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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

           And, last but not least,

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

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

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

 

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

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

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.

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

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

I.          Introduction:

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

II.         Home Health Rule:

A.        Who is covered under the rule?

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

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

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

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

This face-to-face encounter must take place:

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

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

C.       What else is required?

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

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

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

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

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

III.        Hospice Rule:

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

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

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

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

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

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

C.        What else is required?

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

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

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

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

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

IV.        Here Come the ZPICs, PSCs and RACs:

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

V.         Compliance Considerations:

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

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

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

V.         Conclusion:

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

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

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

  

Predictive Modeling: The Latest Advances in Sophisticated Data Mining Techniques are Enabling ZPICs and Law Enforcement to Identify Fraud Sooner and Prevent it from Continuing

(April 15, 2011):  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.  You may contact us at: 1 (800) 475-1906.         

 

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

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

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

I.        Background:

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

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

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

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

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

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

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

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

II.      Overview of the ZPIC Program:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

IV.        Closing Thoughts:

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

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

 

 

 

 

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

(April 1, 2011):

I.        Background:

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

II.         Questionable Billing Practices by Skilled Nursing Facilities:

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

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

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

Identify SNFs that engaged in questionable billing practices in 2008.

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

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

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

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

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

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

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

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

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

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

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

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

 III.        Areas of Focus by Medicare Contractors:

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

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

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

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

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

 IV.        Recommendations for Providers:

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

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

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

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

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

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

 

 

Post-Payment Audits Conducted by Medicare Contractors: An Overview of the CERT Audit Process

(March 12, 2011):  Health care providers around the country are finding their practices and clinics subjected to Medicare post-payment audits by Zone Program Integrity Contractors (ZPICs), Program Safeguard Contractors (PSCs) and Comprehensive Error Rate Testing (CERT) Contractors.  While all post-payment audits should be taken seriously, there are real differences between both the contractors and the post-payment audits they are conducting.  This is the first of three articles examining these differences.  Starting with the CERT audit program, we will be examining each of the Medicare contractors conducting post-payment audits and review of provider claims for services and devices.   

Historical Background of the CERT Audit Program:

With the passage of the Health Insurance Portability and Accountability Act (HIPAA) of 1996 (P.L.104 -191), the Department of Health and Human Services, Office of Inspector General (OIG) initiated work in an effort to estimate the improper payment error rate of Medicare Fee-For-Service (FFS) claims.  From 1996 through 2002, OIG continued to manage this program. In 2002, the “Improper Payments Information Act” (IPIA) was enacted. The Centers for Medicare and Medicaid Services (CMS) subsequently began working with the OIG in 2003, and worked to further refine the estimated Medicare FFS error rate so that the program would comply with the requirements of the IPIA.  These efforts became known as the “Comprehensive Error Rate Testing” (CERT) program.[1]  Unlike early efforts, the CERT program does not only estimate a national improper payments error rate for Medicare FFS claims.  As Timothy Hill, OIG’s Chief Financial Officer testified before the Senate, the CERT program examines a number of essential aspects of the overall error rate of Medicare FFS claims:

“Contractor-specific improper payment rates – which measure the accuracy of our claims processors.

Provider-type specific improper payment rates – which measure how well the providers who care for our beneficiaries are preparing and submitting claims to the program; and

Other management related information – which provides insight into payment errors by region and reason.”[2]

Notably, the CERT program was designed to provide a comprehensive assessment of the improper payments being made to specific types of Medicare providers, along with the improper payment decisions being made by various Medicare contractors.  In doing so, the CERT program was set up to serve as an integral management tool to be used by CMS. Once problem areas were identified, CMS was able to monitor specific problem areas (and in some cases, specific Medicare contractors making erroneous payment decisions) so that corrective action could be taken.

CERT Contractors:

CMS has selected private contractors to administer the CERT program.  There are two basic types of CERT contractors, a “CERT Review Contractor” (CRC) and a “CERT Documentation Contractor” (CDC).  As an initial step, the CRC will first select random samples of claims from each Medicare claims processing contractor.  The CDC will then take the list of claims selected by the CRC and request the relevant documentation related to these claims from the health care provider who provided, billed and was paid for the services.  Once received, the CDC then forwards the documentation to the CRC. 

A.        Livanta – CDC.

CMS has awarded the CDC contract to a private company named “Livanta, LLC” (Livanta), located in Annapolis Junction, Maryland. Notably, Livanta has also been awarded the “Statistical Contractor” (SC) portion of the Payment Error Rate Measurement (PERM) program.  The PERM program is designed to measure improper payments in both the Medicaid program and the State Children’s Health Insurance Program (SCHIP).  

Focusing on Livanta’s duties as CDC, the contractor typically proceeds as follows when completed its duties as a CERT contractor: 

• Once a provider has been identified, the CDC will contact the provider regarding the audit.  In a number of cases, the CDC will first call the provider by telephone and then follow-up with a fax or written request for the documents sought. 
• If a provider has not forwarded the documents requested to the CDC by day 30, both telephone and written follow-ups are made by the CDC to the provider.   
• If the records are not received by day 45, the CDC will again both call and fax or write the provider to ascertain the status of the requested documentation. 
• If the requested documentation still has been received by day 60, a letter is sent to the provider again inquiring on the status of the missing documents. 
• If no documentation is received by day 76, the claims associated with the missing documentation is denied and scored as an “error” based on the missing documentation.

B.        AdvanceMed – CRC.

Once the CDC has requested and received the claims documentation from the provider, it is forwarded to the “CERT Review Contractor” (CRC).  CMS has awarded the contract to serve as CRC to AdvanceMed. As CRC, AdvanceMed must carefully review the documentation received and determine whether the services qualify for coverage and payment.  The CRC then compares its assessment to that of the Medicare contractor who originally reviewed and paid the claims (the contractor is typically a Medicare Administrative Contractor (MAC) who is responsible for review of the Part A or Part B claims).  If the CRC finds that the Medicare contractor incorrectly billed, paid or processed the services at issue, the claim is noted to be an “error”

Sample CERT Program Results From the Fourth Quarter of 2010:

Each quarter, Highmark Medicare Services (Highmark) reports on the most recent “errors” identified by the CERT contractor in connection with the CERT program audit.  During the Fourth Quarter of 2010, 508 CERT errors were found in connection with the Part A claims reviewed.   The 508 errors can be broken down as follows: 

• 311 errors were due to “insufficient documentation.”  Notably,   a majority of the errors in this category were because the medical record “did not contain a valid physician’s signature” or because a diagnostic test performed “did not contain a valid physician’s order” or an identification of the provider who rendered the service.
• 132 errors were due to “lack of medical necessity” based on the medical documentation submitted.
• 37 errors were due to “incorrect coding” (primarily related to laboratory testing).
• 10 errors were due to “invasive procedures that were assessed  to be without medically necessity.”
• 9 errors were due to an “incorrect procedure code” used when billing the service.
• 6 errors were the result of “billing for services that were not rendered.”
• 2 errors were due to “other errors.”
• 1 error was due to an “incorrect discharge code being used.”  

In addition to the Part A errors identified, a separate error report covering Part B claims is also detailed on Highmark’s website. [3] 

 Responding to a CERT Audit Request for Documents:

Should you receive a CERT audit request for documents from a CDC, it is important to keep in mind that your practice or clinic is not being accused of fraud or wrongdoing.  Fundamentally, a CERT audit is primarily designed to identify deficiencies and mistakes made by Medicare contractors.  As Compliance Officer, upon receipt of a CERT audit request, you should carefully review the request and take steps to assemble a complete set of documentation covering the specific claims at issue.  As Highmark also notes, when dealing with notes that are difficult to decipher, it is recommended that a transcription of the notes be made and submitted with the documentation.  

Appealing CERT Denials:

The results of a CERT audit are likely to be set out in Medicare’s electronic Fiscal Intermediary Standard System (FISS) computer system.  It is imperative that you monitor the status of the claims selected for CERT review.  If the CRC finds that one of more of your paid claims did not qualify for coverage and payment you will have to decide whether or not you agree with the denial decision that has been issued.  Should you dispute the denial, you will need to file for administrative appeal within the standard, established timeframes.   CERT denials are appealed in the same manner as any other claims denial would be appealed.

Comparison of CERT and ZPIC / PSC Post-Payment Audits:

As reflected above, CERT audits are fundamentally different from ZPIC and PSC audits, both in terms of fundamental purpose and in terms of likely financial liability.  At its core, a CERT audit is really an attempt by CMS to learn whether or not its contractors (typically MACs) are properly assessing and processing claims submitted by Medicare providers for review and payment.  If a CERT contractor finds that a provider’s claims should not have been paid, it primarily reflects on the MAC, not necessarily the provider.  Having said that, claims denied by a CERT contractor should still be appealed if the provider believes that the claims do, in fact, qualify for coverage and payment.  While denied claims will still contribute to a provider’s overall error rate (possibly increasing the likelihood that a provider could be subjected to later audits), damages associated with CERT audits are not typically extrapolated.  As a result, the overall damages associated with CERT audits are relatively modest, especially when compared to the potential damages alleged in ZPIC and PSC “big-box” cases.  Additionally, unlike ZPIC and PSC audits, most CERT audits are solely concerned with the coverage and payment of the particular claims under review.  In contrast, ZPIC and PSC post-payment audits can lead to suspension, revocation or even referral to OIG or DOJ in cases where fraud may be evident.

Despite the limited scope of liability inherent in CERT audits, it is imperative that Medicare providers diligently work to respond to requests for documentation in a timely fashion.  Notably, other contractors (including ZPIC, PSC and RAC auditors) may review CERT audit findings for targeting purposes.  The bottom line is fairly simple — if you owe money to the Medicare program, pay it back.  If not, you should challenge unwarranted denials of claims by CERT auditors. 

Liles Parker attorneys represent health care providers around the country in connection with post-payment audits and reviews by Medicare contractors.  Should your practice, clinic or company be subjected to a post-payment audit, give us a call for a complimentary consultation.  We can be reached at: 1 (800) 475-1906.    

Are Medicare ALJ’s Truly Independent Fact Finders, Free From the Informal Pressures of CMS and its ZPIC / PSC / RAC / QIC Contractors?

(February 20, 2011):  Over the years, we have represented a wide variety of health care providers in the administrative appeals process.  Our duties have regularly included representation before Administrative Law Judges (ALJs) presiding out of the Western, Southern, Midwestern and Mid-Atlantic Field Offices of the Office of Medicare Hearings and Appeals.  (OMHA). 

In the course of our work, we have routinely been asked by our health care provider clients for our opinion regarding the “independence” of ALJs from the pressures exerted by the Centers for Medicare and Medicaid Services (CMS) and its contractors (including, but not limited to the Qualified Independent Contractors (QICs), Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs)).  The purpose of this brief article is to examine this issue in more detail.

Background:  As many of you will recall, prior to the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Medicare administrative appeals were heard by Judges working for the Social Security Administration’s (SSA’s) Office of Hearings and Appeals.  For much of that time, the SSA was an agency of the Department of Health and Human Services (HHS).  In 1994, the SSA was officially separated from HHS and was made an independent agency.  Although the SSA was no longer part of HHS, its Judges continued to hear Medicare administrative appeals.

Despite the fact that SSA used to a part of HHS (and for a short period was independent of HHS), in our opinion, SSA Judges were generally thought to be “independent” adjudicators of the facts, not impacted by, or bowing to, the effects of outside agency pressures.

With the enactment of the MMA, the responsibility for hearing Medicare administrative appeals was transferred over to HHS, with OMHA reporting solely to the Secretary, HHS.  In doing so, the OMHA was placed completely outside of CMS’ organizational structure, ostensibly free from any agency pressures that CMS might informally care to exert.  This also placed the OMHA independent of the various contractors working for CMS.  As a review of the Congressional Record reflects, the issue of independence was carefully considered by Congress and the separation of the OMHA from CMS was consistent with their concerns. (See Congressional Record, V. 149, Pt. 22, November 20, 2003 to November 23, 2003, Page 30400). As set out in the June 23, 2005 issuance of the Federal Register (70 Fed.Reg. 36386), titled “Office of Medicare Hearings and Appeals; Statement of Organization, Functions, and Delegations of Authority,” the OMHA is under the direction of a Chief Administrative Law Judge who reports directly to the Secretary, HHS.  This organizational structure was specifically intended to meet the “independence” requirements of the Section 931(b)(2) of the MMA. 

What Can You Expect:

In terms of functional authority, ALJs are comparable in many respects, to that of an Article III Judge, who is appointed by the President and confirmed by the Senate.  While ALJ’s are not Article III Judges, it has been our experience that they are strongly independent, adjudicating over Medicare proceedings in a formal, professional fashion, similar to what you would expect to encounter in a Federal District Court proceeding.

Pursuant to 42 C.F.R. § 405.1026, ALJs cannot even conduct a hearing if they are prejudiced or partial to any party, or if they have an interest in the matter pending for resolution.  To date, we have not seen an ALJ that has been “prejudiced or partial to any party.”

To be clear, health care providers do not always prevail — every case stands or falls based on its merits.  Moreover, just because you have experienced a positive outcome with a particular ALJ on one occasion does not mean that you should expect a similar result when you are next in front of the same judge.  ALJs are trained to weigh the facts and the evidence.  While in past years it was rare for CMS or its contractors to participate in a hearing, it is now commonplace for representatives of the Zone Program Integrity Contractor (ZPIC) or the Program Safeguard Contractor (PSC) to now attend the hearing and seek to provide support for their initial denial actions.  As a result, the job of ALJ is now more complicated than ever.

In summary, the current administrative appeals system has been specifically designed to insulate ALJs from the actual and / or implied pressures which could conceivably be exerted by CMS and its various contractors.  When appearing before an ALJ, it is important to remember that the process has become significantly more complicated now that CMS contractors are now regularly attending and participating in the process.  In light of these changes, it is recommended that you engage experienced legal counsel to represent your interests in an ALJ hearing.  Although the system and its Judges are set up to provide a fair opportunity for you to present your case and be heard, it is much more difficult to prevail when up to three representatives of the ZPIC (a lawyer, a statistician and a clinician) are also participating in the proceedings, providing support and explanations for their prior Medicare claim denial decisions.

Liles Parker attorneys have extensive experience representing a wide variety of Part A and Part B providers in the administrative appeals process, including the ALJ hearing stage.  Please feel free to contact us for a complimentary consultation.  We can be reached at 1 (800) 475-1906.

 

 

 

 

ZPICs and PSCs Will Now Be on the Lookout for “Date Stamps” Used by Home Health and Hospice Providers.

(February 19, 2011):  While the use of “signature” stamps has been prohibited for quite some time, a wide variety of health care providers have continued to use “date” stamps or some other method of memorializing when a document was signed by an ordering or treating physician.  While the Centers for Medicare and Medicaid Services (CMS) has not announced a total ban on such practices, they have recently prohibited home health and hospice agencies from continuing to use “date” stamps.

 Background:      Late last year, CMS notified its Medicare contractors that physicians must sign and date hospice certifications and home health plans of care, verbal orders, and certifications.  A number of Medicare contractors then notified hospice and home health providers of this change, noting that it would become effective for all documents signed on or after January 1, 2011.

 Basis for this Requirement:   Characterized by at least one Medicare contractor as a “clarification,” this change was based on the following CMS references:

 Home Health

Medicare General Information, Eligibility and Entitlement Manual (Pub. 100-01), Chapter 4, section 30.1 which states: ”The attending physician signs and dates the POC/certification prior to the claim being submitted for payment.”

The manual requirement is also addressed in 42 CFR 424.22(D)2 effective 1/11/11, and states “The certification of need for home health services must be obtained at the time the plan of care is established or as soon thereafter as possible and must be signed and dated by the physician who establishes the plan.”  The instructions for recertification are found in the same Part and restates that it “must be signed and dated by the physician who reviews the plan of care.”  

Hospice

 Medicare General Information, Eligibility and Entitlement Manual (Pub. 100-01), Chapter 4, section 60 states:  “Certification statements must be dated and signed by the physician.”

 The manual requirement is also addressed in 42 CFR 418.22(b)(5) effective 1/11/11 and states: “All certifications are recertifications must be signed and dated by the physician(s).”

Other Considerations:

 In reviewing this clarification, it is somewhat confusing (if not inconsistent) in light of CMS’ recent guidance in the Federal Register titled “Medicare Program; Home Health Prospective Payment System Rate Update for Calendar Year 2011; Changes in Certification Requirements for Home Health Agencies and Hospices; Final Rule.”  As the Final Rules reflect, the use of “date stamps” was expressly addressed at approximately the same time CMS sent out its clarification to Medicare contractors.  As the Final Rule reflects:

 Comment: A commenter recommended that CMS continue to accept the hospice date stamp on POCs returned to the agency by physicians who forget or fail to date their signature on this document.

Response: At this time, there is nothing to preclude a hospice from using a date stamp if a physician fails to date his or her signature on the POC.

To be clear, technically the clarification guidance is not inconsistent with CMS’ response in the Final Rule.  When discussing the change for hospices, the clarification focused on certifications and recertifications while the Final Rule focused on plans of care.  Nevertheless, from a compliance standpoint, the message is quite clear – “date stamps” should not be used.   

Compliance Recommendations:

From a compliance standpoint, it is imperative that both physicians and staff are educated and understand that “date stamps” are no longer acceptable.  Although CMS’ clarification was directed at home health and hospice providers, the best practice would be for all providers to discontinue the use of date stamps in connection with all documents, not merely those documents identified above. Like signature stamps, the use of date stamps will likely ultimately be prohibited for all Medicare providers.

It is equally important to recognize that orders, certifications, recertifications and plans of care and other documents must be signed in a timely fashion. They should not be backdated or signed by anyone other than the physician responsible for ordering the certification or establishing the plan of care.

If a home health or hospice provider receives a signed order or certification from a physician who has not dated the document, it should immediately be sent back to him to be properly dated.  

From a “program integrity” standpoint, Zone Program Integrity Contractors (ZPICs) and Program Safeguard Contractors (PSCs) will now be including this issue in its list of technical audit issues.  Health care providers should add this issue to their list of compliance “risks.” 

Liles Parker attorneys represent home health and hospice providers in connection with ZPIC audits, compliance counseling and business transactions.  Should you have questions, please feel free contact us for a free consultation.  We can be reached at 1 (800) 475-1906.    

  

Be Prepared — ZPIC, PSC and QIC Representatives Are Increasing their Participation in Appeal Hearings, Personally Presenting Their Rationale for Denying Your Medicare Claims to the ALJ.

(February 12, 2011):  Over the last year, we have noted an important trend when representing Medicare providers in post-payment overpayment cases at the Administrative Law Judge (ALJ) level of appeal.   Medicare contractors are actively attending and participating in many ALJ hearings.  The virtual “Courtroom” where ALJ hearings are typically held (most ALJ hearings are now held by teleconference or video-teleconference — few are conducted in person) are no longer attended by only a provider, its attorney and the Judge.   Instead, it is now relatively crowded, requiring the scheduling of experts and the testimony of various clinical specialists — representing not only the provider, but also one or more government Medicare contractors.  Although mostly limited to “big-box” cases where the amount at issue ranges from $100,000 to several million dollars, we have even had Medicare contractors attend ALJ hearings involving alleged overpayments of only a few thousand dollars.

This “sea change” in how the government and its contractors view their role in working to help ensure that alleged overpayments stay in place demands that providers reconsider their decision to represent themselves in ALJ appeals hearings.  While many health care providers feel comfortable handling an ALJ hearing on their own when the only parties on the teleconference or on the video-teleconference are the Judge and the Medicare providers themselves, it is a completely different situation when one or more contractors elects to participate in the hearing and present their denial reasons to the ALJ.  The purpose of this article to examine this trend and discuss a number of considerations that Medicare providers should be taking into account when deciding whether or not to represent themselves at ALJ hearing, without an attorney. 

I.          Rights / limitations of a ZPIC or other contractor when acting as a “participant” in an ALJ hearing.

Pursuant to 42 C.F.R. § 405.1010, both representatives from the Centers for Medicare and Medicaid Services (CMS) and its contractors may participate in an ALJ hearing.  Moreover, an ALJ may request that CMS or its contractors participate in a hearing.  As the regulatory provisions provide:

“(a) An ALJ may request, but may not require, CMS and/or one or more of its contractors to participate in any proceedings before the ALJ, including the oral hearing, if any. CMS and/or one or more of its contractors may also elect to participate in the hearing process.

(b) If CMS or one or more of its contractors elects to participate, it advises the ALJ, the appellant, and all other parties identified in the notice of hearing of its intent to participate no later than 10 calendar days after receiving the notice of hearing.

(c) Participation may include filing position papers or providing testimony to clarify factual or policy issues in a case, but it does not include calling witnesses or cross-examining the witnesses of a party to the hearing. (emphasis added).

(d) When CMS or its contractor participates in an ALJ hearing, the agency or its contractor may not be called as a witness during the hearing.

(e) CMS or its contractor must submit any position papers within the time frame designated by the ALJ.

(f) The ALJ cannot draw any adverse inferences if CMS or a contractor decides not to participate in any proceedings before an ALJ, including the hearing.”

While ZPICs and other contractors may not “cross-examine” a Medicare provider or its witnesses during an ALJ hearing, contractors have easily worked around this regulatory obstacle.  Rather than confront a provider directly, a contractor will merely point out their concerns or make a specific point to the Judge.  The presiding ALJ will often then merely ask the provider the same questions first raised by the ZPIC.  As a result, a Medicare contractor never has to cross-examine the provider but his points and questions are still ultimately answered.  For instance, the following very simple exchange might occur during an ALJ hearing:

“ALJ:  I would like to hear the Medicare contractor’s views regarding the medical necessity of this E/M claim.

ZPIC:  Your honor, the 1997 E/M Guidelines clearly reflect the types of situations which would qualify as “High Complexity.”  We don’t believe that the facts here represented that level of complexity.  Additionally, the physician is now alleging that the patient suffered from multiple serious co-morbities which complicated the medical decision-making required.  Where is there proof that the patient had these conditions?

ALJ:  Dr. Smith, can you point out where these medical conditions are documented in the medical records submitted?”

In most instances, a provider should expect the ZPIC’s challenge to be much more pointed that the example cited above.  In any event, the bottom line is simple, under the current rules, it remains quite easy for a ZPIC to point out weaknesses in the provider’s case.  ALJ’s are seeking to determine the facts and decide whether the claims at issue qualify for coverage and payment.  When a ZPIC raises a concern, most ALJ’s will want to follow-up with the provider in order to obtain an answer regarding the points raised.  

Over the last year, we have also seen a marked  increase in the number of cases where a ZPIC has chosen to file a post-hearing brief with the Court.  This can be especially problematic for providers who choose to represent themselves at hearing because the ZPICs have used this as an opportunity to present new evidence and/or new arguments that were never introduced at lower levels of the case or at ALJ hearing.  As a result, the provider is often placed in the position of trying to respond to new arguments, never before presented by the ZPIC or other contractors, at the last minute in the ALJ hearing process.

II.          Who will show up from the ZPIC’s or PSC’s office?

Medicare providers should keep in mind that both ZPICs and Program Safeguard Contractors (PSCs) are quite sophisticated and are becoming more and more active in the ALJ hearing process, often replying to arguments presented to the Judge by a Medicare provider.  Moreover, it is not uncommon for a ZPIC to send as many as three professionals to participate in an ALJ hearing — all of whom may ultimately defend the ZPIC’s initial denial of the provider’s Medicare claims.  One of the ZPIC representatives very well may be an attorney.  A ZPIC contractor against whom we regularly litigate often sends a licensed attorney to respond to pro-provider arguments that the claims qualify for payment because they were not reopened in a timely fashion or that even if the claims do not meet all of the applicable coverage requirements, any overpayment would still qualify for “waiver.”  The ZPIC’s attorney may also respond to a number of limited arguments presented by a provider when trying to get a statistical extrapolation declared invalid by an ALJ.   It has been our experience that the ZPIC’s attorney is typically polished, smart and prepared.  When facing an unrepresented physician, the ZPIC’s lawyer would likely easily address any non-medical arguments presented by a Medicare provider.  A second ZPIC or PSC representative likely to participate in an ALJ hearing is the contractor’s statistician.  He is responsible for defending the legitimacy of the statistical sampling and extrapololation methodology employed by the ZPIC or PSC when extrapolating the damages in a case.  While a significant number of physicians and other health care providers are knowledgeable in statistics and mathematics, few know or understand the regulatory requirements which must be met before a contractor may engage in statistical sampling and seek to extrapolate damages.  As a result, few unrepresented providers have been able to convince an ALJ that an extrapolation is invalid.  While the additional cost of engaging a statistical expert to review a ZPICs extrapolation actions can be costly, it is likely required if a provider hopes to have a reasonable chance of challenging an extrapolation.   Finally, it is quite common for a ZPIC to send a third representative (typically a Registered Nurse) to provide clinical testimony in support of the ZPIC’s decision not to cover and pay certain claims, often citing the ZPIC’s own unique interpretation of LCD and LMRP requirements (an interpetation withwhich we often disagree).  Overall, an unrepresented provider is often unprepared to address and respond to the many legal, statistical and clinical arguments presented by the various ZPIC participants in an ALJ hearing.

While ZPIC and PSC representatives are now regularly participating in ALJ hearings, they are not the only contractors who are prepared to rise to the challenge.   Representatives of the Qualified Independent Contractor (QIC) have also been participating in some ALJ hearings.   In cases we are aware of, the QIC representative has been an attorney working for the contractor.  Nevertheless, there is nothing to prevent a clinician working for the QIC from attending the ALJ hearing and presenting the QIC’s arguments why certain claims did not qualify for coverage and payment.  Additionally, in at least one fairly recent case we handled on behalf of a provider, a Medicare Administrative Contractor (MAC) clinical reviewer chose to participate in the ALJ hearing.  

III.          What are the differences between a “party” to a hearing and a “participant” in a hearing?

As 42 C.F.R. § 405.1010(c) reflects, there are significant differences between a “party” to an ALJ hearing and a “participant” in an ALJ hearing.   As we previously discussed, a “participant”  does not have the right to call witnesses or cross-examine parties or their witnesses.  Additionlly, participants do not have the right to object to the issues described in the ALJ’s “Notice of Hearing.”  As CMS has argued, these elements are “cornerstones” of the adversarial process.  In the absence of these cornerstones, a proceeding is not considered to be adversarial, even though multiple Medicare contractor representatives may participate in an ALJ hearing.  As a result, since the proceeding was not adversarial in nature, a provider will be precluded from seeking to have its attorney’s fees paid under the “Equal Access to Justice Act,” even though it ultimately prevailed at hearing.   While perhaps technically correct, the idea that ALJ hearings are truly “non-adversarial” when Medicare contractors choose to join as a “participant” is flatly untrue.   ZPIC lawyers, clinical reviewers and expert statisticians have proven themselves to be highly capable and effective when arguing their positions, despite the fact that their role in the hearing was considered to be “non-adversarial” in nature.  To their credit, even though both sides may be passionate about their position on the issues, all of the ALJs we have practiced before have kept a strict rein on the proceedings. 

IV.          Depending on the specifics of a case, many providers would be better off engaging experienced legal counsel to represent their interests in an ALJ appeal.

When faced with an administrative overpayment case that is highly complex, involves a significant alleged overpayment or is based on a statistical extrapolation of damages, we recommend that a Medicare provider retain experienced legal counsel to represent the provider’s interests.  While it is possible for an experienced attorney to step in and handle a case at a later level of administrative appeal (such as the QIC and ALJ levels), it becomes more and more difficult to do so in an effective fashion as the case progresses.  We have seen a number of cases where a provider has failed to properly establish the record in a case and important supportive documentation stood the chance of not being admitted in the record because the provider failed to introduce it at lower levels of appeal.  An experienced attorney can help ensure that the record is properly constructed and no important legal defenses or payment arguments have been left out of the case.  Additionally, legal counsel will be able to assess the coverage requirements, identify possible holes in the provider’s case and work with the provider to identify witnesses and obtain supportive evidence to hopefully fill any gaps in the provider’s case. 

V.          Conclusion.

As a final point, it essential to remember that the trier of fact, the ALJ responsible for presiding over the provider’s case, is a lawyer, not a clinician.  Arguably, an experienced health law attorney– rather than a clinician — is uniquely trained to analyze the legal issues presented, organize the provider’s facts and present the relevant evidence to the ALJ (another attorney).  Having said that, an experienced attorney is no substitute for a qualified clinician who can directly address the clinical profiles of the beneficiaries and the medical necessity issues presented. Together, a supporting clinician and a skilled attorney can be a formidable team when arguing a Medicare provider’s case.  Moreover, this team is best equipped to respond to any arguments raised by participating ZPIC representatives during the overpayment hearing.

Liles Parker attorneys in the Firm’s Health Law Practice have extensive experience representing health care providers around the country in ZPIC, PSC and RAC overpayment appeals cases .  Should you have any questions about your case or the overpayment appeals process, please feel free to call us for a complimentary consultation.   We can be reached at 1 (800) 475-1906.

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