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Michael Cook appointed to serve on Virginia’s Medicaid Policy Council

January 2, 2018 by  
Filed under Firm News

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Healthcare Attorney(January 2, 2018):  Congratulations to our very own Michael Cook who has been appointed to serve on the Virginia Medicaid Policy Council for Health and Human Resources. In this role, The Council’s role is to provide recommendations on policy issues involving the programs operated by the Department of Health and Human Resources as part of the transition.

HHS Issues Final Rule to Address Record High Medicare Appeals Backlog

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Medicare appeals backlog(January 20, 2017): The Medicare appeals backlog has reached its all-time worst. If you’re a healthcare provider or supplier waiting for a hearing before an Administrative Law Judge (ALJ) at the Office of Medicare Hearings and Medicare Appeals (OMHA) – the third level of the Medicare appeals process – you’ve likely been waiting years to have your case heard or, at least, you’re expecting such a wait. This wait time has persisted despite that ALJs are statutorily required to issue a decision within 90 days of receipt of a hearing request. The reasons for the backlog depend on who you ask: the American Hospital Association (AHA) and others have contended that the Recovery Audit Program is the “primary culprit in creating and sustaining” the backlog because Recovery Audit Contractors (RACs) “receive a cut of any improper payments they recover […] and can challenge claims going back as far as three years.”  The U.S. Department of Health and Human Services (HHS) agrees that the Recovery Audit Program has contributed to the backlog, but believes there are other reasons as well, like an increase in Medicare beneficiaries and a growing practice among some providers to appeal virtually every claim denial through ALJ review (coupled with only modest increases in funding for the agency, thereby limiting their ability to address the growing number of appeals and backlog).

I.  Statistical Overview of the Medicare Appeals Backlog:

In any event, the statistics are astounding:

  • The number of ALJ appeals filed grew 936%, from 41,733 to 432,534, between fiscal years (FY) 2010 and 2014.
  • By the end of FY2014, 767,422 appeals were pending at ALJ.
  • ALJ decisions are issued well after the 90-day statutory deadline: in FY2014, it took OMHA an average of 415 days to process an ALJ appeal; in FY2015, it took OMHA an average of 662 days to process an ALJ appeal; and in FY2016, it took OMHA an average of 877 days to process an ALJ appeal.

The backlog has been a significant source of frustration for healthcare providers and suppliers (and their representatives) stuck in the lingering appeals process – and not just because it takes so long to achieve a final judgment by the Secretary. The delay often has significant financial consequences because Medicare can statutorily recover the alleged overpayment shortly after a second level (reconsideration) appeal decision issues, despite that the appeals process is not over and despite that the first two levels of appeal are littered with problems (e.g., we see chronic misapplication of Medicare coverage and payment rules by appeals contractors at the first two levels of appeal).

II.  Order by the U.S. District Court:

Thanks to the efforts of AHA and other plaintiffs who sought relief in court, we may see the backlog resolve over the next few years. On 12/05/2016, the United States District Court for the District of Columbia ordered that the HHS Secretary reduce the backlog according to the following timeline:

  • 30% reduction from the current backlog of cases pending at the ALJ level by 12/31/2017;
  • 60% reduction by 12/31/2018;
  • 90% reduction by 12/31/2019; and
  • 100% reduction by 12/31/2020.

III.  Other HHS Efforts to Address the Medicare Appeals Backlog:

In an effort to meet these mandated backlog reduction timelines, HHS issued a final rule on 01/17/2017 titled “Medicare Program: Changes to the Medicare Claims and Entitlement, Medicare Advantage Organization Determination, and Medicare Prescription Drug Coverage Determination Appeals Procedures”. The final rule includes an assortment of initiatives to reduce the backlog which become effective 03/17/2017, including:

  • Giving select Medicare Appeals Council decisions precedential effect. The final rule provides that designated “Medicare Appeals Council decisions […] have precedential effect and are binding on all CMS components, on all HHS components that adjudicate matters under the jurisdiction of CMS, and on the Social Security Administration to the extent that components of the Social Security Administration adjudicate matters under the jurisdiction of CMS.” This is significant because, currently, even if the Medicare Appeals Council interprets a Medicare authority or provision in a specific way in a decision, that interpretation only applies to the case at hand (even though the decision represents the final decision of the Secretary). In other words, an Appellant can’t contend that the interpretation of a Medicare authority or provision in a previous Medicare Appeals Council matter is binding in their case as well, even if the facts and issues are very similar. HHS hopes the precedential nature of Medicare Appeals Council decisions as of 03/17/2017 will create consistency in the appeals process. It’s possible, though, that the discretion given to the Departmental Appeals Board (DAB) Chair to decide which cases have precedential effect may impact how effective this change will ultimately be.
  • Expanding the pool of adjudicators at OMHA to include attorney adjudicators. An attorney adjudicator is a licensed attorney employed by OMHA with knowledge of Medicare coverage and payment laws and guidance, and authorized to take the actions on requests for ALJ hearing and requests for reviews of QIC dismissals. HHS estimates that the expansion of the pool of adjudicators at OMHA could redirect approximately 24,500 appeals per year to attorney adjudicators who would be able to process these appeals at a lower cost than would be required if only ALJs were used to address the same workload.
  • Creating process efficiencies. These include, for example, allowing ALJs to vacate their own dismissals rather than requiring Appellants to appeal a dismissal to the Medicare Appeals Council and using telephone hearings for certain Appellants.

For more information on these and numerous other initiatives, please refer to the Federal Register. The hope is that the finalization of this rule and the Secretary’s accountability to the District Court – the Court retained jurisdiction of the case to review the quarterly status reports the Secretary is required to prepare and to rule on any challenges to unmet deadlines – will achieve the intended result: complete elimination of the backlog by 2020.

The Centers for Medicare and Medicaid Services (CMS) has taken steps in the past to improve the appeals process, and these steps have not always achieved the intended result. For example, with regard to appeals stemming from a post-payment review, CMS directed redetermination (first level) and reconsideration (second level) appeals contractors – effective August 2015 – to restrict their review on appeal to (in most cases) only the issues alleged by the reviewing contractor (i.e., the contractor that requested the records and issued the initial audit results). The purpose was to avoid a moving ball – where one Medicare contractor alleges one issue and the Appellant addresses it, but then another contractor alleges another issue, requiring the Appellant to then address a different issue with regard to the same claim. However, we have seen the redetermination and reconsideration appeals contractors repeatedly disregard this CMS directive and continue to try and add new denial reasons to the administrative record. We have also seen the initial auditing contractors increasingly allege more than one denial reason, throwing everything but the kitchen sink at providers and suppliers. It seems that Medicare is hoping for at least one denial reason to persist through the appeals process.

Judicial oversight is the difference this time around and could be the key to reducing the backlog. We’ll be monitoring HHS’s progress closely and hoping for expeditious relief for our current and future clients, and healthcare providers and suppliers everywhere.

Lorraine Ater, JDHealthcare Lawyer is a health law attorney with the firm Liles Parker.  She is also a Certified Medical Compliance Officer (CMCO) and a Certified Medical Reimbursement Specialist (CMRS).  Lorraine represents healthcare providers and suppliers around the country in connection with Medicare audits and appeals.  Liles Parker is a boutique health law firm with offices in Washington, DC; across the State of Texas; and in Baton Rouge, LA.  Need assistance?  For a free consultation, please call: (202) 298-8750.



AHA v. Burwell, 2016 U.S. Dist. LEXIS 126840 (D.D.C. Sept. 19, 2016).

AHA v. Burwell, 2016 U.S. Dist. LEXIS 167291, 2016 WL 7076983 (D.D.C. Dec. 5, 2016).

Federal Register, Volume 82, Number 10, Pages 4974-5140, “Medicare Program: Changes to the Medicare Claims and Entitlement, Medicare Advantage Organization Determination, and Medicare Prescription Drug Coverage Determination Appeals Procedures” (01/17/2017). Available at https://www.federalregister.gov/documents/2017/01/17/2016-32058/medicare-program-changes-to-the-medicare-claims-and-entitlement-medicare-advantage-organization.

HHS, “FACT SHEET: HHS Issues Final Rule to Improve the Medicare Appeals Process”.

HHS, OMHA, “Average Processing Time By Fiscal Year” (11/18/2016). Available at https://www.hhs.gov/about/agencies/omha/about/current-workload/average-processing-time-by-fiscal-year/index.html#.

2014 HCFAC Report — $27.8 Billion Recovered for Medicare

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Fraud(March 23, 2015):  Last week, the Department of Justice (DOJ) and Department of Health and Human Services (HHS) announced that they had recovered more than $27.8 billion to the Medicare Trust Fund due to the efforts of the Health Care Fraud and Abuse Control Program (HCFAC). As set out in the 2014 HCFAC Report, in Fiscal Year 2014, the government’s health care fraud prevention and enforcement efforts recovered $3.3 billion in taxpayer dollars from individuals and companies that attempted to defraud federal health programs. In particular, the agencies recovered $7.70 for every dollar spent to fight health care related fraud and abuse. This figure represented the third highest dollar amount on record and represents about $2 more than the average return on investment in the HCFAC program since its creation in 1997.

As HHS Secretary Sylvia M. Burwell noted:

“[e]liminating fraud, waste and abuse is a top priority” for HHS. “These impressive recoveries for the American taxpayer demonstrate our continued commitment to this goal and highlight our efforts to prosecute the most egregious instances of health care fraud and prevent future fraud and abuse. New enrollment screening techniques and computer analytics are preventing fraud before money ever goes out the door. And together with the continued support of Congress and our partners at the Department of Justice, we’ve cracked down on tens of thousands of health care providers suspected of Medicare fraud – all of which are helping to extend the life of the Medicare Trust Fund.”  

DOJ Attorney General Eric Holder expanded upon Secretary Burwell’s comments:

“As the innovative and collaborative work of the [HCFAC] proceeds, more taxpayer money is being recovered, more criminals are facing justice, and more fraud is being punished, prevented, and deterred… [t]he extraordinary return on investment we’ve obtained speaks to the skill, the tenacity, and the inspiring success of the hardworking men and women fighting on behalf of the American people. And with these outstanding results, we are sending the unmistakable message that we will not waver in our mission to pursue fraud, to protect vulnerable communities, and to preserve the public trust.”

The DOJ and HHS have been operating under a two-pronged strategy to fight waste, fraud and abuse in the federal health care programs. Under new powers granted by the Affordable Care Act (ACA), these agencies have moved away from the traditional “pay and chase” methods for targeting fraudsters. Instead, they are not working towards preventing health care fraud and abuse in the first place. Furthermore, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), a joint operation run by the HHS Office of the Inspector General (OIG) and DOJ, is changing how the federal government combats certain types of health care fraud. HEAT units are investigating potential fraud cases using real-time data analysis instead of a prolonged subpoena and account analyses. This new approach has resulted in significantly shorter periods of time between fraud identification, arrest, and prosecution.

Government agencies have also utilized the federal False Claims Act (FCA) as another vital tool to combat waste, fraud and abuse. According to the 2014 HCFAC Report, since January 2009, DOJ has recovered more than $15.2 billion in settlements and judgments from civil cases involving health care fraud and false claims against federal health care programs like Medicare and Medicaid.  As detailed on the 2014 HCFAC Report, in the past year, the DOJ obtained $2.3 billion in cases involving health care fraud.

Moreover, the Centers for Medicare & Medicaid Services (CMS) has adopted its own set of preventive measures to combat waste, fraud and abuse in the health care programs. From the outset, CMS has implemented vital safeguards to prevent illegitimate providers from enrolling in and billing the Medicare program. The ACA also requires CMS to revalidate all existing 1.5 million Medicare suppliers and providers under new and updated screening requirements. This has led to the deactivation of at least 470,000 enrollments and revocation of nearly 28,000 enrollments to prevent certain providers from re-enrolling and billing the Medicare program. CMS also issued a regulation that requires prescribers of Medicare Part D drugs to enroll in Medicare and undergo screening. Another ongoing preventative measure has been CMS’ ongoing moratoria on the enrollment of new home health or ambulance service providers in six health care fraud “hot spots”: Miami, Chicago, Dallas, Houston, Detroit and Philadelphia (which includes some counties in New Jersey). CMS believes that this extension will allow it to continue its actions to suspend payments or remove providers from the program before allowing new providers into potentially over-supplied markets.

The HCFAC annual report is available at www.oig.hhs.gov/publications/hcfac.asp. We applaud the government’s efforts to combat waste, fraud and abuse in the federal health care programs. As these latest updates demonstrate, Medicare and Medicaid fraud prevention efforts will continue to expand. With this, providers should also be aware that there will likely be an increase in the number of FCA cases that are filed.   FCA cases have become increasingly important as the Justice Department looks to stop the rising tide of fraud and abuse in the nation’s healthcare system. Thus, health care providers and suppliers should ensure that their compliance programs are effective to identifying and deterring potential violations of the FCA and other laws.

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

The FY 2016 Budget Proposes Medicare Appeals Process Reforms

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Medicare appeals process changes are on the horizon.

(February 27, 2015):  On February 2, 2015, President Obama released his fiscal year 2016 budget proposal. This latest proposal affects a significant number of Federal health care programs and includes over $1 trillion allocated to the U.S. Department of Health and Human Services (HHS). More than 85 percent of HHS’s budget is devoted to programs that fall under the purview of the Centers for Medicare & Medicaid Services (CMS).  The administration’s primary health care focus is expanding access to care and providing higher quality of care. It attempts to accomplish this goal through a series of budget increases coupled with a greater emphasis on efficient practices. For example, the budget proposes several reforms to the Medicare program that purport to save roughly $423.1 billion over the next 10 years.  Medicare appeals process reforms are among the changes impacted by the 2016 budget.  As discussed later in this article, the RAC audit changes that are anticipated will likely result in an increased likelihood that your health care company may be in the proverbial crosshairs.

I.  Administration Goals:

The FY 21016 budget continues to prioritize cutting waste, fraud, and abuse in the Medicare and Medicaid programs. As outlined in HHS’ budget brief, the President’s proposal includes $201 million in investments in program integrity for FY 2016 and $4.6 billion over ten years. These investments include continuing to fund the full Health Care Fraud and Abuse Control (HCFAC) discretionary cap adjustment, increasing mandatory Medicaid Integrity Program funding, and providing more funding to recovery auditors to undertake more corrective actions that will help reduce improper payments. In total, program integrity investments are estimated to yield roughly $21.7 billion in savings to Medicare and Medicaid over ten years. In addition, the Budget supports efforts to monitor and prevent fraud, waste and abuse in the private health insurance market including the Health Insurance Marketplace

II.  Medicare Appeals Process Reforms:

Health care providers should pay particular attention to the budget proposals that affect the Medicare appeals process, an area that has caused significant frustration over the last several years: Medicare and Medicaid contractors and appeals. In December 2013, the Office of Medicare Hearings and Appeals (OMHA) declared that it would stop assigning administrative law judge (ALJ) appeals. The Medicare appeals system had become severely backlogged with pending appeals, due in large part to a significant increase in Recovery Audit Contractor (RAC) reviews of claims. CMS tried to alleviate this backlog through a RAC Audit “Pause”. This pause would allow RACs to complete their remaining claim audits and allow CMS to continue to refine and improve the RAC audit  Audit Program. Nevertheless, frustration with the arduous Medicare appeals process led three hospitals and the nation’s largest hospital association to sue HHS. In a subsequent effort to address the backlog and resulting delays, CMS presented a global settlement offer to hospitals to resolve certain backlogged claims on during Labor Day 2014.

As part of its ongoing efforts to improve the efficiency of the Medicare appeals system – and to reduce the backlog of appeals awaiting adjudication at OMHA – HHS proposes additional funding, administrative actions, and legislative proposals. For example,

  • $36 million is allocated for CMS to engage in discussion with providers to resolve disputes and additional funding for greater participation in ALJ Hearings at OMHA;
  • $270 million is allocated for OMHA, of which $140 million is in budget authority and $130 million is from legislative proposals. This figure constitutes a $53 million increase from FY 2015.

The Budget also expands adjudicatory capacity in new field offices in order to address the backlog for a number of appeals and maintain the quality and accuracy of its decisions. It also includes a package of legislative proposals that provide new authority and additional funding to address the backlog.  A summary of the Medicare appeals process reforms is as follows:

  • Provide OMHA and Departmental Appeals Board (DAB) Authority to Use Recovery Audit Contractor Collections – this would allow program recoveries to fully fund related appeals at OMHA and the DAB;
  • Establish a Refundable Filing Fee – a refundable, per claim filing fee for providers, suppliers, and State Medicaid agencies, including those acting as a representative of a beneficiary, at each level of Medicare appeal, would be instituted. This filing fee would allow HHS to invest in the appeals system in hopes of improving responsiveness and efficiency. Notably, these fees would be returned to appellants who receive a fully favorable appeal determination;
  • Establish Magistrate Adjudication for Claims with Amount in Controversy Below New ALJ Amount in Controversy Threshold – appealed claims below the federal district court amount in controversy threshold ($1,460 in CY 2015 and updated annually) would be heard by attorney adjudicators. This would allow ALJs to hear claims that are more complex and/or include higher dollar amounts.
  • Expedite Procedures for Claims with No Material Fact in Dispute – OMHA could issue decisions without holding a hearing if there is no material fact in dispute;
  • Increase Minimum Amount in Controversy for Administrative Law Judge Adjudication of Claims to Equal Amount Required for Judicial Review – the minimum amount in controversy required for adjudication by an ALJ would be increased to the Federal Court amount in controversy requirement ($1,460 in 2015). Appeals not reaching the minimum amount in controversy will be adjudicated by a Medicare magistrate;
  • Remand Appeals to the Redetermination Level with the Introduction of New Evidence – appeals where new documentary evidence is submitted at the second level of appeal or above would be remanded down to the first level of review. This could incentivize appellants to include all evidence early in the appeals process and ensure the same record is review and considered at subsequent levels of appeal; and
  • Sample and Consolidate Similar Claims for Administrative Efficiency – the Secretary HHS could adjudicate appeals through the use of sampling and extrapolation techniques. Additionally, the Secretary would be authorized to consolidate appeals into a single administrative appeal at all levels of the Medicare appeals process. Parties who are appealing claims included within an extrapolated overpayment, or consolidated previously, will be required to file one appeal request for any such claims in dispute.

III.  Final Remarks:

HHS insists that these proposal will allow OMHA to alleviate the ongoing backlog of appealed claims within the Medicare appeals system. However, these measures are not addressing one of the most significant problems with the entire process – the contractors themselves. No where in the budgetary proposals has HHS identified measures that would address the problem areas that RACs are historically known to create. For example, RACs are still reimbursed on a contingency fee arrangement. This arrangement create adverse incentives whereby RACs pursue (and generally deny) as many claims as possible. Yet, the contractors are not punished for adverse results that may be later overturned at any one of the appeals levels, in particular at the ALJ stage.

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)? Liles Parker regularly counsels health care providers on how best to proactively prepare for an audit and mitigate audit risks. As long as RACs are incentivized to pursue as many claims as possible, the likelihood of an audit of your practice is not “if” but “when.” 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 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 around the country in connection with Medicare and Medicaid audits by ZPICs, RACs and specialty contractors. The firm also represents health care providers in connection with HIPAA Omnibus Rule risk assessments, privacy breach matters, State Licensure Board inquiries and regulatory compliance reviews.  For a free consultation, call Robert at:  1 (800) 475-1906

Miscoded Evaluation and Management Services Cost Medicare $6.7 Billion

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Evaluation and Management Services (June 25, 2014)  Officials at the Department of Health and Human Services, Office of Inspector General (OIG) recently examined medical records from 2010 for claims related to evaluation and management services (E/M services). The results are astounding. OIG determined that Medicare inappropriately paid $6.7 BILLION for E/M services that year due to claims that were incorrectly coded and/or lacking the necessary documentation. In total, over half of the claims for E/M services submitted in 2010 had incorrect codes or lacked the necessary documentation.


I. Coding and Documentation Requirements for Evaluation and Management Services:

E/M services are visits performed by physicians and nonphysician practitioners to assess and manage a beneficiary’s health. These services are divided into different categories known as “visit types” that reflect the type of service, the place of service, and the patient’s status. Most visit types are further divided into three to five levels, which correspond to the complexity of a visit and the Current Procedural Terminology (CPT) codes for billing purposes.

The level of an E/M service for CPT coding is determined by seven components: patient history, physical examination, medical decision-making, counseling, coordination of care, the nature of the patient’s presenting problem(s), and time. The first three components are important in determining the correct code for the E/M service. Higher level codes for a visit type indicates increased complexity of the E/M service. More importantly, it corresponds to higher reimbursement rates.

In order to be reimbursed for E/M services, the services must be medically reasonable and necessary. The services must also meet the individual requirements of the CPT code that is used on the claim. However, if services are billed at a higher level than were actually performed, the medical necessity requirement is not met. Providers must therefore ensure that the claims they submit to Medicare accurately reflect the E/M services provided and are billed at the appropriate level.

Physicians’ documentation is also an important part of the reimbursement process. The documentation must support the medical necessity and appropriateness, as well as the level, of the E/M service. In order to accurately reflect this, the medical record documentation must be clear and concise. The records should reflect the care the patient received as well as the relevant facts, findings, and observations about the patient’s history. Moreover, Medicare requires that the services be authenticated, either through a handwritten or electronic signature. If the medical record fails to include a proper attestation, CMS concludes that the claim is insufficiently documented.

II. Physicians Increase their Billing of High Level Codes, Leading to Higher Payment Amounts:

In 2012, an OIG report analyzed E/M services (all visit types) from 2001 to 2010 and noted that physicians had been increasing their billing of higher level codes. This process would obviously yield higher reimbursement amounts. Additionally, the Centers for Medicare and Medicaid (CMS) has determined that E/M services are 50% more likely to be incorrectly paid compared to other Part B services. These improper payments are more likely to result from errors in coding and/or insufficient documentation.

OIG then conducted a medical record review of a random sample of Part B claims for E/M services from 2010. In this review, OIG stratified claims from physicians who consistently billed higher level codes for E/M services and claims from other physicians. The first group of claims came from “high-coding physicians”. They comprised a sample from 828,646 claims billed by physicians with a history of high-coded claims. These high-coding physicians represented the top 1% of their primary specialties and billed at the two highest level codes (4 and 5) for E/M services at least 95% of the time. The second and larger group – claims from other physicians – included nearly 369 million claims from doctors without a history of high coding.  OIG then had certified professional coders review the claims determine whether the E/M service documented in the medical record for each sample claim was correctly coded and/or sufficiently documented.

III. Medicare Inappropriately Paid $6.7 Billion for Evaluation and Management Claims that were Incorrectly Coded and/or Lacked Necessary Documentation:

The results of OIG’s report are disturbing. Notably, Medicare paid approximately $32.3 billion for E/M services in 2010. However, 21% of this figure corresponded to claims for E/M services that were improperly paid. In total, OIG found that Medicare inappropriately paid $6.7 billion for claims for E/M services in 2010 that were incorrectly coded and/or lacking documentation.

Specifically, OIG determined that 42% of claims for E/M services in 2010 were incorrectly coded, whether the claims were upcoded or downcoded . The upcoded claims represented $4.6 billion in overpayments whereas Medicare underpaid providers approximately $1.8 billion in downcoded claims.  Furthermore, 19% of E/M claims lacked the necessary documentation. This includes 12% of the claims that were insufficiently documented, whereby Medicare made $2.6 billion in overpayments. On the other hand, 7% of the claims were undocumented and these represented $2 billion in overpayments.

Overall, OIG found that 55% of claims for E/M services were incorrectly coded or lacked the necessary documentation for reimbursement.
Additionally, OIG determined that claims from high-coding physicians were more likely to be incorrectly coded or insufficiently documented than claims from other physicians.

IV. Recommendations:

OIG recognized that its findings highlight errors associated with E/M services that must be addressed to properly safeguard the federal Medicare program. Based on the results of its study, OIG made three notable recommendations for CMS:

1. Education physicians on coding and documentation requirements for E/M services;
2. Continue to encourage contractors to review E/M services billed for by high-coding physicians; and
3. Follow-up on claims for E/M services that were paid for in error.

Interestingly, CMS only concurred with the first recommendation. It partially concurred with the third recommendation but did not concur with the second recommendation.

V.  Final Remarks:

The results of this latest OIG report are particularly troublesome. Problems associated with incorrect coding and improper documentation is clearly a widespread problem for E/M claims. In this case, over half of the claims for E/M services were incorrectly coded (whether upcoded or downcoded) or lacked necessary documentation. That is a significant percentage of the $32.3 billion Medicare paid out for E/M services in 2010. Furthermore, the report indicates that the “high-coding physicians” – those with a history of high coding and who are in the top 1% of their primary specialties – are the most likely providers to upcode their claims.

If you are a Medicare provider performing E/M services – especially if you fall into the “high-coding physician” category – what should you do? The most important action you can take is to ensure that your claims accurately reflect the medical necessity requirements for Medicare reimbursement. This includes ensuring that the claims you submit to Medicare accurately reflect the E/M services provided and the billing levels appropriately correspond to those services.

Providers must also confirm that the documentation accurately supports the medical necessity and appropriateness, as well as the level, of the E/M service. The medical records should reflect clear and concise documentation. Physicians must document the care a patient receives, as well as the pertinent facts, findings, and observations about the patient’s history. The record should be complete and legible. It should also include the date and a legible identity of the physician who furnished the E/M service. Moreover, the provider must ensure that the services are authenticated by the author of the record. This may be in the form of a handwritten or electronic signature.

As CMS increases the intensity of its fraud fighting capabilities, providers must be ready for an audit of their claims and medical record documentation. While you may not fall into the “high-coding physician” category, this does not necessarily protect you from an audit. If – and when – you find yourself subject to an audit of your E/M claims, one of the best ways to fight for your reimbursements is through proper legal representation. 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 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 1 (800) 475-1906.

Top Ten Health Care Compliance Risks for 2011

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Compliance Risk(December 31, 2010):  In case you missed it, Congress, President Obama and the healthcare regulators had a banner year with respect to regulatory activism in 2010.  Over the next several weeks we will be releasing a series of articles on our website addressing the compliance risk areas facing your organise dramatic changes and the compliance risks they present for your practice, clinic or health care business in 2011:


Compliance Risk Number 1:  Increased “HEAT” Activity and Enforcement:

Perhaps the greatest risk to consider in 2011 is the increase in targeted health care fraud enforcement efforts by the government’s Health Care Fraud Prevention and Enforcement Action Team (HEAT).  These teams are comprised of top level law enforcement and professional staff from the U.S. Department of Justice (DOJ), the Department of Health and Human Services (HHS), and their various operating divisions.  HEAT team initiatives have been extraordinarily successful in coordinating multi-agency efforts to both prevent health care fraud and enforce current anti-fraud initiatives.

As DOJ noted in September 2010, over the previous Fiscal Year, DOJ (including its 94 U.S. Attorneys’ Offices), HHS’ Office of Inspector General (HHS-OIG), and the Centers for Medicare and Medicaid Services (CMS), jointly accomplished the following:

  • Filed charges against more than 800 defendants.
  • Obtained 583 criminal convictions.
  • Opened 886 new civil health care fraud matters.
  • Obtained 337 civil administrative actions against parties committing health care fraud.
  • Through these efforts, more than $2.5 billion was recovered as a result of the criminal, civil and administrative actions handled by these joint agencies. 

President Obama’s FY 2011 budget request includes an additional $60.2 million in funding for the HEAT program.These funds will be used to establish additional teams and further fund existing investigations. Now, more than ever, it is imperative that you ensure that your Compliance Plan is both up-to-date and fully implemented.  Medicare providers are obligated to adhere to statutory and regulatory requirements and the government’s HEAT teams are aggressively investigating providers who fail to comply with the law.

Compliance Risk Number 2:  Zone Program Integrity Contractor (ZPIC) / Program SafeGuard Contractor (PSC) / Recovery Audit Contractor (RAC) Audits of Medicare Claims:

As you already know, private contractor reviews of Medicare claims are big business – one ZPIC was awarded a five-year contract worth over $100 million.  In 2011, we  should expect to see:

  • The number of ZPIC / PSC / RAC audits of Physician Practices, Home Health Agencies, Hospice Companies, DME Suppliers and Chiropractic Clinics will greatly increase in 2011.

  • The reliance of both contractors and the government on data mining will continue to grow.  Providers targeted will likely be based on utilization rates, prescribing practices and billing / coding profiles.

  • An increase in the number of Administrative Law Judge (ALJ) hearings in where ZPIC representatives choose to attend the hearing as a “participant.”  In these hearings, the ZPIC representative will likely aggressively oppose any arguments in support of payment that you present.

Are you ready for an unannounced / unanticipated site visit or audit?  When is the last time that you have conducted an internal review of your billing / coding practices?  Are you aware of the hidden dangers when conducting these reviews?  In 2011, your Compliance Officer may very well be your most important non-clinical staff member.  Physicians and other providers should work with their Compliance Officer to better prepare for the unexpected audit or investigation.

Compliance Risk Number 3: Electronic Medical Records:

Unfortunately, some early adopters of Electronic Medical Records (EMR) software are now having to respond to “cloning” and / or “carry over” concerns raised by ZPICs and Program SafeGuard Contractors (PSCs).  In a number of cases, these audits appear to be the result (at least in part) of inadequately designed software programs which generate progress notes and other types of medical records that do not adequately require the provider to document individualized observations.  Instead, the information gathered is often sparse and similar for each of the patients treated.  Take care before converting your practice or clinic to an EMR system.  Include your Compliance Officer in the selection and review process.

Compliance Risk Number 4:  Physician Quality Reporting Initiative (PQRI) Issues:

Under the Health Care Reform legislation passed last March. PQRI was changed from a voluntary “bonus” program to one in which penalties will be assessed if a provider does not properly participate.  As of 2015, the penalty will be 1.5% and will increase to 2.0% in 2016 and subsequent years. Additionally, questions about the use of PQRI date in “Program Integrity” targeting remain unanswered.  Once again, it is essential that your Compliance Officer provide guidance to your staff regarding this program and its potential impact.

Compliance Risk Number 5:  Medicaid Integrity Contractors (MICs)  and Medicaid Recovery Audit Contractors (MDRACs):

In recent months, we have seen a marked increase in the number of MIC inquiries and audits initiated in southern States.  Notably, the information and documentation requested has often been substantial.  Medicaid providers must now also contend with MDRACs.  As a result of health care reform, MDRACs are now mandatory in every State and are may initiate reviews and audits as soon as March 2011.   Compliance Officers should review their current risk areas and ensure that Medicaid coding and billing activities are actively monitored to better ensure statutory / regulatory adherance.

Compliance Risk Number 6:  HIPAA / HITECH Privacy Violations:

Failure to comply with HIPAA can result in civil and / or criminal penalties. (42 USC § 1320d-5).

  • Civil Penalties – A large retail drug store company was recently fined $2.25 million for failure to properly dispose of protected information.

  • Criminal Penalties – Earlier this year, a physician in Los Angeles, CA, was sentenced to four months in prison after admitting he improperly accessed individual health information.

As of mid-2010, there had been 93 breaches affecting 500 or more individuals.  The total number of individuals whose information was disclosed as a result of these breaches was estimated at over 2.5 million.  Out of the 93 breaches, 87 involved breach of hard copy or electronic protected health information (about 1/4 involved paper records and 3/4 involved electronic records. The vast majority of the 93 breaches involved theft or loss of the records.  Many of these thefts could have been avoided with appropriate security.  The government is serious about privacy and your practice, and in 2011 you will likely see increased HIPAA / HITECH enforcement.  Your clinic or health care business must take appropriate steps to prevent improper disclosures of health information.

Compliance Risk Number 7:  Increased Number of Qui Tams Based on Overpayments:

Section 6402 of the recent Health Care Reform legislation requires that all Medicare providers, (a) return and report any Medicare overpayment, and (b) explain, in writing, the reason for the overpayment.

This law creates a minefield for physicians and other Medicare providers.  First, providers have only 60 days to comply with the reporting and refund requirement from the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due, whichever is later.  Of course, the legislation does not actually explain what it means to “identify” an overpayment.

From a “risk” standpoint, this change is enormous.  Disgruntled employees try to file a Qui Tam  (“whistleblower”) lawsuit based on a provider’s failure to return one or more Medicare overpayments to the program in a timely fashion.  While the government may ultimately choose not to intervene in a False Claims Act case based on such allegations, a provider could spend a significant amount defending the case.  Providers should ensure that billing personnel understand the importance of returning any overpayments identified as quickly as possible.

Compliance Risk Number 8:  Third-Party Payor Actions:

Third-party (non-Federal)  payors are participating in Health Care Fraud Working Group meetings with DOJ and other Federal agents.  Over the last year, we have seen an increase in the number of “copycat” audits initiated by third-party payor “Special Investigative Units” (SIUs).  Once the government has announced the results of a significant audit, the third-party payor considers the services at issue and reviews whether it may have also been wrongly billed for such services.  If so, their SIU opens a new investigation against the provider.

Compliance Risk Number 9:  Employee Screening:

With the expansion of the permissive exclusion authorities, more and more individuals will ultimately be excluded from Medicare.  As we have seen, HHS-OIG is actively reviewing whether Medicare providers have employed individuals who have been excluded.  In one recent case, HHS-OIG announced that it had assessed significant civil monetary penalties against a health care provider that employed seven individuals who the provider “knew or should have known” had been excluded from participation in Federal health care programs. These individuals were alleged to have furnished items and services for which the provider was paid by Federal health care programs.  All providers should periodically screen their staff against the HHS-OIG and GSA databases to ensure that their employees have not been excluded from participation in Federal Health Benefits Programs.

Compliance Risk Number 10:  Payment Suspension Actions:

Last, but not least, we expect the number of payment suspension actions to increase in 2011.  In late 2010, Medicare contractors recommended to CMS that this extraordinary step be taken against providers in connection with a wide variety of alleged infractions.  Reasons given for suspending a provider’s Medicare number included, but were not limited to: (1) the provider failed to properly notify Medicare of a change in location, (2) the provider allegedly engaged in improper billing practices, and (3) the provider failed to fully cooperate during a site visit.

As each of these compliance risks reflect, health care providers are expected to fully comply with a wide myriad of Medicare and Medicaid statutory and regulatory requirements.  Moreover, the failure to meet these obligations can subject a provider to penalties ranging from suspension from the program to criminal prosecution.  Providers must take compliance seriously if they hope to thrive in 2011.

Robert W. Liles Healthcare AttorneyRobert W. Liles, J.D., represents healthcare providers and suppliers around the country in connection with Medicare and Private payor audits.  Liles Parker attorneys have extensive experience working on compliance related matters and defending providers in connection with allegations of one or more alleged violations of regulatory requirements. Should you have questions regarding these and other issues, give us a call for a free consultation.  We can be reached at 1 (800) 475-1906.

Provider Exclusion Screening / OIG Screening Practices are a Significant Risk

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Provider Exclusion Screening(December 11, 2010):  Has your practice conducted exclusion screening / OIG screening on all of you employees?Earlier this week, HHS-OIG announced that it had assessed significant civil monetary penalties against a health care provider that employed seven individuals who the provider “knew or should have known” had been excluded from participation in Federal health care programs. These individuals were alleged to have furnished items and services for which the provider was paid by Federal health care programs.  The provider paid $376,432 to resolve these allegations. As Lewis Morris, Chief Counsel to the Office of Inspector General stated:

“Providers self-disclosing such violations will ultimately pay lower settlement amounts. . . But in cases initiated by the government — such as this one — providers will, as a matter of course, be required to pay more to resolve the matter.”

As Mr. Morris further noted:

“This case illustrates yet again that OIG will pursue CMPs when providers have employed an excluded person for the furnishing of items or services paid for by Federal health care programs,”

Notably, this matter was referred to HHS-OIG for investigation by the State Medicaid Fraud Control Unit (MFCU).

I.  Lessons to be Learned When Performing Exclusion Screening / OIG Screening:

This case illustrates a number of important lessons for all health care providers who participate in Federal Health Benefits Program, regardless of size. These lessons include:

OIG Screening employees is easy and quick: It takes very little effort for a provider to screen current and prospective employees against HHS-OIG list of excluded parties and GSA’ s list of parties who have been debarred from participation in Federal contracts. Notably, the failure to screen employees can be quite costly.

No mention of actual fraud or overpayment was mentioned in this case — Nevertheless, the employment of excluded individuals was found to be quite serious by HHS-OIG:   HHS-OIG won’t hesitate to pursue civil monetary penalties against a provider who employs excluded individuals, despite the fact that no mention is made of any wrongful billings. Regular screenings of your employees should be made to ensure that none of your employees have been excluded from participation.

The government is serious about self-disclosing problems: HHS-OIG’s Chief Counsel went out of his way to point out that provider’s who self-disclose will ultimately pay a lower amount of damages to the government. While we recognize the government’s preference in this regard, should you identify a problem, you should contact legal counsel before making a self-disclosure. HHS-OIG’s voluntary disclosure protocol has a number of requirements that should be fully assessed prior to deciding to make a disclosure under the program. To be clear, if you owe money to the government, you must pay it back. The issue to be resolved is how to go about returning any monies to which you are not entitled. Depending on the circumstances, a provider may be better off working with their Medicare Administrative Contractor to resolve a problem. In other cases, HHS-OIG’s protocol may be the best option. Every situation is different and should be carefully assessed before action is taken.

Federal and State law enforcement teams are coordinating their actions and findings: Notably, these violations were first identified by a State MFCU who then contacted HHS-OIG. Similarly, we are seeing State Medical Boards advising ZPICs of actions they are taking against licensed health care providers. In several cases, the State Medical Board found that the provider was either not providing adequate supervision over subordinate Nurse Practitioners and Physician Assistants. The ZPIC has then used this as a basis to argue that the claims did not qualify for Medicare coverage.

In summary, health care providers should continually be reviewing their compliance efforts to ensure that basic mistakes such as the ones in this case (failure to properly screen employees) do not occur.

Our attorneys represent health care providers around the country in connection with compliance issues.   Please feel free to contact us for a complimentary consultation.  We can be reached at: 1 (800) 475-1906.

Health Care Reform- The Independent Payment Advisory Board (IPAB) And Its Implications on Health Care Providers

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IPAB(September 14, 2010): As one of the most controversial provisions in the recently enacted health care reform legislation, Congress created the IPAB – a board that is independent from Congress and the United States Department of Health and Human Services (“HHS”) as a mechanism to control Medicare – and potentially all – health care expenditures. Specifically, beginning January 2015, for any year in which the Chief Actuary of the Centers for Medicare and Medicaid Services (“Chief Actuary”) projects that the increase in per capita Medicare expenditures will exceed a defined target level, the IPAB is to develop a detailed proposal to scale back Medicare expenditures for that year. With limited exceptions, unlike the Medicare Payment Advisory Committee, these “recommendations” become binding unless Congress affirmatively acts in an expedited fashion and with a super majority vote to prevent them from becoming law. Additionally, the IPAB is to make non-binding recommendations on controlling expenditures for non-Federal health care programs.

The IPAB provision was developed because the administration and certain members of Congress were concerned that Congress did not have the political will to impose fiscal discipline upon itself. The IPAB has the potential to be a significant player in controlling health care costs overall. However, because some believe that it usurps Congress’ authority, it is also extremely controversial. Complicating the process is the fact that certain provider classes, such as hospitals, are exempted from cost reductions in the IPAB process during the early years, thus placing greater pressure to reduce expenditures for other provider and payor classes. This provision, coupled with a number of incentives in the health reform legislation to change the manner in which providers deliver care, will place strong incentives for the health care community to develop new methods to constrain cost increases without adversely affecting care. These include such mechanisms as coordinating care through such vehicles as Accountable Care Organizations and Medical Homes, bundling of services, and enhanced methods of disease management for high cost patients, as well the use of electronic medical records and more frequent use of email between practitioners and their patients.

Health care entities seeking advice on strategies for adapting to the new health care reform legislation should contact Michael Cook at (202) 298-8750. Also, Mr. Cook has authored a more detailed article on the IPAB and its likely impact on health care entities that is scheduled to be published in October issue of the American Health Lawyers Association Journal on Health and Life Sciences Law. Once that article is published, this website will include an abstract and a link to the article. Additionally, Mr. Cook will be presenting at the Healthcare Reform: Dealing with Hurdles and Building up Success Conference, sponsored by GTCbio, on November 8 and 9, 2010, in Washington, DC.

Questions About the IPAB? Call Michael Cook, Healthcare AttorneyLiles Parker attorneys represent health care providers in connection with a wide variety of health care projects.  Michael Cook has extensive experience as a health lawyer and is a nationally-recognized attorney.  For more information, please contact Mr. Cook.  He can be e-mailed at: mcook@lilesparker.com  Alternatively, call Mr. Cook for a complimentary consultation at: 1 (800) 475-1906.

HHS-ONC Names EHR Certification Bodies

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Have You To Ensure the Your System Qualifies for EHR Certification?(September 1, 2010):  Earlier this week, the Office of the National Coordinator for Health Information Technology (ONC), an organization within the Office of the Secretary of the Department of Health and Human Services (HHS), has named two entities as EHR Certification Bodies.  They include:

The Certification Commission for Health Information Technology (CCHIT), Chicago, Illinois, and  Drummond Group Inc. (DGI), Austin, Texas.

These entities are the first technology review bodies that have been authorized to test and certify EHR systems for compliance with the standards and certification criteria that were issued by HHS earlier this year. As HHS’ Press Release reflects:

Certification of EHRs is part of a broad initiative undertaken by Congress and President Obama under the Health Information Technology for Economic and Clinical Health (HITECH) Act, which was part of the American Recovery and Reinvestment Act (ARRA) of 2009.  HITECH created new incentive payment programs to help health providers as they transition from paper-based medical records to EHRs.  Incentive payments totaling as much as $27 billion may be made under the program.Individual physicians and other eligible professionals can receive up to $44,000 through Medicare and almost $64,000 through Medicaid.  Hospitals can receive millions.

To qualify for the incentive payments, providers must not only adopt, but also demonstrate meaningful use of, certified EHR systems.  The law envisions that defined meaningful use requirements will help ensure that the patient and provider benefits of EHRs are realized.  Initial meaningful use criteria were defined in a final rule issued by the Centers for Medicare & Medicaid Services (CMS) on July 28.”

With these appointments, EHR certification vendors will be able to have their programs certified as meeting criteria to support the “Meaningful Use” which are now required.

Should you have questions regarding these or other health law issues, you should contact your attorney or feel free to call one of the attorneys at Liles Parker.  For a free initial consultation, call: 1 (800) 475-1906.

Medicare Fraud Strike Force Operation Leads to Charges against 94 Defendants, including 4 in South Texas

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Medicare Fraud Strike Force(July 17, 2010): Yesterday, the Department of Justice (DOJ) announced charges against 94 physicians, medical assistants, and health care company owners and executives in connection with alleged false Medicare claims amounting to more than $251 million.  24 defendants from Miami account for approximately $103 million of that amount.  Four defendants were charged in Houston for their alleged roles in a $3 million scheme to submit fraudulent claims for durable medical equipment (DME).  Other arrests were made in Baton Rouge, Brooklyn, and Detroit.

The offenses charged include conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes, and money laundering.  The charges are based on a variety of fraud schemes, including physical therapy and occupational therapy schemes, home health care schemes, HIV infusion fraud schemes and durable medical equipment (DME) schemes.

Announcing the arrests, Attorney General Eric Holder said, “With today’s arrests, we’re putting would-be criminals on notice: Health care fraud is no longer a safe bet.  It’s no longer easy money.  If you choose to engage in health care fraud, you will be found; you will be stopped; and you will be brought to justice.”

The operation was conducted by the joint DOJ-HHS Medicare Fraud Strike Force, multi-agency teams of federal, state, and local investigators designed to combat Medicare fraud through the use of Medicare data analysis techniques and an increased focus on community policing.  Strike Force teams are operating in seven cities in the United States: the five aforementioned cities, Los Angeles, and Tampa.  AG Holder noted that the ongoing Strike Force initiative in South Florida has resulted in the indictments of 810 organizations and individuals since March 2007 and uncovered $1.85 billion in improperly billed claims.

The Strike Forces are a part of Health Care Fraud Prevention and Enforcement Action Team (HEAT), which is made up of top level law enforcement and professional staff from the DOJ and HHS and their operating divisions.  HEAT is dedicated to joint efforts across government to both prevent fraud and enforce current anti-fraud laws around the country.

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

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