Health Integrity’s Audit of Texas and Oklahoma Home Health Agencies are on the Rise — Do You an Effective Compliance Plan in Place?

(August 14, 2011):   

I.          Overview:  Over last few years, the government’s reliance on private contractors to both identify overpayments and potential instances of fraud has greatly increased.  Health Integrity is the Zone Program Integrity Contractor (ZPIC) awarded the contract for Zone 4 (Texas, Oklahoma, Colorado and New Mexico) by the  Centers for Medicare and Medicaid Services (CMS).

II.         Home Health Agencies are Currently Being Scrutinized:  As home health agencies in Texas and Oklahoma can readily attest, Health Integrity is carefully examining home health claims billed to Medicare.  Home health agencies may be subjected to the following actions by Health Integrity:

• Unannounced site visits – leading to probe samples, statistically relevant samples and other actions. Failure to cooperate can lead to revocation from the Medicare program.  Notably, there are no statutory restrictions preventing contractors from showing up unannounced and requesting to see documentation related to Medicare claims.  Should Health Integrity show up at your home health agency, you will likely find that Health Integrity’s auditors are both to-the-point and professional in their dealings you and your staff.  Our clients have generally found that Health Integrity’s reviewers have researched an agency’s billing practices before they arrive.  When they show up, they will already have a listing of the claims-related records to be pulled.   ZPICs have been known to show up with their own scanner or copier.  This has led to problems for providers later on because they failed to receive a copy from the contractor before they left.  Should a ZPIC ask you to make copies, the contractor will often identify a handful to take with them and ask that you forward the other within a set period.
• Unannounced interview of home health patients and their families – Health Integrity is actively conducting interview of home health patients and their families in an effort to determine whether a patient was truly “homebound” during the claim period(s) at issue.
• Pre-payment audit – the number of home health agencies and other providers placed on pre-payment  review appears to have significantly increased over the last six months
• Post-payment audit – Health Integrity is actively conducting post-payment audits of Texas and Oklahoma home health agencies and are extrapolating alleged damages identified in these post-payment audits.
• Suspension – exercise caution when using Electronic Medical Records EMR) software – some software programs are better than others.  Avoid any program which minimizes the need for individualization and the documentation of patient-specific observations.  As always, it is important that home health agencies properly document the medical necessity of skilled care.  In some instances, ZPICs have expressed concern that the patient records generated appeared to be “cloned.”
• Medicare number revocation – take care if your home health agency is subjected to a site visit.  As a participating provider, you have an obligation to cooperate with the ZPIC’s review. Should you fail to cooperate, a ZPIC can recommend to CMS that your Medicare number be revoked. This is a very real threat and should not be discounted.  This becomes even more complicated if the ZPIC’s representatives go beyond mere claims-related questions and appear to be seeking information which could subject you (in your individual capacity), to possible civil and / or criminal liability.   Remember your obligations as a participating provider but call your attorney.  
• Referral for criminal investigation and prosecution  – ZPICs are actively referring cases to HHS-OIG and DOJ for formal civil and criminal review.

III.        Primary Reasons of an Audit:  We currently represent a number of home health agencies around the country in connection with post-payment audits and the appeal of overpayment assessments levied by Health Integrity and other ZPICs.  Our clients often ask why their home health agency was targeted by the ZPIC for audit.  After handling many of these cases, the following reasons for targeting have been cited by the ZPIC or ultimately learned when handling the case:

• Predictive Modeling / Data Mining –  As Chapter 2, Sec. 2.3 of the MPIM details: “Claims date is the primary source of information to target abuse activities.”  Data mining may have been used to examine a home health agency’s “error rate.”  This would provide the provider’s history of repeated overpayments   or improperly filed claims.  
• Complaints –  These can include “complaints” filed by beneficiaries, physicians, other providers (such as competitors), disgruntled current and former employees.
• Referrals –  ZPIC audits may be generated based on referrals from other CMS contractors (other ZPICs, PSCs, RACs, MACs, QA Staff), State MFCUs, Offices of the U.S. Attorney, or other Federal agencies.  Notably, it appears that private payors are now also referring cases to the government.
• Reports –  HHS-OIG and GAO regularly issue reports addressing areas of concern.
• State Licensing Boards –State Medical Boards, Nursing Boards, Pharmacy Boards and other regulatory entities responsible for handling State licensing responsibilities regularly hear or learn of improper actions by providers.  This information may be shared with one or more Federal agencies and ultimately be referred to the ZPIC handling a certain zone.

IV.        Reducing Your Risk of Audit:  While many home health agencies believe that their Compliance Plan is satisfactory, it has been our observation that many of the plans currently in place are little more than copies taken from a sample off of the internet.  Unfortunately, many providers view Compliance Plans as mere paperwork, rather than as a useful “tool” to be used by the organization on an ongoing basis. When properly constructed, an effective Compliance Plan can both improve the quality of patient care rendered and assist a provider in its efforts to fully comply with applicable statutory and regulatory requirements.  Therefore, it is imperative that you take steps to ensure that your Compliance Plan takes into account each of the unique risks faced by your home health agency.

To be clear, although there are a number of steps you can take to reduce the likelihood of a ZPIC audit, there is no way to entirely eliminate the risk.  Nevertheless, the development, implementation and consistent application of an effective Compliance Plan can greatly reduce an organization’s potential liability.  In many respects, an effective Compliance Plan is similar to a flu shot.  Although a flu shot cannot prevent you from getting sick, it will hopefully reduce the severity of your illness should you catch the flu.  Similarly, if you have implemented and diligently adhered to an effective Compliance Plan, you could still be audited by a ZPIC, a Recovery Audit Contractor (RAC) or by a law enforcement agency, such as the Department of Health and Human Services, Office of Inspector General (HHS-OIG).  However, as a compliant home health agency, an auditor is much more likely to find that your billing practices comply with applicable coverage requirements.

Robert W. Liles is an attorney with Liles Parker, Attorneys & Counselors at Law.  Mr. Liles has extensive experience representing home health agencies and other providers in connection with the appeal of post-payment audits conducted by ZPICs, Program Safeguard Contractors (PSCs) and RACs.  Mr. Liles has conducted “gap analyses” of many provider organizations and has worked with these providers to implement effective Compliance Plans.  Should you find that your organization is being audited, feel free to call give him a call for a complimentary consultation.  He can be reached at: (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.  The Southern District of Texas (especially South Texas) has been hit hard in recent months.  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 Robert W. Liles for a complementary consultation.  Robert can be reached at:  1 (800) 475-1906.  

According to HHS-OIG, More than Half of All Power Wheelchairs Claims Paid by Medicare are Improper — An Effective Compliance Plan Can Greatly Improve a DME’s Efforts to Conform with Medicare’s Documentation and Coverage Rules.

(July 16, 2011):  Despite continuing efforts by many Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) companies to address and remedy long-standing compliance risks, the Department of Health and Human Services, Office of Inspector General (HHS-OIG), reported this month that more than one-half of the billings for power wheelchairs by Durable Medical Equipment (DME) suppliers were improper during the period audited.

I.          Scope of the Problem:

            As HHS-OIG’s July 2011 report details, approximately 61% of the power wheelchairs billed to Medicare during the period reviewed were either medically unnecessary or lacked sufficient documentation for HHS-OIG to determine medical necessity.   Collectively, these improper billings accounted for $95 million of the $189 million paid by Medicare for power wheelchairs.

II.         Types of Problems Noted:

              In reviewing these Medicare power wheelchair claims, HHS-OIG conducted a random sample of 375 claims.  HHS-OIG’s review included both standard and complex wheelchairs.  Based on records submitted by DME suppliers, HHS-OIG found that:

• 9% of all power wheelchairs were medically unnecessary
• 52% had claims with insufficient documentation to determine medical necessity.

             A number of specific problems are outlined in HHS-OIG’s July 2001 report.  Two of the most significant concerns included:

• Some Medicare patients received power wheelchairs when only a manual wheelchair, cane, or walker was needed.
• Many of the claims were for power wheelchairs appeared to be justified and medically necessary based on suppliers’ records. However, when HHS-OIG examined the corresponding ordering physicians’ records, most of these same power wheelchairs were found to be either:
  • Medically unnecessary, or
  • Insufficiently documented, or
  • Undocumented.

              Essentially, the suppliers’ records were either unsupported, or, in some cases, were contradicted by the related ordering physicians’ medical documentation.

III.     Summary of HHS-OIG’s Findings:

              HHS-OIG’s July 2011 report is especially significant in light of the fact that the agency previously issued two prior reports based on the same sample of power wheelchairs.  While the earlier reports noted that there significant coding and documentation requirements, this recent report focuses on supplier compliance deficiencies.  Summarizing its findings among the three reports, HHS-OIG noted that 80% of the power wheelchair claims sampled did not meet Medicare’s documentation and / or coverage requirements. HHS-OIG concluded its report by saying:

“Although CMS has taken steps since 2007 to decrease errors among suppliers of power wheelchairs and other DME, Medicare has paid significantly more in recent years for power wheelchairs than it did in 2007. These increases may indicate that CMS continues to pay for power wheelchairs that are not medically necessary and/or have claims that do not meet documentation requirements.”

IV.        Practical Impact of HHS-OIG’s Findings:

              As a participating provider, power wheelchair suppliers have an obligation to ensure that their claims fully comply with Medicare’s coverage and billing requirements.  Unfortunately, as HHS-OIG’s report reflects, most of the power wheelchair claims paid by Medicare have not met these requirements.

            From a practical standpoint, HHS-OIG’s findings are not new – both physicians prescribing power wheelchairs and the suppliers of this equipment have repeatedly failed to either meet Medicare’s documentation requirements or show that this equipment is medical necessity for the care of the patient and that less expensive assistive devices (such as a cane, walker or manual wheelchair) are insufficient to meet the patients’ medical needs.  As a result, these claims have been regularly examined by various government law enforcement agencies (e.g. HHS-OIG, the Federal Bureau of Investigation and the U.S. Department of Justice) and CMS’ contractors (e.g. Zone Program Integrity Contractors (ZPICs), and DME Medicare Administrative Contractors (DME MACs)).  With the release of this report, suppliers will likely find their practices under yet additional scrutiny.

            Both physicians who prescribe power wheelchairs and DMEPOS suppliers who fill these prescriptions must ensure that their practices fully comply with applicable statutory and regulatory requirements.  As discussed below, the completion of a“gap analysis“ is an essential element of an effective Compliance Plan.

V.         Conducting a Gap Analysis:

             From a compliance standpoint, unless they have recently done so, all power wheelchair suppliers should immediately conduct a gap analysis to determine whether their practices fully comply with applicable statutory and regulatory requirements. Gap analyses are routinely used in practically every industry to assist Compliance Officers and others in identifying corrective actions that need to be taken in order to bring an entity’s practices to an acceptable baseline of compliant operations.  Gap analyses conducted by health care providers must analyze two aspects of their practices in order to ensure compliance.  These include:

Requirement #1:  A review of their documentation, coding and billing practices.  Additionally, the evidence must reflect that the power wheelchair billed was medically necessary and appropriate.

Requirement #2: A review of the supplier’s business practices to ensure that the supplier is not committing violations of the Federal Anti-Kickback, Stark or other statutory enforcement requirements.

             This article focuses on the first set of requirements set out above.

            Every gap analysis begins with a review of applicable statutory and regulatory provisions.  Additionally, suppliers must assess Medicare’s latest guidance covering documentation, coding and billing requirements.  In addition to issuances by CMS, Local Coverage Determinations (LCD’s), Local Medical Review Policies (LMRP’s) must be reviewed so that specific regional directives are also identified.

            Upon completing an analysis of the regulatory landscape, suppliers must next conduct a baseline assessment of its existing documentation, coding and billing practices. At this point in the process, a supplier can compare its practices with the government’s requirements. This process is often referred to as a “gap” analysis. In this fashion, a supplier is able to use this performance measurement tool to determine the extent to which action must be taken to bring the supplier’s practices up to the desired level of compliance.

VI.        CMS’ Power Wheelchair Requirements:

             As an initial starting point, power wheelchair suppliers should examine the “Face-to-Face Examination Checklist” that has been issued by CMS in MLM Matters Number SE1112.  As the guidance reflects, Power Wheelchairs are one of several devices collectively classified as “Power Mobility Devices” which qualify for coverage under Medicare Part B.

             CMS has defined “Power Mobility Devices” as covered items of DME which include a Power Wheelchair or a Power Operated Vehicle (POV) that a beneficiary uses in the home. Effective May 5, 2005, CMS revised its national coverage policy to create a new class of DME.  This new class of equipment was identified as “Mobility Assistive Equipment” (MAE), which included a continuum of technology–  from canes to power wheelchairs.

            A.        Ordering / Treating Physician Requirements.

           Regardless of how they are described, prescribing or ordering physicians are the proverbial “front-line” in the claims process. These physicians are responsible for determining whether a PMD is medically necessary and appropriate.  If so, the physician must:

Provide the power wheelchair supplier with supporting documentation consisting of portions of the medical record essential for supporting the medical necessity for the PMD in the beneficiary’s home. In order to document the need for a PMD there are a few specific statutory requirements that must be met before the ordering physician can issue a written prescription for the equipment: 

“1. An in-person visit between the ordering physician and the beneficiary must occur. This visit must document the decision to prescribe a PMD.  

2. A medical evaluation must be performed by the ordering physician. The evaluation must clearly document the patient’s functional status with attention to conditions affecting the beneficiary’s mobility and their ability to perform activities of daily living within the home. This may be done all or in part by the ordering physician. If all or some of the medical examination is completed by another medical professional, the ordering physician must sign off on the report and incorporate it into their records.  

3. Items 1 and 2 together are referred to as the face-to-face exam. Only after the face-to-face examination is completed may the prescribing physician write the prescription for a PMD. This prescription has seven required elements and is referred to as the seven-element order which must be entered on the prescription only by the physician.  

4. The records of the face-to-face examination and the seven-element order must be forwarded to the PMD supplier within 45 days of the completion of the face-to-face examination. 

5. CMS’ National Coverage Determination requires consideration as to what other items of mobility assistive equipment (MAE), e.g., canes, walkers, manual wheelchair, etc., might be used to resolve the beneficiaries mobility deficits. Information addressing MAE alternatives must be included in the face-to-face medical evaluation.”  (MLM SE 1112, page 2 of 7). 

Once the above requirements have been met, an ordering physician can properly issue a prescription for a PMD.

            B.        Ordering / Treating Physician Requirements.

           As MLM SE 1112 reflects, the following checklist is not to be used as a substitute for a patient’s underlying medical records.  Having said that, the checklist serves as a helpful tool for verifying that an ordering physician’s documentation (as reflected by the patient’s medical records) are both complete and sufficient to meet Medicare’s coverage requirements.  The following information should be fully documented in the patient medical records:

Documentation of “History” Component

The medical record for the patient includes the following history:

_____ Signs/Symptoms that limit ambulation;

_____ Diagnoses that are responsible for these signs/symptoms;

_____ Medications or other treatment for these signs/symptoms;

_____ Progression of ambulation difficulty over time;

_____ Other diagnoses that may relate to ambulatory problems;

_____ How far the patient can ambulate without stopping and with what assistive device, such as a cane or walker;

_____ Pace of ambulation;

_____ History of falls, including frequency, circumstances leading to falls, what ambulatory assistance (cane, walker, wheelchair) is currently used and why it is not sufficient;

_____ What has changed in the patient’s condition that now requires the use of a power mobility device;

_____ Reason for inability to use a manual wheelchair; such as assessment of upper body strength;

_____ Why does the patient need a power wheelchair rather than each level of mobility assistive equipment (a cane, walker, optimally configured manual wheelchair, scooter)?

_____ What are the reasons that the patient should not or could not use a cane, walker, optimally configured manual wheelchair or power operated vehicle (scooter) in the home to satisfy their needs? and

_____ Description of the home setting, including the ability to perform activities of daily living in the home, as well as the ability to utilize the PMD in the home.

Documentation of Examination Component

The physical examination is relevant to the patient’s mobility needs and the medical record for the patient contains:

_____ Weight and Height

_____ Musculoskeletal examination

• Arm and leg strength and range of motion;

_____ Neurological examination

• Gait

• Balance and coordination

• If the patient is capable of walking, the report should include a documented observation of ambulation (with use of cane or walker as appropriate).

VII.       Conclusion:

            DMEPOS suppliers have an obligation to ensure that power wheelchairs billed to Medicare fully meet the program’s documentation, coding and billing requirements. To that end, it important that suppliers carefully examine both their relationships with prescribing suppliers and the documentation of medical necessity associated with any claims billed to Medicare.  Importantly, it isn’t merely a paper-only exercise which requires that you “document” medical necessity – a patient must actually require this type of assistive device.  Therefore, the documentation must accurately reflect a patient’s diagnosis, signs / symptoms and clinical limitations which limit ambulation and necessitate the use of a power wheelchair.

Our attorneys have extensive experience representing health care providers in ZPIC audits of post-payment claims.  Additionally, we can assist with the development and implementation of an effective Compliance Plan.  Should you have questions, please call us for a complimentary initial consultation. Call:  1 (800) 475-1906.

Fundamental Medicare Compliance Concepts Everyone Can Understand, Use and Follow!

(July 15, 2011):  There are “rules of life” we have learned that can really bring certain essential Medicare compliance concepts into focus. While sometimes considered little more than a cliché, these helpful sayings and principles can be quite helpful when explaining fundamental compliance concepts to new staff or non-compliance personnel.  Five fundamental compliance concepts that everyone can understand include:

(1)  “If it isn’t yours, give it back” 

Sound familiar? This is one of the first principles we are taught as children.  Nevertheless, it is as true today as it was then.  Medicare providers have a statutory obligation to promptly return any and all overpayments identified. In fact, with the passage of the Affordable Care Act (ACA) in 2010, it is now a requirement that providers return Medicare overpayments to the government within 60 days of identification or face significant liability under the False Claims Act.

While the prompt, mandatory return of a known overpayment is clearly required, we were recently asked about a provider’s obligations when it comes to less clear, potential overpayments.  For example, suppose that a provider identifies a specific claim that was improperly submitted and paid by Medicare.  When reviewing how the overpayment occurred, the provider also learns that a former employee mistakenly believed that a certain service was covered by Medicare.  While the provider may only have evidence that a single claim was improperly submitted and paid by Medicare, the provider may suspect that the former employee may have incorrectly handled similar claims.  The issue therefore becomes whether a provider has an obligation to further investigate and determine whether other, unconfirmed overpayments may exist.  In considering this issue, we believe that the general principle still applies, regardless of the fact that the mandatory return provisions set out under the ACA may not cover this situation.  Remain unconvinced?  In addition to being the ethical and right action to take, it is important to keep in mind that even if the 60-day repayment provisions of the ACA may not technically apply, a provider who turns a blind eye to possible overpayments is exposing the practice to a potential whistleblower suit under the False Claims Act by a current or former employee. Do you know of a potential overpayment?  More than likely, someone else in your practice is also aware of the problem. The bottom line is simple — “If it isn’t yours, give it back” 

(2)  “Participation in the Medicare program is a privilege, not a right.”

 Remember taking driver’s education in high school?  After 30 years I still remember my driver’s education teacher repeatedly reminding us that we did not have a right to have a driver’s license.  Rather, it was a privilege to be permitted to drive – a privilege that could be taken away by the State as quickly as it was granted if we failed to follow the laws of the State and the rules of the road.  Frankly, Medicare is no different.  Health care providers do not have a right to participate in the Medicare program.  It is a privilege that must be earned.  Should a provider fail to adhere to Medicare’s coverage, coding and billing requirements, this privilege can be taken away.  With this in mind, providers must actively work to better ensure that they fully comply with Medicare’s coding and billing requirements. Should they not fully understand one of more of the program’s guidelines, it is the provider’s responsibility to learn Medicare’s rules and ensure that the provider’s business practices fully comply with the program’s provisions.

(3)  “If it sounds too good to be true, it probably is.”  

Physicians, small group practices and clinics should exercise caution when dealing with ‘consultants’ or ‘experts’ who boast of guaranteed increases in revenues or profits.  Unfortunately, many providers are having to deal with ongoing, steady declines in both Federal and private payor reimbursement rates.  In the current weak economy, unemployment rates have remained high and many patients are having a difficult time meeting their financial obligations (including monies owed to their health care provider).  In this environment, the promises and assertions of unscrupulous  individuals and companies who claim to know of “innovative” business models or ways to modify a provider’s coding / billing practices which will significantly increase a practice’s revenues can be tempting to a provider experiencing financial difficulties.  Have you been approached by someone with a “deal” which sounds too good to be true?  Be sure and check out HHS-OIG’s “Fraud Alert” titled “Special Advisory Bulletin: Practices of Business Consultants.”  While published a decade ago, the lessons and concerns discussed in the bulletin are as current today as they were a decade ago.  Check it out – and remember — the age old cliché “If it sounds too good to be true, it probably is,” is especially true when it comes to health care business opportunities.

(4)  “Everyone does it, so it must be okay.”

 In years past, a number of drug companies and medical device companies played fast and loose with Medicare’s rules, showering physicians with lavish gifts, inviting them to attend paid vacations and entering into sham “advisory” or “consulting” agreements which paid the physicians regular stipends for little, if any, work.  Why did these companies engage in these practices?  In many instances, the companies wanted to influence the physicians’ decision-making when it came time to prescribe certain drug or order medical devices to be used in the care and treatment of their patients. These actions amounted to kickbacks – plain and simple.  Today, drug and medical device industry representatives have made great strides in educating their members and in eliminating these illegal practices.  At the height of these practices, many physicians appeared to take the position that since their peers accepted kickbacks, it must be okay.  Clearly, this mindset is just flat wrong.  Unfortunately, it isn’t limited to drug and medical device companies. Generally, physicians should exercise care before accepting any thing of value from a company or clinical practice with whom the physician works – especially when the physician either makes referrals to the company or recommends / prescribes items or devices sold by that company to their patients.  In considering this issue, it is often helpful to ask, “Where do I send my referrals?” and / or “Where do I send my patients for Medicare-covered medical items or supplies?” Additionally, ask yourself, “From whom do I receive business or referrals?” Once answered, these business relationships should be carefully reviewed to ensure that there are no transactions that could give even the appearance of being improper. A typical example which repeatedly arises involves the use of “Medical Director” agreements where a physician is paid a monthly stipend which exceeds the fair market value of any services which are provided under the agreement.

(5)  “Neatness and accuracy count.”   

Our Firm represents a wide variety of health care providers when responding to post-payment claims audits conducted by ZPICs and other Medicare contractors. Over the last two years, we have noted a significant increase in the number of claims being denied because medical documentation is either illegible or incomplete. From a compliance standpoint, these problems are among the easiest for a provider to remedy on a going-forward basis.

 Handwritten portions of a medical record must be legible by an average reviewer, not merely by the passage’s author –   When assessing claims denial reasons cited by ZPICs, our attorneys, paralegals and other personnel are often required to go through medical records as we assemble responsive arguments in support of payment.  More often than not, we don’t have any problem deciphering the records cited by the ZPIC as being “illegible.”  Having said that, ZPICs and other contractors have an enormous audit caseload, making it difficult to spend an inordinate amount of time trying to make sense out of poorly written passages.  As a result, if their reviewers cannot readily read a passage, they merely deny the claim and move on.

The lesson to be learned is clear – physicians, nurses, therapists, counselors and others must ensure that any handwritten comments, signatures, dates or other information entered into a medical record can easily be read by an outside third party who is not experienced in reading the handwriting of your staff.  It is important ot keep in mind that if there is an audit or review of this information by a ZPIC or another government contractor, it is likely to be several years in the future. During that period, the writer may no longer be with the practice and it may be difficult (if not impossible) to easily locate the writer for assistance in deciphering handwritten passages.  From a compliance standpoint, regular self-audits can prove quite helpful in identifying possible problems.

If you are conducting a self-audit and find that words or passages are illegible or incorrect, you should consider taking the following remedial steps:

Advise your staff of the problem and follow-up to ensure that future entries are legible and accurate – Physicians, nurses and staff should be educated regarding the importance of ensuring that their handwriting is easily legible and the information they are providing is accurate. In most instances, once this is identified as an issue, most staff are willing to work with you so that future problems do not arise.  We recommend that regular follow-ups are conducted to ensure that problematic handwriting does not again deteriorate to where it is again illegible.

Correcting illegible or erroneous words, phrases or passages – Should you find that certain portions of a patient’s record documenting prior services rendered are illegible, you cannot merely erase it or use white out to hide the original handwritten section  before re-writing the passage so that it is legible. We recommend that you contact your Compliance Officer or legal counsel before making any changes to a medical record (regardless of whether the record is handwritten or electronic).  Legal counsel can guide you on the correct way to make changes or corrections to a medical record which documents services previously rendered. If a change or correction to a word or passage is necessary, you should not erase, white-out, scratch out or use a marker to conceal the original remark.  Instead, we usually recommend that a single line through the incorrect or illegible phrase or passage is made. If you are audited, an outside reviewer will be able to readily see the original passage. Next, the corrected entry should be carefully written next to or above the original entry. It should then be signed and dated by the individual making the correction.  In this fashion, an outside reviewer will not be misled in any way about what was originally written, when the corrected entry was made and / or the identity of the person making the change to the record.

As set out in Chapter 3, Section 3.3.2 of the Medicare Benefit Policy Manual, the Centers for Medicare and Medicaid Services (CMS), when conducting a “Medical Review,” CMS advises ZPICs to consider the following:

“3.3.2 – Medical Review Guidance

For example, ZPIC staff looks for some of the following situations when reviewing documentation:

 • Possible falsification or other evidence of alterations including, but not limited to: obliterated sections; missing pages, inserted pages, white out; and excessive late entries;

 • Evidence that the service billed for was actually provided; or,

 • Patterns and trends that may indicate potential fraud.” (emphasis added).

 As a participating provider in the Medicare program, it is essential that you ensure that the care and treatment you provide is factual, accurate and recorded in a legible fashion.

To that end, one Medicare Administrative Contractor (TrailBlazer Health Enterprises) has suggested that when reviewing medical documentation, providers should check to ensure that:

• Records are legible; reasonable clinicians will easily recognize that all abbreviations and symptoms
• The patient’s name and the date of service appears on every page of the record (including the back side of double-sided forms).
• The medical record clearly indicates the identity and professional credentials of all people who contributed to the service and / or the record, and who contributed which portion(s) of the service and or record.
• Information in the record clearly supports all diagnoses reported on the claim.
• Information in the record clearly demonstrates that all of the work described by the code(s) and / or modifier(s) reported on the claim was performed.
• All procedures reported are clearly documented.
• Education and Management (E/M) services reported on the same day as a procedure are clearly documented, medically necessary, significant and separate from the procedure.
• The record of services performed “incident to” a physician service demonstrates the link between the employee’s work and physician’s service.
• The record of services split / shared by a physician and non-physician practitioner demonstrates the face-to-face encounter and contribution to patient management by each practitioner involved.

Ultimately, providers who diligently work to achieve these points will have made significant strides towards a compliant culture in your  practice or clinic.

Liles Parker attorneys have extensive experience assisting providers in establishing an effective Compliance Plan.  Should you have questions regarding compliance, please give us a call for an initial complimentary consultation.  We can be reached at:  1 (800) 475-1906. 

ZPICs, PSCs, and RACs are Conducting Audits of SNFs — Skilled Therapy and Skilled Nursing Services Must be Fully Documented and Must Comply with Medicare’s Coverage Requirements

(July 10, 2011):  I.   Introduction:  In response to a report released by the Office of the Inspector General (HHS-OIG) of the Department of Health and Human Services, the Centers for Medicare and Medicaid Services (CMS) recently signaled that it will direct Medicare contractors to more closely scrutinize the billing patterns of skilled nursing facilities (SNFs). In fact, since HHS-OIG released its report, we have noted a dramatic increase in the number of SNF audits being performed by Zone Program Integrity Contractors (ZPICs), Program Safeguard Contractors (PSCs), and Recovery Audit Contractors (RACs). These audits can potentially result in extrapolated overpayments of millions dollars. 

In light of these enhanced audit and enforcement efforts, it is essential that SNFs take steps to better ensure that their actions fully comply with applicable documentation, coverage and payment requirements.  Areas of particular concern identified by ZPICs have included:

II.  Areas of ZPIC Concern:

Certifications and Recertifications. Federal regulations require that a physician certify a patient’s need for SNF services “at the time of admission or as soon thereafter as is reasonable and practicable.” The first recertification must take place by the patient’s 14^th day of SNF care, and each subsequent recertification must take place every 30 days. Providers should ensure that they conduct and document certifications and recertifications in a timely fashion. A number of contractors have refused to accept copies of physician’s orders — including orders for additional or ongoing therapy care — as a substitute for a certification or recertification.

Hospital Documentation. Medicare rules state that all patients receiving SNF care must have received inpatient hospital care for at least 3 consecutive days and be admitted to the SNF within 30 days following discharge from the hospital. Patients must receive SNF care for a condition for which they received treatment in the hospital. At a minimum, providers should obtain the following documentation related to each patient’s qualifying hospital stay: 

Patient history and physical.

All laboratory reports and tests.

All physician orders and progress notes.

All inpatient therapy progress notes.

Patient discharge summary. 

Providers should obtain this information from the discharging hospital as soon as possible after a new patient is admitted to the SNF. Incomplete or insufficient records (especially those that establish a baseline level of patient function) will give contractors ample bases on which to deny your claim.  

Therapy Documentation. All therapy care must be provided under a plan of care established by a physician, nurse practitioner, or licensed therapist. The documentation must also reflect the patient’s diagnosis, anticipated therapy goals, and the type, amount, frequency, and duration of therapy. The documentation should also include the patient’s prior functional ability, rehabilitation potential, and evidence of an expectation for material progress. At a minimum, the therapy documentation for each claim should consist of: 

A treatment plan for each RUG code billed and for all dates of service on the claim.

A log of all therapy minutes that were provided during the dates of service on the claim.

Progress notes to support the look-back period for each RUG code billed as well as the entire payment period for the dates of service. 

Providers should ensure that information from the therapy logs (especially the number of minutes of therapy) accurately reflects the amount of therapy provided and is consistent with the information coded on the MDS. Inconsistent coding will likely result in a denial of the claim, despite the fact that these therapy services were properly provided. 

Nursing Documentation. Under applicable regulations, patients must require skilled care on a daily basis in order to be eligible for post-hospital SNF services. Generally speaking, skilled nursing care is that which is so complex that it can only be safely and effectively performed by professional or technical personnel. Generally, examples of skilled nursing cited by SNF have often included:

Management and evaluation of the care plan;

Observation and assessment of the patient’s changing condition; or

Patient education services.

 SNFs have sought to demonstrate a skilled level of nursing care by documenting the nurse’s ongoing observation and assessment of a patient’s condition. However, in order for observation and assessment to qualify as skilled care, the patient’s condition must such that imminent deterioration is possible. In those cases, observation and assessment of the patient only constitutes skilled care until the patient’s condition is stabilized. Providers should therefore document any and all facts and circumstances which indicate a possible imminent decline in the patient’s condition. Otherwise, a ZPIC deny the claim on the basis that the care given does not constitute skilled nursing care.

III.  Recommendations and Conclusion:  Over the past year, the number of SNFs audited by ZPICs, PSCs and RACs has significantly increased, due in large part to the government’s continuing concern that the services being provided do not qualify for coverage and payment. 

While an audit of your SNF may be inevitable, you can reduce the likelihood of an overpayment through the use of an effective Compliance Plan which includes the use of periodic self-audits designed to identify possible deficiencies which may exist.  Once identified, SNFs must immediately take remedial steps to correct any deficiencies which are identified and modify its practices (and the risk areas within its Compliance Plan) to better ensure that these problems do not reoccur. 

Prior to conducting a review, we recommend that you contact your legal counsel to discuss possible review options.  Working with legal counsel, SNFs should consider working with outside third-party reviewers who are familiar with both ZPIC / PSC / RAC concerns and SNF coverage and payment requirements. While it is certainly important for providers to actively participate in the self-audit, a third party engaged to direct the review may be more objective in their assessments of the documentation than the therapy or skilled nursing providers themselves. Attorneys who are familiar with the risk areas unique to SNFs can also readily identify problems with documentation, recommend strategies for improvement, and work with SNFs to adjust their Compliance Plans accordingly.  Ultimately, the assistance of knowledgeable counsel could help providers avoid (or reduce) future liability it audited by a Medicare contractor.  As a final point, regardless of whether a self-audit is conducted by a third party or by the SNF itself, it is essential to keep in mind that:

 “If it doesn’t belong to you, give it back” – All providers, including SNF must comply with this simple rule.  Should you identify a Medicare or Medicaid overpayment, it must be returned to the government within 60 days. 

 “Documentation of services rendered must be accurate” – Therapy and skilled nursing services must be accurately documented in each patient’s medical records.  It isn’t sufficient to merely state that therapy or skilled nursing services were provided.  As detailed above, SNFs must document aspects of the therapy or services provided which qualify as “skilled” care.  Finally, documentation must accurately describe the work actually conducted and ensure that the duration of services documented is correct.     

Liles Parker attorneys have extensive experience representing SNF and other health care providers in connection with ZPIC audits and / or reviews by other Medicare contractors.  Should you have questions, please give us a call for a complimentary initial discussion of your project or case.  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. 

Texas Physicians are Starting to Level the Playing Field in Their Dealings with the Texas Medical Board.

(June 20, 2011):  Last week, Texas Governor Rick Perry signed legislation aimed at bringing modest reform to the rules governing investigations of physicians by the Texas Medical Board (the Board). The Board is the state’s regulatory body that licenses and disciplines physicians and other health care professionals. House Bill 680 (HB 680), which takes effect on September 1, 2011, is seen as a hard-fought victory by Texas physicians. To their credit, the Association of American Physicians and Surgeons (AAPS), a professional association of physicians in all types of practices and specialties, has reportedly been one of the strongest advocates for reform measures such as this in Texas and across the country.

I.          Important provisions of HB 680:

The primary purpose behind HB 680 concerned reforming the complaint process filed with the Board. Among other provisions, several of the most important changes to the Board’s rules included the following:

• The Board may no longer accept “anonymous” complaints. An “anonymous”  complaint is one which lacks sufficient information to identify the source or the name of the person who filed the complaint. Sec. 154.0535 of the Texas Occupations Code.
• Requires the names and addresses of insurance companies and their agents, third party administrators and pharmaceutical companies who file complaints to be given to the physician subject to the complaint. Furthermore, unless the notice would jeopardize the investigation, the Board must notify the physician of those complaining parties no later than the 15th day after the date the complaint is filed. Sec. 154.0535
• Establishes a seven (7) year statute of limitations on complaints, unless the complaint dealt with care provided to a minor. In that case, the Board may not review or proceed on a complaint after the later of either:
  • The date the minor is 21 years of age; or
  • The seventh anniversary of the date of the care. Sec. 154.051
• Allows the physician to have his Informal Settlement Conference (ISC) hearing with Board officials to be recorded, thereby reducing any potential abuse of power. These recordings become part of the physician’s investigative file and may not be released to third parties unless authorized under other provisions of the Occupations Code. Sec. 164.003.
• Requires that the Board dispose of a contested case by issuing a final order based on an administrative judge’s (ALJ) findings of fact and conclusions of law.  Importantly, the Board may not change an ALJ’s “Findings of Fact” or “Conclusions of Law” or vacate or modify the ALJ’s order. Nevertheless, the Board still retains its sole authority and discretion to determine the appropriate action or sanction. The ALJ may not make any recommendations regarding these latter decisions. Sec. 164.007(a) and (a-1).
• Extends the timeframes the Board has to complete a preliminary investigation of a complaint and notify a physician of an ISC from 30 to 45 days. Sec. 154.057(b)
• Allows the Board to propose and institute a “remedial plan” to resolve the investigation of a complaint. This plan may not contain a condition that either revokes, suspends, limits or restricts a physician’s license or other authorization to practice medicine. Furthermore, the plan may not contain a provision that assesses an administrative penalty against a physician. However, the Board may assess a fee against a license holder participating in a remedial plan in an amount necessary to recover the costs of administrating the plan. Sec. 164.0015
• Prevents “remedial plans” to be used in certain cases.  For example, “remedial plans” may not be imposed to resolve complaints concerning:
  • A patient’s death;
  • The commission of a felony;
  • A matter where the physician engaged in inappropriate sexual behavior or contact with a patient or became financially or personally involved in an inappropriate manner with a patient; or
  • An appropriate resolution that may involve a medicine. Sec. 164.0015
• Bars the issue of a remedial plan to resolve complaints against a physician if the license holder has previously entered into a remedial plan with the Board for the resolution of a different complaint. Sec. 164.0015
• Allows remedial plans to become public information. Furthermore, in civil litigation matters, these plans constitute a settlement agreement under Rule 408[1], Texas Rules of Evidence. Sec. 164.002(c) and (d).

II.         Several Provisions of Earlier Legislative Efforts Were Not Included in HB 680:

HB 680 is an important step in the right direction for medical board reform. However, the Bill falls short of earlier legislation that had been introduced in the State. Many of the provisions in HB 680 were taken from Texas HB 1013 which had passed the Texas House 147-0 on May 10, 2011. HB 1013 was allegedly drafted to provide legal due process protections for physicians and require for administrative transparency and accountability by the Board.  Important proposed reforms covered by HB 1013 which were not incorporated in HB 680 include:

• Eliminating “confidential” complaints. With a “confidential” complaint, the Board knows the name of the person or group who files the complaint but keeps that name confidential from the physician subject to the complaint. The physician would have received a copy of the complaint containing the name of the person filing the complaint. Only patients and the patients’ relatives would have been exempted from disclosure.
• Prohibiting conflicts of interests by Board members. The provision stems from instances where Board members served as witnesses to medical malpractice cases while serving simultaneously serving on the Board, without disclosure to the public or to the physicians subjected to the Board’s review/discipline.
• Allowing the Board to only use actively practicing physicians as experts, who would be allowed to review the accused physician’s record, but without knowing the particular name of that physician.
• Assigning ISC panel members randomly.
• Entitling physicians, like attorneys, to a right to a jury trial if their license would be revoked.
• Making the Board annually disclose a list of those individuals who participated on its ISC panels, as well as how often.

Despite having 87 sponsors to the bill, HB 1013 was reportedly blocked from being heard in the Texas Senate.

III.        Conclusion:

As previously discussed, when the Board is unable to resolve a case, the case is then referred to an ALJ at the State Office of Administrative Hearings. Like many States, prior to the passage of HB 680, the Board did not have to accept the “Findings of Fact” or “Conclusions of Law” issued by an ALJ assigned to hear a case.  HB 680 now requires the Board to accept the ALJ’s decisions on whether a physician has committed a violation.  This single change is a huge “win” for Texas physicians. 

While Texas physicians are far better off today than they were prior to enactment of HB 680, it is important that they familiarize themselves with their obligations under the Texas Medical Practice Act.  The TMB remains strong and is known for the stringent positions it takes. 

Liles Parker attorneys have extensive experience representing physicians and other health care professionals in investigations and disciplinary actions taken by State Medical Boards.  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 Robert W. Liles for a complimentary initial consultation.  Robert can be reached at:  1 (800) 475-1006  

  

Predictive Modeling: ZPICs Using Data Mining to Identify Fraud

Over the last decade, the Centers for Medicare and Medicaid Services (CMS) and its contractors (Zone Program Integrity Contractors (ZPICs), Program Safeguard Contractors (PSCs) and Recovery Audit Contractors (RACs)),  have steadily assembled an extensive database of the coding and billing practices of Medicare providers around the country.  Analyzing this data, contractors have been able to identify the profile of a ”typical” provider for each specialty.  With this information, Medicare contractors are better able to identify changes in the coding and / or billing habits of a particular provider.   Providers whose billing practices are significantly different from those of their peers may also be easily identified.  The purpose of this article is to provide an overview of the government’s current use of  “data mining”  and “predictive modeling”  techniques.

I.         Introduction:

            CMS’ computerized database of claims and services billed to the Medicare program covers a comprehensive record of the bills submitted by health care providers for payment.  Over the years, Medicare contractors and law enforcement have steadily refined their ability to analyze this enormous amount of quantitative data.  In addition to assisting with the government’s efforts to estimate future growth in the size of the Medicare program, this database has enabled  Medicare contractors and law enforcement to employ highly sophisticated data mining techniques, thereby identifying (1) health care providers whose current coding and billing actions appear to have deviated from their prior practices, and (2)  Medicare providers whose coding and / or billing actions are significantly different from those of their peers.  Typical factors considered when using data mining techniques for targeting purposes have included, but are not limited to:

• A Medicare provider’s specific area of practice.
• A Medicare provider’s practice location.
• The types and frequency of health care services or supplies billed to Medicare.
• The relative size of a provider’s practice, clinic or health care related organization (based on the number of Medicare billing providers employed).

            Through an examination of these factors or data elements, Medicare contractors and law enforcement have been able to identify health care providers whose coding and / or billing practices make them “outliers” when their actions are compared to similarly-situated Medicare providers.  Once a health care provider has been identified as an “outlier,” further action may be taken.

       Typical “data mining” actions taken by ZPICs, PSCs,, RACs and / or law enforcement have historically included:

• An unannounced site visit by the ZPIC or PSC to the Medicare provider’s practice location.
• Sending a request for supporting documentation related to a limited number of claims (often less than 10, this type of review is generally referred to as a “Probe Audit”).
• Sending a request for supporting documentation related to 30 claims or more (these claims are often then used by the ZPIC or PSC as a “sample” in order to calculate an alleged overpayment based on extrapolated damages).
• Sending a demand letter for an alleged overpayment based on an “automated” review of the data conducted by a RAC or ZPIC.
• Using “data mining” to identify outlier’s whose billing practices warrant to initiation of an investigation by law enforcement.

II.         The Use of “Data Mining” to Identify Post-Payment Improper Practices:

            While Medicare contractors such as RACs, PSCs and ZPICs long utilized post-payment data mining to identify providers who appear (based on their assessment of the data) to have likely engaged in improper billing activities, the regular use of data mining by the Department of Justice to identify criminal targets is a fairly recent practice.  As Lanny A. Breuer, Assistant Attorney General of the Department of Justice’s (DOJ’s) Criminal Division indicated last August:

“In 2007, the Criminal Division of the Justice Department refocused our approach to investigating and prosecuting health care fraud cases. Our investigative approach is now data driven: put simply, our analysts and agents review Medicare billing data from across the country; identify patterns of unusual billing conduct; and then deploy our “Strike Force” teams of investigators and prosecutors to those hotspots to investigate, make arrests, and prosecute. And as criminals become more creative and sophisticated, we intend to use our most aggressive investigative techniques to be right at their heels.” (emphasis added).

            As law enforcement has readily acknowledged, post-payment billing data is being effectively utilized to “identify patterns of unusual billing conduct.”   Using data mining as a targeting tool, the government is able to quickly focus its investigative and audit resources on specific providers whose coding / billing practices fall outside the scope of what would normally be expected.

III.        The Use of Predictive Modeling to Minimize Wrongdoing:

            While identifying improper billing practices after-the-fact has proven enormously helpful, law enforcement has also taken  steps to identify problem providers much sooner in the process, thereby minimizing the amount of improper billing that may be submitted to Medicare for payment.  As HHS Secretary Kathleen Sebelius stated on March 15, 2011, during the joint HHS / DOJ “Detroit Fraud Prevention Summit,” HHS is moving away from the “old pay and chase model.”  According to Secretary Sebelius:

“. . . Instead of the old ‘pay and chase’ model, we’re getting proactive.

Late last year we issued a solicitation for state-of-the-art analytic tools to help predict and identify fraudulent claims as soon as they are submitted, so we can stop payment before it goes out the door.

These are the same type of predictive modeling tools that banks and insurance companies use to identify potential fraud before it occurs. They are how your credit card company can raise the alarm if they see a dozen flat-screen televisions charged to your card in one day. . ..” (emphasis added).

            While post-payment claims data analyses will likely play a role in identifying overpayments, the government is serious about stopping health care fraud as soon possible in the process.  While the government cannot “predict” wrongdoing before it happens, based on a complex analysis of various factors, it can effectively identify wrongdoers so quickly that the amount of improper claims paid by the government can be dramatically reduced.

IV:       Provider Concerns:

Many providers are concerned that the government’s heavy reliance on predictive measures such as data mining to identify targets may subject a provider to an unjustified audit or investigation.  Moreover, there is a concern that data mining might create an unwarranted presumption that a Medicare provider has engaged in improper billing practices.  Unfortunately, even if ultimately shown to be incorrect, a provider can spend an enormous amount of money defending itself in connection with a post-payment claims audit.  Providers placed on pre-payment review as a result of data mining can be especially hard-hit.  It is not at all unusaul for providers to remain on pre-payment review for six to twelve months (or even longer).  During this time period, cash-flow is interrupted and many providers find it almost impossible to remain in business.

V.        How to Avoid Being a Target: 

In today’s environment of sophisticated data mining, it is essential that Medicare providers have a clear picture of how their coding and billing practices compare to those of their peers.  To be clear, both Medicare contractors and law enforcement recognize that a provider’s practices may differ in one aspect or another from those of their peers.  Moreover, those differences can result in billing practices which might make a provider appear to be an “outlier.”   There are a number of companies who publish benchmarking charts which make it relatively easy for a physician or other provider to compare their billing practices to that of their peers.

To be clear, just because a provider’s coding and billing practices differ from those of their peers (in the same specialty area), does not necessarily mean that a provider’s practices are improper. In recent years, we have seen providers who were targeted by a PSC or ZPIC precisely because their utilization rates of certain codes exceeded those of their peers.   In at least one case, we found that a provider was recognized as an “expert” by his peers and often received highly-complex referrals by other Medicare providers. As a result, the number of highly complex Evaluation and Management (E/M) reviews conducted exceeded those of similarly-situated providers.  Having said that, if a provider were to find that its billing practices did not match of its peers, it could conceivably find that its understanding of the coding requirements was incorrect and that remedial training was immediately needed.

In either case, the bottom line is clear – all providers have an obligation to try and ensure that services billed to Medicare meet applicable statutory and regulatory requirements governing coverage and medical necessity.  If your organization is subjected to an audit, it is essential that you determine whether your billing practices fully comply with the rules.  If so, you must be prepared to explain to Medicare contractors or law enforcement why the anomalies identified through data mining or predictive modeling are not evidence of fraud or overpayment.  Providers facing this situation should work with experienced legal counsel to ensure that the arguments to be presented fully address the government’s concerns.  Failure to do so may result in an expansion of the government’s audit.

Liles Parker attorneys and staff have extensive experience representing health care providers in connection with Medicare contractor audits and / or investigations.  Should you find that your organization is facing a ZPIC, PSC or RAC audit, please give us a call for a complimentary consultation regarding your case.  Call us at: 1 (800) 475-1906.       

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