Top Ten Health Care Compliance Risks for 2011.

(December 31, 2010):  In case you missed it, Congress, President Obama and the healthcare regulators had a banner year with respect to regulatory activism in 2010.  Over the next several weeks we will be releasing a series of articles on our website addressing these dramatic changes and the compliance risks they present for your practice, clinic or health care business in 2011:

Compliance Risk Number 1:  Increased “HEAT” Activity and Enforcement:  Perhaps the greatest risk to consider in 2011 is the increase in targeted health care fraud enforcement efforts by the government’s Health Care Fraud Prevention and Enforcement Action Team (HEAT).  These teams are comprised of top level law enforcement and professional staff from the U.S. Department of Justice (DOJ), the Department of Health and Human Services (HHS), and their various operating divisions.  HEAT team initiatives have been extraordinarily successful in coordinating multi-agency efforts to both prevent health care fraud and enforce current anti-fraud initiatives.

As DOJ noted in September 2010, over the previous Fiscal Year, DOJ (including its 94 U.S. Attorneys’ Offices), HHS’ Office of Inspector General (HHS-OIG), and the Centers for Medicare and Medicaid Services (CMS), jointly accomplished the following:

• Filed charges against more than 800 defendants.
• Obtained 583 criminal convictions.
• Opened 886 new civil health care fraud matters.
• Obtained 337 civil administrative actions against parties committing health care fraud.
• Through these efforts, more than $2.5 billion was recovered as a result of the criminal, civil and administrative actions handled by these joint agencies. 

President Obama’s FY 2011 budget request includes an additional $60.2 million in funding for the HEAT program. These funds will be used to establish additional teams and further fund existing investigations. Now, more than ever, it is imperative that you ensure that your Compliance Plan is both up-to-date and fully implemented.  Medicare providers are obligated to adhere to statutory and regulatory requirements and the government’s HEAT teams are aggressively investigating providers who fail to comply with the law.

Compliance Risk Number 2:  Zone Program Integrity Contractor (ZPIC) / Program SafeGuard Contractor (PSC) / Recovery Audit Contractor (RAC) Audits of Medicare Claims:  As you already know, private contractor reviews of Medicare claims are big business – one ZPIC was awarded a five-year contract worth over $100 million.  In 2011, we  should expect to see:

• The number of ZPIC / PSC / RAC audits of Physician Practices, Home Health Agencies, Hospice Companies, DME Suppliers and Chiropractic Clinics will greatly increase in 2011.
• The reliance of both contractors and the government on data mining will continue to grow.  Providers targeted will likely be based on utilization rates, prescribing practices and billing / coding profiles.
• An increase in the number of Administrative Law Judge (ALJ) hearings in where ZPIC representatives choose to attend the hearing as a “participant.”  In these hearings, the ZPIC representative will likely aggressively oppose any arguments in support of payment that you present.

Are you ready for an unannounced / unanticipated site visit or audit?  When is the last time that you have conducted an internal review of your billing / coding practices?  Are you aware of the hidden dangers when conducting these reviews?  In 2011, your Compliance Officer may very well be your most important non-clinical staff member.  Physicians and other providers should work with their Compliance Officer to better prepare for the unexpected audit or investigation.

Compliance Risk Number 3: Electronic Medical Records: Unfortunately, some early adopters of Electronic Medical Records (EMR) software are now having to respond to “cloning” and / or “carry over” concerns raised by ZPICs and Program SafeGuard Contractors (PSCs).  In a number of cases, these audits appear to be the result (at least in part) of inadequately designed software programs which generate progress notes and other types of medical records that do not adequately require the provider to document individualized observations.  Instead, the information gathered is often sparse and similar for each of the patients treated.  Take care before converting your practice or clinic to an EMR system.  Include your Compliance Officer in the selection and review process.

Compliance Risk Number 4:  Physician Quality Reporting Initiative (PQRI) Issues:  Under the Health Care Reform legislation passed last March. PQRI was changed from a voluntary “bonus” program to one in which penalties will be assessed if a provider does not properly participate.  As of 2015, the penalty will be 1.5% and will increase to 2.0% in 2016 and subsequent years. Additionally, questions about the use of PQRI date in “Program Integrity” targeting remain unanswered.  Once again, it is essential that your Compliance Officer provide guidance to your staff regarding this program and its potential impact.

Compliance Risk Number 5:  Medicaid Integrity Contractors (MICs)  and Medicaid Recovery Audit Contractors (MDRACs):  In recent months, we have seen a marked increase in the number of MIC inquiries and audits initiated in southern States.  Notably, the information and documentation requested has often been substantial.  Medicaid providers must now also contend with MDRACs.  As a result of health care reform, MDRACs are now mandatory in every State and are may initiate reviews and audits as soon as March 2011.   Compliance Officers should review their current risk areas and ensure that Medicaid coding and billing activities are actively monitored to better ensure statutory / regulatory adhereance.

Compliance Risk Number 6:  HIPAA / HITECH Privacy Violations:  Failure to comply with HIPAA can result in civil and / or criminal penalties. (42 USC § 1320d-5).

• Civil Penalties – A large retail drug store company was recently fined $2.25 million for failure to properly dispose of protected information.
• Criminal Penalties – Earlier this year, a physician in Los Angeles, CA, was sentenced to four months in prison after admitting he improperly accessed individual health information.

As of mid-2010, there had been 93 breaches affecting 500 or more individuals.  The total number of individuals whose information was disclosed as a result of these breaches was estimated at over 2.5 million.  Out of the 93 breaches, 87 involved breach of hard copy or electronic protected health information (about 1/4 involved paper records and 3/4 involved electronic records. The vast majority of the 93 breaches involved theft or loss of the records.  Many of these thefts could have been avoided with appropriate security.  The government is serious about privacy and your practice, and in 2011 you will likely see increased HIPAA / HITECH enforcement.  Your clinic or health care business must take appropriate steps to prevent improper disclosures of health information. 

Compliance Risk Number 7:  Increased Number of Qui Tams Based on Overpayments:  Section 6402 of the recent Health Care Reform legislation requires that all Medicare providers, (a) return and report any Medicare overpayment, and (b) explain, in writing, the reason for the overpayment.

This law creates a minefield for physicians and other Medicare providers.  First, providers have only 60 days to comply with the reporting and refund requirement from the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due, whichever is later.  Of course, the legislation does not actually explain what it means to “identify” an overpayment.

From a “risk” standpoint, this change is enormous.  Disgruntled employees try to file a Qui Tam         (“whistleblower”) lawsuit based on a provider’s failure to return one or more Medicare overpayments to the program in a timely fashion.  While the government may ultimately choose not to intervene in a False Claims Act case based on such allegations, a provider could spend a significant amount defending the case.  Providers should ensure that billing personnel understand the importance of returning any overpayments identified as quickly as possible.   

Compliance Risk Number 8:  Third-Party Payor Actions:  Third-party (non-Federal)  payors are participating in Health Care Fraud Working Group meetings with DOJ and other Federal agents.  Over the last year, we have seen an increase in the number of “copycat” audits initiated by third-party payor “Special Investigative Units” (SIUs).  Once the government has announced the results of a significant audit, the third-party payor considers the services at issue and reviews whether it may have also been wrongly billed for such services.  If so, their SIU opens a new investigation against the provider.

Compliance Risk Number 9:  Employee Screening:  With the expansion of the permissive exclusion authorities, more and more individuals will ultimately be excluded from Medicare.  As we have seen, HHS-OIG is actively reviewing whether Medicare providers have employed individuals who have been excluded.  In one recent case, HHS-OIG announced that it had assessed significant civil monetary penalties against a health care provider that employed seven individuals who the provider “knew or should have known” had been excluded from participation in Federal health care programs. These individuals were alleged to have furnished items and services for which the provider was paid by Federal health care programs.  All providers should periodically screen their staff against the HHS-OIG and GSA databases to ensure that their employees have not been excluded from participation in Federal Health Benefits Programs.

Compliance Risk Number 10:  Payment Suspension Actions:  Last, but not least, we expect the number of payment suspension actions to increase in 2011.  In late 2010, Medicare contractors recommended to CMS that this extraordinary step be taken against providers in connection with a wide variety of alleged infractions.  Reasons given for suspending a provider’s Medicare number included, but were not limited to: (1) the provider failed to properly notify Medicare of a change in location, (2) the provider allegedly engaged in improper billing practices, and (3) the provider failed to fully cooperate during a site visit.

As each of these compliance risks reflect, health care providers are expected to fully comply with a wide myriad of Medicare and Medicaid statutory and regulatory requirements.  Moreover, the failure to meet these obligations can subject a provider to penalties ranging from suspension from the program to criminal prosecution.  Providers must take compliance seriously if they hope to thrive in 2011.

Liles Parker attorneys provide health law guidance and advice to health care providers around the country.  Our attorneys have extensive experience working on compliance related matters and defending providers in connection with Medicare audits and investigations.  Should you have questions regarding these and other issues, give us a call for a free consultation.  We can be reached at 1 (800) 475-1906.

 

Keeping an Eye on Medicare’s AdQIC:

(December 29, 2010): At the outset, it is important to keep in mind that the following observations are merely our opinion, nothing more.  These observations are based on our experiences dealing with health care provider Medicare overpayments and alleged false claims, over many years.  

Many health care providers are familiar with the revised administrative appeals process for contesting denied Medicare claims.  In exercising their appeal rights, many providers (or their legal counsel) have appealed denied claims through the second level of appeal, submitting their claims and arguments in support of payment to the Qualified Independent Contractor (QIC) responsible for hearing reconsideration appeals. Q2 Administrators (Q2A) is one of the contractors selected by the Centers for Medicare and Medicaid Services (CMS) to serve as a QIC. 

Notably, Q2A has also been awarded the first task order to serve as Administrative Qualified Independent Contractor (AdQIC). Q2A’s responsibilities as AdQIC are separate and distinct from its responsibilities as one of the general QICs chosen by CMS to serve as the reconsideration reviewer of denied Medicare claims.   

The role played by Q2A as AdQIC is often misunderstood by many health care providers.  Officially, Q2A performs its AdQIC duties out of its headquarters in Columbia, South Carolina.  As Q2A’s reflects, in its role as AdQIC, is responsible for performing a number of essential administrative appeal functions.  As AdQIC, QA2 notes that the unit is responsible for:

• Developing training and standard work protocols.
• Analyzing appeal outcomes.
• Recommending improvements to the appeals process.
• Managing case files.

Sounds fairly innocuous doesn’t it?  Unfortunately, the current AdQIC system represents a major challenge for prevailing providers to overcome.  Rather than merely “analyzing appeal outcomes,” as Q2A’s website reflects, the AdQIC appears to primarily serve as CMS’ appellate counsel, challenging favorable decisions by Administrative Law Judges (ALJs) with which it disagrees.   To be clear, we have seen no evidence that the AdQIC serves as an impartial reviewer of ALJ decisions.  Instead, our review of the cases referred to the Medicare Appeals Council (MAC) by the AdQIC suggests that unit is only interested in cases where the presiding ALJ has ruled in favor of the provider.

 So what does as AdQIC really do?

As Q2A’s website reflects, the company’s stated mission is to:

“[P]rovide support and services to the Federal government and other customers that reflect our ideal of ‘Quality to the Next Level.’ Q2A delivers consistent, quality outcomes and solutions for our customers by utilizing sound processes and a stringent quality assurance program. (emphasis added).

On its face, Q2A’s mission expressly reflects where its interests lie – the company’s focus is on delivering “consistent, quality outcomes and solutions” for its “customers.”  In the case, the customer is CMS, not health care providers.  As the “Frequently Asked Questions” section Q2A’s website reflects: 

Question:  What happens after I receive a favorable (emphasis added) ALJ Decision? 

Answer:  Favorable rulings by an Administrative Law Judge (ALJ) do not result in immediate payment of claims.

Once an ALJ rules favorably on an appeal, the Office of Medicare Hearings and Appeals (OMHA) forwards the decision and case file to the Administrative Qualified Independent Contractor (AdQIC).

The AdQIC subsequently has 10 days to update the appeals tracking system and to decide whether the case requires further review by the Medicare Appeal Council or is sent to the Medicare contractor for payment. The AdQIC’s review cannot begin until it receives the case file. Regulations do not require the OMHA to forward case files within a given amount of time.

If the AdQIC refers the case to the Medicare Appeals Council, the Medicare contractor that processed the original claim is notified. Effectuations (payment of claims) made by the contractor are then contingent upon the Medicare Appeal Council’s decision.

For ALJ decisions that require no further review, the AdQIC sends an effectuation notice to the contractor, who must then pay specified claim amounts within 30 days. Effectuations in which the contractor must calculate the amount may take up to 60 days.

While an AdQIC doesn’t have the authority to appeal a favorable ALJ decision to the MAC, it can (and often will) refer a case (where the provider prevailed) to the MAC and ask that the council review the decision.  Two primary points of contention have been typically been argued by the AdQIC:

(1)   Cases where the ALJ has overturned an extrapolation of damages.

(2)   Cases where the ALJ has held that a provider is not liable for alleged overpayments associated with one or more claims under Section 1870 of the Social Security Act.

In many (but not all) cases, the MAC will, in fact, open and review an ALJ’s favorable decision.  The MAC may then remand the case back to the presiding ALJ for reconsideration of the contested points. 

Don’t go into this process alone – retain experienced legal counsel:  

As Medicare claims audit and assessment efforts increase (through CMS’ use of ZPICs, RACs and PSCs), health care providers will be under increasing pressure to ensure that statutory and regulatory coding and billing requirements are met.  Despite your best efforts to remain compliant, you may find that your practice or clinic is subjected to review.  Should that occur, we strongly recommend that you retain qualified, experienced legal counsel to represent your interests.  In a number of cases, we have been retained by other law firms to assist with administrative appeals.  When working with other law firms, the level of our involvement has varied from case to case.

When is a “win” truly a “win”?

Unfortunately, it is becoming more and more difficult each year to rely on a favorable ALJ ruling.  Over the past year, the AdQIC has become more aggressive than ever in challenging holdings with which it disagrees.  As a result, it is important that your counsel plan for beyond the ALJ level when asserting defenses to the government’s arguments.  While a number of arguments may be persuasive to an ALJ, the same arguments may also automatically generate a referral by an AdQIC to the MAC. When hiring an attorney to handle your Medicare claims case, be sure and ask prospective counsel the following:

• How much of your law practice is devoted to health law issues?
• Please describe the extent of your experience handling large, complex administrative appeals of denied Medicare claims.
• How often have you responded to AdQIC appeals of favorable ALJ decisions?
• How often have you handled MAC appeals?
• Can you provide provider references?

Hopefully, your practice will not face a large administrative appeal of denied Medicare claims.  However, should such an event occur, you need to be ready to respond to the contractor’s audit.  While there are no guarantees in this business, knowledge of the rules and experience handling administrative appeals may prove essential to increasing the likelihood of your success.

Liles Parker attorneys have extensive experience handling complex Medicare administrative appeals.  Our attorneys have represented Home Health Agencies, Hospice Companies, CMHCs, Ambulance Companies, Chiropractic Clinics, Physical / Occupational / Speech Therapy Clinics, Nursing Homes, Physian Practices (E/M Claims), Psychology Practices, DME Companies and a wide variety of other Medicare Part A and Part B providers.  Should your practice or clinic be audited by a ZPIC, RAC or PSC, give us a call for a free consultation.  We can be reached at: 1 (800) 475-1906. 

Virginia Judge Concludes That Health Care Reform Law is Unconstitutional.

(December 13, 2010):  A Federal Judge for the Eastern District of Virginia concluded that the provision of the recent Health Reform Law that penalizes/taxes individuals who fail to purchase health insurance, violates the United States Constitution.  In doing so, the Court reaches a different conclusion than two other Federal courts – one in Virginia and one in Michigan, that have concluded that the provision – frequently referred to as the individual mandate — is valid and within Congress’ constitutional authority.

The Court, however, also realized that the final arbiter of the validity of the individual mandate and the health reform law – is likely to be the US Supreme Court.  Moreover, the Court recognized that the specific provision of the Law at issue – the individual mandate – does not become effective until 2014, and therefore refrained from issuing an injunction.  As a result, the decision is unlikely to have any impact on the implementation of the health care reform law at this time.

Liles Parker attorneys provide health law guidance and advice to health care providers around the country.  Should you have questions regarding health care reform, please give Michael Cook us a call.  He can be reached at:  1 (800) 475-1906.

Red Flag Rules Update — Health Care Providers Are Not Covered Under the Rule. Nevertheless, Compliance Officers Should Continue to Review these Issues.

(December 12, 2010):  Under the “Fair and Accurate Credit Transaction Act of 2003,” the Federal Trade Commission (FTC) was required to establish regulations mandating that “creditors” and “financial institutions” develop and implement Identity Theft Prevention Programs.  These programs were aimed at identifying, detecting and responding and, ultimately, preventing identify theft from occurring in connection with “covered accounts” maintained or handled by creditors and financial institutions.  The patterns, practices and / or specific activities which could indicate that identify theft was occurring was referred to by the FTC as “Red Flags.”  The program was therefore commonly known as the “Red Flags Rule.”  Since enacted, the legislation has been widely criticized by health care providers and their professional associations, lawyers, accountants and other professionals who argued that the definition of “creditor” was overly broad and was never intended to cover their work / organizations.  After facing both lawsuits and growing Congressional concerns, the FTC delayed enforcement of the rule so that Congress could consider limiting the scope of the rule.

Both the House and the Senate have recently passed the “Red Flag Program Clarification Act of 2010.”  President Obama is expected to sign the legislation before the end of the year.  As Senator Christopher Dodd commented after the bill was passed, this legislation:

“makes clear that lawyers, doctors, dentists, orthodontists, pharmacists, veterinarians, accountants, nurse practitioners, social workers, other types of healthcare providers and other service providers will no longer be classified as ‘creditors’ for the purposes of the Red Flags Rule just because they do not receive payment in full from their clients at the time they provide their services, when they don’t offer or maintain accounts that pose a reasonably forseeable risk of identity theft.”

While most health care providers will be thrilled to hear of these changes (few businesses, regardless of type, want to be covered by the Red Flags Rule), it is essential to recognize that identity theft is, in fact, a growing problem.  Therefore, the most prudent course would be for Compliance Officers to incorporate procedures into their Compliance Plan which will help prevent identity theft from taking place.  Moreover, should it occur, your practice should have procedures in place to help minimize any adverse impact from such an occurrence. 

Liles Parker attorneys provide health law advice to health care providers around the country.  Our attorneys have extensive experience working with providers to establish effective Compliance Plans for a wide range of organizations.  Identify theft is yet another risk area to be considered when reviewing and / or revising your Compliance Plan.  Please feel to call us for a free consultation.  We can be reached at 1 (800) 475-1906.         

 

Employee Screening Practices are Under Scrutiny by HHS-OIG. Employers Found to be in Violation are Being Fined.

(December 11, 2010): Earlier this week, HHS-OIG announced that it had assessed significant civil monetary penalties against a health care provider that employed seven individuals who the provider “knew or should have known” had been excluded from participation in Federal health care programs. These individuals were alleged to have furnished items and services for which the provider was paid by Federal health care programs.

The provider paid $376,432 to resolve these allegations. As Lewis Morris, Chief Counsel to the Office of Inspector General stated:

“Providers self-disclosing such violations will ultimately pay lower settlement amounts. . . But in cases initiated by the government — such as this one — providers will, as a matter of course, be required to pay more to resolve the matter.”

As Mr. Morris further noted:

“This case illustrates yet again that OIG will pursue CMPs when providers have employed an excluded person for the furnishing of items or services paid for by Federal health care programs,”

Notably, this matter was referred to HHS-OIG for investigation by the State Medicaid Fraud Control Unit (MFCU).

Lessons to be Learned:

This case illustrates a number of important lessons for all health care providers who participate in Federal Health Benefits Program, regardless of size. These lessons include:

Screening employees is easy and quick: It takes very little effort for a provider to screen current and prospective employees against HHS-OIG list of excluded parties and GSA’ s list of parties who have been debarred from participation in Federal contracts. Notably, the failure to screen employees can be quite costly.

No mention of actual fraud or overpayment was mentioned in this case – Nevertheless, the employment of excluded individuals was found to be quite serious by HHS-OIG:   HHS-OIG won’t hesitate to pursue civil monetary penalties against a provider who employs excluded individuals, despite the fact that no mention is made of any wrongful billings. Regular screenings of your employees should be made to ensure that none of your employees have been excluded from participation.

The government is serious about self-disclosing problems: HHS-OIG’s Chief Counsel went out of his way to point out that provider’s who self-disclose will ultimately pay a lower amount of damages to the government. While we recognize the government’s preference in this regard, should you identify a problem, you should contact legal counsel before making a self-disclosure. HHS-OIG’s voluntary disclosure protocol has a number of requirements that should be fully assessed prior to deciding to make a disclosure under the program. To be clear, if you owe money to the government, you must pay it back. The issue to be resolved is how to go about returning any monies to which you are not entitled. Depending on the circumstances, a provider may be better off working with their Medicare Administrative Contractor to resolve a problem. In other cases, HHS-OIG’s protocol may be the best option. Every situation is different and should be carefully assessed before action is taken.

Federal and State law enforcement teams are coordinating their actions and findings: Notably, these violations were first identified by a State MFCU who then contacted HHS-OIG. Similarly, we are seeing State Medical Boards advising ZPICs of actions they are taking against licensed health care providers. In several cases, the State Medical Board found that the provider was either not providing adequate supervision over subordinate Nurse Practitioners and Physician Assistants. The ZPIC has then used this as a basis to argue that the claims did not qualify for Medicare coverage.

In summary, health care providers should continually be reviewing their compliance efforts to ensure that basic mistakes such as the ones in this case (failure to properly screen employees) do not occur.

Our attorneys represent health care providers around the country in connection with compliance issues.   Please feel free to contact us for a complimentary consultation.  We can be reached at: 1 (800) 475-1906.

HHS Publishes Proposed Rules on Medicaid Recovery Audit Contractors Further Highlighting the Question, Is a Claim Every Final? Providers Need to Understand and Take an Active Role in this Process

(November 30, 2010):  The United States Department of Health and Human Services (“HHS”) recently published a Proposed Rule applying the Recovery Audit Contract (“RAC”) process to claims under the Medicaid program.  As background, the RAC process has been a part of the Medicare program since 2005, first as a demonstration project from 2005 – 2008, and then extended to the entire nation effective no later than January 1, 2010.

 Under the Medicare RAC program, HHS retains private contractors for a post payment review process to identify over and under payments on a contingency fee basis.  There are two types of reviews – data mining, which involves simply reviewing data to identify improper payments, and complex reviews, which require reviews of medical records to determine the “legitimacy” of a payment.  To date, HHS has contracted with four RACs – one covering each of four national regions.  HHS pays the RAC a contingency fee based upon a percentage (currently ranging from 9 – 12.5 percent) of the amounts of overpayments that the Federal government recovers and underpayments that HHS repays providers based upon the RAC review.  Overpayment recoveries have far exceeded underpayments that the program has reimbursed providers.

 The process was highly controversial during the demonstration, and HHS implemented a number of changes for the national roll out.  Among others, HHS:  shortened the look back period; set limits on the number of records that the RACs could request at any one time; precluded RACs from retaining their contingency fee payments where the provider prevailed at any stage of the appeals process; required RACs to receive approval from HHS, and publish, the types of claims that they were reviewing; and required RACs to retain physicians as medical directors.  Despite theses changes, the process still requires providers to expend substantial amounts of increased administrative expenditures to accommodate these reviews.

 Although several States have conducted RAC type audits under their Medicaid programs, most have not.  However, as part of the health reform legislation, Congress required all States to establish a Medicaid RAC program by December 31, 2010.[1] See §6411 of the Patient Protection and Affordable Care Act.

 The proposed rules require that States submit a state plan amendment (“SPA”) by the December 31, 2010 deadline.  However, recognizing that responses to the proposed rule are not even due until January 10, 2010, the proposal also indicates that States are not required to implement the program until April 1, 2011.  The proposal also recognizes that some States may need to change their State laws to implement the RAC program, and thus states that HHS may grant exceptions in certain areas, albeit on a limited basis.

 The proposed rules would grant substantial flexibility to states in how they establish their RAC programs.  However, the rules provide that the fees States pay Medicaid RACs for overpayments and underpayments combined may not exceed the amounts that the State collects from overpayments.  This means that both the States and RACS will be strongly incentivized for the RACs to find over, as opposed to under, payments.

 The rules require the State to establish an appeals process for providers to dispute overpayments identified by the RACS.  However, the preamble to the proposed rules would require states to return the Federal match for an overpayment that is identified even if the State does not recover that overpayment from the provider.  If this is construed to require the State to return the Federal share of overpayments that the RAC identifies even if the provider prevails on appeal, this would place a strong disincentive for the State to establish a vigorous and unbiased appeal process.  Similarly, it is unclear whether HHS would recover the Federal portion of identified overpayments even in those cases where the State otherwise would have settled a claim in this process.

 Further, it is not clear whether HHS will attempt to recover the share of the entire identified overpayment, even if it is clear that the provider would have been entitled to a partial payment if the claim had been properly submitted, e.g. in States that pay hospital providers under a DRG system, hospital transfer cases, or cases where the RAC concludes that a hospital case that was billed as an inpatient admission should have been billed as observation.  Absent such authorization, the State would avoid payment for even the portion of treatment that its RAC concluded was legitimate and actually provided, albeit mistakenly claimed.

 Under the proposed rules, it appears that States would have substantial flexibility in designing their programs.  Thus, it would behoove providers and their trade associations not only to submit comments on the proposed Federal rules (which are due on January 10, 2010), but also to become involved in the development of the State process.  Liles Parker attorneys have had success in the past in assisting providers in one State to change the process in an analogous circumstance, to, among other things:  shorten the period for which claims were reviewed; assist providers in convincing the State to implement a routine process to minimize the chance that record requests would be lost; limit the number of medical records that could be requested; limit reveries to the difference between amounts that were claimed and those that could have been claimed under the RAC’s analysis; the qualifications of RAC staff that review medical necessity claims; and establishing the specific criteria that would be used to review medical necessity issues.

 Also, providers will want to discuss with their States a number of other issues such as the extent to which physician judgment will be relied upon in second guessing medical necessity and treatment decisions, the process that will be used to challenge RAC determinations, and the extent to which the State will increase Medicaid payments for the added administrative expense involved in staffing up for these reviews.  This is especially critical under the Medicaid program, where State payments often are far below the cost of providing the service as a result of deficient appropriations.

 Finally, providers will need to develop their internal processes for ensuring that requests for records are properly tracked and timely processed, and for appealing appropriate cases.

 Liles Parker attorneys have extensive experience in all of these areas and are prepared to assist providers and their trade associations in commenting on the proposed Federal rules, assisting in negotiations with States on the development of their RAC programs, and appealing overpayment determinations.  Providers wishing to discuss these issues should contact Michael Cook at (202) 298-8750.

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[1] Congress also expanded the Medicare RAC program to parts C (Medicare Advantage) and D (Medicare Outpatient Prescription Drug program) of Medicare.  We will address these changes in a later issue.

 

Compliance Officers Should Examine Their Facility’s “Form I-9″ Practices to Ensure that All Applicants are Being Treated Equitably — Failure to do so Can Result in Significant Civil Penalties.

(November 28, 2010): In 2003, the Immigration and Naturalization Service (INS) became part of the U.S. Department of Homeland Security. Despite this change, certain functions, such as responsibility for enforcing citizenship discrimination actions remained with the U.S. Department of Justice’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (DOJ-OSC).  As one large not-for–profit hospital group recently found, DOJ-OSC takes this responsibility quite seriously and is aggressively investigating allegations of “citizenship status discrimination” committed by employers (including health care providers). Most recently, DOJ-OSC has pursued violations allegedly occurring when prospective applicants were asked to show that they are eligible to work in the United States.

I.  Background: 

With the passage and implementation of the Immigration Reform and Control Act of 1986, employers (including health care providers) have been required to verify that applicants for jobs show that they are authorized to work in the United States.  For over 25 years, employers have been requiring that prospective applicants complete Section 1 of an “I-9 Form” (officially titled “Form I-9, Employment Eligibility Verification”).  Section 1 provides various options for an applicant to show that they are eligible to work in the United States.  Employers are then required to complete Section 2 of the form within three days of the applicant starting to work.  As the government’s Employer Handbook covering the completion of the Form I-9 reflects:

“To comply with the law, you must verify the identity and employment authorization of each person you hire, complete and retain a Form I-9 for each em­ployee, and refrain from discriminating against individu­als on the basis of national origin or citizenship.”

For most prospective applicants and employers, this process has been relatively painless.  While the failure of a company to complete I-9s for its employees could subject the employer to civil and / or criminal penalties, the relative ease of completion of this form has resulted in the I-9 becoming yet another document to be completed by applicants when they are first hired. 

In a recent case pursued by DOJ-OSC, the government alleged that a health care provider required that:

“[N]on-U.S. citizen and naturalized U.S. citizen new hires . . . present more work authorization documents than required by Federal law, but permitted native born U.S. citizens to provide documents of their own choosing.” 

Based on the fact that non-U.S. citizens and naturalized citizens were treated differently, the government investigated a complaint filed by a “charging party” against this health care provider. Ultimately, the government and the health care provider reached a settlement to the discriminatory allegations presented. 

The health care provider was required to pay $257,000 in civil penalties plus an additional $1,000 which was given to the charging party to make up for back pay that was owed due to the delay in hiring the individual which was caused by the provider’s requirement that this non-U.S. citizen or non-U.S. born citizen was required to provide more extensive paperwork to prove his / her authorization to work in the United States. 

II. Compliance Plan Considerations:

Importantly, I-9 compliance considerations are not limited to only non-discrimination practices.  Both Compliance Officers and Human Resources staff should review the government’s “Handbook for Employers’ and ensure that your facility is complying with each facet of the law in this regard.  As the Handbook states, each provider must:

“Ensure that the employee fully completes Section 1 of Form I-9 at the time of hire — when the employee be­gins work. Review the employee’s document(s) and fully complete Section 2 of Form I-9 within 3 business days of the first day of work.

If you hire a person for less than 3 business days, Sections 1 and 2 of Form I-9 must be fully completed when the employee begins work.”

Importantly, I-9s do not have to be completed for some individuals.  As the government’s Handbook further states:

“You DO NOT need to complete a Form I-9 for persons who are:

1. Hired before November 7, 1986, who are continu­ing in their employment and have a reasonable expectation of employment at all times;

2. Employed for casual domestic work in a private home on a sporadic, irregular, or intermittent basis;

3. Independent contractors; or

4. Providing labor to you who are employed by a con­tractor providing contract services (e.g., employee leasing or temporary agencies).

5. Not physically working on U.S. soil.”

III. Lessons Learned:

While the Compliance Plan covering your health care facility or company likely already covers a wide variety of employment-related issues, Compliance Officers should check to ensure that I-9 requirements are made a part of your overall Compliance Program if these mandates are not already covered.

As this case reflects, health care Compliance Officers should periodically conduct a comprehensive risk assessment (we recommend that such a review be conducted at least annually) of a provider’s operations and business relationships.  While traditional compliance reviews have focused on traditional health care statutory and regulatory obligations and responsibilities, you cannot ignore other risk areas (such as I-9 related actions and responsibilities).  A good place to start would be to meet with both clinical and non-clinical supervisory and managerial employees to discuss regulated aspects of their work. 

Liles Parker attorneys have extensive experience working with providers to develop and implement effective Compliance Plans and Programs.  Should you have questions, call us for a complementary consultation.  We may be reached at 1-800-475-1906.

CMS Authorizes Medicare Contractors to Accept Administrative Appeals by Facsimile and Secured Internet Transmission but Many Contractors have Yet to Implement this Change

(November 21, 2010):  Earlier this year, the Centers for Medicare and Medicaid Services (CMS) issued Change Request (CR) 6958, titled “Guidelines to Allow Contractors to Develop and Utilize Procedures for Accepting and Processing Appeals Via Facsimile and/or Via a Secure Internet Portal/Application.”  Health care providers and their counsel welcomed the guidance, anticipating that this change would make it easier when filing requests for redetermination and reconsideration. 

To its credit, CMS authorized Part A and Part B Medicare Administrative Contractors (MACs), Durable Medical Equipment MACs, Fiscal Intermediaries, Carriers and Regional Home Health Intermediaries (RHHIs) to accept administrative appeals by facsimile and / or secured internet transmission.  However, CMS made this change optional — at the discretion of the contractor.  CMS did not require (at least for now) that contractors implement this change.  Nor did CMS provide additional funding for contractors desiring to allow providers to file administrative appeals in this fashion.  

Many health care providers around the country have experienced difficulty quickly and appropriately responding to pre-payment review actions and extrapolated post-payment audits conducted by Zone Program Integrity Contractors (ZPICs). As Recovery Audit Contractors (RACs) work their way down the provider chain, these pressures will undoubtedly increase.  The option to file an administrative appeal by facsimile or secured internet transmission would significantly assist health care providers, by both reducing filing costs (e.g. FedEx / USPS expenses) and by providing providers with options for handling appeals that must be immediately filed in order to meet applicable deadlines.

To date, few contractors have chosen to allow health care providers to file administrative appeals by facsimile or secured internet transmission. For example, TrailBlazer serves as the Part A and Part B MAC for providers in Texas.  Over the last year, providers in South Texas have been increasingly subjected to site visits, Medicare number revocation actions, pre-payment reviews and post-payment audits. Earlier this month, TrailBlazer released updated guidance covering the administrative appeals process for use by providers in its MAC region. Unfortunately, TrailBlazer confirmed its position in this regard, expressly stating “At this time, redeterminations may not be faxed to TrailBlazer.”  Hopefully, the filing of appeals by facsimile and secured e-mail will be permitted by TrailBlazer in the near future.

 As set out in CR 6958, CMS requires that contractors choosing to accept administrative appeals by facsimile and secured e-mail abide by a number of requirements covering the handling of appeals filed in this fashion.

Liles Parker attorneys represent a wide variety of health care providers in Medicare administrative overpayment cases around the country.  Should you have questions regarding a Medicare audit of your Physician Practice, Clinic, Home Health Agency, Hospice, Community Mental Health Center or DME Company, give us a call for a complimentary consultation.  Mr. Liles can be reached at 1 (800) 475-1906.

Michael Cook to Speak at National Conference On Health Care Reform

(November 3, 2010): Michael Cook will be speaking at a national conference on the new healthcare reform legislation on November 8 and 9 in Arlington, VA.  Michael will speak during a segment on “The Future of Healthcare:  The Next 5 Years, and will be addressing “How Providers are Handling the New Change,” including how the law is likely to affect them.

The conference, which is entitled, “Healthcare Reform – Dealing with the Hurdles & Building Up Success,” will feature a number of prominent experts in the area, including such notables as Hon. Henry Waxman, Chairman of the House Energy and Commerce Committee, and Douglas Holtz-Eakin, President of the American Action Forum and former senior advisor to Presidential candidate John McCain.

 The conference is being sponsored by GTCbio, and interested parties can obtain information on the conference at http://gtcbio.com.

Liles Parker attorneys provide health law guidance and advice to health care providers around the country.  Should you have questions regarding health care reform, give Michael Cook a call for a complimentary consultation.  He can be reached at: 1 (800) 475-1906.

 

American Health Lawyers’ Scholarly Journal Publishes Article by Michael Cook on Health Care Reform

(August 1, 2010): Michael Cook has published an article in the October issue of the American Health Lawyers Association on the Independent Payment Advisory Board. The Abstract of the article is as follows:

 

 

 

“By creating the Independent Payment Advisory Board (IPAB) as part of the health care reform process, Congress attempted to impose fiscal discipline upon itself by creating limits on the amount of spending under the Medicare program, and by removing the process for meeting those targets from its domain. Each year beginning in 2013, the Chief Actuary of the Centers for Medicare and Medicaid Services will compare the projected average per capita increase in Medicare spending against a target. If the Chief Actuary finds that spending is projected to exceed the target, the IPAB – an independent board – is charged with developing a proposal that will be implemented automatically beginning in January 2015, unless Congress, through an expedited process and super majority vote, either overrides the process or votes in 2017 to disband the board in 2020. This article provides a detailed description and analysis of the provisions that create the IPAB, the process on how it will operate, and the implications of this extremely controversial body.” Michael H. Cook, Independent Payment Advisory Board: Part of the Solution for Bending the Cost Curve?, J. HEALTH & LIFE SCI. L., October 2101, at 102.

Because of copyright laws, we are not able to post copies of the article in full on this website. However, for this issue only, the AHLA is selling single copies of the October issue of the Journal. Readers can obtain information on purchasing the article at www.healthlawyers.org/JHLSL.

Anyone seeking additional information on the IPAB can review a short article on this website, and can contact Michael Cook at (202) 298-8750 or mcook@lilesparker.com for information on this and other aspects of the new health care reform legislation.  Mr. Cook is an attorney in Liles Parker’s Washington, DC office.  He has extensive experience working in practically every area of health law. 

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