Déjà Vu – RAC Prepayment Reviews Are Back!

I.    Overview:

Late last week, the Centers for Medicare and Medicaid Services (CMS) announced that prepayment reviews by Recovery Audit Contractors (RACs) would begin (again) on or after June 1, 2012.  As we previously discussed, CMS had originally delayed the program amid significant provider concerns about its operation.

II.   Background:

RACs have long served an important role in detecting and recovering both Part A and Part B overpayments since the program began in 2005. Utilizing both automatic review edits and complex medical reviews to identify a multitude of claims errors, RACs have greatly assisted the government in its efforts to protect the integrity of the Medicare Trust Fund.  As you know, RACs are paid on a contingency basis, based on the amount of improper payments (either overpayments or underpayments) each RAC identifies and actual recovers. Despite harsh criticism from the provider community, RACs have been successful in their audit and recovery tasks, prompting the Federal government to expand their authority to review claims.

III.   RAC Prepayment Review Demonstration:

Initially announced on November 15, 2011, CMS’ RAC Prepayment Review Demonstration Project was slated to start in 11 states on January 1, 2012, including Florida, California, Mississippi, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri. Through the project, CMS was hoping to ensure that Medicare claims reimbursed by the government were medically necessary and met coding and billing criteria before such claims were paid. Due, at least in part, to significant concerns from providers and hospitals about the substantial administrative burden such review would cause, CMS announced last month that it was indefinitely delaying the RAC Prepayment Review Demonstration Project. As we noted when CMS first announced this delay, while providers may have considered this postponement a victory, CMS still has numerous other contractors actively performing prepayment review audits each day around the country. At the end of the day, the issue really isn’t whether CMS is going to instruct its contractors to conduct prepayment reviews, it really comes down to whether providers are properly meeting applicable medical necessarily, coverage, documentation, coding and billing requirements.

IV.   Impact of Being Placed on Prepayment Review:

As you may know, there is no prepayment review administrative appeals process. As a result, providers placed on prepayment review have little recourse to reverse the decision, and often remain on review for four to six months (although we have seen reviews lasting up to a year) or until the provider is able to show their Medicare Administrative Contractor (MAC) that the services billed meet medical necessity, coverage and documentation requirements. Importantly, this determination is entirely based on the respective MAC’s subjective view of the propriety of a provider’s claims.

It is important to note that prepayment review audits can prove disastrous for providers and hospitals who mainly treat Medicare beneficiaries. Prepayment review effective delays payment for several months, even assuming that the MAC finds the provider’s claims are payable. Often times, providers must also take many of these claims through the administrative appeals process, adding another one to two years before payment is made (again assuming that an Administrative Law Judge finds the claims payable).

V.   Avoiding Prepayment Review:

With RAC prepayment reviews on their way, providers may consider investing in the time and energy now to make sure their claims meet applicable payment requirements. While there is no “silver bullet” to completely eliminate the risk of prepayment audit, a number of preemptive steps exist to reduce the likelihood of such an occurrence. You should consider conducting a “gap analysis” of your practice, and in so doing, you will learn whether your billed services, and associated documentation, meet medical necessity and coverage requirements. You may also review your utilization rates of certain procedures and compare these rates to those of your local, regional and national peers. In all, you need to identify the regulatory benchmarks applicable to your practice, identify where you fail to meet these benchmarks, consider the manner and method to rectify these deficiencies, and add proper procedures and additional risk areas to your Compliance Plan. Such efforts now can leave you in an excellent position to respond to any billing questions by RACs or other Medicare contractors. While RAC prepayment reviews are just another type of audit in a long list of concerns for providers, don’t underestimate the ability of these RACs to identity errors and deny payment.

VI.   Reading the Tea Leaves:

CMS’ rekindled RAC prepayment review program is slated to begin again on June 1, 2012.  With the reimplementation of this project, CMS moves yet another step away from its “pay-and-chase” model.  Among its many advantages, the prepayment review approach greatly reduces the likelihood that the claims being paid by the government are improper. We believe that the scope of RAC and ZPIC prepayment reviews will continue to grow in the near future and will represent a key component of the government’s fraud prevention efforts in years to come.

Liles Parker attorneys have extensive experience conducting “gap analyses” and conducting compliance reviews for health care providers of all types. In addition, our attorneys are skilled in assisting providers who have been placed on prepayment review or subjected to post-payment audit. For more information, please call us today for a complimentary consultation.  We can be reached at: 1 (800) 475-1906.

CMS Delays RAC Prepayment Demonstration Project . . . For Now.

(January 11, 2011):

Background:

Last month, we discussed a new demonstration project by the Centers for Medicare and Medicaid Services (CMS) to test Recovery Audit Contractors’ (RACs’) ability to conduct prepayment review of Medicare Part A and B claims. RACs have successfully identified a wide variety of Medicare overpayments and have become one of CMS’ most important post-payment audit tools. In light of their continued success, last November, CMS announced that RACs would also now conduct  prepayment audits. An initial RAC Prepayment Demonstration Project was intended to cover many of the same types of prepayment review as those currently conducted by Zone Program Integrity Contractors (ZPICs) around the country.  The RAC Prepayment Demonstration Project was initially slated to be conducted in Florida, California, Mississippi, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri.

Recent Developments:

After CMS announced the RAC Prepayment Demonstration Project, it reportedly received an outpouring of concerns regarding the scope of these prepayment audits.  In consideration of these concerns, yesterday CMS announced that it was indefinitely delaying implementation of the Project, and would give 30 days notice before the RAC Prepayment Demonstration Project was reactivated.

Commentary:

Importantly, CMS’ decision to delay the RAC Prepayment Demonstration Project does not mean that they will not ultimately pursue RAC prepayment reviews in the future. Moreover, it is essential that health care providers keep in mind that other CMS contractors are already placing a wide variety of Part A and Part B providers on prepayment review.  As before, providers should regularly review their activities to ensure that all regulatory and statutory requirements are being met.  Broken down into areas of concern, providers should examine:

(1) Were the services administered medically necessary?

(2) Do the services meet Medicare’s coverage requirements?

(3) Have the services been properly and fully documented?

(4) Were the services correctly coded?

(5) Were the services correctly billed to Medicare?

If you are unable to answer “Yes” to each of the above questions, you have a serious problem.   It is important to keep in mind that there is no administrative appeals process or other effective legal remedy to get off prepayment review.  In fact, there is no “silver bullet,” despite what you have heard or been told.  The only way to be taken off of prepayment review is to show the responsible Medicare contractor that your claims fully meet each of Medicare’s myriad statutory and regulatory requirements for coverage and payment.  To that end, there are a number of preemptive steps a provider can take to reduce the chances of being selected for prepayment review in the first place.

To start, we recommend that you (or your qualified legal counsel) conduct a “gap analysis” of your claims.  In doing so, you will readily identify any possible deficiencies in your medical necessity assessments, coverage, documentation, coding and / or billing activities.  Moreover, you should consider assessing your utilization rate against the local and national average. For instance, for basic Evaluation and Management (E/M) services, are you or your providers billing higher level codes more often than your peers?  Medicare contractors use this data to identify possible outliers who may be engaging in improper coding and / or billing.  Data mining can also be used by contractors to identify potential problem providers who may need to be audited and / or placed on prepayment review.  Keep in mind, should you identify any overpayments when you conduct a gap analysis, you must report the overpayment and return it to the government within 60 days.  Any deficiencies noted in your review can be promptly addressed and added to the risk areas covered in your Compliance Plan.  After taking these steps, you will likely be well situated to respond to any prepayment audits initiated by a Medicare contractor, regardless of whether the contractor is a RAC or another Medicare contractor.

Get Ready – RAC Prepayment Reviews of Medicare Claims Are on the Horizon

(December 19, 2011):

I.          Introduction: 

As you know, RACs play an important role in the identification of Part A and Part B overpayments. Since the inception of the RAC Demonstration Project in 2005, RACs have successfully identified a number of improper claims, denying payment for reasons ranging from mere technical errors to broad concerns about medical necessity.  Unlike other contractors engaged in post-payment audits (such as Zone Program Integrity Contractors and Program Safeguard Contractors), RACs are not compensated on a fixed contract or cost-plus basis.  Instead, their compensation is based on the amount of overpayments they identify (which remain overpayments after any administrative appeals have been pursued). This arrangement has roundly been criticized by providers. Regardless of whether or not you agree with the RAC concept, the program is here to stay.  After reviewing the results of the RAC Demonstration Project, the government expanded the program and made it permanent.

II.         Expansion of the RAC’s Responsibilities:

On November 15^th, 2011, CMS announced that it was initiating a new demonstration project designed to help ensure that Medicare claims billed to the government are medically necessary and otherwise proper before they are paid. RACs will now be performing prepayment audits of provider claims. These reviews will likely be conducted in much the same manner as those currently initiated by other Medicare contractors. With the addition of RAC prepayment reviews, CMS hopes to further reduce the number of improper claims paid by the government each year.

III.        States to be Covered in the RAC Prepayment Demonstration Project:

The “RAC Prepayment Review Demonstration Project” is initially slated to target physicians, hospitals and other Medicare providers in Florida, California, Mississippi, Texas, New York, Louisiana, Illinois, Pennsylvania, Ohio, North Carolina and Missouri.  Implementation of the new pilot project is set to begin in January 2012.

IV.        Impact of Being Placed on Prepayment Review:

Importantly, there is no administrative appeals process covering prepayment audits. As a result, it is not uncommon for providers placed on prepayment review to remain in this status for four to six months or until the provider is able to show the contractor that the services billed are both medically necessary and fully meet Medicare’s coverage and documentation requirements.  Unfortunately, being placed on prepayment review can prove disastrous for providers with a large Medicare patient load.  It can effectively delay payment for several months, even if the contractor ultimately finds that the claims qualify for coverage and payment.

V.         Avoiding Prepayment Review:

Unfortunately, there is no “silver bullet” you can use to completely eliminate the risk of being placed on prepayment review. Nevertheless, there are a number of preemptive steps you can take to reduce the likelihood of such an occurrence.  To start, you should conduct a “gap analysis” of your claims.  In doing so, you will be able to learn whether or not the services you are billing meet Medicare’s medical necessity, coverage and documentation requirements.  Additionally, you will likely learn whether your utilization of services is less than, comparable to, or exceeds that of your peers.  Any deficiencies noted can be promptly addressed and added to the risk areas covered in your Compliance Plan.  At this point, you will likely be well situated to respond to any prepayment audits initiated by a RAC or another Medicare contractor.

Liles Parker attorneys and staff have extensive experience conducting gap analyses and providing compliance guidance to health care providers.  Additionally, our attorneys are skilled in assisting providers who have been placed on prepayment review. For more information, please call us today for a free consultation at 1-800 (475) 1906.

Lose Your Medicare Appeal at Reconsideration? Don’t Throw in the Towel Just Yet — Consider the Consequences and Your Options.

(June 18, 2011):  As a review of the last several quarters of Medicare appeals statistics reflects, an overwhelming percentage of Medicare providers appealing alleged overpayments through the Medicare administrative appeals process have chosen to “throw in the towel,” so to speak, when they have lost at the reconsideration level.  As you will recall, at the reconsideration level, Medicare claims are assessed by a Qualified Independent Contractor (QIC) selected by the Centers for Medicare and Medicaid Services (CMS) to hear the second level of administrative appeals. 

According to statistics kept by Q2Administrators, the contractor selected to serve as the Administrative QIC (AdQIC), most Medicare providers have chosen not to appeal claims denials issued the QIC at the reconsideration level of appeal.  Nationwide, in the last eight quarters, the percentage of Part B QIC cases not being appealed has risen to an astounding 86%. This trend is also occurring in Part A QIC cases, where the numbers of non-appealed cases have grown from roughly half to 75%.  

The purpose of this article is to examine possible reasons why Medicare providers have chosen not to appeal claims denials to the Office of Medicare Hearings and Appeals (OMHA) to be heard by an Administrative Law Judge (ALJ).  We also examine points to be considered by providers if choosing to be represented by legal counsel in the ALJ hearing process.   

I.          The Third Level of Appeal: ALJ Hearings 

For 2011, if at least $130 remains in controversy following a QIC’s denial decision at the reconsideration level, a Medicare provider may request an ALJ hearing within 60 days of receipt of the reconsideration denial decision. ALJ hearings are intended to be non-adversarial proceedings aimed at determining the facts so that questions of coverage and payment may be properly addressed.  It has been our experience that the ALJ level of appeal is a provider’s best opportunity to present its arguments in support of coverage and payment.

ALJ hearings are usually held by video-teleconference or by telephone, but you may also ask for an in-person hearing. While an ALJ hearing is the third level of the administrative appeals process, it is the first time that a provider is given an opportunity to testify, clarify points missed by reviewers at lower level of appeal and answer any questions that may be raised by the ALJ.

 II.        Why Are Most Medicare Providers Not Appealing Reconsideration Denials? 

When facing an overpayment determination levied by a Zone Program Integrity Contractor (ZPIC), a Recovery Audit Contractor (RAC) or in some instances a Medicare Administrative Contractor (MAC), the first question to be addressed by a Medicare provider is: 

“Based on the record and the facts, should we have been paid for the services rendered and / or the products / devices provided to this Medicare beneficiary?”  

The answer to this question isn’t always as easy as it may initially seem.  Were the services medically reasonable and necessary?  Did you properly document the services? When faced with this question, the basic rule we recommend that providers follow is fairly simple – if it doesn’t belong to you, give it back.  In such a situation, a provider should examine the various reasons why the claim allegedly does not qualify for coverage and payment and should take steps to better ensure that any deficiencies are remedied. Additionally, any other overpayments noted must be promptly repaid to the government, with the 60 day period mandated under the Affordable Care Act (ACA). 

In cases where a provider (or their representative) contends that a claim does, in fact, qualify for payment, it typically appeals an overpayment assessment issued by a ZPIC, RAC or MAC.  Nevertheless, as previously discussed the vast majority of providers who lose an appeal at the reconsideration level choose not to further appeal the denial. In speaking with Medicare providers, the primary reasons for not appealing any further include: 

• Cost / benefit considerations. By the time a provider reaches the ALJ level, the provider has already endured the time, expense and frustration of unsuccessfully arguing its case through two levels of appeal.  By this time, many providers conclude that the amount in controversy does not justify the time and expense of further appealing the QIC’s denial to the ALJ level.  
• Many providers are intimidated by the hearing process and do not feel comfortable participating in an ALJ hearing.  Despite the fact that ALJ hearings are typically conducted by teleconference, the process can still be quite intimidating.  ALJs almost always place testifying providers and their designated “experts” under oath before taking their testimony.  Additionally, if a provider has introduced new evidence into the record, it will be required to show “good cause” for its admission at this late stage of the proceedings.  Finally, most providers find that the ALJ handling their case is quite knowledgeable and typically has extensive experience analyzing coverage requirements and assessing the adequacy of a provider’s documentation.  Providers who have failed to adequately prepare for the hearing are likely to find that the process can be quite difficult.   
• The ALJ hearing process has become considerably more complicated due to the participation of ZPIC personnel. Over the past year, the ALJ hearing process has become quite complicated when dealing with large, “big box” overpayment cases.  For instance, in cases when damages have been extrapolated, it is quite common for representatives of the ZPIC who issued the initial denial decision to attend the hearing as a “participant.”  When this occurs, ZPIC representatives often include an attorney representing the ZPIC, a statistician who will be prepared to support the extrapolation applied in the case, and a clinician (typically a Registered Nurse) who will testify why the claims allegedly do not qualify for coverage.   
• In cases where a provider’s third-party biller has agreed to handle claims appeals, few billers have agreed to pursue a denial past the reconsideration level of appeal.    

III.        Consequences of Not Filing for ALJ Appeal 

Assuming that no extended repayment plan has been established and the alleged overpayment has not already been repaid, the MAC will initiate recoupment of the alleged overpayment 30 days after the QIC issues its denial decision. Unfortunately, this will occur regardless of whether a request for ALJ hearing is filed in a timely fashion.  

Should a provider choose not to further appeal, its important to recognize that its “claims denial ratio” will increase.  As the government and its contractors increasingly rely on “data mining” when identifying potential targets for audit, providers with a high error rate will likely find their practices subject to further scrutiny.

 IV.       Don’t Give Up on Properly Billed Claims – Consider Your Options  

As Medicare claims audit and assessment efforts increase (through CMS’ use of ZPICs, PSCs and RACs), health care providers will be under increasing pressure to ensure that all statutory and regulatory medical necessity, documentation, coding and billing requirements are met.  Despite a provider’s best efforts to remain compliant, it may find that its practice or clinic is alleged to have been overpaid by a Medicare contractor. Should that occur, we strongly recommend that you retain qualified, experienced legal counsel to represent your interests as early in the appeals process as possible.

Should you choose to handle the appeal yourself and lose at the reconsideration level, contact experienced legal counsel before deciding to discontinue the appeal.  Depending on the facts, you may find that it is both cost-effective and advisable to have your case handled at the ALJ level by experienced legal counsel.  When retaining counsel,  there are several important questions that you should ask:

• How much of your law practice involves health law issues?
• Please describe the extent of your experience handling large, complex administrative appeals of denied Medicare claims.
• Please describe your experience in challenging statistical extrapolations applied to an alleged overpayment in a case.
• How often have you responded to AdQIC appeals of favorable ALJ decisions?
• How often have you handled MAC appeals?
• Can you provide provider references?

Hopefully, your practice will not face a large administrative appeal of denied Medicare claims.  However, should such an event occur, you need to be ready to respond to the contractor’s audit. 

V.         Conclusion

 In addition to representing a wide variety of providers in the administrative appeals process, our Firm has been retained by a number of other law firms to assist them with large, complex administrative appeals.  After representing health care providers for many years in administrative hearings, involving literally tens of thousands of claims, it has been our experience that the ALJ level of appeal is the single best opportunity that a provider has to present its arguments in support of payment.

 While there are no guarantees in litigation, working with qualified clinical personnel, experienced legal counsel can effectively present a provider’s arguments in support to an ALJ assigned to hear the provider’s case.  Keep in mind, the trier of fact is an attorney – not a clinician or a consultant. Experience, coupled with an in-depth knowledge of the statutory and regulatory requirements may prove essential in proving your case. The ALJs we have practiced before have been attentive, knowledgeable, willing to listen to the provider’s viewpoint, and perhaps most importantly, FAIR.   If facing an ALJ hearing, consider the benefits of retaining experienced counsel when considering your options.

Liles Parker attorneys have extensive experience representing Home Health, Hospice, CMHC, DME, Ambulance, Physician Practices, Nursing Homes, SNFs, and PT / ST / OT Therapy providers in the Medicare administrative appeals process. Our attorneys also work with providers to help better ensure that their Compliance Program addresses applicable statutory and regulatory requirements.   Need assistance?  Call us for a complimentary initial consultation.  We can be reached at:  1 (800) 475-1006.

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  

  

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. 

 

 

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.

Health Data Insights Begins Medical Necessity Reviews

(August 30, 2010): Introduction:

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

 

Scope of Responsibility:

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

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

Provider Concerns:

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

Audit and Appeal Considerations:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Summary:

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

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

 

Region B RAC CGI Announces that it will Begin Review of Eighteen Projects that Involve Medical Necessity

(August 25, 2010): CGI Technologies and Solutions, Inc., (CGI), has announced it will immediately begin reviews on 18 newly approved projects that involve the medical necessity of selected inpatient DRG payments.  A complete list of the “issues” currently being examined by CGI can be found on its website. http://racb.cgi.com/Issues.aspx

Recovery Audit Contractors (RACs), such as CGI, contract with the Centers for Medicare & Medicaid Services (CMS) to perform post-payment reviews of Medicare claims to find overpayments and underpayments in return for a percentage (from 9 percent to 12.5 percent) of the amounts recovered. Put simply, they eat only what they kill.  CGI was awarded responsibility for handling Region B audits.  CGI’s contingency fee contract award dollar amount is 12.50% according to CMS.  Issues where CGI will be examining “medical necessity” requirements, include certain procedures related to:

• Chest Pain
• Other Circulatory System Diagnoses
• Other Vascular Procedures
• Syncope & Collapse
• Red Blood Cell Disorders
• Atherosclerosis
• Heart Failure & Shock
• Esophagitis, Gastroenteritis & Misc Digestive Disorders
• Musculoskeletal Disorders
• Chronic Obstructive Pulmonary Disease
• Respiratory
• Nutritional and Metabolic Disorders
• Kidney & Urinary Tract Infections
• GI Disorders
• Percutaneous Cardiovascular Procedures
• Renal Failure
• Nervous System Disorders and
• Cardiac Arrhythmia & Conduction Disorders.

 As CGI’s website discusses, when asked “What utilization criteria will CGI be using to review for medical necessity?” in its FAQ section, CGI states, “CGI will utilize the rules for National Coverage Determinations (NCD), Local Coverage Determinations (LCD), HCPCS, ICD-9 (ICD-10 when implemented and appropriate) and CCI that were in effect on the date of service.” 

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

 Should you have questions regarding the RAC process, you may contact us for a complimentary consultation.  We can be reached at 1 (800) 475-1906.

 

Don’t Take ZPIC or RAC Extrapolation Calculations at Face Value – Can Their Results Be Readily Reproduced?

(July 14, 2010): Imagine a ZPIC, PSC, or RAC handing you a claim analysis rife with alleged errors, an indecipherable list of statistical formulae, 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, use of formulas and application of the RAT-STAT program when selecting a statistical sample and extrapolating the alleged damages based on the sample pulled.  Over the years, we have challenged the extrapolation of damages conducted by Medicare contractors around the country, covering tens of thousands of claims.  Regardless of whether you are providing Partial Hospitalization, Evaluation and Management, Home Health, Physical Therapy, Surgical or other services, it is imperative that you work with experienced legal counsel and statistical experts to analyze the statistical sampling and extrapolation steps taken by the contractor. Should you succeed in invalidating the extrapolation, the whole games changes.  The question is – “How can you go about fighting an extrapolation calculation?”

One method is to show that the contractor’s auditor failed to identify a Statistically Valid Random Sample (SVRT).  Among the first steps is you should take is to retain experienced legal counsel to review the Medicare contractor’s actions.  Notably, there are a multitude of legal arguments which may be asserted (depending on the specific facts in your case).  Our firm has worked with several outstanding statistical experts over the years, each of which has a proven track record of analyzing the contractor’s actions and identifying any flaws made by the ZPIC or PSC when extrapolating damages.

Notably, Section 3.10.4.2 of CMS’ Medicare Program Integrity Manual establishes that the contractor is obligated to fully document the statistical methods an auditor employs:

“The PSC or ZPIC BI [Benefit Integrity] unit or the contractor MR [Medical Review] unit shall identify the source of the random numbers used to select the individual sampling units. The PSC or ZPIC BI unit or the contractor MR unit shall also document the program and its algorithm or table that is used; this documentation becomes part of the record of the sampling and must be available for review.” (emphasis added)

“The PSC or ZPIC BI units or the contractor MR units shall document all steps taken in the random selection process exactly as done to ensure that the necessary information is available for anyone attempting to replicate the sample selection.” (emphasis added)

ZPIC and PSC statisticians must be able show their work to the extent that a reviewer can attempt to “replicate” their actions and determine whether or not the steps taken were consistent with accepted principles and practices of statistical sampling.  The failure of a ZPIC or PSC statistician to fully and properly document his actions may serve as the basis for seeking to invalidate the extrapolation. The calculation of a valid statistical sample and the extrapolation of damages by ZPIC and PSC statistician is a highly complex process. After handling many extrapolated damages cases, we have found that few ZPIC or PSC statisticians fully meet their obligations to document the steps taken and / or conduct the process in a proper fashion, consistent with accepted statistical sampling procedures.  Should your practice or clinic find that it is facing an extrapolated Medicare audit, it is strongly recommended that you engage qualified, experienced counsel to represent you in the process.  Your legal counsel can then engage a qualified statistician to assess the contractor’s actions.

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

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