetermination appeal (as outlined in he MAC’s demand letter)[4], should you fail to file the request for redetermination appeal within 30 days of the date of the MAC’s demand letter (not 30 days after receiving the demand letter!), your Medicare payments will be recouped starting on day 41.  Alternatively, a provider may set up an extended repayment program with the MAC so that the alleged overpayment can be repaid through monthly installments.  We strongly recommend that you set this up.  You will then be able to take advantage of the 120 period permited to file a redetermination appeal rather than try and file a poorly prepared set of arguments within the previously discussed 30 day period.  Similar issues (with completely different deadlines) are present at the reconsideration level of appeal — the next level in the administrative appeals process. Once again, these issues can be quite complicated.  We recommend that you discuss available appeals options with your legal counsel. 

Recommendation #9: Foster a corporate culture which encourages compliance.  ZPICs have increased their audit activities dramatically in numerous areas of the country.  South Texas has been especially hard-hit.  Providers in Houston, McAllen, Harlingen, Edinburgh, Laredo, Corpus Christi and Brownsville appear to have experienced a recent surge in audit activity.  Be aware that ZPICs are looking for aberrations in billing patterns and often target providers based on these variations in coding or billing practices.  Compliance with regulations and consistency in your “message” to employees is essential. Establishing good intake and records management procedures, continuing employee education and training efforts, can facilitate the adoption of an ethical, compliant corporate culture.

           And, last but not least,

Recommendation #10:  When drafting a Compliance Plan, providers should include a “Code of Conduct” that is easily understood by all employees.  We believe that a “Code of Conduct” should accurately reflect the belief system an organization has pursued and sincerely intends to follow.   In doing so, an organization can engender a compliant corporate culture.  Over the years, we have seen organizational “Codes of Conduct” which range from a succinctly described phrase to discusions which take up more than a page.

Our favorite “Code of Conduct” (which also happens to be the “Code of Conduct” adopted by our law firm) is used by Cadets at the United States MilitaryAcademy at West Point. Modified for use by health care providers, the “Code of Conduct” reads: 

“Our clinicians and staff will not lie, cheat, steal, or tolerate those who do.”

 

This simple, yet elegant “Code of Conduct” succinctly lays out a provider’s ethical responsibilities, both with respect to Medicare and in their other business dealings.  We recommend that you consider adopting and adhering to this or a similar “Code of Conduct.”

Our attorneys have extensive experience representing Physicians, Clinics, Home Health Agencies, Hospices, DME Companies, Skilled Nursing Facilities, Chiropractors, Pain Medicine Clinics, Rehabilitative Medicine Clinics and other Medicare providers in connection with audits by ZPICs, PSCs, MACs and other contractors.  We also have years of experience assisting providers with “gap” analyses and in implementing an effective Compliance Plan.  Should you have questions about these or other health law issues, please feel free to call us for a complementary consultation.  We can be reached at:  1 (800) 475-1906.  

A Virginia Physician Who Wrongfully Disclosed Patient Health Information is Being Prosecuted by the Feds

(June 24, 2011): Physicians and other health care providers should take care — improprerly  disclosing a patient’s protected individual health information could land you in Federal prison. Earlier this week, Virginia osteopath was indicted in the Eastern District of Virginia on charges that he illegally disclosed a former patient’s health information to the patient’s employer.

The Virginia physician was indicted by a Federal Grand Jury for the wrongful disclosure of individually identifiable health information under the Health Insurance Portability and Accountability Act (HIPAA).  The physician reportedly faces a maximum of up to five years imprisonment if convicted.

According to the indictment, the physician practiced osteopathic medicine and served as Medical Director at a Virginia psychiatric care facility. The physician is alleged to have provided inpatient mental health treatment to a patient in 2007.  As set out in a discharge summary from 2008, the physician indicated that the patient was not considered a danger to others. Nevertheless, on three separate occasions in February 2008, the physician allegedly disclosed, without any authorization, the patient’s individually identifiable health information to an agent of the patient’s employer. In these unauthorized disclosures, the physician  falsely indicated that the patient was a serious and imminent threat to the safety of the public, when he allegedly knew that the patient was not such a threat.

Commentary:  As this case shows, the Federal government is quite serious about health information privacy.  It is essential that health care providers take affirmative steps to ensure that all of their staff – including physicians – are cognizant of both applicable statutory and regulatory requirements and their associated obligations with respect to protected health information.  Effective training on HIPAA, HITECH and the restrictions governing disclosure should represent an important component of each provider’s Compliance Plan. 

Liles Parker attorneys have extensive experience representing physicians and other health care professionals in government investigations and disciplinary actions.  Our attorneys are also knowledgeable regarding HIPAA, HITECH and provider obligations under these statutes.  Need assistance?  Call us for a complimentary initial consultation.  We can be reached at:  1 (800) 475-1006. 

Physician Employment Agreements: What They Didn’t Teach You in Medical School.

(June 9, 2011):

 “What usually comes first is the contract.”  Benjamin Disraeli.             (British Prime Minister and Novelist, 1804 — 1881).

After 20 years of practicing law I can say that most phone calls I receive from a potential client are after a contract has been signed. Unfortunately, today’s employment contracts involving high paid professionals, such as doctors, are several pages long with small print and certainly not written for easy reading or common sense applicability.  Contracts are certainly a pain to read.  However, one or two hours of legal advice before signing a contract can often save a doctor significant money, time and stress.  This is also true if an employer has violated its promises.

Many issues in employment litigation can be avoided by reviewing provisions that are common in most employment agreements for most professions.  There are also concerns and rules applicable only to doctors and that is why consultation with an attorney is always advised to protect your assets, income and career.  

The purpose of this article is to address the primary “contractual” issues to consider prior to entering into an employment agreement.  To be clear, this article is not meant to cover possible Stark and / or Anti-Kickback considerations, both of which may require a separate analysis, depending on the facts presented.

The following 7 issues are discussed in this article:

1.         What are the length and terms of the employment? 

2.         What reasons are listed in the employment agreement for termination?

3.         Is there any language that addresses compensation, bonuses or liquidated damages?

4.         Review the Employment Agreement for noncompete and confidentiality clauses.

5.         What are the choice of law and location of enforcement of the agreement?

6.         What are the provisions as to mandatory mediation or arbitration?

7.         Always consult with an attorney before you decide to terminate your employment. 

 1.         What are the length and terms of the employment?  In many states employees are considered at-will which means the employer can fire you for a good reason, bad reason or no reason at all.  There are exceptions but at-will employment definitely favors the employer.  Consequently, the contract should be examined to see whether or not the agreement states you are hired for a specific length of time or if it is silent as to length of term. 

Even if the agreement states you are to be employed for three years it may also state that you agree that you may be terminated at-will.  An attorney can help you determine if a court will enforce the at-will provision.  Arguments can be made, depending on the agreement language, whether or not the at-will provision is enforceable.  This is a critical determination because if the at-will provision is enforced this may eliminate your right to any compensation that you have not been paid.

2.         What reasons are listed in the employment agreement for termination?  If the agreement is for a specific term, such as five years, and is not at-will then it needs to be determined if there are any provisions that outline how the employment may be terminated before the five year term expires. 

Most employment agreements will have a termination for cause paragraph.  Causes for termination range from failure to follow employer polices to the commission of crimes involving moral turpitude (theft) or any felonies.  If you are terminated for cause and the employer can prove the cause, then normally your compensation is limited to what salary you have earned through date of termination and any bonus or incentive pay usually will not be paid.  If you are terminated without cause, then most state laws and courts will require that you be paid any compensation that has been earned including bonus or incentive pay. 

It would be prudent to have an attorney review the employment agreement as many times courts or statutory law may have interpreted the language in the agreement regarding causes for termination.  This is important to you in your decision whether to sign the contract or to try to negotiate the language regarding reasons for termination.  Many times you can convince an employer to add additional provisions to protect you from termination for cause or without cause.  For example, you may have a provision added that if the employer terminates you without cause then you are entitled to a severance package tied to length of time employed.  Additionally you may have language added that you receive written notice from the employer regarding violations and you be allowed a reasonable time to cure any violations before you are terminated for cause.

3.         Is there any language that addresses compensation, bonuses or liquidated damages?  The employment agreement should be reviewed regarding compensation, billing practices, bonuses, and operating expenses.  Are there performance incentives?  Are you allowed to earn income for services you provide outside the Hospital facilities?  What type of insurance does the employer provide, whether liability or other? Is there mention of deferred compensation, stock options, or severance packages?

While the general rule for contract enforcement is that the court will look to the language in the contract to determine rights, there are many exceptions and courts will not always uphold compensation plans that give an employer the power to modify or eliminate compensation.

Review the compensation provision for tax consequences.  A severance package may be subject to special taxes if the severance payments constitute a “golden parachute” payment.  Additionally the IRS has and will make changes or restrictions on certain deferred compensation plans.  It is advisable to consult with a tax professional before signing to determine what tax consequences may be triggered by the compensation plan and if tax consequences can be avoided by redrafting the applicable contract language.

Additionally, beware of any liquidated damage clauses.  Many times, if you receive a bonus and agree to work for a certain number of years, an employer will put in a liquidated damages clause stating that if you quit without notice and/or without what the employer considers a valid reason you will owe the employer money.   This ostensibly is a set monetary number for payment of damages to the employer for your action of quitting.  The clause will state that you agree it is impracticable and difficult to determine the damages the employer will suffer if you quit and then provide factors to determine the damages.  Factors may include expenses relating to securing a replacement or temporary physician for coverage, credentialing and recruiting expenses and potential loss of scheduled services.  If the figure is too large, then many times courts will state the liquidated damage clause is a penalty provision and therefore unenforceable.  Many times you may be able to negotiate the figure down or eliminate the provision through negotiation before signing the employment agreement.

Also beware of any requirement of repayment of a bonus.  For example if you receive a $100,000 signing bonus and sign an employment agreement for 5 years, the employer may require that you pay the unamortized portion of the bonus if you terminate the agreement without cause.  Conversely, you may want to check for language that you keep the entire bonus if the employer terminates you without cause. 

4.         Review the Employment Agreement for noncompete and confidentiality clauses.  A non-competition clause should be reasonable in time and scope and most states and courts have determined what is reasonable.   Important factors are the length of time restraining competition, the activity restrained, and the geographic area in which competition is restrained.  Many times this can be negotiated.

Confidentiality clauses should be reviewed as to enforceability and content.  Certainly there is information that is beneficial to the employer that is not known to competitors or easily ascertained by competitors and this is reasonably protected.  However, many times these clauses may be overreaching and can be renegotiated or clarified. 

Additionally, many courts will enforce a common law duty of confidentiality against an employee.  This means some information is confidential by law, whether or not there is a confidentiality provision in the employment agreement.  It is prudent to have a general understanding of what information you can or cannot take or disseminate or use.  This is important to reduce the possibility of your former employer from filing a lawsuit to prohibit you from using certain information and to seek damages from you.

5.         What are the choice of law and location of enforcement of the agreement?   Most contracts will have a provision stating that the law of a particular state will govern the interpretation and enforcement of a contract.  There normally are provisions that provide that the venue (location) of a lawsuit is to be in a certain county, and in state or federal court.  This is important if you move from your former place of employment in California to Maine.  If there is litigation you may be forced to hire an attorney in California and litigate on your employer’s home turf.  Alternatively, if you remain in California, but the employer is national, the contract may state New York law governs and any litigation will be in New York.  Many times choice of law and venue clause can be negotiated and this can be important in terms of litigation expenses.

6.         What are the provisions as to mandatory mediation or arbitration? Mediation is normally a non-binding settlement conference whereby the employer and employee present their side of the case to an impartial trained mediator when are all present. Thereafter the parties are separated and the mediator goes between the parties to attempt to reach a settlement.  If a settlement is reached normally an agreement is signed and the signed agreement is enforceable in court.  If the parties do not reach a settlement they have the option to go to court or to arbitration.

Arbitration is a more formal process and incorporates many of the rules of formal litigation. Arbitration is usually binding, meaning that the arbitrator, after hearing formal presentations of evidence by both sides will make a written decision which is final absent some fraud or a significant erroneous application of law.  Basically, it is very hard to appeal or overturn an arbitration decision and the law favors finality of these arbitration decisions.  Arbitration should be less costly than litigation in a court and should be completed sooner than a court case.   Arbitration clauses or agreements may preempt an employee filing a discrimination case or wrongful termination case in court.  These clauses should be reviewed and pro’s and con’s weighed.  Many times these terms are negotiable.

7.        Always consult with an attorney before you decide to quit your employment.   The old saying is an ounce of prevention is worth a pound of cure.  As a doctor or health care professional you diagnose a patient’s symptoms or review test results, and then prescribe a plan of treatment and/or preventive measures.  The same reasoning applies to having an attorney review an employment agreement before you sign it. The same reasoning also applies if you want to terminate an employment agreement.  It is true that knowledge is power and without careful consideration, your plans or actions may cause legal headaches. There are many fair strategies you may take to protect your compensation and resources when you consider terminating your employment. 

 Just as important is to realize that this article is not intended to be specific legal advice or to be acted upon as legal advice. This article is an overview of general areas of contract law and issues faced by employees. If you have any legal question(s), please contact an attorney.

This article was written by Leonard Schneider.  Mr. Schneider is a partner in Liles Parker and primarily works out of the Firm’s Houston, Texas office.  Jennifer Papapanagiotou assisted in this article and is of Counsel and also at the Houston office. The firm focuses on health care, health care audits, business contracts and acquisitions, and other general corporate and business litigation matters.  They can be contacted at lschneider@lilesparker.com or jpapa@lilesparker.com .  Should you need assistance with an employment contract, give us a call.  Both Mr. Schneider and Ms. Papapanahiutou can be reached at:  1 (800) 475-1906.

New Face-to-Face Requirement for Hospices and Home Health Agencies

(May 8, 2011):  Over the last year, both hospice and home health agencies have faced a number of regulatory challenges.  In many instances (including the new requirement discussed below), these regulatory changes have been implemented in an effort to better ensure that the services ordered are reasonable and medically necessary.  Regulators have long expressed concern regarding the ordering of hospice or home health services which are not medically required.  As set out below, the Affordable Care Act (ACA), signed in to law by President Obama on March 23, 2010, included mandates aimed at addressing these concerns.

I.          Introduction:

Under the ACA, physicians and certain non-physician practitioners are now required to perform face-to-face encounters with patients when evaluating their need for hospice or home health services. This rule was originally intended to go into effect on January 1, 2011. However, the Centers for Medicare and Medicaid Services (CMS) postponed implementation of the rule to April 1, 2011. CMS now expects hospices and home health agencies to fully comply with the provisions of this new regulation. This rule is a condition of payment, and any certification documents that do not attest to a face-to-face encounter between the physician and the patient are, by definition, incomplete. Consequently, home health and hospice providers should review the fundamentals of the new rule to ensure effective compliance. This article will examine the practical application of this rule by hospice and home health agencies.

II.         Home Health Rule:

A.        Who is covered under the rule?

To be eligible for covered home health services, Medicare patients must now have a face-to-face encounter with their physicians or covered non-physician practitioner. The rule defines a covered “non-physician practitioner” (NPP) as:

• Nurse Practitioner.
• Clinical Nurse Specialist.
• Certified Nurse Midwife.
• Physician’s Assistant.

If an NPP conducts the face-to-face encounter with the patient, he or she must document the clinical findings of that encounter and communicate them to the physician. Although an NPP can conduct a face-to-face encounter with a patient, it is important to note that only a physician can sign a home health certification.

B.        When must the face-to-face encounter take place?

This face-to-face encounter must take place:

• Within 90 days before a patient’s start of care date with a home health agency; or
• Within 30 days after a patient’s start of home health services.

For a visit within the 90 days preceding the patient’s start of care to qualify under this rule, the patient must have seen the physician for a condition that is related to his or her need for home health services. The face-to-face encounter rule only applies to the initial certification at the start of care; this requirement does not apply to subsequent treatment episodes.    

C.       What else is required?

In addition to the home health certification, the physician or NPP conducting the patient encounter must now compose a brief narrative describing how the patient’s clinical condition supports the patient’s homebound status and need for skilled care. This documentation must be signed and dated by the certifying physician. All of this documentation must be completed by the physician; it is unacceptable for the physician to orally communicate this information to a home health agency where the health agency then documents this information to be signed by the physician.

D.        Where can the face-to-face encounter take place?

The face-to-face encounter can take place in person or via a telehealth service in an approved originating site. The originating sites currently authorized by law include:

• The office of a physician or practitioner.
• A hospital.
• A critical access hospital.
• A rural health clinic.
• A federally qualified health center.
• A hospital-based renal dialysis center.
• A skilled nursing facility.
• A community mental health center.

Additionally, a physician who cares for a patient in an acute or post-acute setting may conduct a face-to-face encounter with the patient and then certify that patient’s need for home health services. That physician would then transfer care of the patient to the patient’s community-based physician. 

III.        Hospice Rule:

A.        Who qualifies to perform the face-to-face encounter?

The new hospice rule similarly requires that hospice patients have a face-to-face encounter with a hospice physician or a hospice nurse practitioner. A hospice physician is one who is employed by the hospice or contracts to perform work for the hospice, and a hospice nurse practitioner is one who is employed by the hospice. CMS considers an “employee” to be one who:

• Works for the hospice and for whom the hospice is required to issue a W–2 form on his or her behalf;
• If the hospice is a subdivision of an agency or organization, an employee of the agency or organization who is assigned to the hospice; or
• Is a volunteer under the jurisdiction of the hospice.

If a hospice nurse practitioner performs the face-to-face encounter, then he or she must document the clinical findings of the encounter and communicate them to the hospice physician. As with home health services, it is important to note that only a physician (who is employed by the hospice) can certify a patient’s eligibility for the hospice benefit.

B.        When must the face-to-face encounter take place?

The encounter must take place no more than 30 days prior to the patient’s third benefit period AND each subsequent benefit period thereafter.  In some instances, a hospice patient could be an emergency weekend admission, or the hospice may be unaware that the patient is in the third benefit period. In such exceptional cases, the face-to-face encounter may occur within 2 days following the patient’s admission. Additionally, in such circumstances, if a patient dies within 2 days of admission to the hospice without a face-to-face encounter, then the encounter requirement will be deemed satisfied.

C.        What else is required?

The hospice physician or nurse practitioner who conducts the face-to-face encounter must attest that the encounter took place, document the date of the encounter, and sign the attestation clause.

Additionally, physicians have been required since October 2009 to compose a brief narrative explaining the clinical findings that support a patient life expectancy of 6 months or less. With the implementation of the new face-to-face requirement, physicians must now include in the narrative for the third benefit period (and each subsequent benefit period) an explanation of why the clinical findings of the face-to-face encounter support a patient life expectancy of 6 months or less. If these narratives are included on the certification form, then they must be located immediately above the physician’s signature. If the narrative is part of an addendum to the certification form, then the addendum must also be signed by the physician.  

Although the physician’s certification and face-to-face attestation are separate requirements, hospice physicians are also now required to include with the certification or re-certification the benefit period dates that the certification or recertification covers. Physicians and nurse practitioners will thus be able to readily identify when the face-to-face encounter must be performed.  

D.        Where must the face-to-face encounter take place?

Hospice patients are not required to travel to the location of the hospice physician or nurse practitioner. If traveling would not optimize the patient’s comfort or be consistent with the patient’s or family’s goals for hospice care, then the physician or nurse must travel to the patient’s location to conduct the face-to-face encounter. 

IV.        Here Come the ZPICs, PSCs and RACs:

Following the implementation of this new rule, CMS stated that, “we will issue instructions to the contractors who perform medical reviews to ensure compliance with this regulation.”  As the number of both pre-payment and post-payment audits of hospice and home health agencies increases now and in the future, this requirement will be carefully examined by Zone Program Integrity Contractors (ZPICs), Program Safeguard Contractors (PSCs) and Recovery Audit Contractors (RACs).

V.         Compliance Considerations:

In addition to these new face-to-face encounter requirements, the ACA also required that all Medicare providers (not merely hospice and home health providers), implement the elements of an effective Compliance Plan.  Unfortunately, at this time, many hospice and home health agencies have not dedicated the time and resources to develop and implement an effective Compliance Program. 

Regardless of whether or not you have implemented an effective Compliance Plan, it is important that hospices and home health agencies take note of the following considerations when implementing this new face-to-face requirement:

• Improper Financial Relationships. Like physicians, NPPs conducting the face-to-face home health encounter cannot establish or maintain any improper financial relationships with home health agencies. Improper financial relationships are those which violate Stark laws and/or the anti-kickback statute (and, by extension, the False Claims Act). Providers who are concerned whether a financial relationship violates any of these statutory provisions should contact qualified counsel to conduct the requisite analysis.
• Documenting the Face-to-Face Requirement. Although the new face-to-face encounter rule, like the physician’s certification, is a condition of payment for hospice and home health services, compliance with the two requirements should be documented separately. CMS has advised that documentation of the face-to-face encounter be a separate and distinct section of, or addendum to, the certification form. As such, providers should not simply insert standardized face-to-face encounter language on their certification forms.
• Consistency of Documentation. Many home health providers are rightly concerned that inconsistencies could emerge between the documentation maintained by a physician and that of the home health agency, thereby serving as a basis for Medicare contractors to deny home health claims. Although CMS has stated that it is “not our intent to penalize the [home health agency] if the physician’s own medical record documentation is not in good order,” it remains to be seen whether this intent will be carried out by the contractors.

V.         Conclusion:

Now, more than ever before, it is essential that hospice and home health providers ensure that their practices fully comply with this and other applicable regulatory requirements. To do so, it is recommended that organizations regularly review their documentation, coding and billing practices. When conducting internal reviews, it is recommended that you discuss the approach to be taken with legal counsel prior to initiating such a review. As a final point, should you identify an overpayment, pursuant to another mandate under the ACA, the identified overpayment must be repaid to the government within 60 days. Failure to do so will constitute a violation of the False Claims Act.

In light of these new considerations and mandates, all hospice and home health agencies should review their current Compliance Plan to verify that these new risk issues have been incorporated into the plan. If you have not developed and implemented an effective Compliance Plan, we recommend that you immediately contact qualified legal counsel and engage them to prepare an effective Compliance Plan which takes your organization’s specific risks into account. 

Liles Parker attorneys have extensive experience working with Medicare providers (including hospice and home health agencies) to help ensure that their practices are compliant with applicable statutory and regulatory requirements.  Additionally, our attorneys are experienced in representing hospices and home health agencies in post-payment audits by ZPICs and other Medicare contractors.  Need assistance?  Call us for a complimentary initial consultation.  We can be reached at:  1 (800) 475-1006  

  

AdvanceMed, the ZPIC Responsible for Zone 2 and Zone 5 has Reportedly Been Acquired by NCI

(April 10, 2011):  Last week, it was announced that NCI, Inc., one of the nation’s most successful information technology companies had acquired the outstanding capital stock of AdvanceMed Corporation (AdvanceMed), an affiliate of CSC.  While the acquisition went largely unnoticed by the health care provider community, the transaction may, in fact, be quite significant.

           With this acquisition by NCI, a recognized powerhouse in information technology, Medicare and Medicaid providers should expect AdvanceMed’s expertise in data mining and investigations to continue to grow.  Medicare and Medicaid providers have an affirmative obligation to ensure that operations, coding and billing activities fully comply with applicable statutory and regulatory requirements.  As AdvanceMed continues to fine-tune its data mining efforts and further expands its ability to conduct “Predictive Modeling,” providers will likely find their actions under the microscope like never before.  It is therefore imperative that all health care providers immediately implement an effective Compliance Plan (if they have not already done so) or further enhance their current compliance efforts.   The purpose of this article is to briefly report on NCI’s recent acquisition of AdvanceMed.  An overview of the current ZPIC environment is also provided.

I.        Background:

          NCI first announced its plans to acquire AdvanceMed last February.  As NCI’s February 25th News Release noted (in part):

“The Obama Administration has emphasized reducing fraud, waste, and abuse in Federal entitlements. AdvanceMed is ideally positioned to support the program integrity initiatives of CMS and other Federal Government agencies. . . We are extremely pleased to have AdvanceMed join NCI and believe that this acquisition will provide NCI an outstanding platform to address this rapidly growing market opportunity.”  (A complete account of NCI’s announcement can be found at the above link). 

          In recent years, AdvanceMed has positioned itself to where it now has multiple contracts with the Federal government.  In addition to serving as a Zone Program Integrity Contractor (ZPIC) for Zone 2 and Zone 5, the contractor also serves as Program Safeguard Contractor (PSC) in areas not yet converted to the ZPIC system of contractor review.  Additionally, the contractor also serves as a Comprehensive Error Rate Testing (CERT) contractor.  On the Medicaid side, AdvanceMed also serves as a Medicaid Integrity Contractor (MIC).  While a host of other contractors have been awarded contracts covering other zones and program areas, AdvanceMed’s growth has been undeniably impressive.  As NCI announced as part of April 4^th “News Release” covering the acquisition:

“AdvanceMed is a premier provider of healthcare program integrity services focused on the detection and prevention of fraud, waste, and abuse in healthcare programs, providing investigative services to the Centers for Medicare and Medicaid Services (CMS). Serving CMS since 1999, AdvanceMed has grown rapidly, demonstrating the value and return on investment of the Federal Government’s integrity program activities.

AdvanceMed employs a strong and experienced professional staff, which leverages sophisticated information technology, data mining, and data analytical tools, to provide a full range of investigative services directed to the identification and recovery of inappropriate Medicare and Medicaid funds. AdvanceMed supports healthcare programs in 38 states with a staff of more than 450 professionals, including information specialists, nurses, physicians, statisticians, investigators, and other healthcare professionals.

AdvanceMed has multiple contracts with CMS under the Zone Program Integrity (ZPIC), Program Safeguard (PSC), Comprehensive Error Rate Testing (CERT), and Medicaid Integrity (MIC) programs. All of these programs are executed under cost plus contract vehicles. The largest contracts-ZPIC Zone 5 and ZPIC Zone 2-were awarded in late 2009 and 2010 and have five-year periods of performance.

The acquisition price was $62 million. Included within the price is a recently completed, state-of-the-art data center to support the ZPIC Zone 5 and ZPIC Zone 2 contracts. Additionally, NCI will make a 338(h)(10) election, enabling a tax deduction, which is expected to result in a tax benefit with an estimated net present value of approximately $6 million to $8 million. NCI expects the transaction to be slightly accretive to 2011 earnings.

As of the end of March 2011, AdvanceMed has a revenue backlog of approximately $300 million with approximately $51 million of that amount being currently funded. Revenue for the trailing 12 months ending March 31, 2011, is estimated to be approximately $51 million, all of which was generated from Federal Government contracts, and 99% of the work performed as a prime contractor. NCI’s AdvanceMed 2011 revenue, covering the nine-month period of April 2, 2011, to December 31, 2011, is estimated to be in the range of $43 million to $47 million (the equivalent of $57 million to $63 million on a full 12-month basis), with the midpoint reflecting a full-year growth of approximately 16%. . . “   (A complete account of NCI’s statement can be found at the link indicated above).

II.      Overview of the ZPIC Program:

          The following comments are intended to provide an overview of the ZPIC program and is not focused on any ZPIC in particular.

         Under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), CMS was required to take a number of steps intended to streamline the claims processing and review process:

•  Using competitive measures, CMS was required to replace the current Medicare Fiscal Intermediaries (Part A) and Carriers (Part B) contractors with Medicare Administrative Contractors (MACs).
• After setting up the new MAC regions, CMS created new entities, called Zone Program Integrity Contractors (ZPICs).
•  These actions were intended to consolidate the existing program integrity efforts.  Over the last 2 — 3 years, ZPICs have been taking over PSC audit and enforcement activities around the country.

           At the time of transition, there were twelve PSCs that had been awarded umbrella contracts by CMS. As these contracts have expired, CMS has transferred the PSCs’ fraud detection and deterrence functions over to ZPICs.   Of the seven ZPIC zones established in the MMA, CMS has awarded contracts for a number of the zones. CMS is still working to issue awards for the final ZPIC zones.  The seven ZPIC zones include the following states and / or territories:

• Zone 1 – CA, NV, American Samoa, Guam, HI and the Mariana Islands.
• Zone 2 – AdvanceMed: AK, WA, OR, MT, ID, WY, UT, AZ, ND, SD, NE, KS, IA, MO.
• Zone 3 – MN, WI, IL, IN, MI, OH and KY.
• Zone 4 – Health Integrity: CO, NM, OK, TX. 
• Zone 5 – AdvanceMed: AL, AR, GA, LA, MS, NC, SC, TN, VA and WV.
• Zone 6 – PA, NY, MD, DC, DE and ME, MA, NJ, CT, RI, NH and VT.
• Zone 7 – SafeGuard Services: FL, PR and VI.

          In many instances, these changes have been more of a “name change” rather than a substantive change in the way claims will be audited. ZPIC responsibilities are generally the same as those currently exercised by PSCs. While ZPIC overpayment review duties have not appreciably changed, the number of civil and criminal referrals appear to be increasing. In our opinion, ZPICs clearly view their role differently than that of their PSC predecessors.  ZPICs clearly view themselves as an integral part of the law enforcement team, despite the fact that they are for-profit contractors.  In consideration of their ability to recommend to CMS that a provider be suspended or have their Medicare number revoked, and / or refer a provider to law enforcement for civil and / or criminal investigation, providers should take these contractors quite seriously.

          Both ZPICs and PSCs have traditionally asserted that unlike their RAC counterparts, they are not “bounty hunters.”  ZPICs are not paid contingency fees like RACs but instead directly by CMS on a contractual basis.  Nevertheless, common sense tells us that if ZPICs aren’t successful at identifying alleged overpayments, the chances of a ZPIC’s contract with CMS being renewed are likely diminished.  Additionally, experience has shown us that despite the fact that ZPICs are expected to adhere to applicable Medicare coverage guidelines, a ZPIC’s interpretation and application of these coverage requirements may greatly differ from your understanding of the same provisions.

           In recent years, ZPICs have been aggressively pursuing a wide variety of actions, including but not limited to:

• Pre-Payment Audit.  After conducting a probe audit of a provider’s Medicare claims, the ZPIC may place a provider on “Pre-payment Audit” (also commonly referred to as “Pre-Payment Review”).  Unlike a post-payment audit, there is no administrative appeals process that may be utilized by a provider for relief.  Having said that, there are strategies that may be utilized by a provider which may assist in keeping the time period on pre-payment review at a minimum.
• Post-Payment Audit.  Audits conducted by ZPICs primarily involve Medicare claims that have already been paid by the government.  After reviewing these claims, it is not uncommon for a ZPIC to find that the audited provider has been overpaid.  Having said that, the ZPICs we have dealt with appear to apply a strict application of the coverage requirements, regardless of whether a provider’s deviation from the rules is “de minimus” in nature.  In doing so, it is not unusual to find that a provider has failed to fully comply with each and every requirement.  Depending on the nature of the initial sample drawn, a ZPIC may extrapolate the damages in a case, significantly increasing the alleged overpayment.  In doing so, the ZPIC is effectively claiming that the “sample” of claims audited are representative of the universe of claims at issue in an audit.
• Suspension.  While the number of suspension actions taken by ZPICs has steadily increased in recent years,  Medicare providers should expect to see this number continue to grow.  Under the Affordable Care Act (often informally referred to as the “Health Care Reform” Act), CMS’ suspension authority has greatly expanded.   
• Revocation.  As with suspensions, we have seen a sharp increase in the number of Medicare revocation actions taken over the last year. The reasons for revocation have varied but have typically been associated with alleged violations of their participation agreement. In some cases, the ZPIC contractors found that the provider has moved addresses and did not properly notified Medicare. In other cases, a provider was alleged to have been uncooperative during a site visit. Finally, there were a number of instances where the provider allegedly did not meet the “core” requirements necessary for their facility to remain certified.
• Referrals for Civil and Criminal Enforcement.  ZPICs are actively referring providers to HHS-OIG (which can in turn refer the case to the U.S. Department of Justice for possible civil and / or criminal enforcement) when a case appears to entail more that a mere overpayment. However, just because a referral is made doesn’t mean that it will prosecuted. In many instances, HHS-OIG (and / or DOJ) will decline to open a case due to a variety of reasons, such as lack of evidence, insufficient damages, etc.).

 III.        Steps Providers Can Take Now, Before They are Subjected to a ZPIC Audit:

          In responding to a ZPIC audit, it is important to remember that although they may not technically be “bounty hunters,” it is arguably to their benefit to find that an overpayment has occurred. These overpayments are often based on overlapping “technical” (such as an incorrect place of service code) and “substantive” (such as lack of medical necessity) reasons for denial. In recent years, the level of expertise exercised by ZPICs is often quite high — noting multiple reasons for denial and concern.

          Unfortunately, the reality is that most (if not all) Medicare providers will find themselves the subject of a ZPIC, CERT, RAC or other type of claims audit at some point in the future.  In our opinion, the single most effective step you can take to prepare for a contractor audit is to ensure that your organization has implemented and is adhering to an effective Compliance Plan.  A comprehensive assessment of an organization’s coding and billing practices is one element of an effective plan.  Several general points to consider also include:

Keep in mind your experiences with PSCs and other contractors.  The lessons you have learned responding to PSC, CERT and RAC audits can be invaluable when appealing ZPIC overpayments.  As you will recall, the appeals rules to be followed are virtually the same.

Monitor HHS-OIG’s Work Plan.  While often cryptic, it can be invaluable in identifying areas of government concern.  Are any of the services or procedures your organization currently provides a focus of HHS-OIG’s audit or investigative?

Keep an eye on RAC activities.  Review the service-specific findings set out in annual RAC reports.  Review targeted areas carefully to ascertain whether claims meet Medicare’s coding and medical necessity policies.

You never realize how bad your documentation is until your facility is audited. While many providers start out “over-documenting” services (to the extent that there is such a thing), a provider’s documentation practices often become more relaxed as time goes on – especially when the provider has not been audited for an extended period of time.  In such situations, both physicians and their staff may fail to fully document the services provided.  Moreover, the care taken to ensure that all supporting documentation has been properly secured may have also lapsed over the years.

Review your documentation.  Imagine you are an outside third-party reviewer.  Can an outsider fully appreciate the patient’s clinical status and the medical necessity of treatment?  Are the notes legible and written is a clear fashion?  Compare your E/M services to the 1995 or 1997 Evaluation and Management (E/M) Guidelines – have you fully and completely documented the services you provided?  If dealing with skilled services, have you fully listed and discussed both the need for skilled services and the specific skilled services provided?

IV.        Closing Thoughts:

          Imagine a ZPIC hands you a claims analysis rife with alleged errors, an indecipherable list of statistical formulas, and an extrapolated recovery demand that will cripple your practice or clinic. What steps should you take to analyze their work? Based on our experience, providers can and should carefully assess the contractor’s actions, particularly the use of formulas and application of the RAT-STATS program when selecting a statistical sample and extrapolating the alleged damages based on the sample.  To be clear, not all statistical extrapolations will be flawed.  Denpending on the steps taken by the ZPIC’s statistician,  to the Over the years, we have challenged the extrapolation of damages conducted by Medicare contractors around the country, including tens of thousands of claims. Regardless of whether you are a Skilled Nursing Facility providing skilled nursing and skilled therapy services, an M.D. or D.O. providing E/M services, a Home Health company or a Durable Medical Equipment (DME) company, it is imperative that you work with experienced legal counsel and statistical experts to analyze the actions take by a ZPIC.

Liles Parker attorneys and staff have extensive experience representing a wide range of Medicare providers in audits by ZPICs, PSCs and other contractors.  Should you have questions regarding an inquiry from a ZPIC, PSC or RAC that you have received, please feel free to give us a call for a complimentary consultation.  We can be reached at:  1 (800) 475-1906.

 

 

 

 

Liles Parker Staff Member Achieves Certification as a Medical Compliance Officer

(April 9, 2011):   Liles Parker is pleased to announce that one of its staff members, Edward Dickey, has taken and passed the “Certified Medical Compliance Officer” course and examination offered by Practice Management Institute (PMI), one of the oldest and most recognized medical education suppliers in the country.   Unlike other courses, PMI’s Compliance Officer certification course is the only one focused on non-hospital medical office environments.   As Managing Partner David Parker stated:

“Liles Parker has always encouraged its staff to participate in continuing medical and legal education.  As a Certfied Compliance Officer, Edward will be better able to understand our client’s business needs and assist our attorneys when we conduct GAP analyses of a client’s medical office or clinic.  We are proud of Edward and look forward to working with him on our compliance projects.”

Edward currently works as a Paralegal at Liles Parker.  He earned his Paralegal Certification from Boston University in 2009.  He chose to take the PMI Compliance Certification course in an effort to further expand his knowledge of the medical industry and claims coverage requirements. 

Liles Parker and its staff have extensive experience working with health care providers around the country on a full range of compliance-related projects.  For a free consultation, please give us a call at: 1 (800) 475-1906.   

Report by HHS-OIG Likely Precedes an Increase in ZPIC Audits of Skilled Nursing Facilities — Providers Should Prepare to be Audited and Compliance Officers are Well Advised to Review their Practices and Take Corrective Steps

(April 1, 2011):

I.        Background:

The Prospective Payment System (PPS) under which Skilled Nursing Facilities (SNFs) are reimbursed by Medicare has long been criticized by many concerned with “benefit integrity” and curbing waste, fraud, and abuse in the Medicare program. Critics argue that because the SNF reimbursement rate is prospective in nature and largely commensurate with the extent of skilled services provided to a beneficiary, SNFs will be more likely to provide unnecessary or unreasonable services for beneficiaries, thus increasing their reimbursement rates. For example, simply increasing the number of minutes of therapy a beneficiary receives (or providing a second or third therapy modality) could upgrade the Resource Utilization Group (RUG) to which the patient has been assigned, thereby resulting in a substantially higher reimbursement rate for the provider. This concern has prompted increased scrutiny of SNF billing practices.

II.         Questionable Billing Practices by Skilled Nursing Facilities:

              The Office of the Inspector General of the Department of Health and Human Services (HHS-OIG) recently released a report last December 2010 entitled “Questionable Billing Practices by Skilled Nursing Facilities” (Report No. OEI-02-09-00202). The three chief objectives of this report were to:

 Ascertain the extent to which billing practices by Skilled Nursing Facilities (SNFs) changed between 2006 and 2008;

Determine the extent to which billing varied by type of SNF ownership in 2008; and

Identify SNFs that engaged in questionable billing practices in 2008.

             HHS-OIG analyzed all Part A SNF claim line items from 2006 and 2008, including the types of RUGs billed by SNF, beneficiary characteristics, and the average length of stay in the SNF for each beneficiary. OIG specifically focused on SNFs that billed frequently for higher paying RUGs (or “therapy RUGs”), namely those falling under the “Rehabilitation” or “Rehabilitation Plus Extensive Services” categories.  Based on the data it reviewed, HHS-OIG reached several conclusions regarding the billing practices of SNFs between 2006 and 2008, most notably:

The percentage of “Ultra High” therapy RUG placements (corresponding with the highest possible reimbursement rates) increased substantially between 2006 and 2008, while RUG assignment rates for all other categories decreased or remained static. This increase in “Ultra High” therapy RUG billing represented approximately $5 billion in additional Medicare payments to SNFs between 2006 and 2008.

For-profit SNFs were more likely than non-profit or government SNFs to bill for higher paying RUGs.

Three quarters of all SNFs had up to 39% placement rates in “Ultra High” therapy RUGs.

             HHS-OIG then outlined several recommendations based on its conclusions, one of which entailed increased oversight of SNFs that bill for higher paying RUGs:

CMS should instruct its contractors to monitor the SNFs billing for higher paying RUGs using the indictors discussed in this report. Specifically, the contractors should determine for each SNF: (1) the percentage of RUGs for ultra high therapy; (2) the percentage of RUGs with high ADL scores, and (3) the average length of stay. CMS should develop thresholds for each of these measures and instruct contractors to conduct additional reviews of SNFs that exceed them. If SNFs from a particular chain frequently exceed these thresholds, then additional reviews should be conducted of the other SNFs in that chain.

Contractors should use this information to target their efforts to more effectively identify and prevent inappropriate billing. Contractors could conduct medical reviews of a sample of claims from SNFs that exceed these thresholds. Contractors could use their findings to recover inappropriate payments, to place certain SNFs on prepayment review, and to initiate fraud investigations. (emphasis added).

            In response to this recommendation, the director of the Centers for Medicare and Medicaid Services (CMS) remarked,                                      

The CMS concurs….We will use the results of this review to determine whether additional safeguards, including thresholds, shall be put in place by the Medicare Administrative Contractors (MACs) to target their efforts to identify and prevent inappropriate billing…CMS will share the HHS-OIG report and any additional claims information with the appropriate Medicare contractors to consider the issues identified in this report when prioritizing their medical review strategies and other interventions. (emphasis added).

             The message to Medicare contractors is thus crystal clear: SNFs, especially those that have a significant placement rate for “Ultra High” therapy RUGs- should be increasingly targeted for audits. Meanwhile, OIG has shown no signs of relenting in its scrutiny of SNFs, noting in its 2011 Work Plan that:

We will review the extent to which payments to SNFs meet Medicare coverage requirements… We will conduct a medical review to determine whether claims were medically necessary, sufficiently documented, and coded correctly during calendar year (CY) 2009.

            Providers should ensure that their medical records and documentation satisfy applicable regulations and that they have an effective compliance plan in place to deter future audits. Otherwise, SNFs targeted for review could face the imposition of prepayment review status, payment bans, or civil monetary penalties (CMPs).

 III.        Areas of Focus by Medicare Contractors:

             Based on the concerns raised by HHS-OIG, Zone Program Integrity Contractors (ZPICs), MACs, other Medicare contractors conducting audits of SNFs are likely to focus on the following issues:  

Proper RUG Placement: SNF care must be provided at the appropriate level. This means that all services are necessary and reasonable and information entered on all Minimum Data Sets (MDS) for each beneficiary is complete and accurate. Contractors will closely scrutinize all RUG assignments, particularly those falling under the “Ultra High” therapy category.

Necessity and Reasonableness of Therapy Care: All therapy services must be consistent with the nature and severity of the beneficiary’s illness or injury. In many instances, contractors may question the therapy modalities provided to a beneficiary, the amount of therapy a beneficiary receives, or even the activities in which a beneficiary participates during therapy.

Provision of Skilled Care: All care provided by an SNF must be “skilled,” meaning that it can only be safely or effective provided by technical or professional personnel, such as nurses or therapists. Contractors will often conclude that skilled care is not supported by documentation that is vague, generic, or repetitive.

             Providers should review their medical documentation and related policies to ensure that, at a minimum, all of the elements and requirements discussed above are adequately addressed. There are also a number of additional steps providers can take to limit their liability in any future audits.

 IV.        Recommendations for Providers:

1.           Tailor Each Care Plan to the Beneficiary’s Individual Needs: As discussed above, care provided by an SNF must be necessary and reasonable, meaning that it is consistent with the beneficiary’s illness or injury. This is essentially a principle of proportionality. Providers should ensure that all RUG classifications and care plans created for beneficiaries- especially therapy care plans- are tailored to the beneficiary’s individual needs and designed to address the beneficiary’s functional deficits. Contractors will be on the look out for RUG assignments or care plans that provide for overly extensive services or excessive treatment modalities.

2.          Maintain Detailed Medical Records: SNFs must provide beneficiaries with “skilled” care, so all documentation should be sufficiently detailed to reflect the technical or specialized knowledge of the SNF staff. SNFs should also amply document all activities related to management and evaluation of beneficiary care plans, observation and assessment of beneficiaries’ medical conditions, any beneficiary education services regarding self-care, or any therapeutic exercises conducted with the beneficiary.

3.          Ensure that the MDS is Consistent with the Beneficiary’s Clinical Record: The first document a contractor will scrutinize when it questions a RUG placement will be the MDS. Contractors will often argue that the information coded on the MDS is inconsistent with the clinical record. Providers should thus ensure that all data entered on every MDS is supported by the corresponding clinical record. A more robust record will make it much harder for a contractor to successfully challenge a RUG classification.

4.          Consult Qualified Counsel: The consequences of an audit can be financially devastating to a provider. In light of increased scrutiny from Medicare contractors and the overall complexity of the medical review process, providers should consult qualified counsel if they have concerns regarding the sufficiency of their medical documentation or a potential audit. Counsel can assist providers with designing and implementing a comprehensive compliance plan or, if necessary, effectively responding to an audit initiated by a Medicare contractor.  Liles Parker attorneys and staff have extensive experience handling both (a) administrative appeals of denied claims in post-payment audits by ZPICs and PSCs, and (b) working with therapy and other providers to devise effective compliance plans and provisions designed to assist these providers in meeting their statutory, regulatory and administrative obligations under the Medicare and Medicaid programs.

          In our opinion, Medicare contractors (including ZPICs, PSCs and RACs), acting at the direction of CMS and HSS-OIG, will continue to expand their audit efforts against SNFs, particularly those with a significant number of beneficiaries assigned to “Ultra High” therapy RUGs. Accordingly, SNFs should review the quality and sufficiency of their documentation and implement comprehensive compliance efforts to deter potential audits.  Therefore, it is imperative that affected providers immediately take steps to assess their current practices and take remedial steps to correct any deficiencies identified.

Liles Parker attorneys and staff have extensive experience representing Medicare providers in post-payment audits of skilled therapy (PT, ST and OT claims) and related skilled nursing services claims by ZPICs and other contractors.  Should you have questions regarding this article or the defense of post-payment audits, please give us a call for complimentary consultation.  We can be reached at 1 (800) 475-1906. 

 

 

Hotel Occupancy Tax Funds – Management and Duty – Part III of III

(March 30, 2011): In Part I, the Hotel Occupancy Tax (“HOT”) was defined and examples of how it can be used were given. Part II examined the two-part test to determine if a proposed expenditure of HOT funds meets the purpose of the HOT tax.

Many cities will hire a third party firm or organization to manage and use HOT funds.  Texas law allows this. See Texas Tax Code at § 351.101(c). When approving a contract and funding to a third party the City Council determines if the proposed uses by the third party is a permissible use and will “directly enhance and promote” tourism and the hotel and convention industry. See Tex.Atty.Gen.Op. No GA-0124 (2003); Texas Tax Code at § 351.101(b).

A contract with a third party should reference the statute authorizing the Hotel Tax and duties regarding the expenditures of the Tax. This is because the funds are given to the third party.  The Contract should also specify that any HOT funds given to a third party should be kept in a separate account by the third party and the funds cannot be commingled with any other money. Texas Tax Code at § 351.101(c)

Since HOT funds are taxes paid by the public, a fiduciary duty is imposed on the third party regarding the management of the HOT funds. Id. At the most basic level, fiduciary duty means the third party would put the City’s interest above its own in the management and expenditure of HOT funds entrusted to it. Additionally, whether by case law or statute, fiduciary duty also means the third party needs to maintain complete and accurate financial records of each expenditure of HOT funds and upon request the records should be made available to the City. See Texas Tax Code at § 351.101(d). The level of financial records kept should be such that an independent party could examine the records and determine if the money was spent appropriately.

HOT funds are a public tax. A City that wishes to contract with a third party to manage HOT funds should have an independent audit conducted every year or two to determine if the monies are being spent appropriately and accurate records are being kept.

A third party that wishes to manage HOT funds for a city should put in procedures to make sure the HOT funds are maintained in a separate account and that financial records are kept that will show how, when and on what the HOT funds were spent.  Notably, an officer of a corporation is liable for any tort committed through him or her, regardless of whether the officer personally benefits from the tort committed. McCollum v. Dollar, 213 S.W. 259, 261 (Tex.Com.App.1919); Gardner Machinery Corp. v. U.C. Leas., 561 S.W.2d 897, 899 (Tex.Civ.App.1978, writ dism’d) This includes being individually liable for breaching a fiduciary duty owed by the corporation (third party) to the City. Gardner, 561 S.W.2d at 900; Searle-Taylor Mach. Co., Inc. v. Brown Oil Tools, Inc., 512 S.W.2d 335, 338 (Tex.Civ.App.1974, writ ref’d n.r.e.)

Always, in the handling of HOT funds, whether a City or a third party, an attorney should be consulted.

Liles Parker attorneys and staff have extensive experience representing Texas cities and municipalities.  Should you have questions regarding this article, please call Leonard Schneider for a complimentary consultation.  You may contact us at: 1 (800) 475-1906.         

 

Hotel Occupancy Tax Funds and Proper Use – Part II of III

(March 22, 2011): In Part I the Hotel Occupancy Tax (“HOT”) was defined and examples of how it can be used were given.

HOT tax funds (in Texas) are to be spent on authorized uses if the HOT funds are spent in a manner directly enhancing and promoting tourism and the convention and hotel industry.

A two-part test in Texas that is commonly recognized by administrative agencies and cities is: (i) will the spending of the HOT funds put “heads in beds”, in other words, will the funded project using HOT funds likely attract overnight tourists to the city hotels and motels thereby promoting the city’s hotel industry; and (ii) does the expenditure of HOT funds fit into the uses authorized by the state law? See Bennett Sandlin, General Counsel Texas Municipal League “The Hotel Tax Two-Step”, Texas Town & City pp. 45-46 (April 2005).

This two-part test should be applied to every proposed used of HOT funds for a particular project.  For example, will the donation of HOT funds to a shelter meet the test? While funding a shelter is a worthy cause, it is unlikely that the promotion of a shelter will directly enhance and promote the attraction of tourists to the city.   Nor does the shelter likely fit into any authorized uses.

What about the donation of $1000.00 of HOT funds to a Chamber of Commerce for its annual fund raiser dinner?  While the Chamber annual fund raiser may attract political figures from out of town, will that directly enhance and promote tourism? The political figures may tell others outside of the city about the Chamber and extol the city, but will that likely cause future tourists to come to town?  Objectively, the expenditure of the $1000.00 of HOT funds to a Chamber fund raiser, at the most, will indirectly enhance and promote tourism and therefore does not meet the first part of the test.  Further, the promotion of a Chamber normally will not fit into an authorized use or category which is the second part of the test. Id.

What about donating HOT funds to advertise a weekend long folk music festival in the city that attracts out of town artists and folk music lovers?  This likely meets the first part of the test in that promotion of the two and ½ day music festival will directly enhance and promote tourism that will result in overnight stays in the hotels and motels of the city.  This also fits the second part of the test in that many HOT tax statutes allow the funding of art events that include the presentation and performance of music.

What about the advertising of various city weekend long events or conventions in a city in a State-wide or State sponsored travel magazine?  This is similar to promoting the music festival above.  The purchase of the advertising is likely to directly enhance tourism to the city by letting readers of these magazines know of events that they may wish to attend, such as a music festival, a week-long sporting event, or a three day convention for school administrators. This would also meet the second part of the test because a permissible category to spend HOT Funds is to advertise and promote programs to attract tourists and convention delegates.

Every proposed HOT fund expenditure should be subjected to the Two Part test because there may be different facts that may allow or disallow the expenditure.

Part III will address the management of HOT funds and fiduciary duty in the managing of HOT funds.

Liles Parker attorneys and staff have extensive experience representing Texas cities and municipalities.  Should you have questions regarding this article, please call Leonard Schneider for a complimentary consultation.  You may contact us at: 1 (800) 475-1906.    

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