Michael Cook and Robert Liles, partner and managing member of Liles Parker, respectively, are extensively quoted in an article published in the May 2012 issue of Provider Magazine.  Provider Magazine is the official publication of the national trade association for nursing and skilled nursing providers.  The article, entitled “Fraud Fighters Mine Data,” focuses on the fact that skilled nursing facilities (SNFs) have seen a substantial uptick in both the volume and level of aggressiveness of ZPICs in their audits of SNF providers.  The article discusses how ZPICs are utilizing data mining techniques and predictive modeling to target SNFs that they believe have a high prevalence of submitting claims for residents in the Ultra High Resource Utilization Groups (Ultra High RUGs).

The article discusses not only the increase in volume, but also the fact that ZPIC auditors are showing up at facilities without notice, and often demanding to see records and interview staff during the middle of the day, when the staff are also responsible for delivering resident care.  The article also discusses the likely driver of the audits, a report from HHS-OIG, and why a high prevalence of patients falling within the Ultra High RUGs may not signify any improper billing, but rather simply reflect the fact that treatment of what previously was labeled sub-acute patients, and the increasing of acuity in the resident complement, may simply represent current  and cost efficient use of resources.

In the article, Mr. Cook and Mr. Liles comment on steps that SNF providers can take in protecting themselves against these audits, not only through the appeals process, but also through the implementation of strong compliance and quality assurance programs, as well as training of staff on how to respond to these audits.  While the article is specific to ZPIC audits of SNFs, the preventive strategies discussed by Liles Parker attorneys are transferable to all provider groups, including home health agencies, durable medical equipment suppliers, hospices, and physicians.

The link to the article is http://www.providermagazine.com/archives/archives-2012/Pages/0512/Fraud-Fighters-Mine-Data.aspx.

Liles Parker attorneys have extensive experience working with nursing facilities and other providers and their associations on matters of this nature.  This includes working with clients on compliance issues, audits, appeals, and training.  For a free consultation, contact Michael Cook or Robert Liles at 202-298-8750.

Liles Parker PLLC

MIC Audits Background and OIG Report

Recent efforts by CMS to improve the performance of MIC audits of Medicaid claims have resulted in procedural changes for these contractors and new financial incentives for Medicaid Recovery Audit Contractors (MRACs) to increase their audit efforts and effectiveness.

The recent U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) report entitled “Early Assessment of Audit Medicaid Integrity Contractors”, issued on 03/19/12, revealed that MICs underwent a learning curve during their startup audit efforts in 2010 and after identifying several problems, the Medicaid Integrity Program (MIP) is now poised to significantly improve its audit presence and its ability to target and identify healthcare waste, fraud and abuse.

The report indicated that initial MIC audits in state-administered Medicaid programs were largely ineffective, but identified correctable issues associated with the application and analysis of Medicaid data.  As a result, significant improvements in Review and Audit MIC capabilities to identify audit overpayments can soon be expected.

The federal government’s share of Medicaid spending for 2010 was $271.4 billion, with the various states accounting for the remaining $133.9 billion.  As set out in CMS’ 2010 Actuarial Report, overall Medicaid spending totaled $404.9 billion. CMS projected $22.5 billion in improper payments through its Medicaid Payment Error Rate Measurement, discussed in the HHS Agency Financial Report for 2010.

The OIG report found that of the 370 pre-screened MIC audits that had been conducted or were still ongoing in the first 6 months of 2010, 81% were either unable or unlikely to identify overpayments.  From January 1, 2010 through June 30, 2010, the OIG found that, “Only 11% of assigned audits were completed, with findings of $6.9 million in overpayments, $6.2 million of which resulted from seven completed collaborative audits involving Audit MIC’s, Review MIC’s, States and CMS.”

Moreover, CMS spent approximately $30.5 million on Review and Audit MICs in 2010, with $17.2 million going to Audit MICs. The government has enjoyed success on the Medicare side with increased contractor audits by RACs and ZPICs, and is now looking to improve its initially disappointing performance on the Medicaid side and increase its $6.9 million total in overpayment recoveries.

The OIG report found that Audit MIC performance was hindered by poor target identification algorithms in their data analysis software and mistakes in the Review MICs’ application of State Medicaid program policies and data, bearing in mind that each state’s program policies and data are unique.  The OIG made a number of suggestions for improved application and analysis, with the result being that providers should expect largely improved overpayment identification by MICs in the future.

Significantly, the OIG found that $6.2 million of the $6.9 million dollars identified as overpayments in 2010 resulted from 7 of 8 collaborative audits conducted between Audit MICs, Review MICs, State MICs and CMS.  Of the 42 MIC audits studied, these 7 collaborative audits identified 90% of the overpayments for that period, with only $700,000 coming from the remaining 35 MIC audits.

OIG recommended that CMS expand its collaborative audit efforts with State Medicaid administrative agencies, and improve its audit target selection in states that choose not to collaborate with the federal government in improving identification of waste, fraud and abuse by Medicaid providers.

Liles Parker is a full service health law firm, providing assistance and representation with Medicaid and Medicare compliance concerns, government audits and appeals, and other health law matters.  Should you have any questions, please contact Richard Pecore at 713-432-4747 for a free consultation.

Liles Parker PLLC

Jurisdiction H Implementation

Liles Parker continues to monitor the consolidation of current MAC Jurisdictions 4 & 7 into Jurisdiction H, which will include Texas, Colorado, New Mexico, Oklahoma,  Louisiana, Arkansas and Mississippi and will be serviced by Novitas Solutions (formerly Highmark Medicare Services).

Novitas has posted a number of important alerts and informative FAQs on the implementation process over the last several weeks, including the following:

• All providers in new Jurisdiction H who are currently serviced by Pinnacle Business Solutions, Inc., Cahaba Government Benefits Administrators  or TrailBlazer Health Enterprises  will receive letters over the next few months requesting they submit a new CMS-588 EFT Authorization Agreement so that Novitas can continue issuing payments post-cutover.  Arkansas, Louisiana and Mississippi Part A and Part B providers are first on Novitas’ implementation schedule and should receive their letters by May 16, 2012.  Providers will have 30 days to respond to a request letter or they may experience delays in payment after their cut-over date.  For full details, please see this notice published by Novitas.

• All new, change of information, change of ownership and revalidation provider enrollment applications that are in process on a particular jurisdiction cut-over date will be transitioned to Novitas as of that date.  Novitas will have an online tool for confirming the status of in process applications, and will issue further instructions for checking the status of a transitioned application in the near future.  In addition, Novitas will take over all revalidation requests as of a jurisdiction’s particular cut-over date.

• All Part A and Part B providers will continue using the same CCN/PTAN and NPI numbers post-transition.

• Novitas will post all LCDs it intends to adopt for Jurisdiction H on June 28, 2012 to its website and to the Medicare Coverage Database.  After a 45 day notice period, the LCDs will become effective as of the date a particular contractor’s workload transitions to Novitas.

• A number of FAQs on EDI were posted that address the transition process.

Please check Novitas’ Jurisdiction H Transition webpage for additional details and updates.  You can find the current schedule for cut-over dates and other useful information as well.

Liles Parker is a full service health law firm, providing provider enrollment and change of ownership assistance, administrative appeal of overpayments, and legal analysis and assistance with Medicare reimbursement issues.  Should you have any questions, please contact Jennifer Papapanagiotou at 832-594-4376 for a free consultation.

Liles Parker PLLC

Medicaid Therapy Services Reminder Issued by Texas HHSC

Recognizing that many Medicaid therapy services in the state are not in compliance with fraud, waste, and abuse laws, Tom Suehs, the Executive Commissioner for the Texas Health and Human Services Commission (HHSC), issued a reminder last week. Specifically, the Commissioner identified several violations of Texas law in recent months, most notably in South Texas, which prompted such a response.

The Commissioner primarily identified the fact that Medicaid therapy services providers in South Texas were providing services to children without the presence or consent of the child’s parent or legal guardian. This practice violates a Texas law, which prohibits services provided to a child under the age of 15 unless a parent, legal guardian or other properly authorized adult accompanies the child.  The intent of the law is to make sure that an adult can verify that the services were, in fact, provided, and to ensure the safety of the child from medically unnecessary, or even dangerous, procedures.

In addition, transportation of children to and from medical procedures paid through Medicare or Medicaid by providers or those with which they have a business relationship may raise serious concerns, and may possibly implicate the Federal Anti-Kickback Statute, among other laws. Notably, this is a criminal statute. Because of the severity of punishments for non-compliance, it is imperative that Medicaid therapy services providers in Texas, especially South Texas, ensure that their practices fully comply with all applicable rule, regulations, and other guidance.

Implementing an effective compliance plan means more than simply downloading a model plan off of the Internet – instead, an effective compliance plan is one that is individualized to your practice, recognized by your employees, and followed on a daily basis. This may include the use of a gap analysis to assess your documentation practices and evaluate your business relationships for any signs of impropriety. Remember, the government is looking for these things, and they will most likely find them. You need to make sure that your practice can undergo and withstand an audit or other scrutiny.

Liles Parker is a full-service health law firm focusing on regulatory compliance and representing providers in health law and business matters. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for all types of health care providers, including providers of Medicaid therapy services. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid.

 For more information on how we can assist your practice in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is a Managing Partner at the Firm and can be reached at 1-800-475-1906. Call him today for a free consultation.

Liles Parker PLLC

Largest Health Care Fraud Bust in History

Update (May 3): In total, 107 individuals were charged yesterday in connection with a health care fraud scheme comprising $452 million in false billing. 91 of the accused have been arrested and are in custody.

News outlets are reporting that approximately 100 people have been arrested and charged with one or more health care fraud schemes involving false billings to Medicare, Medicaid, and other federal health care programs. These health care fraud schemes allegedly resulted in approximately $450 million in fraudulent billings, one of, if not the largest, such busts in the history of federal health care programs. The report goes on to state that arrests were made in seven major metropolitan areas as a  result of an investigation over several months into these issues. CBS is reporting that over 50 of the individuals arrested were in Miami, Florida. Other arrests were made in Los Angeles, Houston, Detroit, Chicago, Tampa Bay, and Baton Rouge. In Baton Rouge, authorities are saying that these arrests were not just the result of several months of investigation, but a capped a six year long process to uncover fraudulent activities. Many of those arrested were allegedly involved in schemes related to the provision of mental health services or home health services.

Law Abiding Providers Should Take Note

Health care providers in the cities where these health care fraud busts occurred should be wary. While HHS-OIG and DOJ have allegedly rooted out criminals from the Medicare program, these events cast a bad light on all providers in these regions. It has been our observation that after a large health care fraud bust such as this, the Zone Program Integrity Contractor (ZPIC) or Recovery Audit Contractor (RAC) for each region enhances their auditing efforts of similar providers. The ZPICs in these regions include SafeGuard Services (Los Angeles, Miami and Tampa), AdvanceMed Corporation (Baton Rouge) and Health Integrity (Houston). All of the ZPICs are capable, aggressive, and will critically audit a provider’s claims for both technical deficiencies and lack of medical necessity issues.

Despite the federal government taking health care fraud wrongdoers off of the streets, ZPICs and RACs will likely step up enforcement efforts for other providers. It is therefore imperative that you establish and follow an effective compliance plan in your practice or facility as soon as possible. You should conduct a gap analysis to review your documentation practices, business operations, and relationships with referral sources, suppliers, and other providers. These issues are too important at this point to ignore. Moreover, if you have received a letter from a ZPIC or RAC, it is not something to fool around with or ignore. These entities will often review a sample of claims, deny many or all of those claims, and then extrapolate those findings onto a one or two year universe. This results in alleged overpayments to providers, sometimes in the millions of dollars. If you have received one of these letters, call us today to learn more about the process and your rights and responsibilities.

Liles Parker is a full-service law firm with offices in Washington, DC, Baton Rouge, Houston, and San Antonio. We provide nationwide representation of health care providers in a variety of administrative and other matters, including administrative appeals of ZPIC, RAC, MAC, MIC and Medicaid RAC overpayment determinations. In addition, we provide compliance plan drafting and implementation, compliance training for office staff, and mock audits. For more information, call us today at 1-800-475-1906 for a free consultation.

Liles Parker PLLC

Yesterday we discussed issues surrounding returning an identified dental overpayment to Medicaid or other payors. Below is Part II of this article.

VII.       Examples of Problematic Overpayments

Dentists, oral surgeons and their staffs may ask “What types of actions might constitute an “identified” dental overpayment?”  That’s a fair question, especially since the Affordable Care Act does not provide much direction in this regard.  Nevertheless, there are a number of situations that could signify that an overpayment is present.  Examples include:

• A routine dental office audit discloses full payment by a beneficiary’s primary and secondary payor for the same claim.
• A dental practice learns that one of their employees or providers has been excluded from participation in Medicare or Medicaid.
• An anonymous employee of the dental practice alleges that orthodontic claims are being improperly billed to Medicaid.
• A parent of a dental patient calls and states that her child never received a certain service that was paid by Medicaid and is listed on the “Explanation of Benefits” form sent by the payor to the patient.

VIII.      What Must a Dentist do if a Medicaid Dental Overpayment is Identified?

Pursuant to Sec. 6402 of the Affordable Care Act, all providers (including dentist) are required to:

• Report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address; and
• Notify the Secretary, State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment.

In summary, once a Medicaid dental overpayment has been identified, a dentist must report and refund that dental overpayment to the government, within 60 days of the date on which the dental overpayment was identified.

Additionally, once any Medicaid overpayments have been returned to the government, any associated co-payments paid by beneficiaries must also be returned.  See 42 C.F.R. § 489.41. 

Importantly, you need to assess the nature of the mistake and determine whether this “error” or other action which resulted in the dental overpayment was an isolated event.  If not, under the government’s interpretation of the repayment rules, you likely have an obligation to repay other similar errors from prior periods. Keep in mind – your obligation to repay funds that do not belong to you extends far beyond the provisions of the Affordable Care Act.

IX.        Taking Corrective Action

In today’s enforcement environment, it is essential that you know, beyond a shadow of a doubt, whether you are fully complying with applicable coverage, documentation, medical necessity, coding and billing requirements.

As a first step, we recommend that you “Identify your weaknesses – then correct them.” If you have not already done so, engage qualified legal counsel and conduct a “Gap Analysis” of both your dental business operations and your coding / billing practices. In most cases we have found that dental practices have learned of deficient practices of which they were completely unaware.  The steps to take include:

1. As a first step, dental and orthodontic offices should review each of the regulatory and statutory provisions related to the specific services being billed to Medicaid.
2. Next, these offices should compare their actual documentation, coding and billing practices with Medicaid’s rules.  Any “Gaps” between the applicable requirements and a dentist’s / orthodontist’s actual practices must immediately be remedied.
3. Additionally, should these “Gaps” represent an overpayment, the Medicaid provider must repay the overpayment to the government within 60 days of identification.    
4. Prior to conducting a “Gap” analysis, you should contact your legal counsel for advice and assistance

Once remedial actions are taken, the next step is to design and implement an effective Compliance Plan. Despite the fact that significant strides in compliance have been made by large providers (such as hospitals and nursing homes), it has been our observation that most dental practices still do not have a tailored Compliance Plan in place.

To be clear, we recognize that many dental offices may have copied draft Compliance Plans off of the internet or purchased a sample plan from their local association.  While they may fully 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 these dentists have not had the time or expertise to complete the project.  As a result, we recommend that you engage qualified legal counsel to assist you with this project.  The benefits of an effective Compliance Plan can be significant, and could conceivably mean the difference between an aggressive investigation and a mere cursory review by the government once they learn that you have taken multiple steps to better ensure that your operations and practices fully comply with applicable Federal and State requirements.

Liles Parker is a full-service health law firm focusing on regulatory compliance and representing providers in health law and business matters. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental practices, orthodontic practices, and other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid.

 For more information on how we can assist your practice in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is a Managing Partner at the Firm and can be reached at 1-800-475-1906. Call him today for a free consultation.

Liles Parker PLLC

I.          A Practice’s Obligation to Repay a Dental Overpayment is Long-Standing

While considerable attention has been paid to the Affordable Care Act (generally referred to as “Health Care Reform”) and its requirement that “identified overpayments” be promptly repaid to the government, it is important to keep in mind that this repayment obligation is not new – it has long been firmly in place.  Moreover, it applies to all health care providers, including dentists, orthodontists, and their outside billing companies. An identified dental overpayment must be repaid.

II.         Handling a Medicaid Dental Overpayment

As a review of the 1998 “Third Party Billing Company” Compliance Program Guidance issued by the Department of Health and Human Services, Office of Inspector General (HHS-OIG) in the Federal Register reflects, “[f]ailure to repay overpayments within a reasonable period of time could be interpreted as an intentional attempt to conceal the overpayment from the government, thereby establishing an independent basis for a criminal violation.” (63 Fed. Reg. 70138 (Dec. 18, 1998)).

As this guidance clearly reflects, the government has long considered the failure of providers to return Medicare overpayments, Medicaid overpayments and overpayments made by other Federally-funded health plans to be a serious concern.  Unfortunately, many dental practices appear to have been unaware of this requirement.  We have seen situations where an identified dental overpayment was not actively worked, thereby placing the practice in peril.

Notably, there are also criminal prohibitions against the purposeful concealment and / or failure to disclose a Medicaid dental overpayment to the government.  As 42 U.S.C. §1320a-7b(a)(3) states, “Whoever, having knowledge of the occurrence of any event affecting his initial or continued right to any such benefit or payment . . . conceals or fails to disclose such an event with an intent fraudulently to secure such benefit or payment either in a greater amount than is due or when no such benefit or payment is authorized [is a criminal violation].”

Unfortunately, our review of dental practices has found that most dentists do not have an effective Compliance Plan in place. As a result, few dental practices conduct periodic internal billing reviews.  Moreover, even fewer dental practices have engaged outside legal counsel or consultants to examine their coding and billing practices. The dental community has been relatively quiet on this issue, to the detriment of dentists who are now finding their practices under investigation.

III.        Handling Private Party Overpayments

In addition to Federally-funded payor plans, Texas dental practices also have an obligation to repay an identified dental overpayment made by a private payor.  Under 18 U.S.C. § 669, it is a violation to “knowingly and willfully” embezzle, steal or otherwise without authority convert or intentionally misapply the monies, funds or assets of a health benefits program. (emphasis added).

As this statutory provision reflects, this obligation covers all payor types, Federal and private.  Therefore, dental practices are obligated by Federal (and possibly State) law to return a dental overpayment or incorrect payment to a private payor.  In all likelihood, your contractual agreement with the private payor imposes repayment deadlines and other requirements.

As a final point in this section, it is essential to keep in mind that a dental overpayment does not belong to you, even if a private payor tells you to keep it.  For example, if upon receiving a dental overpayment check from you, a private payor might say, “We are returning your check — it would be an administrative nightmare for us to allocate this ‘overpayment’ properly to the dates of service in our system.” As set out below, virtually no dental overpayment belongs (or can be retained) by a dentist’s office.

IV.        Handling “Unclaimed” Overpayments

As discussed, any and all overpayments made to a dental practice by Medicaid, a private insurance payor, or a patient, must be promptly returned to their rightful owner.

Nevertheless, it is quite common for some overpayments to be returned to a dental office, either because a patient has moved, died or failed to claim their mail, or a private insurance company refused to accept the check because it would take too much administrative work to allocate the funds appropriately.

In such situations, it essential to keep in mind that every State has passed laws governing the State’s right to “Unclaimed Property and Funds.”  Literally every state has “Escheat” and / or “Unclaimed Property” laws which cover such overpayments.[1] For instance, in Texas:

The [Texas] unclaimed property law requires financial institutions, businesses, and government entities to report to the state, personal property they are holding that is considered abandoned or unclaimed.

The Texas Comptroller of Public Accounts is responsible for administering the Texas Unclaimed Property Program. Property is turned over to the Comptroller’s office annually when the owner’s whereabouts are unknown and the property has been inactive on the books of the reporting company after the appropriate abandonment period has expired.

Should you fail to report and turn over overpayments held by your dental practice, you may be subject to significant penalties if you are audited.  As you can imagine, many States are aggressively audited companies in today’s poor economy in an effort to bolster their sagging treasuries.

V.       Deadlines for Returning a Dental Overpayment – Prior to Health Care Reform

Long before passage of the Affordable Care Act, the Centers for Medicare & Medicaid Services (CMS) had issued proposed rules in the Federal Register indicating that an overpayment must be returned to the government within 60 days of identification.  As the Federal Register noted, health care providers must, within 60 days of identifying or learning of the excess payment, return the overpayment to the appropriate intermediary and carrier, at the correct address, and notify the intermediary and carrier, in writing, of the reason for the overpayment.  (emphasis added) (67 Fed. Reg. 3662 (January 25, 2002)).

In the preamble to the proposed rule, CMS has implied that failure to report overpayments in accordance with the proposed rules might be a criminal violation of Section 1128B(a)(3) of the Social Security Act.

VI.        Impact of Affordable Care Act

Among its various provisions, the Affordable Care Act legislation made it crystal clear that the knowing retention of an identified overpayment constitutes a violation of the False Claims Act.  As the revised statutory provision states:

(d) Reporting and Returning of Overpayments.

(1) If a person has received an overpayment, the person shall—(A) report and return the overpayment to the Secretary, the State, an intermediary, a carrier, or a contractor, as appropriate, at the correct address; and (B) notify the Secretary, State, intermediary, carrier, or contractor to whom the overpayment was returned in writing of the reason for the overpayment.

(2) … An overpayment must be reported and returned under paragraph (1) by the later of—(A) the date which is 60 days after the date on which the overpayment was identified; or (B) the date any corresponding cost report is due, if applicable.

(3) Enforcement. Any overpayment retained by a person after the deadline for reporting and returning the overpayment under paragraph (2) is an obligation (as defined in section 3729(b)(3) of title 31, United States Code) for purposes of section 3729 of such title. (emphasis added)(See 42 U.S.C. 1320a-7k)

Importantly, under Sec. 6402 of the Affordable Care Act, the term “overpayment” was expressly defined by its drafters to include both Medicare and Medicaid payments to which health care providers (such as a dental practice) are not entitled:

. . . any funds that a person receives or retains under title XVIII [Medicare] or XIX [Medicaid] to which the person, after applicable reconciliation, is not entitled under such title. (emphasis added).

Liles Parker is a full-service health law firm focusing on regulatory compliance and representing providers in health law and business matters. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental practices, orthodontic practices, and other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid and disclosure and repayment of an identified dental overpayment.

 For more information on how we can assist your practice in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is a Managing Partner at the Firm and can be reached at 1-800-475-1906. Call him today for a free consultation.

Liles Parker PLLC

CMS Initiative Background

According to the Director of the Centers for Medicare & Medicaid Services (CMS) Medicare-Medicaid Coordination Office, more than 1800 entities have expressed interest in a CMS initiative that will provide $128 million over 4 years to entities to reduce hospital admissions and readmissions from nursing facilities for dual-eligibles (patients with both Medicare and Medicaid coverage). According to the CMS announcement, the Agency will partner with “enhanced care & coordination providers” to implement evidence-based interventions to reduce hospitalizations. Organizations eligible to apply for these grants include physician practices, care management organizations, and other public and not-for-profit entities.

The Center for Medicare & Medicaid Innovation (CMMI) Fact Sheet lists past demonstrations that have reduced avoidable hospitalizations through the use of nurse practitioners in nursing facilities to manage residents’ medical needs. Presumably, this refers to the EverCare demonstration project which was held several years ago. Additionally, the Fact Sheet discusses strategies such as implementing quality improvement and communication tools for changes in resident status and condition. Letters of intent are due to CMMI byApril 30, and proposals are due by June 14.

Private Insurers Following CMS’ Lead

Private insurers also are expected to implement a variety of partnerships and strategies with nursing homes and other post-acute providers. For example, earlier this year Aetna announced an agreement with Genesis HealthCare, a large post-acute company, to establish an incentive arrangement if the company is able to reduce hospital readmissions.

We also anticipate a number of other types of innovative arrangements between nursing homes, insurers, and other providers and organizations, including managed care organizations, to develop strategies and incentives to provide more efficient care to post-acute patients, including managed care patients.

Michael Cook recently presented to the American Health Lawyers Association Conference on Long Term Care and the Law on the topic of “Opportunities and Challenges to Managed Care Contracting for Post-Acute and Long Term Care Providers During and After Health Care Reform.” Providers and other entities desiring assistance in responding to incentives posited by the Affordable Care Act and CMMI should contact Michael Cook at (202) 298-8750. Michael has substantial experience in assisting post-acute providers and others in structuring innovative care delivery mechanisms to respond to the delivery systems reform incentives.  

Liles Parker PLLC

I.          HHSC-OIG Audit of Texas Medicaid Dental Claims:

Texas dentists, orthodontists and oral surgeons are under considerable scrutiny by the government, and most practices don’t even realize it.  This article examines several one of the current tools being used by the government to calculate the alleged amount of “damages” (improper claims) paid to dental providers by the State under Medicaid.

Many dental and orthodontic practice who treat children covered by Medicaid have found themselves part of an ongoing, Texas Medicaid dental audit.  Essentially, the Texas Medicaid dental audit project is targeting providers who have been providing orthodontic services to the state’s most needy citizens, children covered by Medicaid.  Dental professionals currently facing Texas Medicaid dental claims audit have been hit hard by HHCS-OIG. In addition to denying orthodontic claims that had been pre-approved by a third-party contractor working for the State, many practices are now learning that the State has “extrapolated” the amount of alleged damages involved.  While extrapolated damages are quite common in Medicare cases, it is fairly unusual to see its widespread use in Texas Medicaid dental cases.

II.         What Does it Mean to “Extrapolate”  Damages?

“Extrapolation” is the process of using statistical sampling in a review to calculate and project the amount of alleged overpayments made in connection with claims for care and treatment submitted by a health care provider to a payor for reimbursement.  Basically, a Federal or State agency (or in some cases, its contractor) will start by requesting the supporting documentation associated with a specific sample of claims.  It is not until much later that a health care provider learns that the “sample” of claims requested was allegedly a “statistically relevant sample” of the health care provider’s claims (the claims at issue can be Medicare claims, Medicaid claims, or even claims paid by a private payor).  After examining the sample of claims requested, the government agency (or its contractor) then calculates and applies the “error rate” found to the entire universe of claims covering a given period of time. This long-standing practice thereby allows them to grossly inflate the monetary demands on their audit targets while avoiding the need to actually review each individual claim in the universe for which they are seeking recoupment or offset.

III.        How Did this Practice Get Started?

Although the practice of using a statistically relevant sample to estimate the number of times something may be present in the universe of items has been around since the advent of higher mathematics, the application of this methodology to estimate the number of improper claims paid over a specific period of time is relatively new.  The application of statistical sampling to health care claims for this purpose dates back about twenty years to a decision by the U.S. Secretary of Health and Human Services (HHS) to authorize the use of statistical sampling in lieu of engaging in onerous claim-by-claim reviews. In Chaves County Home Health Services v. Sullivan, 931 F.2d 914 (D.C. Cir. 1991), the Federal District Court upheld extrapolation as being within the Secretary’s discretion.  The use of statistical sampling has spread over the years.  Federal agencies (such as HHS-OIG, CMS-contracted auditors, etc.), State agencies (such as HHSC-OIG) and even private insurance payors now capitalize on the use of this damages-estimating tool, usually to the detriment of the targeted health care provider.  To be clear, everyone recognizes that an “extrapolation” is merely a substitute for conducting a claim-by-claim review of every claim submitted by thee provider and paid by a payor during the period in question.  Nevertheless, the methodology is here to stay, regardless of the adverse impact it can have on a provider’s ability to remain in business.

IV.        How Can a Dental Practice or Orthodontist Practice Respond?

Unfortunately, the practice of seeking extrapolated damages can be a surefire way of destroying a dental provider’s practice. We’ve seen the use of statistical sampling, especially of Texas Medicaid dental claims, grow considerably in recent years. In fact, the Federal and State government’s passion for statistical sampling only seems to be growing. This makes it essential for dentists, orthodontists and other dental professionals to involve experienced legal counsel as soon as possible after you have received notice of an audit. Over the last decade, Liles Parker attorneys have noted a marked increase in the prevalence of extrapolated damages in Medicare audits, Medicaid audits and in audits by private payor Special Investigative Units (SIUs). Rather than assume that the government’s (or their contractor’s) calculations are correct, we have carefully analyzed the statistical methodology utilized when the auditors have extrapolated damages.  To be fair, sometimes their auditors have conducted the extrapolations properly.  Nevertheless, in many cases, the government auditors failed to properly handle this complex mathematical process, thereby rendering their extrapolation void.

Over the years, Liles Parker has worked with a number of the best statisticians in the country, challenging the extrapolation of damages and having it invalidated at various levels of the administrative appeals process. If your dental practice’s Medicaid claims are audited, we strongly recommend that you engage experienced legal counsel to represent your interests during this challenging process.

V.            Is There Anything I Can Do to Lessen the Likelihood of an Overpayment in the Future?

To be clear, there is no proverbial “silver bullet” that can be used by a dental practice that treats Medicaid patients to avoid the scrutiny of HHSC-OIG and / or other law enforcement agencies.  Every dental and orthodontic practice  in Texas (and in other States, for that matter) should expect to be audited at some point if you accept Medicaid or another Federal / State insurance plan.  Rather than wait for such an eventuality, dentists and orthodontists should affirmatively review their operations, coding and billing practices to ensure that their practices fall squarely within the rules.  An experienced law firm knowledgeable in dental compliance issues can assist you with these efforts.

Liles Parker is a full-service health law firm focusing on regulatory compliance and provider representation. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental and orthodontic practices, as well as for other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid.

For more information on how we can assist you in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is Managing Partner at the Firm and can be reached at 1-800-475-1906. Call him today for a free consultation.

Liles Parker PLLC

Why is Dental Compliance So Important?

As previously reported, Medicaid RAC contracts have been awarded in 26 states, and more are being awarded each day. Medicaid RACs are gearing up to conduct audits, and the focus isn’t exclusively on hospitals and large group practices. Dentists and orthodontists, especially those who treat children, should expect significantly increased enforcement efforts. This is why dental compliance, and implementing an effective dental compliance program, may be critical to your practice.

Under the Affordable Care Act (the law currently being reviewed by the Supreme Court), States must contract with Medicaid RACs to audit claims under the Medicaid program and recoup any identified overpayments. While the rules, initially proposed in November 2010 and finalized in September 2011, have been delayed several times by the Centers for Medicare & Medicaid Services (CMS), several States have consummated contracts with Medicaid RACs. We only expect the number of States with active Medicaid RAC programs to increase in the future.

Because the Medicare and Medicaid programs – and who they cover – vary greatly, Medicaid RACs will likely have a very different set of audit targets. These targets may include dentists and dental practices, which have otherwise been immune to these types of audits in the past. As a consequence, dentists and orthodontists should review the medical necessity of their procedures as well as the documentation used to support such procedures with a critical eye – RAC auditors will be doing the same.

Steps to Implement an Effective Dental Compliance Program

The most effective method overall to enhance your dental practice’s compliance with applicable laws and regulations is to implement an effective dental Compliance Plan. In addition, your practice should conduct a gap analysis of both your business and clinical operations to identify any deficiencies and possible corrective actions that need to be completed. We recommend that a gap analysis include the following four steps:

1. Identify applicable legal and ethical standards to be achieved and maintained, including Federal and state statutory regulatory requirements, coding and billing requirements for claims, and optimum documentation practices.
2. Conduct an audit of the entity’s current coding activities, billing practices, operations and business practices. Review documentation, medical necessity of services, contracts, leases, and other arrangements.
3. Assess where coding, billing, operations, and billing practices fall short. This represents the “gap” that must be filled.
4. Continually monitor applicable standards so that any changes can be readily identified and any necessary corrective action can be taken.  Additionally, periodically review the provider’s actual baseline and ensure that the provider continues to meet the applicable performance standards.

Conclusion

There’s no question that dental compliance is going to be critical for dental and orthodontic offices in the future. Rather, the question is how your practice will respond and implement an effective program. Remember – a “Model Compliance Plan” downloaded from the internet or disseminated from a professional association is just that – a model.  A Dental Compliance Plan that has not been personalized to your practice will likely be little help to you and your staff.  It is essential that you engage a qualified law firm to conduct a “Gap Analysis” of your practice.  Once practice-specific risks are identified, mechanisms will be set up to prevent those “unique” risks from reoccurring.  Ultimately, an effective Dental Compliance Plan is like a flu shot – it cannot completely prevent you from catching the flu, but if you have endured the shot, the flu symptoms should not be that bad.

Liles Parker is a full-service health law firm focusing on regulatory compliance and provider representation. Our attorneys are highly skilled in designing and implementing effective Compliance Plans for dental and orthodontic practices, as well as for other health care providers. Moreover, our attorneys are experienced in handling an array of complex health law matters, including the appeal of alleged overpayments to Medicaid.

For more information on how we can assist you in developing an effective dental compliance plan, call Robert W. Liles, Esq. Robert is Managing Partner at the Firm and can be reached at: 1 (800) 475-1906. Please call him today for a free consultation.

Liles Parker PLLC