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Home Health Agency Alert: The Review Choice Demonstration Project is Moving Forward in Illinois Effective June 1, 2019

April 9, 2019 by  
Filed under Home Health & Hospice

Review Choice Demonstration Project in Illinois(April 9, 2019): This article updates our article of February 19 on the lifting by the Centers for Medicare and Medicaid Services (“CMS”) of the moratorium on the enrollment of new home health agencies in Florida, Illinois, Michigan and Texas, and the announcement by CMS of the implementation of a new five year “Review Choice Demonstration Project” in three of those four states (Florida, Illinois, and Texas) as well as Ohio and North Carolina (with a possible extension to other states within the Palmetto/JM jurisdiction).

At the time of that article, CMS had announced that the project would begin in Illinois, with implementation in the other four states in the near future thereafter.  However, CMS had not specified a “start date” for Illinois because it was awaiting approval by the Office of Management and Budget (“OMB”) at that time.  CMS has now received that approval and has announced implementation in Illinois to begin on June 1, 2019.  All episodes of care beginning on or after that date during the period of the demonstration will be subject to the requirements of the project.

I.  Background of the Review Choice Demonstration Project:

As background, under the Review Choice Demonstration Project, home health agencies in the affected states will initially select from three options to have their claims reviewed:

  • Pre-claim review
  • Post-payment review, or
  • Minimal post-payment review with a 25% reduction.

After each six-month period, agencies with a 90% affirmation or approval rate under one of the first two options, above, will also be able to choose between two additional options.  Each of these options is described in our February 19 article.

II.  Illinois Home Health Agencies are Under the Microscope:

Home health agencies located in Illinois must choose and register for one of the three options, above, between the dates of April 17 and May 16 on a portal established by Palmetto GBA.  Any agency that fails to make a choice during that period will be assigned to the third option and will not be able to change that option during the entire five-year period, and thus will receive a 25% payment reduction during this entire time.

As discussed in our February 19 article, the Review Choice Demonstration is an outgrowth of the Pre-claim Review Demonstration for Home Health Services that had been initially implemented in Illinois and then “paused” and never “restarted.”  However, Illinois agencies that had met the 90% full provisional affirmation rate under that project (based on a minimal 10 request submission between August 2016 and March 2017) will be permitted to begin the Review Choice Demonstration by selecting from any of the options including the additional ones available to agencies with a 90% affirmation or approval rate during a 6-month period.

CMS has established links to both the Palmetto GBA portal described, above, and to an operational guide and Special Open Door Forum Presentation that describes the program at

III.  Is Your Home Health Agency Ready for an Audit?

Our earlier article goes into greater depth in describing the various options.  That article also emphasizes the critical nature of the choice that each agency makes in selecting an option.

Each of the options presents a separate set of risks and benefits as opposed to the others – the one exception being that the third option of a 25% payment denial does not appear to be a viable one for any agency.  Our earlier article also sets out several examples of these risks.  We thus recommend that every agency take the necessary time to consult with knowledgeable individuals, both internal and external, in making this selection during each 6-month period.

Additionally, as stated in that article, we cannot recommend strongly enough that agencies in the affected states have procedures in place to properly document coverage for all the cases that they handle, and also a process to prepare and move documentation through the system quickly and comprehensively.  They also should be updating their compliance and quality assurance programs to respond to these changes.

Liles Parker attorneys have substantial experience working with home health agencies in preparing them for the audit process which is similar to the processes that they will need to follow in responding to the Review Choice Demonstration Project, and in identifying the risks of choosing one option in relation to the others.  A number of our attorneys are also certified coders who have substantial experience in developing a format to justify coverage.  Finally, we have substantial experience working with agencies in developing and updating their compliance plans.

Healthcare LawyerAny person wishing a free consultation in the area should contact Michael Cook, the author and Co-chair of our Health Care Group. Michael can be reached at (202) 298-8750 or

The Changing Definition of Medical Necessity

(July 16, 2014): The term “medical necessity” has varying definitions depending on who is using it. Providers, physicians, courts, private insurers, state governments, and the federal government all have their own interpretation of what constitutes medical necessity.  This changing definition of medical necessity can be problematic when a provider’s claims are audited by a Zone Program Integrity Contractor (ZPIC) or another program integrity contractor working for the Centers for Medicare and Medicaid Services (CMS).

I. Definition of Medical Necessity Under the Social Security Act:

The Social Security Act authorizes payment only for medically reasonable and necessary care. It imposes criminal and civil liability for filing claims that are medically unnecessary. Medicare regulations do not specifically define medical necessity, but rather characterize the concept as providing adequate care according to the practices of the medical community.

II. Definition of Medical Necessity Under the Texas Administrative Code:

The Texas Administrative Code has separate definitions of medical necessity for different age groups and services. For example, for Texas Medicaid members under the age of 20, the following services are considered medically necessary:

  • “…screening, vision, dental, and hearing services; and
  • other health care services or dental services that are necessary to correct or ameliorate a defect or physical or mental illness or condition…”

The Texas definition also states that medical necessity for children may take into account other factors relevant in the state’s adult medical necessity definition.

III. Case Law Holdings Defining Medical Necessity:

Courts have not been consistent in interpreting medical necessity. Although some have held that the sole responsibility for determining medical necessity should be placed in a patient’s physician’s hands, other courts have held that medical necessity is just a contractual term in which a patient’s physician must prove that a procedure is medically appropriate and worthwhile.

The U.S. District Court for the Western Division of Tennessee defined medical necessary as a treatment that is commonly and customarily recognized as standards of good practice, appropriate and consistent with the diagnosis or treatment of an illness or injury, and an appropriate supply or level of service that can safely be provided. Whitehead v. Federal Express Corp., 878 F. Supp. 1066 (W.D. Tenn. 1994).

In April 2000, the State of Texas and Aetna U.S. Healthcare signed a settlement agreement  in which Aetna agreed that medically necessary care is “health services and supplies that under the applicable standard of care are appropriate: (a) to improve or preserve health, life, or function; or (b) to slow the deterioration of health, life, or function; or (c) for the early screening, prevention, evaluation, diagnosis or treatment of a disease, condition, illness or injury.” Included in this definition is the cost effectiveness of services and supplies. A treatment is cost effective if it is the least expensive medically necessary treatment selected from two or more treatments that are “equally effective.”

IV.  The American Medical Association’s Definition of Medical Necessity:

The American Medical Association (AMA) defines medical necessity as: “Health care services or products that a prudent physician would provide to a patient for the purpose of preventing, diagnosing or treating an illness, injury, disease or its symptoms in a manner that is:

a)      in accordance with generally accepted standards of medical practice;

b)      clinically appropriate in terms of type, frequency, extent, site, and duration; and

c)      not primarily for the economic benefit of the health plans and purchasers or for the convenience of the patient, treating physician, or other health care provider.”

V.  Final Remarks:

As is evidenced by these varying definitions, the way the term medical necessity is used comes down to who is using it and for what purpose. Providers generally use medical necessity as a reason to deny access to care. This sometimes arises where there are patients with unique or special health care needs. Healthcare advocates use medical necessity in conjunction with the concept of a standard of care to ensure the necessary treatments are provided.

Inconsistencies in the definition and application of the term medical necessity make it difficult for consumers and providers to determine whether a particular medical service will be covered by their health plan and whether their health plan will pay for medical services that have been rendered. It is important for providers to clearly define medical necessity to eliminate ambiguity.

Healthcare LawyerRobert W. Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Liles Parker attorneys represent health care providers around the country in connection with both regulatory and transactional legal projects. For a free consultation, call Robert at: 1 (800) 475-1906.

Proposed Rule Seeks the Expansion of OIG’s Exclusion Authority

OIG’s Exclusionary Authority

(July 15, 2014): On May 9, 2014, the Department of Health and Human Services, Office of Inspector General (OIG) published a Proposed Rule in the Federal Register (79 Fed. Reg. 26810) that seeks the expansion of OIG’s exclusionary authority. The new rule is consistent with previous statutory changes passed as part of the Affordable Care Act (ACA).  The expansion of OIG’s exclusionary authority is significant.  Providers and suppliers participating in Medicare, Medicaid and other federal / state health benefits programs need to fully understand the new reasons that may be relied upon by OIG when excluding an individual or entity.  Additionally, providers, suppliers and their affiliated contractors must know how to conduct a thorough screening to ensure that they are not employing an excluded party.  An overview of the primary purpose of the expansion of OIG’s exclusionary authority is discussed below.

I. Primary Purpose of this Proposed Expansion of OIG’s Exclusionary Authority:

Passage of the ACA has resulted in the expansion of OIG’s exclusionary authority.  Simply put, OIG’s authority to exclude individuals and entities involved in misconduct from federal health care programs has signficantly broadened.  The purpose behind exclusion is to protect beneficiaries from untrustworthy health care providers suspected or implicated in Medicare fraud.

OIG has authority to impose mandatory and permissive exclusion. Mandatory exclusions are for a period of at least 5 years. The OIG is required to exclude those who commit more serious or repeated offenses. Permissive exclusions apply to specified categories of misconduct, and can have minimum benchmarks and timelines, depending on the basis for exclusion. OIG generally has discretion to determine whether to impose an exclusion and what the appropriate duration of an exclusion should be.

To decide how long a proposed exclusion period will last, HHS-OIG will use a set of factors. The same factors will also be used to determine recommended penalties and assessments, which generally accompany exclusion.

II.  Codifying ACA Provisions Pertaining to Exclusion:

The Proposed Rule implements several provisions of the ACA that authorize OIG to exercise permissive exclusionary authority over individuals and organizations that obstruct audits, fail to supply payment information, or make false statements.

  • Obstruct Audits.  The ACA extended the OIG’s existing discretion to exclude an individual or entity who was convicted of an offense in connection with obstruction or interference with an audit. A conviction regarding an audit obstruction is usually part of a plea bargains or settlement concerning a Federal health care investigation, such as direct or indirect misuse of funds.
  • False Statements.  The OIG has proposed a provision incorporating the ACA’s grant of authority to exclude any individual or entity that makes false statements, omissions, or misrepresentations of material facts in applications to participate as a provider or supplier under a Federal health care program.
  • Failure to Supply Payment Information.  The OIG proposes to impose exclusions for failure to supply payment information for items or services for which payment may be made under Medicare or any State health care program. Originally this provision applied to those individuals who furnish items or services for payment. The ACA expanded it to also apply to individuals who “order, refer for furnishing, or certify the need for,” items or services for payment.
  • Issuance of Testimonial Subpoenas. Another proposed change would allow OIG to issue testimonial subpoenas in investigations for exclusions, which the OIG already had the right to do under its Civil Monetary Penalty (CMP) authority.

III.  Other Propositions to Consider:

In addition to the changes under the ACA, OIG proposed a modification to the waiver authority and reinstatement rules for individuals excluded as a result of losing their licenses. This is to allow them to rejoin Federal healthcare programs earlier, when appropriate.  The OIG has also recommended removing the statute of limitations on exclusion actions based on the false or improper claims provision of the Social Security Act. Finally, the OIG’s proposes modified procedures for exclusionary proceedings, including updates and clarifications to certain aggravating and mitigating factors.

IV.  A Simple Solution to Protect Your Healthcare Organization:

Even though most of the Proposed Rule simply codifies changes from the ACA, the new regulation will still expand OIG’s ability to effectively utilize its exclusion authority to combat alleged healthcare fraud and abuse.  How can you best avoid potential penalties for the wrongful employment or engagement of an excluded individual of entity?  If you participate in Medicare, Medicaid or other federal / state health benefits programs, you need conduct regular, periodic screening of all available exclusion databases.  At last count, there are 40 different federal and state databases that list individuals and entities that have been excluded from Medicare, excluded from Medicaid or debarred from doing business with the government.  An excellent low-cost option to perform these OIG screening / exclusion screening functions is Exclusion Screening.  Their website is located at:

Healthcare AttorneyRobert W. Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Liles Parker attorneys represent health care providers around the country in connection with both regulatory and transactional legal projects. For a free consultation, call Robert at: 1 (800) 475-1906.

2013 Medicare Improper Payments Were $100 Billion!

2013 Medicare Improper Payments(July 14, 2014): According to a new report released by the Government Accountability Office (GAO), the amount of 2013 Medicare improper payments made were $100 billion.  What is especially troubling, however, is that this figure could be even higher.  And the largest sources for improper payments?  That would be government health care programs, such as Medicare’s Fee-for-Service program.  As background, the Improper Payments Information Act of 2002 (IPIA) – as amended by the Improper Payments Elimination and Recovery Act of 2010 (IPERA) and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA)[1] – requires that all federal executive branch agencies: (1) Review all programs and activities; (2) Identify those that may be susceptible to significant improper payments; (3) Estimate the annual amount of improper payments for those programs and activities;  Implement actions to reduce improper payments and set reduction targets; and (4) Report on the results of addressing the foregoing requirements. A key player in this oversight of government-side improper payments is the Office of Management and Budget (OMB).  In fact, OMB has set a goal where the government-wide improper payment error rate would be 3% or less by the end of FY 2016.  OMB has also established guidance for federal agencies on reporting, reducing, and recovering improper payments as required by IPIA and IPERA, as well as on protecting privacy while reducing improper payments with the Do Not Pay Initiative[2].  IPERIA requires that OMB issue guidance to agencies for improving estimates of improper payments.

I.  What the GAO Found with Respect to 2013 Medicare Improper Payments:

Overall, Federal agencies reported an estimated $105.8 billion in improper payments in FY 2013.  Despite this high figure, this was actually a decrease from the prior year revised estimate of $107.1 billion. This decrease is attributed in significant part to decreases in reported error rates for FY 2013 for the Department of Health and Human Services’ (HHS) Medicaid and Medicare Advantage (Part C) Programs.

The 2013 estimate came from improper payments made on behalf of 84 programs managed by 18 Federal agencies. Nevertheless, five of these 84 programs accounted for a majority of the $105 billion estimate in improper payments. In particular, these 5 programs accounted for about $82.9 billion or 78% of the total estimated improper payments agencies reported for 2013.

Additionally, of this nearly $83 billion figure, HHS’ Medicare Fee-for-Service program accounted for $36.0 billion in reported improper payment estimates. OMB also reported that this risk-susceptible program to have an improper payment error rate of 10.1%. Under IPERA, an agency reporting an improper payment rate of 10% or greater for any risk-susceptible program or activity must submit a plan to Congress describing the actions that the agency will take to reduce improper payment rates below 10%.

Fortunately, the report also indicates that federal agencies have maintained their efforts to recover improper payments, for example through recovery audits. OMB reported that federal agencies recovered over $22 billion total in overpayments through recovery audits and other methods in 2013.

II.  The GAO’s Estimate of Improper Payments Made by Medicare May be Understated:

Yet, the $105.8 billion figure may not even be the extent of the improper payment. The GAO indicates that the Federal government was unable to determine the full extent to which improper payments occur and could not reasonably assure that appropriate actions are taken to reduce them as a material weakness in internal control.  The GAO also identified existing internal control weaknesses at the agency level which continued to increase the risk of improper payments occurring.  But these problems are not new and the GAO has identified them for some time.

III.  Strategies to Help Reduce Improper Payments by Medicare:

The GAO has also previously identified several different government strategies that could help reduce the occurrence of improper payments.  These include:

  • Analyzing the root causes of improper payments in order to help agencies target effective corrective actions.

The GAO noted that some agencies reported root causes of improper payments using three error categories required by OMB (documentation and administrative, authentication and medical necessity, and verification). However, because the three categories are general, more detailed analysis to understand the root causes could help agencies identify and implement more effective corrective actions. An example of this strategy comes from HHS’ corrective actions. In 2013, HHS reported diagnosis coding errors as a root cause of improper payments in its Medicaid program and cited corrective actions related to provider communication and education.

  • Designing and implementing strong preventive controls to help defend against improper payments.

This strategy could increase the public’s confidence and avoid the difficult “pay and chase”[3] aspects of recovering improper payments. Preventive controls involve activities such as up-front validation of eligibility through data sharing, predictive analytic tests, and training programs. For example, HHS’ Centers for Medicare & Medicaid Services (CMS) uses analytic technology – referred to as predictive analytic technologies – to identify and prevent improper payments in the Medicare Fee-for-Service program. CMS uses these predictive analytic technologies to analyze and identify Medicare provider networks, billing patterns, and beneficiary utilization patterns and detect those that represent a high risk of fraudulent activity. With this, CMS then identifies unusual or suspicious patterns or abnormalities and prioritizes additional review of suspicious transactions before payments are made.

  • Implementing effective detection techniques to quickly identify and recover improper payments after they have been made.

While preventative controls are a vital tool to prevent improper payments from occurring, these controls cannot prevent every overpayment. As a result, effective detection techniques are necessary to assist in quickly identifying and recovering those overpayments that do occur. These measures can also identify why these payments were made and identify where agencies can implement stronger preventative controls. Detection activities include data mining and recovery audits.  Federal health care agencies have already implemented these tools. CMS has a data mining program called One Program Integrity, which provides CMS staff and contractors access to a single source for Medicare and other data needed to help detect improper payments as well as tools for analyzing those data.  Moreover, HHS’ Medicare Fee-for-Service recovery audit program[4] has identified approximately $4.2 billion and recovered $3.7 billion in overpayments by the end of 2013.  Additionally, the federal government could provide greater incentives to encourage and support states in their efforts to implement effective preventive and detective controls in state-administered programs.

V.  Final Remarks:

Improper payments have become an increasingly problematic issue for the federal government as Congress continues to slim agency budgets. “Nobody knows exactly how much taxpayer money is wasted through improper payments, but the federal government’s own astounding estimate is more than half a trillion dollars over the past five years,” said Rep. John Mica, R-Fla. “The fact is, improper payments are staggeringly high in programs designed to help those most in need — children, seniors and low-income families.”

GAOs’ 2013 Medicare improper payments report signifies that the Federal government has a significant, continuing problem with improper payments.  Therefore, health care providers should not shirk their own responsibilities to ensure that their claims qualify for coverage and payment. Providers have an affirmative duty to refund any overpayment from a Federal health care program[5].  This situation is generally seen with “reverse false claims” – a situation where a party had previously obtained money from the Federal government to which it was not entitled, and subsequently used false statements or records to conceal the overpayment and wrongfully retain the money. Setting aside the possibility of criminal sanctions, providers who fail to repay an identified overpayment severe civil monetary penalties.  This penalty is three times the aggregate amount of the false claims, plus civil monetary penalties of $5,500 to $11,000 per claim.

Have you identified an overpayment amount that you are not entitled to and don’t know what to do?  Even if the answer is “no”, as indicated above, the Medicare Recovery Audit Program has increased its efforts to combat fraud, waste, and abuse in this program.  If you have been audited by one of these contractors, it is imperative that you hire experienced legal counsel to assist you in this complicated and time-consuming process.  Even if you have not been audited yet, it is just a matter of time before you will.  Please do not hesitate to give us a call today and we would be more than happy to assist you in your fight.  Call 1 (800) 475-1906

Healthcare AttorneyRobert 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 ZPICs and other CMS program integrity 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.

[1] IPIA, Pub. L. No. 107-300, 116 Stat. 2350 (Nov. 26, 2002), as amended by IPERA, Pub. L. No. 111-204, 124 Stat. 2224 (July 22, 2010), and IPERIA, Pub. L. No. 112-248, 126 Stat. 2390 (Jan. 10, 2013), and codified as amended at 31 U.S.C. § 3321 note

[2] The DNP is a web-based, centralized data-matching services that allows federal agencies to review multiple databases to determine a recipient’s award or payment eligibility prior to making payments. This initiative was enacted into law by the IPERIA and its purpose was to reduce improper payments by intensifying efforts to eliminate payment error, waste, fraud, and abuse in the major programs administered by the Federal Government. Available at (last accessed on July 7, 2014).

[3] GAO uses the phrase “pay and chase” to refer to the “labor-intensive and time-consuming practice of trying to recover overpayments once they have already been made rather than preventing improper payments in the first place.”

[4]  Medicare recovery audit contractors are paid on a contingency basis, based on both the percentage of overpayments collected and underpayments identified. As noted in previous articles, this may incentivize these contractors to miss-identify (or over-identify) improper payments when no such instances occur.

[5] The Fraud Enforcement and Recovery Act of 2009, which made significant changes to the Federal False Claims Act, 31 U.S.C. § 3729 et seq., by imposing liability on any person who fails to make timely repayment of any “obligation to pay or transmit money or property to the Government.”

Proposed Rule Seeks to Give Expand OIG CMP Authority

Proposed Rule Seek to Expand OIG CMP Authority

(July 14, 2014): In the near future, Medicare Providers may be at an increased risk of Civil Monetary Penalties (CMP).  Last month, the Department of Health and Human Services, Office of Inspector General (OIG) published a Proposed Rule (79 Fed. Reg. 27080) that will potentially expand OIG’s authority under the Affordable Care Act (ACA) to impose CMPs, assessments, and exclusion actions against Medicare providers who defraud or abuse federal health care programs.


I.   Primary Purpose of the Proposed Rule – Expand OIG CMP Authority:

This Proposed Rule is intended to amend the current CMP rules so that they reflect statutory changes made under the ACA.  The ACA expanded the type of conduct that permits the HHS-OIG to impose CMPs, and in its proposed rule the OIG proposes to codify these permissions. The ACA and the Proposed Rule enumerate the following bases for CMPs:

  • Failure to provide OIG with timely access to records upon reasonable request;
  • Ordering or prescribing while excluded by OIG;
  • Making false statements, omissions, or misrepresentations in an enrollment application;
  • Failure to report and return a known overpayment; and
  • Making or using a false record or statement that is material to a false or fraudulent claim.

Although the ACA did not specify a penalty amount for failure to report and return a known overpayment, the OIG is proposing the default penalty is up to $10,000 per day. The Proposed Rule does not specify whether this default penalty will attach to each claim identified as an overpayment. Furthermore, the Proposed Rule would allow the OIG to also impose $10,000 per day penalties on drug manufacturers who fail to timely report and certify drug-pricing data.

II.   Factors Considered when HHS-OIG Recommends Penalties, Assessments and Exclusion Actions:

Notably, the Proposed Rule sets out a list of factors that HHS-OIG intends to review when deciding how long a proposed exclusion period will last.  These factors will also be used by HHS-OIG to arrive at the amount of recommended penalties and assessments that the agency will pursue against a health care provider or other party in response to one or more statutory violations.  These factors include:

  • The nature and circumstances of the violation;
  • The degree of culpability of the person;
  • The history of prior offenses;
  • Other wrongful conduct; and
  • Other matters as justice may require.

III.   Impact on Medicare Advantage Plans, Part D Organizations, and their Agents:

As a final point, the Proposed Rule also clarifies that penalties and assessments may be imposed against a Medicare Advantage Plan or a Part D contracting organization when its employees or agents, or any provider or supplier who contracts with it, engages in prohibited conduct. The Proposed Rule states:

“This statutory change broadens the general liability of principals for the actions of their agents under our existing regulations . . . to include contracting providers and suppliers who may not qualify as agents of the contracting organization.”

The ACA created new categories of misconduct that can serve as the basis for CMPs, including:

  • Enrolling people without prior consent;
  • Transferring enrollees to a different plan without prior consent;
  • Transferring enrollees solely for the purpose of earning a commission;
  • Failure to comply with applicable marketing restrictions; and
  • Employing or contracting with anyone who engages in certain wrongful conduct (which includes failure to provide medically necessary care and discouraging enrollment by vulnerable eligible individuals).

IV.  Final Remarks:

The Proposed Rule would expand the OIG’s ability to impose significant penalties on providers and suppliers and in expand the circumstances under which CMPs can be imposed. When the rules are finalized and enacted, it can be expected that OIG will take an even more active role in settling Federal health care investigations.

Healthcare AttorneyRobert W. Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Liles Parker attorneys represent health care providers and suppliers around the country in connection with Medicare audits, 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.


Hospice Providers – New HIS Record Requirements!

Hospice providers must comply with new HIS records requirements.(July 7, 2014): As of July 1, 2014, Medicare-certified hospices must directly submit a Hospice Item Set (HIS) (for Admission and Discharge) records for each patient admission that occurs on or after July 1.  These HIS 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 — HIS Records:

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.  Final Remarks:

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.

Healthcare AttorneyRobert 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 ZPICs and other CMS program 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.

Electronic Criminal HIPAA Attacks on Protected Health Information Rise 100% In Four Years

Criminal HIPAA Attacks On Health Care Providers Rise 100% In Four Years.

(March 14, 2014) A recently released Ponemon Institute study reveals startling insight into new and expanded threats to the security and privacy of patient information in the U.S. health care system.  Alarmingly, electronic criminal HIPAA attacks on health care providers have risen 100% since 2010.  Moreover, many cite the Affordable Care Act (ACA) as one of the biggest factors putting patient health information at risk. Furthermore, increasingly complex federal and state privacy and security regulations have led to ongoing compliance problems for many providers. Nevertheless, while almost every health care organization represented in the study reported some form of data breach, the total number of data breaches has declined.



I.  Health Care Systems Participating in the Study:

Ninety-one health care organizations participated in the Ponenmon research study, all of which are covered entities subject to the Health Insurance Portability and Accountability Act (HIPAA)’s Privacy and Security Rules.  Respondents included hospitals or clinics that are part of a health care network (49%), integrated delivery systems (34%), and standalone hospitals or clinics (17%). Moreover, researchers conducted approximately 388 separate interviews with senior level personnel working in compliance, information technology (IT), or patient services and privacy.

II. Reports of Data Breaches are on the Decline; However, the Economic Impact is Still Significant:

When it comes to the privacy and security of patient health information, data breaches are a significant – and prevalent – concern for providers. The study found that 90% of health care organizations reported experiencing at least one data breach in the previous two years.  In fact, 38% reported experiencing more than five incidents! Remarkably, this figure actually reflects a decrease in data breaches from last year’s report.  In the 2013 report, 45% of organizations reported more than five data breaches.

What might this decline suggest? According to Larry Ponemon, chairman and founder of the Ponemon Institute, health care organizations may be making “modest progress on managing sensitive patient information” and reducing threats to patient data. Yet, Mr. Ponemon emphasized the word “modest.”

Not surprisingly, data breaches represent significant economic burdens for health care organizations. Over a two-year period, breaches costs the responding organizations anywhere from less than $10,000 to more than $1 million, with an average economic impact totaling roughly $2.0 million. For the healthcare industry overall, data breaches could potentially impose annual costs of up to $5.6 BILLION.

III.  New Health Care Law Increases the Risk to Patient Privacy and Information Security:

A large majority of respondents pointed to one factor exacerbating the risks to exposing patient health information.  Almost seven in ten organizations represented in the study (69%) believe that the Affordable Care Act (ACA) either significantly increases (36%) or increases (33%) risk to patient privacy and security.  Their primary concerns include insecure exchange of patient information between healthcare providers and government (75% of organizations), patient data on insecure databases (65%) and patient registration on insecure websites (63% of organizations).

IV.  Electronic Criminal HIPAA Attacks Have Risen 100%:

Insecure websites, databases, and health information exchanges are highly vulnerable to both insider and outsider criminal HIPAA attacks and threats.  Criminals are breaching security systems in order to obtain patient health records and commit medical identity theft. Unfortunately, this problem is getting much worse. For example, the Ponenmon Institute conducted its first study on security and privacy of patient information in the U.S. health care system in 2010.  In that year, 20% of organizations reported criminal attacks.  In the latest study, 40% of organizations reported criminal attacks – a 100% increase.

Nevertheless, external attacks are not the greatest concern to providers.  Health care systems report that a bigger security risk lies within its own internal organization. Seventy-five percent of providers state that employee negligence is their biggest security problem. This risk is followed by the use of public cloud services (41%), mobile device insecurity (40%), and cyber-attacks (39%).

Clearly, employee negligence and the use of insecure mobile devices are a significant concern. Yet, nine in 10 (88%) organizations have a “bring your own device” (BYOD) policy. This allows employees and medical staff to use their own personal mobile devices, such as a smart phone or tablet, to connect to the organization’s internal network or email system.  These BYOD policies present new risks – many of the personal devices are hander to manage, control and secure. In the study, more than 50% of health care providers are not confident that their employees’ personally owned mobile devices are secure.

“Employee negligence, such as a lost laptop, continues to be at the root of most data breaches in this study. However, the latest trend we are seeing is the uptick in criminal attacks on hospitals,” said Mr. Ponemon, in a March 12 press statement. “The combination of insider-outsider threats presents a multi-level challenge, and healthcare organizations are lacking the resources to address this reality.”

V.  The HIPAA Final Omnibus Rule Imposed New Requirements on Covered Entities and Business Associates:

Under the HIPAA Final Omnibus Rule[1], both covered entities and their business associates must conduct an incident risk assessment for every data security incident that involves protected health information (PHI). The purpose behind the Final Rule was to strengthen the Health Information Technology for Economic and Clinical Health (HITECH) Act as well as the privacy and security provisions under HIPAA for health information.

However, only 51% of respondents said they are in full compliance whereas 49% report they are not compliant or are only partially compliant. Moreover, 39% indicate that their incident assessment process is not effective and cite a lack of consistency and inability to scale their process as the primary reasons.

While only half of the providers are themselves fully compliant, most do not trust their business associates with securing private patient health information.  Seventy-three percent of the organizations are either somewhat confident (33%) or not confident (40%) that their business associates would be able to detect, perform an incident risk assessment and notify their organization in the event of a data breach incident as required under the business associate agreement. In contrast, only 30% are either very confident or confident that their business associates are appropriately safeguarding patient data as required under the Final Rule.

What type of business associates are most concerning to providers? Respondents indicated that IT service providers, claims processors and benefits management were the most worrisome.

For those health care organizations that are fully (or somewhat) compliant with the HIPAA Omnibus Rule’s requirements, most are relying on internal policies and procedures to do so. Fifty-five percent of organizations agree they have the policies and procedures that effectively prevent or quickly detect unauthorized patient data access, loss or theft. Yet, organizations cite shortfalls in their budgets, technologies, and resources that prevent them from fully safeguarding PHI. Moreover, only 46% have personnel on hand who are knowledgeable about the HITECH Act and states’ breach notification laws.

So, has the Final Rule had an effect? A majority (44%) of the responding providers indicate that yes, the Final Rule has affected their programs in better protecting patients.  However, 41% indicate that it has not while 15% say it is too early to tell.

VI.  Final Remarks:

As the latest Ponemon Institute study reflects, health care organizations face a series of problematic issues with safeguarding private patient health information. Data breaches may be on the decline, they still remain a pervasive problem for all organizations.  While many respondents indicate that the ACA is putting patient data at risk, the law does not appear to be going anywhere. Providers must respond to the law’s rules and regulations accordingly and stay up-to-date regarding any new changes.  Furthermore, health care organizations must adapt to the rise in external criminal attacks without forgetting about employee negligence, a much greater concern.

Finally, health care systems must ensure that they remain fully compliant with the new HIPAA Omnibus Rule.  There are greater civil monetary penalties that may be imposed for violations, both to covered entities and business associates.  Yet, the study reveals that many of these entities are not taking the Final Rule seriously. One of the best ways to become compliant with the law is to adopt a written compliance plan!

A compliance plan may seem like a burdensome exercise.  However, it is one of the best safeguards for a health care organization to consider given the complex statutory and regulatory issues facing providers today.  While we hope that you are one of the few who already have a compliance plan in place, if you need any assistance implementing one – or making your current plan more effective – do not hesitate to give us a call today!

Healthcare LawyerRobert W. Liles, Esq., serves as Managing Partner 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.

[1] 45 CFR Parts 160 and 164.

CMS Announces a Pause in RAC Operations

CMS Pause in RAC Operations

(March 6, 2014): The Centers for Medicare & Medicaid Services (CMS) recently announced that there would be a “pause” in Recovery Audit Contractor (RAC) operations.  What is a “pause” in the program?  According to CMS, the goal of suspending RACs from conducting additional audits is to allow these contractors to complete all remaining claim audits and other processes by the end date of their current contracts before CMS begins the procurement process for the next round of Recovery Audit Program contracts.  Furthermore, this RAC pause “will allow CMS to continue to refine and improve the Medicare Recovery Audit Program.”

I.  Important Dates to Remember with Respect to the Pause in RAC Operations:

Health care providers should note the following timeline that is being used to wind down current RAC operations.

  • February 21, 2014: the last day a RAC may send a postpayment Additional Documentation Request (ADR);
  • February 28, 2014: the last day a Medicare Administrative Contractor (MAC) may send prepayment ADRs for the Recovery Auditor Prepayment Review Demonstration; and
  • June 1, 2014: the last day a RAC may send improper payment files to the MACs for adjustment.

II. Upcoming RAC Changes:

CMS also announced a number of “improvements” that will be implemented under the next RAC program contract awards. Notably, these changes are being implemented in response to industry feedback. CMS believes that these changes will “result in a more effective and efficient program, including improved accuracy, less provider burden, and more program transparency.”  Specifically, the following changes will be effective:

  • RACs must wait 30 days to allow for a discussion before sending the claim to the MAC for adjustment. Providers will not have to choose between initiating a discussion and an appeal;
  • RACs must confirm receipt of a discussion request within three (3) days;
  • RACs must wait until the second level of appeal(i.e., reconsideration) is exhausted before they receive their contingency fee;
  • CMS is establishing revised ADR limits that will be diversified across different claim types (e.g., inpatient, outpatient); and
  • RACs will be required to adjust the ADR limits in accordance with a provider’s denial rate (providers with low denial rates will have lower ADR limits while provider with high denial rates will have higher ADR limits).

III.  Final Remarks:

Has your hospital, practice, Home Health Agency, Hospice, DME Company, or PT / OT / ST Clinic been audited by a RAC or Zone Program Integrity Program (ZPIC)?  Just because RACs are taking an operational “pause,” does not mean that you may not be affected in the future.  It may only be a matter of time before your practice is negatively burdened by a RAC audit.  Despite your best efforts to follow Medicare’s directives, your organization may still be placed on prepayment review or subjected to a full-blown postpayment audit.  Should you receive a request for records from a RAC or ZPIC, being prepared (in advance of receiving an audit letter) can greatly assist your efforts to show that the care and treatment services you are providing do, in fact, qualify for coverage and payment.  If you have any questions or concerns regarding any ongoing – or future – RAC or ZPIC audit, please do not hesitate to give us a call! We would be more than happy to assist you with your compliance needs.

Healthcare LawyerRobert W. Liles, Esq., serves as Managing Partner 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 program integrity 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.

Texas Providers Are Required by Law to Have a Medicaid Compliance Program


Texas Medicaid providers are required to have a Medicaid Compliance Program in place.

(February 21, 2014): If you are a participating provider in the Texas Medicaid program, do you have a Medicaid compliance program in place for your practice? If the answer to this question is “no” – or, more worrisome, if you are asking, “What is an effective compliance program?” – you are violating the terms of your enrollment agreement with the Texas Medicaid program. According to your contract, you must have a compliance program in place prior to enrollment. Without one, you may be subject to recoupment and / or various administrative sanctions.


I.  Texas Medicaid Compliance Program Requirements:

Pursuant to the Texas Medicaid Provider Enrollment Application, prospective Texas Medicaid providers must attest to its compliance program requirement. Under this condition, a provider must verify that in accordance with requirement TAC 352.5(b)(11), the provider has a Medicaid Compliance Program containing the core elements as established by the Secretary of Health and Human Services referenced in §1866(j)(8) of the Social Security Act (42 U.S.C. §1395cc(j)(8)), as applicable.

Does this section look familiar to you? A Texas Medicaid provider must affirmatively attest that he or she has a compliance plan in place prior to submitting his or application for enrollment. However, you may have simply checked the box “yes” without even realizing what a compliance program is or what is required under this section. This may be a serious, detrimental mistake that can lead to administrative, and possibly even criminal, sanctions.

II.  Provider Compliance Program Requirements for Medicaid Enrollment:

An effective compliance program will generally be tailored to complement a provider’s practice requirements as necessary.  However, a Texas Medicaid provider must ensure that his or her compliance program includes, at a minimum, the following core elements:

  • Conducting internal monitoring and practice standard;
  • Implementing compliance and practice standards;
  • Designating a compliance officer or contact;
  • Conducting appropriate training and education;
  • Respond appropriately to detected offenses/ develop corrective actions;
  • Developing open lines of communication;
  • Enforcing disciplinary standards through well-publicized guidelines.

We have previously addressed these elements more in-depth in previous articles.  But remember – these core elements are just the framework and a model that a successful provider will build upon. These elements do not form a complete and effective compliance program but will give you sufficient guidance to begin establishing a plan for your own practice. In addition, Texas Medicaid providers should consider using qualified health law attorneys to conduct a “GAP” analysis in addition to implementing an effective compliance program. Moreover, providers should remember that simply putting a compliance program in place is not the end – you must ensure that you are properly providing compliance training to your staff.

III. Failure to Have a Medicaid Compliance Program – or Falsely Attesting to Having One – Can Lead to Recoupment and Administrative Sanctions:

More importantly, by signing your enrollment application, the prospective Medicaid provider understands and agrees that any falsification, omission, or misrepresentation in connection with the application for enrollment is a violation of law.  Moreover, it may result in the denial of previously paid claims and could also result in other administrative sanctions such as payment hold, exclusion, debarment, contract cancellation, and monetary penalties.

Thus, if a Texas Medicaid provider falsely attests that he or she has a compliance program in place when, in fact, this is not the case, that provider is committing Medicaid fraud. In this case, a provider may be prosecuted under applicable Federal and Texas state laws.  Moreover, fraud is a felony and may result in additional fines or imprisonment.

Medicaid fraud has become a significant issue in the State of Texas over the last decade. Recoveries obtained by the State of Texas under the Texas Medicaid Fraud Prevention Act (TMFPA) and its federal analog, the False Claims Act (FCA), reflect that the state has obtained tremendous recoveries.  For example, from 2006 through 2012, Texas recovered over $821 million for state and federal taxpayers in recoveries for Medicaid fraud.[1]  If you become subject to exclusion, you are barred from ordering or prescribing any services to beneficiaries after the exclusion date.  You do not want to be included in one of these figures.

IV.  Final Remarks Regarding Your Need to Implement a Medicaid Compliance Program:

If you have recently submitted your application for enrollment to the Texas Medicaid program, and discover that you have submitted your application with errors, you have some reprieve. You have 30 calendar days to inform the Texas Health and Human Services Commission or its designee, in writing, as to any changes to the information submitted in connection with your application to participate in the Medicaid program.

While a compliance program, and compliance in general, may seem like a burdensome exercise, it is the ultimate safeguard for your practice considering the myriad statutory and regulatory problems a healthcare provider can run into.  More importantly, it is a requirement for your participation in the Texas Medicaid program. As the Texas government and its private enforcers increase their funding, skills, and sophistication, you need to keep pace and ensure your practice continues to thrive.  While we hope that you already have a compliance program in place, if you need any assistance implementing one – or making your current program more effective – do not hesitate to give us a call today!

Healthcare LawyerRobert W. Liles, Esq., serves as Managing Partner 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 ZPICs and other CMS program integrity 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.


Medicare ALJ Appeals of Denied Home Health Claims

February 11, 2014 by  
Filed under Home Health & Hospice

Denied home health claims can be appealed through the Medicare appeals process.(February 11, 2014):  Has a Zone Program Integrity Contractor (ZPIC) denied your home health claims?  If you believe that these denials are unwarranted, your home health agency (HHA) may challenge the denials through Medicare’s administrative appeals process.  Medicare’s appeals process provides five levels of appeal. The first four levels of appeal are before different administrative bodies.  The fifth level of appeal requires that an aggrieved provider file suit in federal court.  The levels include: Redetermination (conducted by the Medicare Administrative Contractor); Reconsideration (conducted by a Qualified Independent Contractor, or QIC); after reconsideration, a dissatisfied provider may file for ALJ appeal; next, a provider may seek review by the Medicare Appeals Council; and finally, an appeal to federal court. The purpose of this article is to describe certain considerations peculiar to the ALJ review process from the point of view of a Home Health Agency (HHA), or its legal representative.  The article focuses on the initial steps to be taken before an ALJ hearing and how to proceed during the hearing. 

I. Engaging a Qualified Expert to Challenge an Extrapolation of Damages Related to Home Health Claims:

The extrapolation of alleged overpayment amounts using an error rate calculated by statistical sampling is one of the most powerful weapons a ZPIC can bring to bear against a home health provider. In our experience, it is often difficult for Medicare contractors to properly conduct sampling in the statistically-valid manner required by law.[1] Where extrapolation is used in Medicare enforcement audits, long-standing CMS program materials and Federal caselaw require that the sample in which the error rate is determined to be from established in a statistically valid manner. See HCFA Ruling 86-1 at 4, and Ratansen v. California 11 F.3d 1467 at 1471 (CA 9 1993).

If alleged overpayment amount in your case is large enough to justify it, a home health agency should engage a statistician familiar with Medicare’s processes to examine and critique any extrapolation that have been applied by a ZPIC.  If significant flaws are identified, the home health agency may be able to have the extrapolation reversed by the ALJ. In order to assess and critique the extrapolation, the expert must be able to review the statistical data and methodology used in the sampling.[2] The home health agency’s representative should communicate in writing with the ZPIC or other audit contractor to request in all of the statistical sampling data and records used by the ZPIC when calculating the extrapolation of damages.  If the requisite data is not forthcoming, your attorney should extend its requests to all administrative and appeals contractors who enter into the audit or appeals process. Although reversals of extrapolations are infrequent at the redetermination and reconsideration levels of appeal, they are possible.  Our firm has succeeded in getting extrapolations thrown out at every level of administrative appeal.

Occasionally the Medicare contractors involved in an audit and a subsequent appeal will refuse or merely fail to provide the extrapolation sampling data sufficiently for an expert to evaluate and challenge the extrapolation. When this happens, a home health agency has an argument for the reversal of the extrapolation entirely independent from issues of statistical validity. The contractors inevitably supply claim-line and similar spreadsheets which, while irrelevant to statistical sampling, can bear a superficial similarity to sampling data. The provider must therefore never assume that the absence of extrapolation and sampling data from the documents produced by the contractors will be conceded by the CMS parties, and must be prepared to prove that absence in its appeal just like any other disputed fact.

With this in mind, in any case where the full set of necessary data is given to the provider in an untimely manner or not at all, the statistical expert should examine all data provided by the contractors, and report in writing on its sufficiency for determination for determining statistical validity. The expert should be ready to testify about sufficiency in these cases, and his reports and testimony must be kept separate from those addressing the merits of statistical validity.

II. Engage a Skilled Nurse Expert to Report & Testify on Clinical Issues:

Unless the dollars at issue are small, or the issues in an appeal are exclusively legal in nature, a home health agency can benefit from engaging a skilled nurse as an expert witness.  The nurse expert can provide written reports on clinical issues for submission to the ALJ, and testify at the hearing. If the home health agency has a skilled nurse on staff, he / she may be able to perform these tasks. Otherwise, forensic nurses can be engaged for this purpose who are familiar with home health Medicare claims. In any case, the nurse expert should have education, other training and work experience sufficient to survive a challenge of their qualifications at the hearing.

Because the ALJ’s review in an appeal is a determination de novo of all legal and clinical issues of payability of each claim appealed,[3]the nurse expert’s written report should address all clinical issues in each claim, not just those cited as a grounds for denial in the decision being appealed. Accordingly, the nurse expert’s report should address the homebound status of the beneficiary, and the medical necessity of the services billed to Medicare.

In her testimony at the hearing, however, the nurse should avoid mention of clinical issues that aren’t being argued. The home health agency’s attorney or other representative conducting the hearing must communicate in advance so the nurse expert knows what clinical issues he expects to argue about, can organize her testimony to be concise and effective on those issues, and avoid other topics. The balance of the nurse expert’s report will be in the record if a contractor or the ALJ strays off into clinical issues not addressed by the QIC. If that happens, of course, she should be ready to give verbal testimony on the additional issues as well.

Often during an ALJ hearing, questions will arise about the real-world practices of a home health agency. The nurse expert can be useful to offer advice and explanations in such cases to the ALJ. This boosts the judge’s trust and confidence in the nurse, and tends to enhance her credibility on clinical issues.

 III. Preparation For Hearing: Planning a Method to Streamline the Hearing of Clinical Issues:

Home health cases appealed to the ALJ level typically involve a large number of home health claims.  Most ZPIC overpayment audits employ statistical sampling, where a sample of home health claims is audited, and the resulting error rate (as determined by the ZPIC), is applied to all billings by the home health agency over a multi-year period. To constitute a statistically valid random sample, the sample usually consists of 30-90 individual home health claims. Although individual home health claims may be relatively small, it may not appear to be cost-effective to file an appeal.  We recommend you challenge single claim denials if you believe that the services qualify for coverage and payment.  This can help keep your overall error rate low and reduce the likelihood of future audits and reviews.

Medicare ALJs strive to conclude all appeal hearings in a single day; and every hearing will require at least two hours of arguments on procedural, statistical and legal issues of general application to all claims. Meaningful oral arguments on medical necessity of a single home health claim denial will consume 10-20 minutes. So an actual hearing of oral arguments on medical necessity issues in 30 or more individual claims would simply be too time-consuming to be feasible. Accordingly, most ALJs will seek to establish a method early in the hearing by which separate oral arguments on each claim at issue can be avoided.  Working with your attorney, a home health agency may be able to formulate a method of grouping its claims into a small number of categories, so that representative claims in each category can be argued exhaustively. The separate written arguments on the various claims will remain for separate consideration by the ALJ, but in this way a favorable impression in a stronger claim can be extended to a weaker one.

Meritless arguments run the risk of getting noticed here, in which case they will harm a home health agency’s credibility on the stronger claims. There is little chance a meritless argument will prevail, and having them present hurts the persuasiveness of a home health agency’s other arguments.

An appeal to the ALJ is, strictly speaking, an appeal of the denial reason cited by the QIC in its reconsideration decision.  Nevertheless, since the ALJ level of appeal is a de novo review, you must be prepared to address the alleged errors identified by the ZPIC and the MAC if requested to do so by the judge.

IV. The ALJ’s Record — Consider Citing Risk of Change Factors in Prior Episodes of Care:

Where a home health agency is supporting the medical necessity of skilled nursing services for Observation and Assessment by pointing to factors in the medical record which show a “likelihood of change” as defined in Medicare Program Benefit Manual Ch. 7, §, dangerous and unstable medical conditions evident in the Beneficiary’s medical record are often cited. If the episode in question is a follow-on episode, it is more convincing to point to dangerous and unstable conditions in earlier episodes. This is because medical necessity must be determined as of the date of the physician’s order for the skilled care in question.[4]Conditions which were already documented in the record at the time of the order will be more persuasive in establishing the reasonableness of the physician’s judgment.

To do this, obviously the records of the prior episodes must be available for review and submission to the appeal record; but the need for this sort of argument won’t normally be evident at the start of the case when medical records are being gathered. So for this and for other reasons, it is wise to gather the records of all episodes of care for the Beneficiaries in the appeal, not just the episodes at issue.

The handling of medical records by contractors in Medicare enforcement audits and appeals is notoriously sloppy. Although audit denials are generally based on an audit contractor’s review of medical records it receives from a provider or seizes, and CMS regulations require each contractor handling an appeal to turn over its entire file to the provider upon request,[5]contractors evidently find it impossible to comply. For this reason, providers appealing an overpayment determination must include a full set of all medical and billing records at issue, provided separately with each redetermination, reconsideration, and ALJ appeal filing.

A home health agency should therefore collect all medical billing and other records pertaining to all beneficiaries in the relevant audit sample, “Bates Label” them at the start of the appeal, and include the Bates labeled set with each appeal filing .  The same labeling must be used at every level of appeal. Efforts to organize each set of records in a logical and consistent manner will pay off later as well. The nurse expert and statistical expert must use Bates references for all document identification in their reports and live testimony. Judges always appreciate this, as it vastly speeds and simplifies testimony on any records.

V.  Keep Your Experts’ Live Testimony Short and Concise:

The live hearing before the ALJ is no place for a verbose treatment of a technical subject. Make sure each expert handles his written report, which can and should be a complete coverage of all issues, very differently from his verbal testimony which will be most effective if short. Complex subjects can seldom be communicated exhaustively in a 1-day hearing, and the expert will quickly lose the ALJ if he insists on trying to do that. Make sure your experts plan their testimonies accordingly.

CMS contractors can and do participate in ALJ hearings, but they can do so only as non-parties. Medicare regulations require non-parties to give notice of their intent to participate within 10 days of an ALJ’s notice of a hearing date.[6] When contractors give late notice, or appear at a hearing without notice, your legal representative may choose to object on the record at the start of the hearing. These objections will be more successful if the representative can plausibly argue that he would have prepared differently for the hearing if timely notice had been given. 

A sizable appeal to an ALJ may involve submissions to the judge after the filing of the initial appeal. In any case, evidence submitted subsequent to the issuance of the reconsideration decision can be admitted to the ALJ record only on a motion and showing of good cause.[7  Keep in mind, it is getting more difficult each year to show the requisite requirement of “good cause.”  Therefore, every effort should be made to submit relevant evidence into the record BEFORE the QIC has issued its reconsideration decision.

A seldom-addressed issue in Medicare enforcement audits is non-physicians being allowed to challenge, years after the fact, the medical judgment of physicians who saw the patients and have cared for them. Ostensibly, payment denials for lack of medical necessity are based on “lack of adequate record,” but in practice Medicare audits involve just this sort of second-guessing. The provider’s representative should try to make this point occasionally during the hearing, and not let the ALJ forget that the treating physician’s medical judgment is reflected in the medical records he is reviewing.

A recognized goal of home health care is keeping beneficiaries out of nursing homes and other long-term care facilities; and Medicare Benefit Policy Manual Ch. 7, §30.5.2 expressly provides that the number of re-certification periods for Home Health Care is unlimited as long as the beneficiary remains qualified. CMS contractors however often look askance at successive recertification periods, and suggest they are disfavored[8]. Providers’ representatives should not allow a suggestion along those lines at an ALJ hearing to go unchallenged, and be prepared to explain why and by what authority home health care is not limited to any specific time period.

Healthcare LawyerDavid Parker practices in the business transaction and healthcare areas. In the health law area, Mr. Parker represents providers in Medicare, Medicaid, and private payor administrative proceedings involving overpayment, revocation and other audit matters, and buyers and sellers in healthcare related transactions. He also gives advice on False Claims Act, Stark, and Anti-Kickback Statute issues.  For a free consultation, call:  1 (800) 475-1906.

[2]. Medicare Program Integrity Manual Ch. 8, § lists the extrapolation statistical data which the contractor must preserve in its files and make available to the provider.

[3]. 42 CFR 405.1032(a).  The ALJ cannot however re-open claims in an audit which are not appealed to him.

[5]. See Medicare Claims Processing Manual Ch. 29, §300.3

[6]. See 42 CFR §405.1010(b)

[7]. See 42 CFR §405.1018 & 1028

[8]. Several CMS contractors disseminate program materials which state, without citing any authority, that Home Health Care should be provided only for short periods. For example, one enforcement contractor in the Southwest includes in its standard form Educational Letter on Medicare HHC the statement “We must preserve …HHC services [for] people who, for a short period of time, are too… infirm to leave their homes…to receive physician…services.”


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