Medicare Post Payment Audits and the “Average” Provider

(November 16, 2011) Many providers believe that their practice is a normal one – average billings, average patient load, costs of care which are consistent with industry standards – and that they need not be concerned with undergoing a Medicare post payment audit for being a “statistical outlier.” As you may know, Medicare and Medicaid contractors rely heavily on “data mining” to identify potential audit targets. With “data mining,” RACs, ZPICs and other entities conducting Medicare post payment audits can look at historical billing data, as well as billing date from regional and local peers of a particular provider, and determine if that particular provider’s billings appear suspect.

While a provider might think its billing is in line with or below that of its peers, it is very important to remember that the Medicare post payment auditors are experts in “slicing and dicing” the data in so many ways that virtually every provider could show up as an outlier. For instance, perhaps the cost per patient, cost per procedure or cost per service plotted high, or maybe the total number of services per patient was high. For length-of-stay (LOS) providers, perhaps the total number of days of service on average was high or the billings per day ended up being high.

Moreover, even if a provider thinks they run a “tight ship,” a lot of Medicare claim reimbursement is dictated by the medical necessity of the services provided to each patient. For instance, a provider may have a string of highly complex, highly demanding patients, who need more in-depth care. These same providers may have gained a local reputation for handling high complexity cases, thereby further driving up the data “against” them. In any event, Medicare post payment auditors are looking out for high-billing providers and have many ways of interpreting the relevant data to justify their audit decisions.

Liles Parker handles Medicare post payment audit appeals, in addition to other health law matters. For more information or to speak to one of our attorneys, please call 1 (800) 475-1906 today for a free consultation.

 

Health Data Insights Begins Medical Necessity Reviews

(August 30, 2010): Introduction:

Health Data Insights (HDI), the Centers for Medicare & Medicaid Services (CMS) Recovery Audit Contractor (RAC) responsible for auditing health care providers in Region D, has announced it will immediately begin reviews on previously approved projects which involve the medical necessity of selected inpatient DRG payments.  A complete list of the medical necessity “issues” currently being examined by HDI can be found on its Website. 

 

Scope of Responsibility:

RACs, such as HDI, contract with the CMS to perform post-payment reviews of Medicare claims to find overpayments (and theoretically, underpayments in return for a percentage (from 9 percent to 12.5 percent) of the amounts recovered. Put simply, they “eat what they kill.” HDI was awarded responsibility for handling Region D audits.  Region D consists of 17 States and 3 U.S. territories (Alaska, Arizona, California, Hawaii, Iowa, Idaho, Kansas, Missouri, Montana, North Dakota, Nebraska, Nevada, Oregon, South Dakota, Utah, Washington, Wyoming, Guam, American Samoa and Northern Marianas).  HDI’s contingency fee contract award dollar amount is 9.49% according to CMS.  The 29 DRGs where HDI will be examining “medical necessity” requirements, include certain procedures related to:

• Nervous System Disorders
• Respiratory
• Cardiac Procedures
• Cardiovascular Diseases
• Cardiovascular, Other
• Gastrointestinal Disorders
• Musculoskeletal Disorders
• Endocine, Nutritional & Metabolism Disorders
• Kidney & Urinary Tract Disorders, and
• Blood & Immunological Disorders

Provider Concerns:

A continuing concern of health care providers is that the RAC determinations of medical necessity will be performed by personnel with little, if any, specific knowledge of the specific claims at issue. Given the RAC business model, providers remain worried that audits will not reflect a fair and reasonable application of applicable coverage requirements. This is especially worrisome in light of the fact that approximately 41 percent of overpayments in the demonstration project were due to medical necessity determinations.

Audit and Appeal Considerations:

As set out CMS’ June 2010 reported entitled “The Medicare Recovery Audit Contractor (RAC) Program — Update to the Evaluation of the 3-Year Demonstration,” as of 03/09/10, the cumulative number of claims with overpayment determinations identified by RACs has grown to 598,238.  Notably, only 76,073 of these overpayments were appealed by health care providers.  Of the claims appealed, over half were decided in favor of the health care provider.  Interestingly, HDI had one of the highest number of claims denials overturned on appeal, in favor of the appealing provider. Four basic steps to be taken when preparing for a RAC audit include:

(1)               Monitor issues of interest to the government and its contractors.  Are the services you provide currently under scrutiny by RACs and other Medicare contractors?  You should keep abreast of current enforcement initiatives and mistakes made by other providers.  Learn from their mistakes. 

(2)               Know where your current weaknesses are and fix them.  This typically requires that you conduct an internal audit of your coding, billing and operational practices.  Take care when engaging an outside “consultant.”  We have seen numerous cases where the consultant conducts an internal assessment and identifies multiple problems with the provider’s prior and current practices. Unfortunately, few consultants consider the fact that their adverse report to the provider will likely not be privileged.  As a result, if the provider is ever investigated, the report could easily serve as a roadmap for the government. Prior to conducting an internal audit – call your attorney!   

(3)               Know your rights. If your practice is audited, know your rights both during the audit and once the audit results are issued by the contractor.  There is a fine line between exercising your rights as a provider and being perceived by a contractor as refusing to cooperate in their review.  You should immediately call your attorney to clarify which actions must be taken if your practice is subjected to a site visit by a Medicare contractor.  The best practice would be for you to call your attorney today and discuss how you should respond in the event of a site visit.  CMS takes allegations of non-cooperation very seriously.  Should the contractor argue that you refused to cooperate in their efforts, you could find the action taken by the contractor is to seek a revocation of your Medicare number.  This is an especially sensitive issue.

(4)               Have a firm understanding of how the Medicare appeals process works.  Depending on the amount in controversy, you may choose to handle Medicare claims denials internally.  As the use of data-mining increases, Medicare contractor reliance on provider profiling will continue to increase.  While mere errors or mistakes should be returned to the government (or not appealed is properly denied by the contractor), should you find that claims were improperly denied, we recommend that you appeal such denials. RACs and other Medicare contractors will likely focus on providers with high error rates. 

While every case is different, health care providers should consider the following when faced with a RAC audit:

The scope of RAC audits is expanding.  In the past, hospitals and other “low-hanging fruit” were the focus of HDI and other RACs around the country.  As a result, some physicians, small practice groups, clinics and other smaller providers have grown complacent in their compliance efforts.  This is a mistake, as more issues are identified and approved, the RACs will be expanded the scope of their reviews.  Now is the time to get your practice in order.

ZPICs and PSCs continue to represent a greater danger to small physician practices and health care provider groups. Zone Program Integrity Contractors (ZPICs) and Program SafeGuard Contractors (PSCs) are not subject to the time, audit and service scope limitations imposed on RACs.  The implementation of effective compliance efforts will help reduce the likelihood of liability should the practice be audited by a ZPIC, PSC or RAC.

Beware of “canned” consultant solutions.  As a search on Google will readily attest, consulting firms around the country are touting the latest RAC audit “tool” or audit response “template.”   We recommend that you exercise caution when retaining any organization that “guarantees” results or seeks to dissuade you from engaging legal counsel support.  

Retain experienced health care counsel. Under the current appeal structure, there is a significant likelihood that your case will eventually be heard by an Administrative Law Judge (ALJ).  Importantly, ALJs are lawyers — not typically clinicians.  In defending your case, it is strongly recommended that you retain legal counsel, regardless of whether you ultimately decide to work with a consultant or employ a clinician as an expert witness.  Legal counsel will be best situated to understand and argue the various legal arguments which may prove essential in winning your case.

While RACs have not represented much of a threat to individual physicians and small practice groups in the past, the future is likely to be quite different.  Physicians must already contend with audits by ZPICs, PSCs, Medicaid Integrity Contractors (MICs), Medicaid Fraud Control Unit (MFCU) investigators and Comprehensive Error Rate Testing (CERT) contractors.  The expansion of the RAC program will further increase the need for statutory and regulatory compliance.  Physicians and small practice groups and organizations should avoid the misconception that their limited size and / or relative billings will keep them “off the radar,” thereby limiting their chances of being audited.

ZPICs and PSCs are continuing to rely statistical sampling in an effort to extrapolate damages:

In our practice, we have seen a marked increase in the number of solo physicians and small providers groups who have been subjected to pre-payment and post-payment audits of their Medicare billings. 

In the case of post-payment reviews, the vast majority of Medicare audits we have worked on have included the statistical extrapolation of damages by ZPICs and PSCs.  We expect RACs to follw suit as the number of their audits increase.  In defending a post-payment audit, it is essential that you examine the statistical methodology utilized and identify any flaws in the contractor’s approach.  We have successfully convinced both Qualified Independent Contractors (QICs) and ALJs to invalidate statistical extrapolations based on mistakes in the process committed by the ZPIC or PSC.  Arguments can be legal and / or methodology-based.  In many cases, it is necessary to engage the assistance of a qualified statistical expert.  Should you succeed – be ready to defend this decision before the Medicare Appeals Counsel (MAC).  Over the past year, practically every invalidation of the statistical extrapolation of damages was appealed to the MAC by the Administrative QIC (AdQIC). 

Summary:

Health care providers must be proactive in their efforts to better comply with applicable Medicare coding and billing practices.  Should your practice be placed on pre-payment audit or have its post-payment Medicare claims reviewed, we recommend that you immediately contact your health care attorney for assistance.

Should you have questions regarding RAC, ZPIC or PSC audit processes, you may contact us for a complimentary consultation.  We can be reached at 1 (800) 475-1906.

 

With ZPICs, PSCs, and RACs Fighting Most Challenges to Their Extrapolation, Experience Counts

(July 20, 2010): In recent years, we have seen agents for the Centers for Medicare & Medicaid Services (CMS) increasingly rely on statistical extrapolation estimates when assessing claims overpayments. In early cases, attorneys successfully invalidated countless extrapolations by identifying relatively basic reasons for why the calculations were inconsistent with accepted statistical principles and practices.  Now, however, providers should expect for ZPICs and PSCs (and soon, RACs) to send a team of statisticians and attorneys to vigorously oppose most (if not all) hearings challenging the validity of the extrapolation calculation.

Regardless of whether you are providing Partial Hospitalization, Evaluation and Management (E/M), Home Health, Physical Therapy, Surgical, or other services, should your practice or clinic find that it is facing an extrapolated Medicare audit, it is strongly recommended that you engage qualified, experienced counsel to represent you as early in the process as possible.  Your legal counsel can then engage an expert statistician to assess the contractor’s actions and assist with the attorney’s efforts to have the extrapolation thrown out by either the Qualified Independent Contractor (QIC) or the Administrative Law Judge hearing your case.

Before you engage counsel, you should consider asking the following questions:

• Has the attorney ever handled large, complex contractor audits before? Some firms will happily take your case, despite the fact that they have little or no experience in this area of health law. Don’t pay for your attorneys to learn how to handle a case. While every case is different, an experienced firm will have developed a number of arguments and defenses that may be readily used in your case without having to conduct costly, extensive legal research.
• Can the firm provide client references who are willing to speak with you about the quality of work performed on their Medicare statistical extrapolation case?
• Who will be working on your case? Will it be an inexperienced Associate attorney or one of the partners who has actually fought and won a multitude of Medicare overpayment claims and cases where the damages have been extrapolated by the contractors?
• What are the credentials of the attorneys and paralegals who will be working on your case? Have they ever worked on the side of the government? One of our attorneys served as an Assistant U.S. Attorney for many years, ultimately being selected to serve as the First National Health Care Fraud Coordinator for the Department of Justice, Executive Office for U. S. Attorneys. In addition to a law degree, he also holds a Master’s in Health Care Administration. To fully appreciate the challenges faced by health care providers, you need an attorney who understands both the legal constraints and the practical business risks faced by health care providers.

In several of the cases we have handled, the alleged error rate has exceeded 90%.  With the resulting alleged damages often in the millions of dollars, few providers are in a position to merely pay such an overpayment.  Instead, they need experienced counsel to aggressively fight to have this overpayment overturned.  When defending these cases, it is essential that you challenge both the denial of claims and the extrapolation itself.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

 

HHS / CMS Issues Final “Meaningful Use” Objectives for Electronic Health Records (EHRs). Providers Should Exercise Extreme Caution Before Converting to an EHR System.

(July 14, 2010):Yesterday, the Department of Health and Human Services (HHS) issued its final regulations concerning what it means for eligible Medicare and Medicaid providers to be “meaningful users” of certified electronic health record (EHRs) technology in 2011 and 2012.  We are cautiously optimistic that HHS’ approach will allow small providers the flexibility they need to participate in the program if they choose but, as detailed below, are not convinced that CMS contractors are ready for the technology.

The rules support the Health Information Technology for Economic and Clinical Health Act (HITECH), which authorized incentive payments through Medicare and Medicaid to clinicians and hospitals when they use EHRs privately and securely to achieve specified improvements in care delivery.  According to HHS, the incentives could be as much as $44,000 (through Medicare) and $63,750 (through Medicaid) per clinician. Subsequent rules will govern later phases of the ten year program.

The meaningful use objectives for 2011-12 are categorized in two tiers – core and menu objectives.  The first set of “core” objectives comprises basic items essential to creating any medical record, such as:

• Recording patient demographics;
• Maintaining active medication list; and
• Generating and transmitting permissible prescriptions electronically.

The second “menu” set is comprised of 10 additional important activities from which providers will choose any 5 to implement in the first two years.  They include:

• Implementing drug formularies;
• Incorporating clinical laboratory test results into EHRs as structured data; and
• Sending reminders to patients (per patient preference) for preventative and follow-up care.

For most of the core and menu items, the regulations also specify rates at which providers must use the functions to be considered meaningful users and how to report clinical quality measures.

HHS is establishing a nationwide network of Regional Extension Centers to assist providers in adopting and using certified EHR technology.  The full 864 page rule is available at http://www.ofr.gov/OFRUpload/OFRData/2010-17207_PI.pdf

While the concept of EHR and electronic medical records (EMR) may sound great, a number of our clients have already experienced the dark side of EHR / EMR.  Unfortunately, the Centers for Medicare and Medicaid Services (CMS) have completely disregarded (or remained completely ignorant of) the fact that a number of early adopters of this technology have found that Medicare Administrative Contractors (MACs) and Program SafeGuard Contractors (PSCs) (now being replaced by Zone Program Integrity Contractors (ZPICs)) appear to be inexperienced in their review of medical records that have been generated with the assistance of EMR / EHR software programs. 

In some cases, the Medicare contractors have mistakenly alleged that the records documenting the care provided are overly similar – erroneously concluding that the records were “copied” or “cloned.”  Every software program is different.  Nevertheless, many of the programs utilize “drop-down” menus that offer providers a number of different options for documenting their observations, the patient’s symptoms, or clinical findings.  While such an approach may facilitate the completion of an evaluation, progress notes, or other clinical service, it also inadvertently leads to “similar” wording or phrases among classes of documents generated.  When a significantly number of these clinical documents are reviewed by a Medicare contractor, in some cases the contractor has incorrectly concluded that instead of documenting individualized observations, these EMR / EHR-generated medical records are mere “copies” or “clones” of other medical records.  In reaching such a conclusion, PSCs / ZPICs have denied claims and then extrapolated the alleged damages to the universe of claims at issue.

Thus, providers should exercise extreme care before transitioning over to an EMR / EHR system.  Every effort should be made to ensure that your observations are individualized to the greatest extent possible.  Prior to choosing a software program, a provider should test the program with a significant number of claims to ensure that the end product generated by the program does not leave a third party reviewer with an incorrect picture of the care provided.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

President Obama Appoints New Head of CMS

Enactment of “Doc Fix” Bill Offers Another Temporary Reprieve for Medicare Physicians

(June 28, 2010): On Friday, June 25, 2010, President Obama signed the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (H.R. 3962), which provides yet another band-aid for our broken Medicare physician pay system.  The bill replaces the 21% Medicare physician payment cut that took effect at the beginning of this month with a retroactive 2.2% payment increase for the period from June 1 to November 30.

What this increase means, of course, is that after November 30, 2010 physicians’ pay is expected to tumble 23%, instead of 21%.  This bill is just the latest in a series of Congress’ short-term “doc fix” budget maneuvers, designed to stave off the deleterious impacts of the fundamentally flawed Sustainable Growth Rate (SGR).  The fact is that the constant cycle of SGR-mandated pay cuts and uncertain legislative patches punishes doctors and patients.

Upon signing the bill, the President issued a statement, noting that, “A 21-percent pay cut to physicians’ payments would have forced some doctors to [stop] seeing Medicare patients – an outcome we can all agree is unacceptable.”  We imagine that a 23% drop in December will be similarly unacceptable but, at this point, Medicare physicians (and patients) will be forced to continue operating without any certainty of a long-term solution.

The Centers for Medicare and Medicaid Services (CMS) have been processing claims at the lower rate since June 18 but will reprocess these and begin processing future claims at the increased pay rate by July 1.  Physicians should carefully monitor their claims for this period and ensure that CMS contractors make the necessary adjustments.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one our other attorneys at 1 (800) 475-1906.

A Look at RACs — Part I: What Do Physicians, Home Health, Hospice, and DME Providers Need to Know?

(June 25, 2010): The purpose of this series of articles is to assess the Recovery Audit Contractor (RAC) Program from the perspective of physicians, home health, hospice, durable medical equipment (DME) providers, and other relatively small Medicare providers.  As many non-hospital providers will acknowledge, early cries of wolf by law firms and consultants did a fine job of initially publicizing the RAC threat.  Unfortunately, the threat of a RAC audit now appears to be largely ignored by non-hospital providers due to the seemingly widespread sense that RACs will likely continue to focus their efforts on large, institutional Medicare providers – the ultimate “low hanging fruit” in terms of potential Medicare overpayments.

RACs are, in fact, a real threat to physicians and other small Medicare providers, despite the fact the contractors have passed over these providers in the past.

Over the last six weeks, the Centers for Medicare and Medicaid Services (CMS) has sponsored nationwide conference calls titled “Nationwide RAC 101 Call” specifically aimed at physicians, home health, hospices, and DME providers. Further, CMS conducted two general nationwide conference calls discussing the RAC program that were open to all Medicare providers.

These seemingly innocent informational calls were in fact extraordinarily significant, servicing almost as a “touchstone” for CMS and its RAC auditors.  With the completion of these nationwide teleconferences, outreach has now been completed and CMS can affirmatively state that these non-hospital providers have been given multiple opportunities to learn about the RAC program and prepare for a RAC audit.   All states are now eligible for review.

While CMS must still approve “issues” prior to their widespread review by the RACs, the contractors now have the billing data that they need to analyze and identify possible targets.

As physicians and other non-hospital providers prepare for possible audit, it is helpful to review hospitals’ experiences when preparing for and responding to a RAC audit.  On June 22, 2010, the American Hospital Association (AHA) released its findings that the RAC program is having a widespread impact on almost all hospitals, even though many have not even been subjected yet to a RAC audit.[1] In fact, for the first quarter of 2010 alone:

• 84% of responding hospitals reported that RACs impacted their organization;
• 49% of responding hospitals reported increased administrative costs; and
• 17% of the hospitals using external resources to address RACs hired consultants at an average cost of almost $92,000.

So, what do providers and non-hospital Medicare providers need to know about RACs?  This multi-part series will address the following:  First, the purpose and impact of RACs; Second, how to respond to RACs when they come calling; Third, some of the emerging issues for physicians and other small Medicare providers regarding RACs.

I. What’s a RAC?

The RAC program was created by Section 306 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).  Operating under the direction of the Department of Health and Human Services (HHS), RACs are independent third-party contractors tasked with identifying and correcting improper past Medicare payments.  Each of four RACs has jurisdiction over a separate region of the United States.

After a three year demonstration in which RACs identified $1.03 billion in improper Medicare fee-for-service payments, the program became permanent earlier this year.  RACs join scores of other Medicare audit contractors.  CMS created the following table to clarify the role RACs are supposed to play compared to other contractors.[2] However, as we will see later in this series, these roles are not clearly delineated and the overlap in the review process can create substantial confusion and waste.

Role of Medicare Review Contractors
Improper Payment Function	Contractor Performing Function
Preventing future improper payments through pre-pay review and provider education	Medicare claims processing contractors
Detecting past improper payments	RACs
Measuring improper payments	CERT [Comprehensive Error Rate Testing]
Performing higher-weighted DRG [diagnosis related group] reviews and expedited coverage reviews	QIOs [Quality Improvement Organization]

RACs are highly incentivized to hunt for evidence of overpayments in high-cost categories of service and to needle out errors that have nothing to do with actual patient care. RACs are paid on a contingency basis so it stands to reason that, during the initial program demonstration, only 4% of improper payments identified were underpayments.  This “bounty hunter” approach also helps to explain why prior audits have focused almost exclusively on high-cost inpatient care services. Recent GAO testimony shed light on this situation and may cause RACs or other contractors to shift their focus to entities that do not have hospitals’ long history of review and compliance, namely physicians and other relatively small Medicare providers.  Finally, a substantial percentage of overpayments collected by RACs during the demonstration program resulted from preventable coding errors, countering the myth that CMS is primarily focused on weeding out unnecessary service claims.

Providers in Region C may want to consider that the AHA found hospitals in that region, encompassing nearly 40% of all U.S. hospitals including those in Texas, Florida, and Virginia, reported the highest number of medical records requested, the highest amount of dollars targeted in medical record requests, and the highest number of denied claims (47% of the $2.47 million in denied claims reported in the first quarter of 2010).

II. Are There Any Safeguards to Protect Physicians and Other Small Group Providers?

Based on the demonstration program, numerous providers and others have expressed concern that RACs are overly aggressive auditors.  Despite some improvements, concerns about the RAC process are likely to persist.  As recent testimony by the GAO Health Care Director pointed out, the oversight of RACs leaves something to be desired.

Changes have been made to reduce the RACs unintended incentive to drive up fees (through the improper denial of claims). RACs are now required to pay back their contingency fee if the claim is overturned at any level of appeal, rather than just the first level as in the demonstration program.

Additionally, there are some limitations in place regarding the RACs ability to overwhelm providers with record requests.  RACs may not request records more frequently than every 45 days and, for instutitional providers, their requests are limited to 1% of all claims submitted for the previous calendar year.  This is an overall limit, however, meaning that a RAC may determine the composition of the records in an additional document request.  They can – and do – request categories of records up to the limit even if the request is disproportionate the provider’s business.

Finally, none of these improvements address the concern that the first several levels of the appeals process do not provide meaningful recourse for the overly aggressive auditing.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one  of our other attorneys at 1 (800) 475-1906.

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[1] Available at http://www.aha.org/aha/content/2010/pdf/Q1RACTracResults.pdf

[2] Available at http://www.racaudits.com/uploads/RAC_Demonstration_Evaluation_Report.pdf.

GAO Testimony Recommends CMS Improve Enrollment, Payment, and Oversight Procedures to Prevent Medicare Fraud, Abuse, and Waste

(June 23, 2010): Yesterday we told you about recent Congressional testimony regarding the impact of health care reform on HHS enforcement efforts.   On the same day, GAO Health Care Director Kathleen M. King offered Congress testimony that made clear that the Centers for Medicare & Medicaid Services (CMS) continue to face substantial challenges to preventing Medicare and Medicaid fraud, waste, and abuse.  The GAO’s recommendations signal that home health agencies (HHAs) and suppliers of durable medical equipment (DMEs) are likely targets of future audits and that contractors require improved oversight.

King critiqued the enrollment process for prospective HHAs, saying, “We found that the screening process was not thorough.  This may have contributed to a rapid increase in the number of HHAs that billed Medicare in certain states with unusually high rates of billing patterns indicative of fraud and abuse.” (emphasis added).   Similarly, GAO found that the DME enrollment process contains persistent weaknesses.   King assessed that the effectiveness of new enrollment screening authorities provided in the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act (HCERA) “is unknown and will depend on CMS’ implementation.”

HHAs and DMEs are also identified as vulnerable services that do not receive adequate post-payment review by recovery audit contractors (RACs).  “Because RACs are paid on a contingent fee based on the dollar value of the improper payments identified, during the demonstration RACs focused on claims from inpatient hospital stays, which are generally more costly services.”  Recall that RACs are bounty hunters, explaining their limited focus on classes of high-value claims.  GAO recommends CMS direct other contractors to focus on high vulnerability items and services that RACs are known to overlook.

Next, targeting drug plan sponsors, King reminded Congress of a 2008 GAO study showing that the sponsors covering one-third of all Medicare prescription drug plan enrollees had not completely implemented CMS’ required compliance plan elements and fraud prevention measures.  Although CMS published a final rule to address this failing in April 2010, GAO continues to identify the improved oversight of drug plan sponsors and other contractors as a major need.

Ultimately, GAO offered recommendations to CMS regarding improvement of (1) enrollment screening processes, (2) pre-payment claims review, (3) post-payment claims review, (4) contractor oversight, and (5) the process for addressing identified vulnerabilities.  Regular observers will notice, however, that several of GAO’s June 2010 recommendations are virtually identical to recommendations that date back as far as September 2005 and that are not yet implemented.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

 

Counsel for HHS-OIG Discusses the Impact of Health Care Reform on Enforcement with Congress

(June 22, 2010):  In his testimony last week before the Health and Oversight Subcommittees of the House Committee on Ways and Means, Lewis Morris, Chief Counsel to the Inspector General (OIG) of Health and Human Services (HHS), emphasized the increasing speed and intensity of HHS-OIG’s multi-pronged health care fraud enforcement efforts.  Morris’ testimony reinforces the need for Medicare providers and suppliers to aggressively prepare for a knock on the door from HHS-OIG or one of its many enforcement partners.

Morris highlighted numerous new enforcement tools available under the Patient Protection and Affordable Care Act (PPACA), paying particular attention to innovations in data access and use.  These measures include consolidating and sharing data across agencies, as well as deploying new technology that allows “investigators to complete in a matter of days analysis that used to take months with traditional investigative tools.”

He further praised the enhanced accountability measures contained in PPACA, such as HHS-OIG’s ability to impose civil monetary penalties for “failing to grant [upon reasonable request] timely access to HHS-OIG for investigations, audits, or evaluations.”  Notably, PPACA Section 6408 provides for a penalty of $15,000 for each day for failure to grant access.

Morris’ testimony also reminded the health care community that:

• PPACA allows the HHS Secretary to suspend payments to providers or suppliers based on credible evidence of fraud.  At the same time, it expands the types of conduct constituting Federal health care fraud offenses under Title 18.
• HHS-OIG has improved access to information from entities directly or indirectly involved in providing medical items or services payable by any Federal program.

Perhaps most significantly:

• Medicare and Medicaid program integrity contractors (i.e., ZPICs and PSCs) are required to provide performance statistics, “including the number and amount of overpayments recovered, number of fraud referrals, and the return on investment of such activities.” (emphasis added).

 While not surprising, it is nonetheless disconcerting that ZPICs and PSCs are essentially being “graded” based on the “amount of overpayments recovered,” along with the number of enforcement actions handled and referred to law enforcement.  Based on these performance measures, is there any real difference between ZPICs and RACs?  While RACs may be compensated directly based on the amount of overpayments collected (and ZPICs are not), it is crystal clear that the government’s expectations of ZPICs are quite similar.  Now, more than ever before, it is essential that providers implement effective compliance measures to cover their practices and clinics.

Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

A Look at the Opposition – For AdvanceMed, it’s Not Personal, it’s Just Business — Big Business . . .

(March 26, 2010): Overview:  Over the next few days, we will be publishing a brief overview of specific Zone Program Integrity Contractors (ZPICs) – the companies who have been hired by CMS to conduct the medical reviews of Part A and Part B health care providers around the country.  As we have previously discussed, over the last year, ZPICs have been taking over where Program Safeguard Contractors (PSCs) left off.  While our firm is still handling a number of cases that were initiated by PSCs, all of our recent cases have involved ZPICs.

As PSCs and ZPICs have been so quick to point out, they are not paid a percentage of the Medicare overpayments identified like their fellow medical reviewers – Recovery Audit Contractors (RACs).  Nevertheless, as you will soon see, they are handsomely paid for their efforts, albeit in a different fashion than are RACs.

It is essential to keep in mind that both RACs and ZPICs are designed to “find and prevent waste, fraud and abuse in Medicare.” Further, like their RAC cousins, ZPICs look at billing trends and patterns, focusing on providers whose billings for Medicare services are higher than the majority of providers in the community (e.g. their peers).

I.     Where is AdvanceMed Currently Operating?

Initially, AdvanceMed Corporation was awarded a $107,957,737.00 five-year contract to handle the ZPIC duties for Zone 5.   Zone 5 covers the states of Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia.  Yes, you read this correctly, AdvanceMed is being paid over $100 million.

As the ZPIC for Zone 5, AdvanceMed assumed the Benefit Integrity functions for Medicare Parts A, B, Durable Medical Equipment, and Home Health and Hospice, as well as establishing a Medicare / Medicaid (Medi-Medi) data matching program for each state within the Zone.

The AdvanceMed Zone 5 ZPIC contract performs the following functions for CMS as a ZPIC:

• Medicare fraud investigation and prevention, including referrals to law enforcement;
• Medicare data analysis (discovery, detection, investigation, and overpayment projection);
• Medical Review to support fraud case development, including coverage and coding determinations;
• Reviewing audit, settlement, and reimbursement of cost reports, and conducting specified audits;
• IT Systems for case and decision tracking and data warehousing;
• Interface with the Medicare contractors, the medical community (outreach & education), and law enforcement; and
• Medicare/Medicaid data matching program safeguards work for each state in Zone 5.

II.      AdvanceMed’s Extrapolations of Alleged Damages:

Over the years, we have gone up against AdvanceMed numerous times, challenging their interpretation of LMRPs / LCDs and assessing the methods they utilized to engage in a statistical extrapolation of the alleged damages in our client’s cases.  To give the company its due – their statistical experts are smart, aggressive and do not hesitate to respond when their methods have been challenged.  We like that – it keeps us sharp.

With the help of some of the best statisticians in the country (including, but not limited to the late Will Yancey, Ph.D.), in  a number of cases, we have been able to show that their extrapolation of damages (and that of other PSCs and ZPICs) has not complied with applicable requirements, and is therefore invalid.  To be fair, every extrapolation is different, both in terms of facts, the methodology employed, and in the associated calculations conducted.  As attorneys, we work with our experts to break down and assess AdvanceMed’s (and other ZPICs) calculations.  Perhaps they handled it appropriately – or maybe they didn’t.  There really isn’t any way to know if it was handled properly without a complete copy of their file (including associated work papers and calculations) so that we can fully assess their actions.

Over the last year, we have seen a marked increase in contractor (e.g. PSC and ZPIC) participation (as “participants” not as “parties”)  in ALJ hearings.  Their experts have consistently been professional, concise and ready to answer any questions posed by the ALJ.  Our recommendation – both counsel and their defense expert better be prepared.  It’s never to early to start thinking about how to best contest the extrapolation that has been conducted.  As a final point, we are aware of a number of instances where a  provider (or their representative) has chosen to ignore the extrapolation as a contestable issue.  In other words, they just accept the extrapolation as a foregone conclusion and focus solely on the claims.  We respectfully disagree with that approach.  If we identify deficiencies with the extrapolation, we aggressively challenge its application.

III.      AdvanceMed’s Medical Reviews:

Once a provider has been identified as an outlier (or identified as a possible problem through a variety of other mechanisms), a medical review of their claims is often conducted by a ZPIC, such as AdvanceMed.

A number of year ago, Kevin Gerold, CMS’ former Acting Deputy Director for Program Integrity was quoted as saying that the agency had revamped its approach to claims processing in an effort to better “grasp the experience of the patient encounter.” Mr. Gerold was further quoted as saying that CMS was going to “let medical reviewers assess a claim’s legitimacy based on the big picture of the patient encounter, not on a nit-picking slavery to perfect documentation.” Unfortunately, in our humble opinion, AdvanceMed’s medical reviews have conducted have been extremely technical — resulting in the denial of many claims based on minor omissions, technical deficiencies and / or the contractors’ own peculiar spin regarding the application of an LCD.

In responding to AdvanceMed’s reasons for denial, it is essential that you obtain each and every reference relied upon by the contractor when denying the claims at issue.  We have identified multiple instances where a Medicare contractor (not necessarily AdvanceMed) attempted to apply an LCD retroactively.  Moreover, it is important to examine the underlying statutory authority to determine whether the contractor’s interpretation of a coverage provision is consistent with the underlying law or regulation.  Finally, it isn’t enough to merely “poke holes” in AdvanceMed’s reasons for denial – we like to go one step further – show that the particular claims at issue do, in fact, qualify for coverage and payment.

IV.       Conclusion:

The bottom line is simple — if you are audited by AdvanceMed, your Medicare claims will be scrutized as never before.  While we often disagree with AdvanceMed’s findings, we have consistently found them to be professional in their dealings and consistent in their arguments.  Regardless of whether or not you ultimately choose to be represented by our law firm, we strongly recommend that you seek legal representation if your practice or clinic is audited by AdvanceMed.

Our attorneys have years of experience representing Medicare providers in connection with post-payment audits and other administrative actions taken by ZPICs, PSCs and other Medicare contractors.  Should you have any questions regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert W. Liles or one of our other attorneys at 1 (800) 475-1906.

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