Medicare Advantage Plans May Soon Offer Personal Care Services

April 10, 2018 by  
Filed under Health Law Articles, Medicaid

Medicare Advantage Plans May Soon Cover Personal Care Services

(April 10, 2018):  On April 2, the Centers for Medicare and Medicaid Services (CMS) announced an expansion of the benefits that private health plans may offer Medicare beneficiaries under the Medicare Advantage (MA) program in 2019.  In its Final Call Letter for bids from plans that participate in the MA program (“MA plans”) for 2019, CMS expanded the services that plans would be permitted to offer in 2019 as supplemental health related benefits, even if the primary purpose of those benefits includes daily maintenance.  While these benefits are not required to be included in MA plans, plans are provided the latitude to include them if they choose and may very well change the reimbursement landscape for personal care agencies around the country.

I.  Background:

As background, MA Plans are permitted to offer certain benefits that are not included as part of the Medicare fee for service, or Original Medicare, benefits, if those benefits are, among other things, primarily health related.  As discussed in the Final Call Letter, CMS considers an item or service to be primarily health related “…if the primary purpose of the item or service is to prevent, cure, or diminish an illness or injury.”  However, CMS previously has not considered a service to fit within this category if the primary purpose is daily maintenance.

II.  Expansion of Coverage for Personal Care Services:

In the Final Call Letter, CMS recognizes that there is value in certain services that “diminish the impact of injuries or health related conditions and reduce avoidable emergency and health care utilization.”  The Letter does not specify the benefits that would fall under this rubric, but includes as an example, fall prevention devices for individuals at risk high risk for falling and similar products that protect against injury resulting from falls.  The Letter further states that services that diminish the impact of injuries and health conditions and reduce avoidable utilization can be included as supplemental benefits under certain circumstances, even if a significant purpose of the item is daily maintenance.”

As further described in the Letter, “[u]nder the new interpretation, in order … to be ‘primarily health related’ … [an item] must diagnose, prevent, or treat an illness or injury, compensate for physical impairments, act to ameliorate the functional/psychosocial impact of injuries or health conditions, or reduce avoidable emergency and healthcare utilization.”  The intent is to provide plans with the flexibility to offer supplemental benefits that can enhance quality of life and improve health outcomes.

The service must, however, be medically appropriate, recommended by a licensed provider as part of a plan of care, and cannot include items or services that are solely to induce enrollment.  The Letter also indicates that CMS will be issuing more detailed guidance in the future.

As noted, above, while not entirely clear, it is quite possible that MA plans will be permitted to cover personal care services under the revised standards for supplemental benefits.  Indeed, in a press release issued by CMS announcing a draft of the Bid Letter for comment in early February, CMS described the proposal as allowing supplemental benefits to “include services that increase health and improve quality of life, including coverage of non-skilled in-home supports, portable wheel chair ramps and other assistive devices and modifications when patients need them.” (Emphasis supplied.)  While neither the press release accompanying the Final Bid Letter nor the Letter, itself, includes any language specifically referencing these items, the broader language of the Final Letter can certainly be read to permit plans to offer personal care services under certain circumstances.

III.  What Steps Should Your Personal Care Agency Take?

So what can a provider that wishes to offer these services, including personal care services, as part of an MA plan for 2019, do at this point?  First, providers can be watchful for additional guidance from CMS that should be forthcoming.  Second, they can begin to approach the MA plans that cover a significant number of MA subscribers in their service area to discuss both including these items or services as supplemental benefits in the plans’ upcoming bids to CMS for the 2019 year, and to discuss pricing.   In doing so, providers should be prepared with data or other information demonstrating that offering the service will reduce costs without harming patients.  For example, a provider that wished to offer personal home care services would attempt to prepare a cost benefit analysis showing that home visits reduce the incidence for hospital admissions or admissions to skilled nursing facilities. Additionally, if the MA plan is also a provider of Medicaid managed care services, the provider may also include in the analysis the cost/benefit of lowering admissions to the nursing facility long stay side of the equation.  There are other permutations to the analysis, but the key is to begin discussions with the various plans, and to accumulate data that demonstrate both the short term and long-term cost and health benefits of the particular service.

Providers that wish to take advantage of this opportunity should also note that the Bipartisan Budget Act of 2018 expands supplemental benefits for chronically ill enrollees to also encompass benefits that are not primarily health related in certain circumstances beginning in 2020.  This change recognizes the importance of certain social determinants to health status – something that some state Medicaid programs are beginning to recognize as well.  However, this change only affects “chronically ill” beneficiaries and does not begin until 2020, whereas the expanded definition of supplemental benefits in the Bid Letter affects services provided to all MA beneficiaries and begins in 2019.  Additionally, the Final Bid Letter notes that the expanded definition of supplemental benefits in that Letter requires that the benefit address specific illnesses and/or injuries, and reiterates that it will be issuing further guidance on both expansion options in the future.

We would also note that all MA plans are required to have compliance programs in place that meet the seven elements of an effective program.  Under this program, they are also responsible for providing certain training for providers under their programs, as well as for the compliance of those providers.  While Liles Parker attorneys, and in fact, virtually all knowledgeable health care attorneys, have long counseled their clients on the importance of establishing and maintaining effective compliance programs, and while some segments of the industry are required to maintain such programs by law, any entity that wishes to contract with MA plans to provide health care related services almost certainly will be required by the plan to maintain a compliance program.  Thus, any entity that wishes to take advantage of the expanded coverage of services under the Final Bid Letter should be prepared to demonstrate that it has an effective compliance program.

With respect to providers of personal care services, there are a number of areas of vulnerability.  One major such area is ensuring that aides actually perform the services for which a program is billed.  Several years ago, there were a number of investigations and prosecutions where aides were alleged to have colluded with clients to defraud the Medicaid program by failing to provide the service for which the aides were paid, and paying the client a portion of the payments.  There are mechanisms to monitor this type of activity; however, it is a major risk area for home care agencies and should be addressed in any compliance program.

IV.  Conclusion:

In short, the Final Bid Letter for 2019 presents the possibility of expanding the services that certain MA plans will cover, including the possibility of covering personal care services.  However, providers that wish to contract with MA plans for these services should be taking the actions described, above. Liles Parker attorneys have extensive experience in assisting clients throughout the health care industry, including home care and home health, in responding to new government and payor initiatives, including establishing and maintaining an effective compliance program.

Michael Cook is a healthcare lawyer and represents personal care providers around the countryMichael Cook, J.D., is a Partner at the firm Liles Parker, Attorneys & Counselors at Law.  Mr. Cook represents nursing home, assisted living, home health and personal care clients in regulatory matters.  Anyone interested in discussing the material discussed in this article should feel free to contact Michael Cook at 202-298-8750 or mcook@lilesparker.com.       







Medicaid Dental Audits are Examining Dentist Eligibility to Provide Treatment

Dental Practice(January 9, 2017):  A recent report of the New York State agency that administers the Medicaid program by the Department of Health and Human Services, Office of Inspector General (OIG) further highlights the importance of ensuring that dentists providing services to Medicaid beneficiaries are properly licensed, enrolled as a Medicaid provider and not excluded from program participation.  This article examines the steps that must be taken by all dental practices providing services to Medicaid beneficiaries in order to ensure that their providers meet these basic eligibility requirements.


I. Has Your Dental Practice Implemented a Compliance Program?

As an initial step, every dental practice participating in the Medicaid program must develop and implement an effective Compliance Program. Among its many provisions, the Affordable Care Act requires that a “provider of medical or other items or services or supplier within a particular industry sector or category” shall establish a compliance program as a condition of enrollment in Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP).  An effective Compliance Program can greatly assist a dental practice in its efforts to ensure that each of its dentists are eligible to provide and bill for services administered to Medicaid beneficiaries.

II. Are Your Dentists Properly Licensed?

As a first step to determining eligibility, you must ensure that the individuals providing dental services in your practice are properly licensed by the state.  All states require that dentists be properly licensed in order to engage in the practice of dentistry.  For example, anyone seeking to practice a profession in the State of New York must comply with a strict requirements set out in Title VIII of the New York State Education Law.  Under this law, Article 133 – Dentistry and Dental Hygiene, defines the practice of dentistry in §6601.  As the applicable section provides:

  • 6601. Definition of practice of dentistry.

The practice of the profession of dentistry is defined as diagnosing, treating, operating, or prescribing for any disease, pain, in jury, deformity, or physical condition of the oral and maxillofacial area related to restoring and maintaining dental health. The practice of dentistry includes the prescribing and fabrication of dental prostheses and appliances. The practice of dentistry may include performing physical evaluations in conjunction with the provision of dental treatment.

While the definition of the practice of dentistry has been purposely written in broad, general terms, the law clearly reflects that only an individual properly licensed to practice dentistry can engage in the profession or use the title of “dentist.”  As set out this section:

  • 6602. Practice of dentistry and use of title “dentist”

Only a person licensed or otherwise authorized to practice under this article shall practice dentistry or use the title “dentist.”

Should an unlicensed individual engage in the practice of dentistry, they may be guilty of a Class E Felony §6612 of the New York State Education Law.  Moreover, if a licensed dentist aids of abets three or more unlicensed persons in the practice of the profession, that person may be guilty of a Class E. Felony.

As part of your ongoing compliance efforts, you should periodically verify that each of your professionals are properly licensed by the state to practice dentistry and that there are no limitations on their license.  It is also important to monitor the status of any licenses maintained by members of your staff in other states.

III. Is a Dentist Properly Enrolled as a Medicaid Provider?

All states have established strict requirements that must be met if a dentist desires to enroll as a Medicaid provider. For example, the New York Medicaid Enrollment Form expressly states that:

You will be at financial risk if you render services to Medicaid beneficiaries before successfully completing the enrollment process. Payment will not be made for any claims submitted for services, care, or supplies furnished before the enrollment date authorized by the Department of Health.

Unfortunately, when audits of paid Medicaid dental claims are conducted, this is a common risk area that has been identified around the country.  Dental practices bringing on new staff may mistakenly think that it is permissible to bill for dental services provided by a non-credentialed dentist (whose enrollment application with Medicaid is pending) under the number of a credentialed dentist.  In most states, such a practice is improper and could subject a practice to fines, penalties and other sanctions.  The enrollment process is there to help protect the integrity of the Medicaid program.  If an applicant has previously been terminated, denied enrollment, suspended or otherwise sanctioned by Medicaid, a state may determination that it is not in the interests of the program to allow the applicant to participant in the program.  Similarly, an applicant may have been convicted of a health care related crime or may have adverse licensure actions pending in another state. For these reasons (and others), the enrollment process is an essential tool used by the state to filter out applicants that may represent a significant risk to the Medicaid program or its beneficiaries.

IV. Have You Screened Your Dentists and Staff Through Available Databases?

Among its many duties, OIG has been delegated the authority to “exclude” individuals and entities from participating in federal health benefits programs. Depending on the nature of the offense, the decision to exclude an individual or entity may be either mandatory or permissive.  There are currently 38 state databases and 2 federal databases that must be checked every 30 days to ensure that the members of your staff have not been added to the one or more exclusion list. Should you fail to properly screen and inadvertently employ an excluded dentist or other staff member, you may face overpayments, civil monetary penalties and / or other sanctions. Essentially, Medicaid will not pay for any claim if an excluded individual or entity contributed to the basket of services provided to the patient — either directly or indirectly.   Exclusion screening is a fundamental component of an effective Compliance Plan.  There are a number of companies that can provide these screening services for a low monthly cost. Two of our attorneys established a company, Exclusion Screening, LLC to conduct these screening services. For information on their services, you can call:  1 (800) 294-0952.

V. Lessons Learned.

As a participating provider in the Medicaid program, you are obligated to comply with a wide variety of statutory and regulatory provisions.  Confirming the eligibility of each of your professional staff members to provide services to Medicaid beneficiaries is merely one of these requirements. The development, implementation of an effective Compliance Program can greatly reduce your overall level of regulatory risk.

Dental PracticeRobert W. Liles, M.B.A., M.S., J.D., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Liles Parker is a boutique health law firm, with offices in Washington DC, Houston TX, San Antonio TX, McAllen TX and Baton Rouge LA. Robert represents home health agencies around the country in connection with Medicare audits and compliance matters. Our firm also represents health care providers in connection with federal and state regulatory reviews and investigations. For a free consultation, call Robert at: 1 (800) 475-1900.

It’s Time for CMS and Congress to Review Outdated Medicare and Medicaid Provisions

November 23, 2016 by  
Filed under Firm News, Health Law Articles, Medicaid

Michael Cook, co-chair of the Health Care Group, has an article published in the October issue of the American Health Lawyers Association Journal of Health Law & Life Sciences entitled “It’s Time for CMS and Congress to Review Outdated Medicare and Medicaid Provisions.”  The article discusses the fact that given the dramatic changes in payment and delivery system reform, there are a number of outdated, and in some instances counter-productive, rules that no longer make any sense and that should be reviewed by CMS and Congress.  The article cites three examples – the three day hospital stay requirement for Medicare SNF coverage, the limitations for coverage of care in Institutions for Mental Diseases and psychiatric hospitals under Medicaid, and for certain circumstances in alternative payment systems, the homebound requirement for Medicare home health coverage, but there likely are many more that will need examination in the coming years.  Ashley Hudson, an associate of the Firm, assisted in the research for the article.

The article can be reviewed at http://www.healthlawyersjournal.com/healthlawyers/october_2016/?pg=24&pm=2&u1=friend.

ProvisionsMichael has more than 40 years’ experience representing clients on health care issues in government and in private practice, serves on the Board of Medical Assistances Services that oversees Virginia’s Medicaid program, and also has advised a number of campaigns of candidates for state and national political offices.  Michael and Ashley can be reached at 202-298-8750.

Hospice Providers – Don’t Forget About Your New Hospice Item Set Requirements!

contractsAs of July 1, 2014, Medicare-certified hospices must directly submit a Hospice Item Set-Admission and -Discharge record for each patient admission that occurs on or after July 1.  These records must be completed on an ongoing basis and submitted electronically the Centers for Medicare & Medicaid Services. Any hospice that fails to collect and report its HIS records for July 1 through December 31, 2014 will incur a 2% reduction in hospice payments for fiscal year 2016.

I.  Hospice Quality Reporting Requirements

On August 7, 2013, CMS published its final rule setting forth changes to the requirements for the hospice quality reporting program (HQRP).  The rule discontinued previous reporting measures and implemented a standardized patient-level data collection vehicle known as a Hospice Item Set (HIS). The HIS will then be used to calculate the seven National Quality Forum (NQF) endorsed measures.

These NQF-endorsed measures include:

  1. NQF #1617 Patients Treated with an Opioid who are Given a Bowel Regimen;
  2. NQF #1634 Pain Screening;
  3. NQF #1637 Pain Assessment;
  4. NQF #1638 Dyspnea Treatment;
  5. NQF #1639 Dyspnea Screening;
  6. NQF #1641 Treatment Preferences; and
  7. Modified NQF #1647 Beliefs/Values Addressed (if desired by the patient).

Hospices must begin using the HIS for each patient admission that occurs on or after July 1, 2014.  For this process, each hospice must submit two (2) HIS records for each patient admitted.  The first record – an HIS Admission record – contains both administrative items for patient identification as well clinical items for calculating the 7 NQF measures. The second record – an HIS-Discharge record –  is a limited set of administrative items also used for patient identification; however, it also contains discharge information that will be used primarily to determine patient exclusions for some of the 7 quality measures.

II.  HIS Records Must Be Completed and Submitted Electronically

Each HIS record must be completed on an ongoing basis.  Notably, HIS completion timeframes vary depending on the record being submitted.

For HIS-Admission records, hospices will have 14 days from admission to complete HIS-Admission records. However, hospice Providers must be aware that there is a difference between the Completion Date and the Completion Deadline.

The Completion Date (Item Z0500 on the HIS-Admission record) is the actual date on which the hospice completes the HIS record. The Completion Date is defined as the date on which all required information has been collected and recorded in the HIS and completeness of the record has been verified and recorded in Item Z0500. On the other hand, the Completion Deadline is the latest possible date on which a provider should complete the HIS record. For the HIS-Admission record, the Completion Deadline is defined as the Admission Date plus 14 calendar days. Furthermore, CMS stresses that, should a patient’s status with respect to a care process item  change between the Completion Date and the Completion Deadline, the hospice should not update the HIS-Admission record to reflect these changes.

For the HIS-Discharge record, hospices will have 7 days from discharge to complete this task. After completing HIS records, hospices must electronically submit its HIS records to CMS.  Hospices will have 30 days from a patient admission or discharge to submit the appropriate HIS record for that patient.

In order to submit the HIS-Admission and HIS-Discharge records, hospice providers must register for a CMSNet User ID and a QIES User ID. The CMSNet User ID and the QIES User IDs are essential for the successful submission of HIS data beginning July 1. Providers can obtain the online self-registration application for the CMSNet User ID that is available on the CMSNet Information web page.

III.  CMS Provided Training

In recent weeks, the Centers for Medicare & Medicaid Services (CMS) has released several new and updated materials to assist hospices in their preparations for the coming requirement.

On the “Hospice Item Set (HIS)” portion of the website, these resources include:

  • UPDATED Version of the HIS Manual (V1.01) and Relevant Change Table. Providers should review V1.01 of the HIS Manual and the relevant change table so that they are aware of changes made in the updated version of the HIS Manual.
  • NEW Fact Sheet about Guidelines for HIS Completion. This Fact Sheet replaces previous CMS guidance about updating the HIS and provides important new information.
  • NEW Question and Answer (Q&A) Document. This Q&A document contains frequently asked HIS-related questions received on the HelpDesk January – March 2014.

On the “HIS Technical Information” portion of CMS’ website, helpful materials include:

  • Registration process for hospice User IDs. Hospices will need 2 user IDs to submit HIS records to the QIES ASAP system.
  • Technical training modules covering HIS registration and submission processes including submission of files to QIES ASAP and using the HART software.

CMS also has posted on its website a recording of HIS training that was performed in February 2014. This training covers HIS data collection processes, such as item-specific instructions for each item in the HIS, along with tips and examples for HIS items. The HIS Training follows closely along with the HIS Manual and follows the HIS Training Slides. The Manual is an essential tool in understanding how to complete the HIS; it is recommended that you review the Manual prior to viewing the training.

IV.  Conclusion

The data submitted to CMS will be published as part of the HQRP. Any provider who fails to collect and submit their HIS records for July 1 through Dec. 31, 2014, will incur a 2 percent reduction in hospice payments for FY2016. The HQRP is currently “pay-for-reporting,” which means that it is the act of submitting data that determines compliance with HQRP requirements. Performance level is not a consideration when determining market basket updates/Annual Payment Updates (APU).

Hospice providers have had ample time to prepare for the implementation of the HIS-Admission and HIS-Discharge requirements.  As a result, there should be no reason that any provider incurs this penalty.  The links above should assist you with any questions related to the new HIS requirements.  However, should you still have questions related to this matter – or any hospice related issue – please feel free to give us a call today at 1 (800) 475-1906.

Saltaformaggio, RobertRobert Saltaformaggio, Esq., serves as an Associate at Liles Parker, Attorneys & Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers around the country in connection with Medicare audits by RACs, ZPICs and other CMS-engaged specialty contractors.  The firm also represents health care providers in HIPAA Omnibus Rule risk assessments, privacy breach matters, State Medical Board inquiries and regulatory compliance reviews.  For a free consultation, call Robert at:  1 (800) 475-1906.

Investigations of Medicaid Dental Fraud in Texas

MP900185167 (2)(July 1, 2014): State and federal authorities are avidly investigating and prosecuting health care providers for crimes based upon allegations of Medicare or Medicaid Fraud. When looking for fake billing to Medicare or Medicaid, investigators have historically targeted hospitals and doctors, but increasingly dentists have come under watch. In Texas, increased measures have been adopted to investigate Medicaid dental fraud.

I.          New Texas Legislation

In response to millions of dollars in dental and orthodontic Medicaid fraud recently uncovered in the state, the Texas legislature passed H.B. 3201, effective September 1, 2013. This law created a new process for investigating complaints against dentists that is similar to the process the Texas Medical Board uses to investigate complaints against physicians. It also adds requirements to the licensing requirements for dentists.

Process for Investigating Complaints

The bill establishes a new system for dental patients to file complaints and to track Medicaid providers. It also requires that within 60 days of a complaint being received, the Texas State Board of Dental Examiners must complete an investigatory process and make a decision.  Prior to the new regulations, the board had been taking an average of more than 400 days to resolve complaints.

In the past, the seven-member dental board reviewed each case individually with the help of volunteer experts. Under the new process, staff members including dentists, lawyers, investigators, licensing specialists and support staff will review complaints and conduct preliminary investigations to determine if violations occurred.

In cases where an investigation is pursued, complaints involving standard of care are referred to a new expert panel comprising dentists and dental hygienists. The dental board will hear all others investigations. The board will make final decisions on all cases involving alleged violations and will review the staff’s dismissal of other complaints.

Licensing Requirements

HB 3201 also creates a $55 surcharge added to the cost for dentists who are obtaining or renewing their licenses. These extra funds will allow the dental board to hire new staff members and an expert panel of dentists to review complaints.

Dentists will also be required to submit more information when they apply for a license. When completing their yearly registration before, dentists were only required to list the name of the dental practice, its physical address, hours worked there per week, number of weeks worked per year, the type of practice and the number of hygienists and assistants. Under the new law, registration applicants must include more information on the license holder, whether the dentist is a provider under Medicare, and whether the licensee is affiliated with a dental service organization.

II.        Medicaid Fraud Unit of the Office of the Texas Attorney General

The Texas Attorney General’s Medicaid Fraud Control Unit is also pursuing Medicaid fraud. The department conducts criminal investigations of Medicaid providers who are suspected of cheating the Medicaid Program. The unit employs investigators, auditors and attorneys who conduct investigations and assist in the prosecution of Medicaid providers who defraud the system or abuse the elderly.

Case Example

Last year, the Medicaid Fraud Unit, in conjunction with the FBI, led an investigation which resulted in an Abile dentist pleading guilty to a Medicaid fraud scheme. The dentist had practiced pediatric dentistry and admitted that he made false and fraudulent statements and entries on patient records, which caused Medicaid to be billed for, and pay, at least $120,000 for services falsely claimed to have been performed. He faced a maximum statutory penalty of five years in federal prison, a $250,000 fine, and restitution. In February of this year, the dentist was sentenced to 18 months in federal prison and was ordered to pay $57,969 in restitution.

III.       Conclusion

Especially in light of new legislation, it is essential that dentists participating in any state Medicaid dental programs review their practices to ensure that they are complaint and have preventative measures in place. Federal and state enforcement investigations of possible incidents of dental fraud have steadily increased in recent years, and there is every indication that these efforts will continue to rise.

Robert W. Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Liles Parker attorneys represent dentists, orthodontists, and other health care providers around the country in connection with both regulatory and transactional legal projects. For a free consultation, call Robert at (800) 475-1906.

Medicaid and CHIP Audits are Increasing Under CMS’ PERM Audit Program

PERM Audits are Examining Medicaid Providers(March 5, 2013):  Providers participating in the Medicare and Medicaid programs are currently subject to audit by numerous federal and state regulatory and law enforcement agencies.  Additionally, CMS has selected a number private contractors to handle various aspects of administrative integrity audits of claims submitted for payment by participating providers.  Most recently, CMS has fully implemented its Payment Error Rate Program (PERM).  An overview of the program and the claims reviewed as part of its mandate are set out below:

I.  Historical Background of the PERM Audit Program

Payment Error Rate Program (PERM) audits are perhaps the least understood type of administrative audit routinely conducted by contractors working for CMS, despite the fact that their findings are both significant and publicly disclosed each year. The origin of the PERM audit program is somewhat convoluted.

In 2002, with the passage of the Improper Payments Information Act (IPIA), which was later amended in 2010 by the Improper Payments Elimination and Recovery Act or (IPERA), the heads of federal agencies were required to annually review certain programs and identify those that may be susceptible to significant improper payments.  Once reviewed, each agency is required to project the amount of any improper payments made by their programs and submit a report to Congress setting out their findings and discussing the actions they have taken to reduce these improper payments.

CMS programs identified by the Office of Management and Budget (OMB) for audit review include both Medicaid and the Children’s Health Insurance Program (CHIP) programs. Consistent with their obligations under IPIA and IPERA, CMS developed and implemented the PERM audit program

The ultimate goal of the PERM audit program is to calculate an accurate projection of the true error rates of the Medicaid, Managed Care and CHIP programs. Due to the massive scope of these programs, CMS has projected these error rates through an audit of a statistically relevant sample of the universe of claims in each program. These audits are conducted each fiscal year (FY).  Areas reviewed include:

Fee-for-service (FFS) claims.

Managed care claims.

Eligibility components of each program.

After reviewing these program areas, an unbiased error rate is projected through the use of statistical sampling methodologies. Importantly, CMS has noted that this error rate is not a measure of fraud.  As CMS states:

It is important to note the error rate is not a “fraud rate” but simply a measurement of payments made that did not meet statutory, regulatory or administrative requirements.[1]

The first PERM audit was conducted in FY 2008.  At that time, only FFS Medicaid claims were examined, managed care and eligibility areas were not audited. Under § 601 of the Children’s Health Insurance Program Reauthorization Act (CHIPRA) of 2009, CMS was not permitted to calculate or publish a national or state-specific error rates for the CHIP program until six months after a new final rule for the PERM program had been in place.  This final rule covering the PERM audit program was effective on September 10, 2010, thereby resulting on no CHIP error rate being published prior to 2012.  In subsequent years, each program area was audited.  The results of these audits are reflected below:

                                                         Payment Error Rate Measurement Program (PERM)

Medicaid Error Rates[2]


Annual   Medicaid Error Rates for Each FY



PERM   Cycle






Managed   Care



FY   2007[3]


Cycle   1:

FY   2006





FY   2008


Cycle   2:

 FY 2007





FY   2009


Cycle   3:

FY   2008





FY   2010


Cycle   1:

FY   2009





FY   2011


Cycle   2:

FY   2010





FY   2012


Cycle   3:

FY   2011





II.  Which States are Audited Under the Program?

Notably, the PERM audit program is one of the few truly random audit programs currently in place to examine the propriety of Medicaid, Managed Care and CHIP claims.  CMS has divided the country into three cycle of around 17-states apiece.  PERM auditors rotate from cycle to cycle, examining the claims in each state at least once every three years.

           Medicaid and CHIP States by Measurement Cycle 

Cycle #1 Alaska, Arizona, District of Columbia, Florida, Hawaii, Indiana,   Iowa, Louisiana, Maine, Mississippi, Montana, Nevada, New York, Oregon, South   Dakota, Texas, Washington
Cycle #2 Arkansas, Connecticut, Delaware, Idaho, Illinois, Kansas,   Michigan, Minnesota, Missouri, New Mexico, North Dakota, Ohio, Oklahoma,   Pennsylvania, Virginia, Wisconsin, Wyoming
Cycle #3 Alabama, California, Colorado, Georgia, Kentucky, Maryland,   Massachusetts, Nebraska, New Hampshire, New Jersey, North Carolina, Rhode   Island, South Carolina, Tennessee, Utah, Vermont, West Virginia

Contractors Involved in the PERM Audit Program

A.           Statistical Contractor – The Lewis Group:

During FY 2013, the Lewin Group was selected by CMS to serve as the Statistical Contractor (SC).  As such, the Lewin Group is responsible for handling:

Claims data selection duties.

Sample selection.

Error rate calculation.

In their capacity as Statistical Contractor, the Lewin Group is required to review the universe of Medicaid, managed care and CHIP claims (processed as FFS claims) on a quarterly basis. They are then supposed to select a statistically-relevant sample of claims from each universe.  After selecting the samples, the claims are then sent to each state whose claims are being audited.  Each state is responsible for examining the claims and supplemented the claims information.  This combined data is then sent to a Review Contractor (RC).

B.           Reviewing Contractor – A+ Government Solutions:

 CMS has selected A+ Government Solutions to serve as the RC for FY 2013.  Upon receiving the sample sets from the SC, the RC sends out record requests to affected providers whose claims are being reviewed.  The RC then pulls all state Medicaid and CHIP documentation, coding, billing and payment policies which will be used to conduct medical reviews of the claims.  Health care providers are typically given 75 calendar days to collect and send the requested medical records and supporting documentation to the RC.  If the provider fails to comply with the RC’s request, the state is notified and the claims are denied due to no documentation.

Once the medical documentation is collected, the RC is responsible for conducting a medical review of the FFS claims. Notably, managed care claims are not part of this particular process.  If the medical documentation submitted is incomplete, the RC is supposed to notify the provider so that supplementary information can be submitted.  Health care providers are typically 14 calendar days to submit additional information.

After reviewing the propriety of these FFS claims, the RC sends their findings back to the SC.  The SC is then required to calculate both a state-by-state set of error rates and a national error rate under the PERM audit program.

III.  Steps You Should Take Now!

While taking remedial steps to address problems identified in an audit will assist you in staying out of trouble in the future, there is no substitute for reviewing your current documentation, coding, billing and business practices now, so that any problems can be identified before — not after — you face a PERM or other audit.  CMS takes compliance with applicable laws and regulations seriously and its contractors are expressly directed to ensure that provider documentation fully complies with these requirements.  If not, your claims will be denied.  An effective Compliance Plan is a necessity.  If your practice or clinic has not yet developed and implemented an effective Compliance Plan, this is the time to put one in place and properly train your staff.

Robert W. Liles is a health care attorney experienced in handling prepayment reviews and audits.Robert W. Liles serves as Managing Partner at Liles Parker.  Robert and other Liles Parker attorneys have extensive experience representing Medicare and Medicaid providers in audits and reviews by CMS and its contractors.  Should you learn that your practice or clinic has been subjected to a Medicare or Medicaid audit, please give us a call for a complementary initial consultation.  We can be reached at: 1 (800) 475-1906.


[1] http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/PERM/index.html

[2] http://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/PERM/Downloads/PERM-MedicaidErrorRates.pdf

[3] In 2007, only FFS claims were audited.

OIG Scrutinizes Medicaid Personal Care Services

November 21, 2012 by  
Filed under Compliance, Health Law Articles, Medicaid

(November 21, 2012):  Recent OIG Report Critical of Federal Monitoring of Personal Care Services Paid for by Medicaid

OIG Report on Personal Care Services

OIG Report on Personal Care ServicesOn November 15, OIG issued a report entitled “Personal Care Services, Trends, Vulnerabilities, and Recommendations for Improvement – a Portfolio”, Report No. OIG-12-12-01 (“Report”).  The Report purports to synthesize a number of prior reports and makes recommendations to improve program vulnerabilities that OIG has detected in its prior audits, evaluations and inspections of personal care services (“PCS”). The OIG indicates that it has previously found significant and persistence compliance, payment and fraud vulnerabilities.  It also emphasizes the seriousness of its concerns by noting that Medicaid costs for PCS’s increased 35% from 2005 to 2011.

Specifically, OIG notes that it has produced 23 audit and evaluation reports from 2006 through 2012 focusing on PCS’s.  The Report lists as problems:

  1. Improper payments linked to a lack of compliance with various requirements including State requirements, lack of documentation to demonstrate that services had been provided, services having been provided while beneficiaries were in institutional stays that, themselves, were reimbursed by Medicare or Medicaid, or services that were provided by staff who did not meet State qualification requirements;
  2. Inadequate controls to ensure appropriate payment and quality including inadequate controls over the prior authorization processes, lack of prepayment controls and edits, inconsistent standards and monitoring of PCS attendants, and inadequate billing practices to substantiate the delivery of services; and
  3. Increasing concern over fraud in the delivery of PCS including conspiracies between beneficiaries and PCS attendants to submit claims for services not provided or not covered, with a special concern over self-directed services.

Although not mentioned in the report, there have been recent reports of convictions for other types of fraud involving kickback arrangements.  In this regard, OIG noted that as of 2010, state Medicaid Fraud Control Units (“MFCUs”) had more open investigations of PCS fraud than any other type of services – more than 1,000 investigations nationwide.

The Report also makes a number of recommendations to CMS for revising requirements for PCS’s that include more standardized regulation of qualifications, expanding federal requirements and guidance, more sharing of data , and other modifications.  CMS agreed with one of the recommendations – better sharing of data suitable for identifying overpayments, while either rejecting or providing qualified acceptance of others.

What Should PCS Providers Do?

The real takeaway for providers of PCS’s is an understanding that these services are coming under increasing scrutiny and State and Federal oversight – especially from State Medicaid auditors, MFCUs, and US Attorneys’ offices.  As such, providers should familiarize themselves with the findings and recommendations of the Report, CMS’ responses, and recent reported cases of convictions or settlements.  It is critical that they develop or ensure that their own compliance programs, including internal and external audits and service monitoring processes incorporate those findings and protect against the conduct that has drawn scrutiny.

Michael CookLiles Parker attorneys have had considerable experience and success in representing PCS providers.  Our team has successfully worked to assist PCS providers in obtaining favorable decisions that exempted several PCS’ from being required to obtain CONs as a condition of retaining their licenses, Medicaid coverage issues, and eliminating entirely provider liability for a major audit disallowance.  Additionally, Liles Parker attorneys have significant experience in assisting providers in establishing and auditing effective compliance plans and programs. Anyone seeking further assistance in this area should contact Michael Cook at 202-298-8750.

Medicaid RACs to Increase Enforcement Efforts

Medicaid RACs Set to Increase Audits

Medicaid RACs Auditing ClaimRecent efforts by CMS to improve Medicaid audit performance have resulted in procedural changes for Medicaid Integrity Contractors (MICs) and financial incentives for Medicaid Recovery Audit Contractors (Medicaid RACs) to increase their audit efforts and effectiveness.

RACs have long been regarded as “bounty hunters” within the Medicare/Medicaid and healthcare provider communities. These entities essentially “eat what they kill”; therefore their profitability ultimately depends on their ability to identify overpayments.  RACs receive a percentage of any overpayment recovery they obtain based on contingency fee rates established by each state under the Medicaid RACs final rule, issued September 16, 2011.  On June 1, 2011, CMS increased the contingency fee for Medicaid RACs who identify overpayments by Durable Medical Equipment (DME) home health providers by 5%, increasing the Medicaid RAC maximum contingency fee from 12.5% to 17.5%.  CMS finally gave notice of this fact on February 24, 2012 when it announced that the Medicaid maximum RAC contingency fee for non-DME claims would remain at 12.5%, while DME claims would be paid at the higher rate of 17.5%.  By authorizing this rate change, CMS has given Medicaid RACs additional monetary incentive to focus on DME providers in finding Medicaid overpayments. The result will be even more pressure on DME providers to follow the law.  Remember that government contractors have a duty to report and refer suspected fraudulent activity.

For example, DOJ recently indicted a DME provider in South Texas who pled guilty to a felony charge of conspiracy for violating the federal Anti-Kickback Statute:

“The federal anti-kickback statute prohibits individuals and entities from knowingly and willfully paying or offering to pay, as well as soliciting or receiving remuneration (money or things of value) in return for the referral of patients for medical services or items which are benefits under a federal health care program, such as Medicare or Medicaid. A violation of the statute is a felony offense.”

The DME service provider’s owner now faces up to 5 years in federal prison and a $250,000 fine.  DME providers should, at a bare minimum, make sure they have supporting documentation for all ordered equipment and supplies from the referring physician they do business with.  This would include diagnostic information, supporting medical tests, and physician orders for medically necessary equipment and supplies.  Such documentation is essential to supporting your DME claims in the event of a RAC audit or law enforcement investigation.

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


Medicaid MIC Audits to Increase

MIC Audits Background and OIG Report

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

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

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

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

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

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

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

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

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

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

Medicaid Therapy Services in Texas

Medicaid Therapy Services Reminder Issued by Texas HHSC

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

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

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

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

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

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

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