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CBRs for Spinal Orthoses (CBR201803): What Do You Need to Know?

CBR201803(April 12, 2018): The Centers for Medicare & Medicaid Services (CMS) utilizes a variety of private contractors to process Medicare claims and conduct both administrative and program integrity audits of claims submitted by healthcare providers and suppliers.  At the present time, CMS has contracted with eGlobalTech (eGT) to analyze data and prepare “Comparative Billing Reports (CBRs) of various services and claims billed to the Medicare program. eGT works directly with another CMS contractor, Palmetto GBA (Palmetto), to conduct the statistical work that is necessary to complete the CBR process. The latest report to be issued by eGT is CBR201803.

I.  eGT is Currently Distributing CBRs to Spinal Orthoses Suppliers:

The most recent CBR review initiated by eGT has been focused on Spinal Orthoses Suppliers. On April 2, 2018, eGlobalTech sent out letters to affected suppliers around the country advising them of the initiation of CBR201803: Spinal Orthoses Suppliers. This CBR is focused on orthotic suppliers that have billed the Medicare Part B program for both off-the-shelf and custom-fitted prefabricated spinal orthoses (commonly referred to as “braces”[1]) in claims with dates of service from October 1, 2016 to September 30, 2017.[2]  CBR201803 focuses on the following Healthcare Common Procedure Coding System (HCPCS) codes:

Prefabricated Custom-Fitted Spinal Orthoses.[3]

L0627: Lumbar orthosis, sagittal control, with rigid anterior and posterior panels

L0631: Lumbar-sacral orthosis, sagittal control, with rigid anterior and posterior panels

L0637: Lumbar-sacral orthosis, sagittal-coronal, with rigid anterior and posterior panels

Prefabricated Off-the-Shelf-Fitted Spinal Orthoses.[4]

L0642: Lumbar orthosis, sagittal control, with rigid anterior and posterior panels

L0648: Lumbar-sacral orthosis, sagittal control, with rigid anterior and posterior panels

L0650: Lumbar-sacral orthosis, sagittal-coronal, with rigid anterior and posterior panels

 II.  The Improper Billing of Medicare Claims for Spinal Orthoses Has Been a Long-Standing Problem for CMS:

The initiation of CBR201803 is merely the government’s most recent attempt to address long-standing problems that have repeatedly been identified in connection with the coverage, coding and billing of spinal orthoses by authorized Medicare suppliers.  As eGT has noted on its website (and in correspondence with affected suppliers), Lumbar-Sacral Orthoses have been on the government’s Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMSPOS) list of “Top 20 Service Types with Highest Improper Payments” as far back as 2013. In fact, as set out in the most recent assessment of improper billing data by the Department of Health and Human Services (HHS), entitled “2017 Medicare Fee-for-Service Supplemental Improper Payment Data,” the estimated improper error rate for Lumbar-Sacral Orthoses was 52.5%. The magnitude of this problem is easily seen when compared with the overall improper payment rate for ALL Medicare claims which has been estimated at 9.5%.  Finally, it is worth noting that the HHS Office of Inspector General (OIG) identified concerns with the billing of orthotic braces in both its 2016 and 2017 Work Plans.[5]

III.  How Were Spinal Orthoses Suppliers Categorized this Review?

At last count, more than 6,000 qualified DME suppliers billed Medicare Part B for spinal orthoses under one of the six HCPCS codes outlined above.  In an effort to define peer groups for general comparison purposes, DMEPOS suppliers and physicians / non-physicians were assigned to a specialty peer group, based on their assigned Medicare Specialty Code and whether or not the provider / supplier was likely to have orthotist training The following categories were used by eGT:

 Peer Group#1:  DMEPOS Supplier Not Likely to Have Orthotist Training 
Medicare Specialty CodeMedicare Provider / Supplier Type Description
A6Medical Supply Co. with Respiratory Therapist
B1Oxygen Supplier
54Medical Supply Co. — Other
58Medical Supply Co. with Registered Pharmacist
63Portable X-Ray Supplier
87All Other Suppliers
 Peer Group#2:  DMEPOS Supplier Likely to Have Orthotist Training 
Medicare Specialty CodeMedicare Provider / Supplier Type Description
B3Medical Supply Co. with Pedorthic Personnel
51Medical Supply Co. with Certified[6] Orthotic Personnel
52Medical Supply Co. with Certified Prosthetic Personnel
53Medical Supply Co. with Prosthetic / Orthotic Personnel
 Peer Group#3:  Physician / Non-Physician Not Likely to Have Orthotist Training 
Medicare Specialty CodeMedicare Provider / Supplier Type Description
A0Hospital
A5Pharmacy
01General Practice
02General Surgery
04Otolaryngology
05Anesthesiology
08Family Practice
11Internal Medicine
16Obstetrics / Gynecology
19Oral Surgery (Dentists Only) (LLP)
30Diagnostic Radiology Head
40Hand Surgery
41Optometry (LLP)
48Podiatry (LLP)
66Rheumatology
84Preventative Medicine
93Emergency Medicine
94Interventional Radiology
99Unknown Physician Specialty
 Peer Group#4:  Physician / Non-Physician Likely to Have Orthotist Training 
Medicare Specialty CodeMedicare Provider / Supplier Type Description
B2Pedorthic Personnel
12Osteopathic Manipulative
13Neurology
14Neurosurgery
20Orthopedic Surgery
23Sports Medicine
25Physical Medicine and Rehabilitation
35Chiropractic (LLP)
55Individual Orthotic Personnel
56Individual Prosthetic Personnel
57Individual Prosthetic / Orthotic Personnel
65Physical Therapist in Private Practice
67Occupational Therapist in Private Practice
70Single or Multispecialty Clinic or Group Practice
72Pain Management

CBR contractors (eGT and Palmetto) then calculated statistics for each of the separate peer groups.  As the categories reflect, the CBR contractors separated suppliers from providers and then further stratified the two primary groups by whether or not they were “likely” to have orthotist training.  While the CBR contractors expressly recognized that an individual may be specially trained to custom fit beneficiaries with a medically necessary orthosis, for the purposes of this review, they still ultimately categorized both suppliers and providers by Medicare specialty code based on the contractors’ assessment of whether a specific specialty was likely to have specialized orthotist training.[7] Unfortunately, there are likely a number of instances where eGT’s presumption of whether a supplier has orthotist training may be just plain wrong.

IV.  Why Was My DME Company Included in this Review?

A Comparison of Your Billing Percentages for Each of the Six HCPCS Categories of Spinal Orthoses.  As a first step, the CBR contractors compared each supplier’s billing patterns, by HCPCS code, with those of other suppliers in their peer specialty group.  To the extent that a supplier’s utilization ratios were aberrant when compared to the ratios of their peers, the supplier was more likely to be sent a CBR.

The Percentage of Allowed Services Defined as Custom-Fitted.  Another primary assessment conducted by the CBR contractors is whether the percentage of spinal orthoses submitted for payment by a supplier was billed as a “custom fitted” brace.  The percentage of custom-fitted braces billed by a specific supplier was compared to the percentage billed to their DME MAC contractor by other suppliers in their respective peer specialty group.  Each supplier’s percentage of custom-fitted brace billings were also compared to the national average.  If a specific supplier’s percentage was deemed to be “significantly higher” than one of these peer groups, it was one step closer to being sent a CBR.

The Percentage of Allowed Services Submitted without a Visit to the Referring Provider within 90 Days of the DMEPOS Service Date.  Another factor analyzed by the CBR contractors is whether a significant percentage of beneficiaries fitted (either custom-fitted or off-the-shelf) for a brace by a specific supplier had not been seen by their referring provider within 90 days of the DMEPOS service date (the date that the spinal orthosis order was filled by the DMEPOS supplier).  Simply stated, red flags are going to be raised if you fill a prescription / order for a brace and the patient hasn’t seen his / her referring provider within the previous 90 days.[8]  Once again, the CBR contractor compared each specific supplier’s percentage to the percentage billed to their DME MAC contractor by other suppliers in their respective peer specialty group.  Each supplier’s percentage of custom-fitted brace billings were also compared to the national average.

The Average Allowed Charges per Beneficiary for the One-Year Period.  The CBR contractors also examined the average allowed charges of each supplier billed to Medicare per beneficiary and compared this number to average allowed charges of other suppliers in their peer specialty group.  If a supplier’s average allowed charged were significantly higher than that of their peers, it was more likely to be issued a CBR.

V.  The Results of an Assessment by eGT:

After reviewing the utilization and billing practices of each spinal orthoses supplier, if a specific supplier’s measures were considered to be Significantly Higher than their peers in at least one of the three factors discussed above, the supplier was issued a CBR.

  1. Supplier is significantly higher than at least one of its peer groups on at least one of the measurements studied;

  2. Supplier is near or above the 45th percentile in allowed charges ($5,000); and

  3. Supplier had at least ten beneficiaries.

VI. Responding to a CBR:

If your company received a CBR, you likely noted the fact that eGT may expressly state in its reports that “no reply is necessary.”   While that may technically be the case, after handling CBRs for many years, our experience (and the collective experience of our associates) has been that your organization is much more likely to be audited if you do not respond and address any misconceptions or incorrect positions about your billing pattern stated by the contractor in its report.

To be clear, if you receive a CBR, you need to immediately take steps to validate or invalidate eGT’s findings.  If, in fact, your billing practices have been improper, you have an affirmative obligation to take steps to remedy any deficiencies. Additionally, the risk issues identified by eGT should be incorporated into your existing Compliance Program and should be taken into account when you perform periodic internal claim audits and monitoring functions.

VII.  Get Ready for Follow-Up Audits by ZPICs / UPICs!

Although your claims haven’t yet been audited, if you received one of these reports an audit of your claims may be right around the corner.  While it has been our experience that responding to a CBR is helpful, (and may reduce your chances of having a prepayment or postpayment Zone Program Integrity Contractor (ZPIC) or Uniform Program Integrity Contractor (UPIC) audit) if eGT has based its assessment on incorrect assumptions, there are no guarantees that a CMS program integrity contractor won’t still choose to initiate an audit of your claims for one or more braces billed to Medicare.

As a CBR recipient, you need to recognize that your organization has been identified as an outlier and there is significant likelihood that your spinal orthoses claims will be audited in the near future by a ZPIC or a UPIC, especially if you have not taken steps to identify and correct any misconceptions about your billing practices that the CBR contractor has made.

Now, more than ever, it is essential that suppliers review their documentation and ensure that they are fulling complying with all applicable requirements to show that each brace was medically necessary, fully documented, properly coded and billed.  For instance, as set forth under the Medicare Program Integrity Manual:

“All DMEPOS items…require detailed written orders prior to billing. Detailed written orders may take the form of a photocopy, facsimile image, electronically maintained, or original ‘pen-and-ink’ document. The written order must be sufficiently detailed, including all options or additional features that will be separately billed or that will require an upgraded code. The description can be either a narrative description (e.g., lightweight wheelchair base), or a brand name/model number. All orders must clearly specify the start date of the order.”

The failure to fully document the delivery of a brace is another significant risk faced by spinal orthoses suppliers.  ZPICs and UPICs routinely refuse payment citing this reason for denial.  As discussed in the Medicare Program Integrity Manual:

“Suppliers are required to maintain proof of delivery documentation in their files. Proof of delivery documentation must be maintained in the supplier’s files for 7 years (starting from the date of service).” 

Pursuant to 42 C.F.R. Sec. 424.57(c)(12), proof of delivery:

Must be responsible for the delivery of Medicare covered items to beneficiaries and maintain proof of delivery. (The supplier must document that it or another qualified party has at an appropriate time, provided beneficiaries with necessary information and instructions on how to use Medicare-covered items safely and effectively).”[9]

VIII.  Potential Liability for Non-Compliance:

After receiving a CBR, you may soon find that your supplier claims will be subject to  prepayment or postpayment audit by a ZPIC or UPIC. Alternatively, you may merely receive an “Additional Document Request” (ADR) from a CMS contractor.  ADRs aren’t uncommon and most suppliers have received multiple such requests since becoming a participating supplier in the Medicare program.  Nevertheless, in recent years, ADRs have taken on a new level of importance. ZPICs and UPICs aren’t hesitating to place a supplier on 100% prepayment review if the documentation submitted in response to an ADR results in the denial of one or more claims.

Similarly, if a supplier is placed on prepayment review and a significant percentage of your claims are denied when the associated supporting documentation is submitted, there is much higher risk that your claims will be subjected to a postpayment audit.  In some cases, a high error rate identified in a prepayment or postpayment audit has led to the suspension of Medicare supplier’s billing privileges. Unfortunately, this “snowball effect” of cumulative adverse administrative actions may not be over. In accordance with 42 C.F.R. Sec. 424.57(e), a CMS contractor may recommend to the agency that your billing privileges are “revoked” if a supplier is found not meet applicable conditions of payment:

“Failure to meet standards. CMS will revoke a supplier’s billing privileges if it is found not to meet the standards in paragraphs (b) and (c) of this section. (The revocation is effective 15 days after the entity is sent notice of the revocation, as specified in §405.874 of this subchapter.)” 

IX. Conclusion:

Despite what you may have been told, CBRs are far from benign.  If a provider or supplier has received a CBR (such as, but not limited to CBR201803), it may be a harbinger of future administrative audits or in more serious cases, a possible civil and / or criminal investigation of your billing practices.  While every case is different, if the CBR contractor’s CBR findings (as outlined in their letter to your organization) are incorrect, it is typically in your best interests to correct the record.  Our attorneys are experienced in assessing these matters and can assist your organization is putting its best foot forward when responding to a CBR, the receipt of an ADR, prepayment review or postpayment audit.  Give us a call for a free consultation.  1 (800) 475-1906.

CBR201803Robert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at the law firm of Liles Parker, Attorneys & Clients at Law.  Robert represents providers and suppliers around the country in ZPIC / UPIC audits, Medicare suspension actions and revocation cases.  For a complimentary consultation, please call: 1 (800) 475-1906.

[1] As set out in the Chapter 15, Section 130 of the Medicare Benefit Policy Manual, braces are “rigid and semi-rigid devices which are used for the purpose of supporting a weak or deformed body member or restricting or eliminating motion in a diseased or injured part of the body.”

[2] eGT’s analysis is based on a snapshot of claims in the Integrated Data Repository as of January 24, 2018.

[3] As set out in the Joint DME MAC Publication, a “Custom-Fitted Orthosis,” is defined as:

  • Devices that are prefabricated.
  • They may or may not be supplied as a kit that requires some assembly. Assembly of the item and/or installation of add-on components and/or the use of some basic materials in preparation of the item does not change classification from OTS to custom fitted.
  • Classification as custom fitted requires substantial modificationfor fitting at the time of delivery in order to provide an individualized fit, i.e., the item must be trimmed, bent, molded (with or without heat), or otherwise modified resulting in alterations beyond minimal self-adjustment.
  • This fitting at delivery does require expertise of a certified orthotist or an individual who has equivalent specialized training in the provision of orthosis to fit the item to the individual beneficiary.

[4] Off-the-shelf (OTS) orthotics are defined as:

  • Items that are prefabricated.
  • They may or may not be supplied as a kit that requires some assembly. Assembly of the item and/or installation of add-on components and/or the use of some basic materials in preparation of the item does not change classification from OTS to custom fitted.
  • OTS items require minimal self-adjustmentfor fitting at the time of delivery for appropriate use and do not require expertise in trimming, bending, molding, assembling, or customizing to fit an individual.
  • This fitting does not require expertise of a certified orthotist or an individual who has equivalent specialized training in the provision of orthoses to fit the item to the individual beneficiary.

[5] In both its 2016 and 2017 Work Plans, OIG noted that it would be reviewing the reasonableness of Medicare payments for orthotic braces when compared to the amounts paid by other non-Medicare payers..

[6]A “certified” individual is someone who is certified by either the American Board for Certification in Orthotics and Prosthetics, Inc., or the Board for Orthotist/Prosthetist Certification.

[7] As set out in Appendix C of the Durable Medical Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) Quality Standards, “Individuals supplying the item(s) set out in this appendix must possess specialized education, training, and experience in fitting, and certification and/or licensing.”  While the CBR contractors expressly recognized that an individual specially trained to custom fit beneficiaries that have a medical need for an orthosis.

[8] To determine this, the CBR contractor checks to see if the referring provider billed for a Part B visit within 90 days of the service date of the DMEPOS claim.

[9] https://www.gpo.gov/fdsys/pkg/CFR-2005-title42-vol2/pdf/CFR-2005-title42-vol2-sec424-57.pdf

 

Medicare Chiropractic Audits are Increasing!

Medicare Chiropractic Audits(June 5, 2017):   Despite the fact that only three treatment services are covered by Medicare, the number of Medicare chiropractic audits conducted by the Department of Health Human Services (HHS), Office of Inspector General (OIG), has remained high over the last decade and is anticipated to grow throughout 2017 and 2018.  As you are aware, the Department of Health and Human Services (HHS), Office of Inspector General (OIG), concluded that in Fiscal Year 2016 the Improper Payment Rate for chiropractic services was 46.0%.  Even more alarming is the fact that OIG has found that the Improper Payment Rate of chiropractic Part B Medicare claims was the highest of any Part B service type in both FY 2015 and FY 2016.[1]

I.   Medicare Chiropractic Audits are Anticipated to Intensify in FY 2017 and FY 2018:

The already-active Medicare audit landscape facing chiropractors is likely the proverbial “calm before the storm.”  When you think of “Medicare Access and CHIP Reauthorization Act of 2015” (MACRA),[2] it’s likely you first think of the statute’s Quality Payment Program provisions which are intended to tie Medicare’s payments to the quality of the medical being provided.   Unfortunately, the documentation of chiropractic services have the unique distinction of being the only Part B service that are expressly address in MACRA.  A detailed discussion of the documentation requirements for chiropractic services under Medicare Part A will be addressed in a separate article.  The bottom line is simple – chiropractors participating in the Medicare Part B program are strongly encouraged to have a comprehensive assessment of their services conducted as soon as possible.  An overview of the current audit landscape is discussed below.

II.   Almost All Part B Medicare Chiropractic Audits Find Documentation Problems:

As set out in OIG’s Improper Payment Report for FY 2016, when examining the 46% of chiropractic services that were denied, the Centers for Medicare and Medicaid Services (CMS) found that  98.4% of the chiropractic denied claims were denied because of NO DOCUMENTATION or INSUFFICIENT DOCUMENTATION.  We believe that this is due, in large part, to the fact that the clinical reviewers employed by a Zone Program Integrity Contractor (ZPIC) or a Medicare Administrative Contractor (MAC) to audit your chiropractic claims (primarily Registered Nurses), aren’t really qualified to conduct these reviews. Sure, they can read Medicare’s guidelines governing medical necessity, coverage, documentation, coding and billing – but that doesn’t mean that they truly understand what constitutes a “subluxation” or that they can recognize that the patient’s condition warrants manual manipulation. The vast majority of medical reviewers examining your claims have little or no substantive knowledge and training in the field of chiropractic care.  Therefore, why are you surprised that the ZPIC reviewer is now alleging that 80$ – 100% of the claims you have billed to Medicare do not qualify for coverage or payment?

III.   Medicare’s Position with Respect to “Medical Necessity”:

Under Medicare, the definition of “medical necessity” is generally defined under Title XVIII of the Social Security Act, Section 1862(a)(1)(a):  As the statute provides:

“No payment may be made under Part A or Part B for expenses incurred for items or services which are not reasonable and necessary for the diagnosis or treatment of necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member.”

Despite the fact that chiropractors are recognized as physicians by Medicare, CMS has steadfastly refused to cover most of the traditional care and treatment services that are offered by licensed chiropractors around the country.  Medicare Part B only covers treatment by means of manual manipulation of the spine that is used to correct a subluxation (i.e. spinal manipulation). Moreover, the coverage policies developed by CMS and its contractors make it clear that the agency has restricted the definition of what is considered to be “medically necessary” chiropractic care to only include spinal manipulation services that are active or corrective in nature.

IV.   Maintenance Therapy is Not Covered by Medicare:

CMS has essentially taken the position that maintenance therapy does not qualify as medically necessary care and therefore does not qualify for coverage and payment.   As set out in the Medicare Benefit Policy Manual, Section 30.5.B:

Under the Medicare program, Chiropractic maintenance therapy is not considered to be medically reasonable or necessary, and is therefore not payable. Maintenance therapy is defined as a treatment plan that seeks to prevent disease, promote health, and prolong and enhance the quality of life; or therapy that is performed to maintain or prevent deterioration of a chronic condition. When further clinical improvement cannot reasonably be expected from continuous ongoing care, and the chiropractic treatment becomes supportive rather than corrective in nature, the treatment is then considered maintenance therapy.  (emphasis added).

The fact that chiropractic care used to “prevent deterioration of a chronic condition” remains non-covered is especially frustrating in light of the 2013 settlement in the case Jimmo v. Sebelius.   Earlier this year, the court approved a Corrective Statement that is to be used by CMS to affirmatively discontinue the use of an “Improvement Standard” for Medicare coverage.  Unfortunately, chiropractors and dentists were specifically carved out of this new rule by CMS.  As CMS noted in its January 14, 2014 guidance intended to clarify the agency’s new position after the settlement in Jimmo v. Sebelius, Pub. 100-02 Medicare Benefit Policy.  Transmittal 179 expressly provides that:

Chiropractors and doctors of dental surgery or dental medicine are not considered physicians for therapy services and may neither refer patients for rehabilitation therapy services nor establish therapy plans of care. (emphasis added).

V.   The Types of Chiropractic Services Covered by Medicare are Extremely Limited.

Under Medicare, the types of chiropractic services that are eligible for coverage and treatment are limited to three chiropractor-administered services.  To ensure that claims are processed in in an orderly and consistent fashion, Medicare employs the Healthcare Common Procedure Coding System (HCPCS) developed by the American Medical Association (AMA).  Level I of this standardized coding system is comprised of Current Procedural Terminology (CPT) codes that the AMA maintains.  The CPT uniform coding system consists of descriptive terms and identifying codes that are used primarily to identify medical services and procedures furnished by physicians and other health care professionals.  The CPT codes of the three chiropractic manipulation services that may qualify for payment by Medicare include the following:

98940: Chiropractic Manipulative Treatment (CMT); spinal, one or two regions;

98941: CMT; spinal, three to four regions; and

98942: CMT; spinal, five regions.[3]

To add insult to injury, even though a number of Medicare procedures may be within a licensed chiropractor’s state-defined scope of practice, with the exception of the three services described above, no other diagnostic or therapeutic service furnished by a licensed chiropractor, or under his / her order, is considered a covered service under Medicare.  We have handled a number of cases in recent years where the medical necessity of these manipulative treatments was never challenged by the auditing ZPIC.  Nevertheless, almost all of the otherwise-covered chiropractic claims were denied because the CMS program integrity contractor concluded that the services were improperly documented.  The primary reasons that these claims have been denied have been documentation-related.

VI.   Medicare’s Position with Respect to the Documentation of Chiropractic Services:

When providing one of these three covered services, it is essential that you carefully review Medicare’s current documentation requirements. The documentation mandates described under MACRA are not the necessarily the litmus test you should be applying.  The statutory requirements mandated under MACRA have been reviewed and interpreted by CMS so that appropriate regulations and policies implanting any applicable statutory provisions have been developed.  Additionally, as described in Section IX below, MACs are given some latitude in further defining what they require in terms of documentation.

VII.   Risks in Using a “Travel Card” if Your Practice is Subjected to a Chiropractic Audit:

Chiropractic services primarily documented with a “travel card” are likely to be denied if you are audited by a CMS program integrity contractor. Although it has been a while since we have defended a case of this type, they still occasionally arise.  For decades, travel cards have been used by chiropractors to document the care and treatment services they have provided.  Travel cards were easy and could provide an excellent picture of whether a patient was progressing.  While additional information (such as x-rays and other diagnostic studies) were also recorded in the patient’s medical record, the travel card was, and still is, utilized in a number of practices as a documentation tool.  Unfortunately, if your Medicare claims are ever audited by a ZPIC or MAC, you are likely to face a multitude of problems if you are relying on a travel card to document your services.  Unfortunately, CMS contractors (such as ZPICs and MACs)) don’t know how to read a travel card.  While there may be isolated exceptions to this statement, in the cases we have handled over the last decade, none of the auditors working for a ZPIC or for the MAC had been trained on how to read and interpret a travel card.  Additionally, most travel cards still in use don’t even come close to documenting all of the various points are set out in a MAC’s LCD.  As a result, when auditing chiropractic claims billed to Medicare, they almost always found a 100% error rate.

VIII.   Are Applicable Documentation Requirements Met if We Utilize Both a Travel Card and SOAP Note to Record the Chiropractic Services Provided?

Efforts to address the travel card problem by also documenting their services in a SOAP note format[4] have often been unsuccessful. Many experienced chiropractors love travel cards.  Their ease of use and ability to provide a quick, accurate picture of the patient’s prior care and progress are invaluable in a busy practice.  Recognizing that both government and private payors now require that a more detailed discussion of the patient’s care be documented, some chiropractors also document the care provided in a SOAP note format.  Unfortunately, in the cases we have seen, this approach typically fails to fully document the points that are now required by governmental and private payors alike.

IX.   Basic Rule for Documentation Under the Social Security Act:

Medicare’s documentation requirements are based on the fundamental obligation set out in Section 1833(e) of the Social Security Act which states that:

“no payment shall be made to any provider of services or other person under this part unless there has been furnished such information as may be necessary in order to determine the amounts due such provider or other person under this part for the period with respect to which the amounts are being paid or for any prior period.”  (emphasis added).

X.   Complying with Medicare’s Documentation Requirements:

If you intend to bill Medicare for one of the three manual manipulation services set out above, it is essential that you regularly check to ensure that your documentation practices fully comply with Medicare’s requirements. When is the last time you reviewed the documentation and coverage requirements issued applicable for your jurisdiction?  MACs have been delegated the responsibility for developing Local Coverage Determination (LCD) guidance by the Secretary for the Department of Health and Human Services (HHS) under section 1395y(a)[5] of the Social Security Act.  This responsibility also includes the promulgation of reasonable and necessary coverage determinations.[6] Therefore, in the absence of applicable National Coverage Determination (NCD) guidance,[7] MACs are responsible issuing LCD guidance.  LCDs must adhere with applicable requirements set out under the Social Security Act, federal regulations, CMS rulings, Medicare Manual Provisions, and other forms of guidance.

An overview of the coverage and documentation requirements that must be met when providing Medicare-covered chiropractic services is set out in the Section 240.1. of the Medicare Benefit Policy Manual.  Additionally, the Medicare Program Integrity Manual (PIM), mandates that any LCD that is promulgated must reflect local medical practice within the contractor’s jurisdiction and must be supported by substantial medical evidence.[8]  A CMS contractor must ensure that LCDs are consistent with applicable Medicare statutory provisions, regulations, NCDs, and other federal guidance.[9]

When developing an LCD, MACs also consider medical literature, the advice of medical societies and consultants, public comments, and comments from the Medicare provider community.[10]  Like NCDs, an LCD’s coverage guidance on whether an item is medically “reasonable and necessary” means that the item is safe and effective and not experimental or investigational as determined by the Food and Drug Administration (FDA) approval process.[11]  Working within these parameters, it is important to recognize that the specific requirements for documenting your chiropractic claims may vary from one MAC region to another.

For instance, National Government Services (NGS) has issued an LCD titled “Chiropractic Services – L27350.” [12]   For chiropractic services to be medically indicated in the region managed by NGS:

“The patient must have a significant health problem in the form of a neuromusculoskeletal condition necessitating treatment, and the manipulative services rendered must have a direct therapeutic relationship to the patient’s condition and provide reasonable expectation of recovery or improvement of function. The patient must have a subluxation of the spine as demonstrated by x-ray or physical exam. (CMS Publication 100-02, Medicare Benefit Policy Manual, Chapter 15, Section 240.1.3).”

Under its section titled Limitations, NGS essentially set out the coverage requirements that must be met in order for chiropractic services to qualify for coverage and payment.  Moreover, ICD codes that support medical necessity are laid out in the guidance.  Should you code a chiropractic service with a diagnosis code that does not qualify for coverage, edits in the claims processing programs run by the MAC will automatically identify and deny the claims.

The documentation requirements set out in the LCD issued by NGS are typical of what you are likely to find in your particular region.  Nevertheless, you cannot assume that they are the same.  Check the LCD documentation requirements that have been published by your MAC.  The documentation requirements that are applied by NGS and other MACs are quite extensive.  A chiropractic audit of your Medicare claims will heavily rely on the coverage requirements set out in the LCD covering your region.

XI.   Elements to Review When Assessing Your Claims in Advance of a Medicare Chiropractic Audit:

The best time to assess your compliance with applicable Medicare medical necessity, coverage, documentation, coding and billing requirements is NOW, not after an audit has already been initiated by Medicare.  There are seven elements to be considered when assessing whether any chiropractic claims will qualify for coverage and payment.  These elements are:

Element #1: Medical Necessity – In addressing this element, every treating health care provider should ask the following question: “Were the services administered medically necessary?”

Element #2: Services Were Provided The second issue addressed is whether the services at issue were actually provided.

Element #3No Statutory Violations Are the services “tainted” by any statutory or regulatory violation, such as the Stark Law, federal Anti-Kickback or a False Claims Act violation?

Element #4Meets all Coverage Rules – Do the services meet Medicare’s coverage requirements?

Element #5Fully Documented Have the services been properly and fully documented?

Element #6: Properly Coded – Were the services correctly coded?

Element #7: Properly Billed – Were the services correctly billed to Medicare?

XII.  Consultants and Device Manufacturer Representatives:

Take care when conducting an internal review of your documentation and billing practices.  Should you decide to bring in an outside consultant to assist you in preparing for a chiropractic audit, you should be prepared to apply the doctrine of “caveat emptor” (let the buyer beware).  The types of problems our clients have faced when engaging consultants generally fall within one of two categories, both of which are discussed below.

  • If it sounds too good to be true – it probably is!

Unfortunately, some consultants and device manufacturer representatives have used the challenging financial environment now facing chiropractic practices to their advantage.[13]  If a chiropractic consultant claims to have “proprietary” or “special” methods that can raise your billing revenues, or makes similar claims, be careful.

We have represented numerous chiropractic and medical practices over the years that have been led astray by coding and / or billing consultants, device manufacturers and others purporting to have identified supposed legal methods of coding and billing non-covered services so that they will, in fact, pass through the MACs edits and be paid. Years later, the chiropractic practice may learn that the practices they taught to employ are improper and do not qualify for payment.

  • Even Well-Meaning Consultants May Adversely Impact Your Practice.

Imagine for a moment that in an effort to improve your level of regulatory compliance, you have decided to engage a well-known coding and billing consultant to review your medical necessity, coverage, documentation, coding and billing practices. Assuming that the consultant is thorough, chances are that he / she will present you with a list of problems at the end of their review, you need to keep in mind that their findings are not privileged.  In other words, any reports that they issue, work papers that they prepare and actions that they take are discoverable by the government.  As a result, a list of problems identified by a coding or billing consultant can essentially be used as a roadmap for the prosecution.

You should therefore consider having a qualified health lawyer engage the consultant and direct his or her work.  Any reports would be issued to the attorney, not to you or your chiropractic practice. As a result, the work product prepared by the consultant would likely qualify and privileged and would not be discoverable by the government.  Does this mean that any errors, improper claims or other problems identified by the consultant could be “swept under the rug”?  No, not at all, but it may give the practice considerably more latitude in how they ultimately take remedial action.  Improper payments must be reported and repaid to Medicare in a timely fashion.. The problem we typically see is that non-attorneys are imprecise in how they describe a problem.  We have seen reports prepared by well-meaning consultants that are full of hyperbole and characterize certain conduct as possible fraud, when in fact, the actions that led to an overpayment were nothing more than a mere accident, error or mistake.

  • Call Liles Parker if Your Chiropractic Practice is Being Audited.

Liles Parker attorneys are not merely dedicated health lawyers.  We require that our associate attorneys study for and pass the certification requirements to be a Certified Medical Reimbursement Specialist.  Additionally, most of our attorneys and paralegals are Certified Medical Compliance Officers. Our staff has extensive experience conducting pre-audit assessments of provider documentation, coding and billing practices.  To the extent that your practice is undergoing a Medicare chiropractic audit by a UPIC, ZPIC or MAC, it isn’t too late to obtain a favorable result. Our health lawyers have extensive knowledge and experience of the Medicare appeals process, up to and including post-ALJ appeals to the Medicare Appeals Counsel and Federal Court.

Medicare Chiropractic AuditsRobert W. Liles, M.S., M.B.A., J.D., has worked on the provider side in health care management, served as a federal prosecutor and now represents chiropractors and other health care providers around the country in connection with Medicare and private payor audits and investigations.  For a complementary consultation, please call us at: 1 (800) 475-1906.

 

 

[1] Chiropractic services were not separately broken out in OIG’s Medicare Fee-For-Service 2014 Improper Payment Report. https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/Downloads/MedicareFeeforService2014ImproperPaymentsReport.pdf

[2] Effective January 1, 2017.

[3] These three claims are expressly covered in Local Coverage Determination (LCD) guidance issued by National Government Services (NGS) and other Medicare Administrative Contractors (MACs).  For additional information please see:  https://apps.ngsmedicare.com/lcd/LCD_L27350.htm

[4] The acronym “SOAP” is a long-standing approach utilized by a variety of medical disciplines when documenting their evaluation of a patient and the plan of care to be followed.  SOAP stands for Subjective, Objective, Assessment, and Plan.

[5] See 42 U.S.C. § 1395h.

[6] See 42 U.S.C. § 1395ff(f)(2)(B).

[7] LCDs are defined as “determination[s] by a [contractor] under. . . part B. . . respecting whether or not a particular item or service is covered. . . in accordance with section 1395y(a)(1)(A).”[7]

[8] See 64 Fed. Reg. 22,619, 22,621 (Apr. 27, 1999) (stating that the purpose of local medical review policies is to explain to the public and the medical community “when an item or service will be considered ‘reasonable and necessary’ and thus eligible for coverage under the Medicare statute”); PIM Ch.1, §§ 2.1.B, 2.3.2.1, 2.3.2.

[9] PIM, supra note 17, at § 2.1.B.

[10] PIM, supra note 17, at §1.2.

[11] See Abbott Laboratories, at 29.

[12] https://apps.ngsmedicare.com/lcd/LCD_L27350.htm

[13] Unscrupulous business consultants are nothing new. Almost 20 years ago, HHS, Office of Inspector General (OIG) recognized this problem and issued guidance to providers outlining its concerns. In June 2001, OIG issued a “Special Advisory” titled “Practices of Business Consultants” which detailed the agency’s concerns in this regard.  As OIG noted, health care providers and suppliers need to be wary of potential:

  • Illegal or Misleading Representations.
  • Promises and Guarantees.
  • Encouraging Abusive Practices.
  • Discouraging Compliance Efforts.

 

Responding to a EHR Meaningful Use Audit

EHR Meaningful Use Audits are Ongoing.  Call Liles Parker for Assistance in Responding.(April 3, 2015): Starting this year, eligible providers who have not attested to meaningful use of the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs for 2014 will face a 1% penalty on Medicare reimbursement. The penalties will increase to 2% in 2016 and 3% in 2017. Depending on the total number of Medicare eligible professionals who are meaningful users under the EHR Incentive Programs after 2018, the maximum payment adjustment can reach as high as 5%. Eligible providers and hospitals should make sure they have sufficient documentation so that they are prepared to respond to a possible EHR meaningful use audit. Key focus areas of an EHR meaningful use audit will likely include eligibility and meaningful use criteria, Health Insurance Portability and Accountability Act (HIPAA) security risk analysis and mitigation documentation, and documentation of the program.

I.  Overview of the EHR Meaningful Use Audit Process:

The meaningful use audit process typically begins with your receipt of an initial request letter seeking information and documentation regarding your efforts to comply with applicable meaningful use requirements. This letter will likely either come directly from CMS or the audit firm CMS has engaged has engaged to conduct meaningful use audits. An eligible provider will have two weeks to respond to the letter and provide the documentation that has been requested. Following submission, the initial review process will commence, where CMS and/or its audit vendor will examine the documentation. Depending on CMS’s findings and concerns, an onsite review may be needed. Finally, the eligible provider will receive an audit determination letter. The letter will inform the provider whether they were successful in meeting meaningful use of electronic health records. If a provider is found not to be eligible for an EHR incentive payment, the payment will be recouped.

II.  Preparing for an EHR Meaningful Use Audit:

To avoid penalties for 2016, eligible health care providers and hospitals should start gathering meaningful use supporting documentation now, not after an audit has been initiated. Specifically, they should retain all relevant supporting documentation used to complete the Attestation Module responses. Providers should keep summary data from the certified EHR system, but because some certified EHR systems are unable to generate reports that limit the calculation of measures to a prior time period, providers should also download and/or print a copy of the report used at the time of attestation for their records. They should also download and/or print primary evidence of eligibility. Primary evidence documents will be needed for more detailed reviews, and should include, at minimum, the numerators and denominators for the measures, the time period the report covers, and evidence to support that the documentation was generated for that eligible provider or hospital.

In addition, not all certified EHR systems currently track compliance for non-percentage-based meaningful use objectives. These objectives typically require a “Yes” attestation in order for a provider to be successful in meeting meaningful use. To validate provider attestation for these objectives, CMS and its contractor may request additional supporting documentation. Any non-EHR based reports should demonstrate the time period of the reports, proof that the report was not changed or updated, and that it is specific to the practice. Screenshots and timestamps can be used to help evidence these facts.

III.  Final Remarks:

Providers should save all electronic or paper documentation that supports attestation in order to ensure preparation for a potential audit. They should also save any documentation that supports the values entered in the attestation module for clinical quality measures. Hospitals should also maintain documentation that supports their payment calculations. If an audit happens, all of this documentation will be used to validate that the provider accurately attested and submitted clinical quality measures, as well as to verify that the incentive payment was accurate. Should you need assistance with a meaningful use

Robert W. Liles is a health care attorney experienced in handling prepayment reviews and audits.Liles Parker attorneys represent health care suppliers and providers around the country in connection with regulatory compliance reviews, Medicare ZPIC and RAC audits, HIPAA Omnibus Rule risk assessments, privacy breach matters, and State Medical Board inquiries. Robert W. Liles, Esq., is a Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Call Robert for a free consultation at 1 (800) 475-1906.

Physicians Being Placed on Non-Random Prepayment Review in Unprecedented Numbers. Are You Ready for an Audit?

ZPIC Non-Random Prepayment Review

(January 3, 2013):  Zone Program Integrity Contractors (ZPICs) are aggressively relying on prepayment reviews in their efforts to identify and deter improper coding and billing practices.  Why has this recent audit activity occurred? As the Government Accountability Office (GAO) recently reported, prepayment edits saved Medicare at least $1.76 billion in fiscal year 2010.  While these savings were substantial, GAO noted that savings could have been even greater if the use of prepayment tools had been expanded.   Notably, Recovery Audit Contractors (RACs) have also now jumped on the proverbial non-random prepayment review bandwagon and have been authorized by the Centers for Medicare for Medicaid Services (CMS) to utilize this audit tool.  It is therefore essential that home health agencies, physician practices and other health care practices develop and implement an effective Compliance Program, designed to assist them in their efforts to endure that claims billed fully comply with applicable rules and regulations.

I. Legislative Background:

With the passage of the Medicare and Medicaid programs in 1965, the Centers for Medicare and Medicaid Services (CMS)[1] became authorized to perform a myriad of Medicare program functions, either directly or by contract. Moreover, on August 21, 1996, the Congress enacted the Health Insurance Portability and Accountability Act of 1996 (HIPAA).   Section 202 of HIPAA added section 1893 to the Social Security Act, thereby establishing the Medicare Integrity Program (MIP Program).  This legislation also permitted CMS to contract with eligible contractors (such as Intermediaries, Carriers and Program SafeGuard Contractors) to perform program integrity activities.

On December 8, 2003, Congress subsequently enacted the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA).  The MMA included a new subsection  regarding both random prepayment reviews and non-random prepayment complex medical reviews.  Today, prepayment reviews of Medicare claims are now conducted by ZPICs and RACs around the country.

II.  Reasons Providers are Targeted for Non-Random Prepayment Review:

          Contrary to popular belief, CMS and its contractors do not conduct random prepayment audits of health care providers.  As CMS expressly set out in the Federal Register:

“Although section 934 of the MMA sets forth requirements for random prepayment review, our contractors currently do not perform random prepayment review. However, our contractors do perform non-random prepayment complex medical review. We are cognizant of the need for additional rulemaking should we wish our contractors to perform random review.”

As a result, if your practice or agency has been subjected to non-random prepayment complex medical review by a ZPIC or RAC, it is because of one or more reasons.  In most instances, non-random prepayment reviews are the result of data mining efforts used by ZPICs and RACs to identify potentially inappropriately billed claims. The data mining runs may have been initiated by:

  • National or local claims data comparisons.
  • An analysis of utilization practices.
  • Beneficiary complaints.
  • Competitor complaints.
  • Department of Health and Human Services, Office of Inspector General (HHS-OIG)
  • Government Accountability Office (GAO) reports.
  • Department of Justice (DOJ) investigations.   

Regardless of the reason for review, once a ZPIC or RAC conducts a data mining run and identifies a likelihood of sustained or high level of payment error, the contractor will typically place a health care provider on prepayment review and immediately request supporting medical documentation in support of any claims submitted by the provider for payment.

III.  Types of Non-Random Prepayment Review:

          Essentially, there are three types of non-random prepayment medical review to which a health care provider may be subjected.  These three types include “automated,” “routine,” and “complex” medical reviews.  All three of these types of review are targeted and non-random in nature.  Examining each of these types of reviews:

1.  Automated: An “automated” non-random prepayment medical review is one involving a review where decisions are made at the system level using available electronic information, without the intervention of contractor personnel.  Importantly, automated non-random prepayment reviews do not disrupt a health care provider’s practice and do not typically require that any additional documents must be submitted.

2. Routine: A “routine” non-random prepayment medical review is limited to rule-based determinations performed by specially trained non-clinical medical review staff.  As with “automated” reviews, a “routine” review does not typically result in any additional work for health care providers.  In fact, most providers are unaware that their claims have been subjected to non-random prepayment medical review in this fashion.  In fact, payments for covered, reasonable and necessary claims are paid without delay.

3. Complex: Generally, a “complex” non-random prepayment medical review involves that review and assessment of any and all supporting documentation associated a claim prior to deciding whether the claim qualifies for coverage and payments.  Contractors do not typically place a health care provider on non-random complex prepayment review prior to conducting a “probe sample” (as opposed to a full-blown statistically-relevant sample) of the provider’s claims.  A probe sample generally consists of an assessment of 20 – 40 claims.  The purpose of a probe sample is to confirm that it appears that a problem exists (either in terms of documentation, medical necessity, billing or coding).

In contrast to “automated” and “routine” non-random prepayment medical review, a “complex” medical reviews will, in fact, typically result in significant delays in having claims processed and paid.  Typically, once a claim is submitted, a contractor will submit a request to the health care provider seeking any and all supporting documentation. This documentation is then reviewed by a qualified medical reviewer.  In some instances, it has appeared that claims the documentation was forwarded to a second contractor for review.   

 IV.  Considerations if Your Practice or Agency is Placed on Non-Random Prepayment Review:

          Importantly, once a provider is placed is placed on prepayment review, it is highly unlikely that the review will be lifted any time soon without significant work on your part.  Please keep in mind:

  • There is no “silver bullet” approach to getting off of prepayment review.
  • There is no administrative appeals process in which to contest the placement of your organization on prepayment review.
  • Be wary of consultants who claim to “know someone” that can have you removed from prepayment review.

Once you have been placed on prepayment review, your first task is to figure out “why?” your claims were placed on this status to begin with.  Were you placed on prepayment review because of your utilization practices, documentation deficiencies or another reason? Ultimately, getting off of prepayment review is just plain hard work.

Over the years, our firm has been contacted by numerous providers whose approach consisted of “holding” their claims in the mistaken belief that the review would eventually be lifted, at which time they would submit their claims for payment.  You need to understand – health care providers are placed on prepayment review because a ZPIC or RAC has reason to believe (rightly or wrongly) that their claims are not in full compliance with applicable coverage, documentation, medical necessity, coding or billing rules. The best approach to having a prepayment review lifted is to carefully analyze each aspect of your claims, compare your practices with those set out in the applicable rules and correct any deficiencies.  Sounds simple doesn’t it?  Unfortunately, it can be quite difficult, depending on the types of claims involved.  Our firm has worked with a number of health care providers over the years, assisting them in getting removed from prepayment review and incorporating these steps into an effective Compliance Plan.

Robert LilesRobert W. Liles is Managing Partner at the health law firm, Liles Parker, PLLC.  With offices in Washington, DC, Houston, TX, McAllen, TX and Baton Rouge, LA, our attorneys represent home health agencies, physicians and other health care providers around the country in connection with Medicare / Medicaid prepayment reviews, post-payment audits, Compliance Plan reviews and state peer review actions.  Should you have any questions, please call us for a free consultation.  Robert can be reached at: 1 (800) 475-1906.   

[1] At the time of passage, the Health Care Financing Administration (HCFA) was responsible for the management of the Medicare and Medicaid programs.  In September 2001, the Secretary, Health and Human Services, Tommie Thompson, changed HCFA’s name to the Centers for Medicare and Medicaid Services [2] Federal Register /Vol. 73, No. 188 / Friday, September 26, 2008 /Rules and Regulations, 55753

The Medicare Audit Improvement Act Appears Promising at First Glance. Is it Really the Answer?

November 12, 2012 by  
Filed under Health Law Provider Updates

Is the Medicare Audit Improvement Act Really Going Help Health Care Providers?(November 12, 2012): The AHA Supports the Medicare Audit Improvement Act of 2012.  Is this Legislation Going to Help Physicians or Not?  On October 16, 2012, a new bill was introduced by Representative Sam Graves (R-MO) entitled the “Medicare Audit Improvement Act of 2012.” This legislation was immediately supported by the American Hospital Association (AHA), which called the act “much-needed guidance for medical necessity audits, keeping auditors out of making medical decisions that should be between patients and their physicians.”

 

I.  What Will the Medicare Audit Improvement Act Require?

If passed, the law would require that the Secretary for the Department of Health and Human Services (HHS) implement certain regulations with respect to HHS’s national audit programs (such as those conducted by Recovery Audit Contractors (RACs) and Zone Program Integrity Contractors (ZPICs)).  Notably, these regulations would specifically require that CMS (and through the agency, its various Medicare contractors) take number of steps designed to better address a number of long-standing concerns expressed by physicians, hospitals and other health care providers participating in the Medicare Program.  Unfortunately, as discussed below, these proposed changes would primarily apply to Part A services — not the Part B services administered and billed by most non-hospital Medicare participating providers.  Proposed changes include:

  • Establishing a consolidated limit for all medical record requests;
  • Implementing financial penalties against audit contractors for poor performance;
  • Improving transparency of Medicare contractors like RACs and ZPICs;
  • Modifying the recent Part A to Part B Rebilling Demonstration Project;
  • Allowing, as appropriate, rebilling of denied inpatient claims as outpatient claims; and
  • Requiring physician review of Medicare denials.

This law is primarily in response to the recent outcry by hospitals and health systems regarding the practices of RACs when evaluating short-stay inpatient admissions. In these situations, RACs have been alleged to have denied inpatient claim outright, without giving credit for services provided on the outpatient side that would otherwise be covered and eligible for some payment. While the Part A to Part B Rebilling Demonstration Project has attempted to remedy this, it is slow-moving and only open to a limited number of providers who are willing to give up their appeal and other rights. As such, the Medicare Audit Improvement Act would give additional relief to hospitals burdened by these audits.

II.     The Medicare Audit Improvement Act and Part B Payments:

If enacted, this legislation will have a significant impact on hospital audits conducted by Medicare contractors.  Importantly, the definition of “Medicare contractor” under the proposed Act is quite broad and includes Medicare Administrative Contractors (MACs), RACs, and ZPICs.  However, the Medicare Audit Improvement Act is intended to only apply to Part A services.  Since most non-hospital health care providers participating in the Medicare program (including, but not limited to: physicians, clinicians, therapists, DME suppliers, and other health care professionals) provide Part B services, this legislation is not expected to provide any relief.

III.  The Medicare Audit Improvement Act Seeks to Penalize Contractors Who Fail to Conduct Their Duties Appropriately.  Is This Fair?

As a review of the bill will show, sections of the legislation, including those related to contractor transparency, financial penalties, and limiting records requests, apply specifically to RACs and do not apply to other “Medicare contractors” as defined under the statute.  Moreover, even if passed, this legislation will have little, if any, impact on Medicare Part B providers.  Is it fair to only penalize RACs for “poor performance”?  Should ZPICs be penalized if claims they deny are ultimately found to be payable?  Don’t answer just yet. . . .

Over the years, we have handled numerous cases where a Medicare contractor denied a claim on the basis of “lack of documentation” or on another basis that is clearly contradicted by a review of the documentation sent to the contractor for assessment.  We share our clients’ concerns — these cases often reflect a fundamental error on the part of the contractor.  Nevertheless, once a claim is denied by a ZPIC or RAC, a provider virtually no ability to have an audit terminated.  Instead, a provider’s only option is to press their concerns and lay out their arguments in support of payment through the administrative appeals process.

IV.  While ZPICs and RACs Occasionally Miss Evidence Clearly in a File, Providers Need to Keep The Contractor’s Actions in Perspective:

Stepping back for a moment and considering contractor audits as an impartial observer rather than as an advocate for our clients can be quite helpful in understanding the frustration sometimes exhibited (albeit in a professional fashion) by ZPIC representatives during hearings before an Administrative Law Judge (ALJ).  As ZPIC reviewers have pointed out in prior hearings, when assessing whether a claim should be paid, they are obligated to apply the applicable medical necessity, coverage, documentation, coding and billing guidelines published by the Centers for Medicare and Medicaid Services (CMS) and its MACs.  This guidance is often in the form of Local Medical Review Policies (LMRPs), Local Coverage Determination (LCD) issuances, and a variety of other publications issued by the government and its agents.  While not discussed, it has become abundantly clear that ZPICs are not intended to exercise their personal judgment when assessing a providers claims.  Rather, their mandate is to apply the above-discussed guidelines.  In contrast, ALJ’s enjoy a significantly broader degree of discretion.  Although they will undoubtedly consider these same guidelines, based on other reasons, an ALJ may ultimately hold that a claim should be paid.   Additionally, in some instances, by the time a claim is heard by an ALJ, records cited by a ZPIC as “missing” have later been found and supplemented into the record by a provider.  With this new information, an ALJ may decide to overturn a prior denial.  Furthermore, it is not at all uncommon for a ZPIC to deny a claim because the physician’s handwriting (and Progress Note) could not be read.  In several cases, we have been able to remedy this deficiency by having the notes as issue “transcribed” and typed out so that a reviewer can easily read the entries.  Once transcribed, an ALJ may have additional information upon which to consider whether a claim should be paid.  Finally, it is essential to keep in mind that the ALJ level is the first time that a provider will have an opportunity to tell its side of the story, thereby addressing and refuting a ZPIC’s concerns.

V.  What Should You Do to Prepare for a Prepayment Review or Postpayment Audit by a Medicare or Medicaid Contractor?

In light of the above, we believe that this issue is much more complicated than it may initially seem.  ZPICs and RACs are far from perfect.  They miss documents and evidence when conducting their reviews and their failure to fully review a record can lead to the improper denial of a claim.  Nevertheless, many times ZPICs and RACs do, in fact, have a basis for initially denying a claim  — you and I may not agree with their assessment, but in most instances they are likely to have at least a colorable argument in support of their denial decision.  The mere fact that an ALJ later overturns a denial does not necessarily mean that the ZPIC has acted improperly.  As described above, the record and arguments reviewed by an ALJ can greatly vary from the information first sent to, and considered by, the ZPIC.

As we have previously discussed, physicians and their staff members need to go back to the basics.  Examine your Local Coverage Determination (LCD) provisions which cover everything from “medical necessity” to documentation requirements for certain services. Read the 1995 and 1997 E/M Guidelines Dust of your copy of the Medicare Benefit Policy Manual.  Unfortunately, physicians are going to continue to experience problems in this regard until they read, understand and apply the same guidelines as those utilized by the RACs and ZPICs.  Internal Audits, ongoing education and training are the key to reducing your error rate and improving your compliance with applicable rules and regulations.  Don’t wait until you are facing an audit — examine your documentation practices NOW  and take remedial action to repay any overpayment which may be owed and educate your staff so that any identified deficiencies do not reoccur.

Robert Liles

Robert W. Liles is the Managing Partner at the health law firm, Liles Parker PLLC.  Our attorneys represent a wide variety of health care providers around the country.  Robert handles health care compliance reviews, internal audits, Medicare and Medicaid post-payment overpayment appeals, fraud and abuse investigations, and a number of other health care matters. He also assists providers in responding to prepayment audits conducted by ZPICs (and now RACs).  Should you have any questions, please feel free to call Robert today for a complimentary consultation.  Robert and our other attorneys can be reached at: 1 (800) 475-1906.

 

Seven Elements of a Payable Claim are an Essential Tool When Preparing for a ZPIC Audit

September 21, 2012 by  
Filed under Medicare Overpayments

(September 21, 2012):  Each year, our attorneys and paralegals review and assess literally thousands of Medicare claims which have been audited (and denied) by Zone Program Integrity Contractors (ZPICs) and other contractors working for the Centers for Medicare and Medicaid Services (CMS).  As intensive ZPIC audits continue, it is essential that health care providers review their processes to better ensure that services provided fully comply with applicable coverage, coding and billing requirements.  While defending physicians and other health care providers in ZPIC audits and government reviews, we have identified a relatively straight-forward approach for determining whether a particular claim qualifies for coverage and payment.  Generally, we refer to this approach as an examination of the Seven Elements of a Payable Claim.Notably, this has proven to be extremely helpful tool when developing an effective Compliance Plan for a client.  As set out below, physicians and other non-hospital health care providers can often use this approach to determine whether specific services billed to Medicare, Medicaid, and/or private payors should be paid.

I.  Seven Elements of a Payable Claim:

A discussion of the seven elements which must be carefully assessed for each and every claim is provided below:

Element #1: Medical Necessity — In addressing this element, a treating health care provider should ask the following question: Were the services administered medically necessary?”

When considering this question, it is important to keep in mind that the medical necessity is essentially a “standalone” determination, separate from each of the other elements.  In other words, a physician may find that a specific course of treatment is medically necessary in light of a patient’s clinical profile and needs.  Nevertheless, just because a certain treatment regime is medically necessary does not mean that it will be covered by one or more payors.  Over the years, we have seen numerous instances where a physician determined that a course of treatment was medically necessary but it was not covered by Medicare, Medicaid, or a private payor plan.

We believe that this element constitutes the most important question to be answered by a provider.  Services which are not medically necessary should never be performed.  However, a provider may choose to provide medically necessary services regardless of whether he or she anticipates a payor to find that the care qualifies for coverage and payment.

Element #2: Services Were Provided The second issue addressed is whether the services at issue were actually provided.

As you can imagine, regardless of the fact that services ordered were medically necessary, the services must actually be administered in order for those services to be billed and paid.  Absent clear, unambiguous evidence that services were provided, they should not be submitted for reimbursement.  Equally important, services must actually be provided at a level of quality consistent with Medicare’s expectations or the expectations of the covering payor.

Element #3 No Statutory Violations Are the services “tainted” by any statutory or regulatory violation, such as the Stark Law, federal Anti-Kickback or a False Claims Act violation?

When examining whether a claim is “payable,” you need to remember that even though the medical service at issue may have been medically necessary and qualified for payment, if it is the result of an illegal activity, it will be tainted and will likely not qualify for payment.  Therefore, when you are reviewing a service or claim, you must consider whether there is any indication of possible statutory or regulatory violations.  For instance, is there any evidence that the service or claim is linked in any way to a breach of the federal Anti-Kickback Statute or Stark’s prohibition against improper self-referrals?  Similarly, is the service or claim associated with a possible violation of the civil False Claims Act?  The bottom line is fairly straight-forward: it is insufficient to merely show that a claim appears to meet the payor’s basic billing rules.  Rather, a broad view of the service or claim should be made to better ensure that it is not otherwise non-payable due to a statutory breach.

Element #4:  Meets all Coverage Rules – Do the services meet Medicare’s coverage requirements?

The next point to be addressed when auditing a claim is to determine whether or not it is covered under a payor’s plan.  It is important to keep in mind that a service or claim can be medically necessary yet still not qualify for coverage and payment.   Ultimately, every service or claim, regardless of whether the beneficiary is a Medicare, Medicaid, or private plan participant, must be examined to see if it qualifies for coverage.

In making coverage determinations, CMS has interpreted the phrase reasonable and necessary to reflect that the item or service in question is safe and effective and not experimental or investigational.[1]  CMS stated that the relevant tests for applying these terms are whether the item or service has been proven safe and effective based on authoritative evidence, or alternatively, whether the item or service is generally accepted in the medical community as safe and effective for the condition for which it is used.[2]  A device is investigational if it has not been approved by the Food and Drug Administration (FDA) through a premarket approval process or the “510(k) certification process.”[3]  Additional guidance to be reviewed includes any applicable National Coverage Determination rules, and any relevant Local Coverage Determination provisions:

National Coverage Determination Rules (NCDs):  In its most general form, the Secretary of the U.S. Department of Health and Human Services (HHS) may articulate “reasonable and necessary” standards through formal regulations that have the force and effect of law throughout the administrative process.[4]  More specifically, the Secretary may publish a formal administrative ruling in the Federal Register setting forth how Medicare statutes and regulations are to be applied in particular circumstances.[5]  These regulations and administrative rulings are binding at all stages of the administrative process.[6]  The first type of formal regulations are publications known as National Coverage Determinations (NCDs).[7]  NCDs are national policy statements that grant, limit, or exclude Medicare coverage for a particular item or service and apply nationally to all Medicare beneficiaries who meet the criteria for coverage.[8]  More precisely, NCDs are determination[s] by the Secretary with respect to whether or not a particular item is covered nationally by Medicare.[9]  NCDs conditions for which a service is considered to be covered (or not covered) and are usually issued as a program instruction.[10]  NCDs are often published detailing how a particular patient population may or may not receive Medicare reimbursement for a covered item or service.[11]  Thus, NCDs relate only to issues of coverage.  NCDs do not reflect a determination of the amount of payment made for a particular item or service.[12]  Moreover, any interested party, including beneficiaries, may make an external request for a new NCD.[13]  Most of these external requests, however, are made by organizations such as drug, device, or medical product manufacturers or by professional medical organizations, providers, or suppliers.[14]  In addition, CMS may make its own internal request if it determines that an NCD is “in the interest of the general health and safety of Medicare beneficiaries.”[15]   Importantly, because of the judicial deference given to the Secretary in making his or her coverage determinations, all requirements set forth within an NCD are binding on coverage determinations made by Medicare Administrative Contractors (MACs) and Administrative Law Judges (ALJs) during the appeals process.[16]  Finally, the Secretary may further define when and under what circumstances services may be covered (or not covered) under the reasonable and necessary standard through coverage provisions in interpretive manuals.[17] Manual instructions are often issued in the form of program memoranda, such as the “Medicare Program Integrity Manual.”

Local Coverage Determinations  (LCDs) The Secretary of HHS may also delegate its responsibilities, under section 1395y (a), to Medicare contractors.[18]  Therefore, in the absence of an NCD, MACs are responsible for promulgating their own reasonable and necessary coverage determinations.[19]  These determinations are published as Local Coverage Determinations (LCDs).  LCDs are defined as determination[s] by a [contractor] under. . . part B. . . respecting whether or not a particular item or service is covered. . . in accordance with section 1395y(a)(1)(A).”[20]  MACs make these coverage determinations by applying the Act and federal regulations, as well as additional guidance provided by CMS in the form of Rulings, Medical Manual Provisions, and other forms of guidance.[21]  In fact, the vast majority of coverage decisions are made at the local level by clinicians who work with the MACs during the claims review process.[22]  CMS’ Medicare Program Integrity Manual (PIM) outlines how LCDs are to be promulgated.  Each LCD must reflect local medical practice within the contractor’s jurisdiction and must be supported by substantial medical evidence.[23]  MACs develop LCDs by considering medical literature, the advice of medical societies and consultants, public comments, and comments from the Medicare provider community.[24]  Like NCDs, an LCD’s coverage guidance on whether an item is medically “reasonable and necessary” means that the item is safe and effective and not experimental or investigational as determined by the FDA approval process.[25]  The contractor must also ensure that LCDs are consistent with the Medicare statute, regulations, NCDs, and other applicable federal guidance.[26]  The PIM also requires that contractors engage in a notice and comment process before publishing coverage policies.[27]  Unlike NCDs, ALJs and the Medicare Appeals Council (Appeals Council)—not to be confused with the Medicare Administrative Contractor (MAC)—are not bound by LCDs or CMS program guidance, such as program memoranda and manual instructions.[28]  However, they will give substantial deference to these policies if they are applicable to a particular case.[29]  This deference is due to interpretations that arise under a complex and highly technical regulatory program,” where even “the identification and classification of relevant criteria necessarily require significant expertise, and entail the exercise of judgment grounded in policy concerns.”[30]  If either an ALJ or the Appeals Council declines to follow a policy in a particular case, the ALJ and/or Appeals Council decision must explain the reasons why the policy was not followed.[31]  An ALJ or Appeals Council decision to disregard that policy applies only to the specific claim being considered and does not have precedential effect.[32]  Furthermore, an LCD made by one MAC is not binding on the other Medicare contractors across the country.[33]  The Secretary of HHS is also responsible for overseeing the evaluation of new LCDs to determine whether they should be adopted nationally and to what extent can consistency be achieved among LCDs.[34]  Because LCDs are established by each individual MACs, variances between LCDs are common.  Notably, while assessing common coverage and documentation requirements from one region to another, we have found that the differences between one LCD and another can be significant.  Finally, if there is no NCD or LCD in place, contractors may make individual claim determinations,” including whether a particular item or service meets the statutory requirement of being reasonable and necessary”.[35]

Challenging NCDs and LCDs:  When a beneficiary is confronted with a denied claim and wishes to challenge that denial, the beneficiary has the option of pursuing review through the claims appeal process, seeking review of the applicable LCD or NCD, or both.[36]  However, any challenge to an NCD or LCD is distinct from the general Medicare claims appeal process set forth in 42 U.S.C. § 405(g).[37]  In fact, challenging these determinations permits an aggrieved beneficiary to seek review of an entire policy or provision rather than just a specific claim denial.[38]  Nevertheless, when the LCD review process was created, the existing claims appeal procedures remained unaltered.  As a result, a beneficiary who wishes to challenge an NCD or LCD still has access to a de novo review by ALJ or to federal district court review, if necessary.[39]  When challenging an NCD or LCD, ALJs and the Appeals Council are responsible for reviewing the reasonableness of these determinations under certain guidance.  In determining whether LCDs or NCDs are valid, the adjudicator must uphold a challenged policy (or a provision or provisions of a challenged policy) if the findings of fact, interpretations of law, and applications of fact to law by the contractor or CMS are reasonable based on the LCD or NCD record and the relevant record developed before the ALJ or the Appeals Council.[40]  As previously indicated, NCDs are determinations promulgated by the Secretary and are therefore given substantial deference when challenged.  Nevertheless, the administrative appeals process affords this same level of deference to LCDs, despite the fact that these determinations are published by independent, private MACs.  42 C.F.R. § 405.1062(a) affirms that ALJs and the Appeals Council are not bound by LCDs or CMS program guidance, such as program memoranda and manual instructions but will also give substantial deference to these policies if they are applicable to a particular case.  In doing so, the ALJs or the Appeals Council must apply the same “reasonableness standard” when conducting a challenge to an LCD as it does to an NCD.[41]  What exactly constitutes a “reasonableness standard”?  In Subject: NCD Complaint—Intraocular Lens (CMS Ruling 05-01),[42] the Appeals Council acknowledged a complaint challenging an NCD that barred coverage of presbyopia-correcting intraocular lenses (PC-IOL) inserted after cataract surgery.  After reviewing the NCD Record and the challenger’s contentions, the Board upheld the validity of the NCD.[43]  The Board outlined its standard of review for an NCD appeal and acknowledged that Section 1869(f)(1)(A)(iii)(I) of the Act limited its review of an NCD “to evaluat[ing] the reasonableness” of the NCD.[44]  Section 1869(f)(1)(A)(iii)(III) also provides that the Board “shall defer only to the reasonable findings of fact, reasonable interpretations of law, and reasonable applications of fact to law by the Secretary.”[45]  The Board recognized that this reasonableness standard required it to uphold the challenged NCD “if the findings of fact, interpretations of law, and applications of fact to law” by CMS are reasonable based on the NCD record and the relevant record developed before it.[46]  The Board also noted that federal regulations provide a two-stage process for reviewing a challenged NCD.  First, if it found the NCD record to be complete and adequate to support the validity of the NCD, it would issue a decision to uphold the NCD.  This would effectively end its review process.  On the other hand, if the Board found that the NCD record was incomplete and inadequate to support the validity of the challenged NCD, it would conduct a review process that permitted discovery and evidence submission, as well as a formal hearing, if necessary.[47]  “Policy Articles” are closely related to LCDs, though they are distinct documents.  While LCDs contain only the reasonable and necessary language, Policy Articles contain any non-reasonable and necessary language a Medicare contractor wishes to communicate to providers.  These Articles essentially provide additional details for coverage requirements and reimbursement procedures.  And while Policy Articles are not LCDs, the Appeals Council has recognized a “long-standing practice to afford some deference” to these articles published by the MACs.[48]  Ultimately, while challenges to the specific claims denials and challenges to the various coverage determinations follow different administrative appeals processes, the adjudicatory entities all afford the Secretary’s decisions substantial deference due to the complex nature of the Medicare program.  As a result, beneficiaries have a significant hurdle in trying to overturn any adverse decision.

          To be clear, there is no “silver bullet” that can be used by a health care provider to avoid the scrutiny of contractors and law enforcement.  Every small- and mid-sized provider should expect to be audited.  Rather than wait for such an eventuality, your organization should affirmatively review its operations, coding, and billing practices to ensure that its practices fall within the rules.

Element #5Full and Complete Documentation – Have the services rendered been properly and fully documented?

It is essential that you pull each and every regulatory issuance, along with any guidance issued by the state which sets out the documentation requirements associated with a particular service or claim.  After auditing literally thousands of claims, we have found that over a majority of the health care providers we have audited have never fully researched and reviewed applicable  documentation requirements.  As clinical reviewers of both Medicare and Medicaid, Recovery Audit Contractors (RACs) and ZPICs are quick to states in hearings before an Administrative Law Judge, “If it isn’t documented, it didn’t happen.”   When made during a hearing by a RAC or ZPIC, this point is quite effective—it is extremely difficult for a provider to prove that a service was provided if there is insufficient documentation of the work conducted in the patient’s medical records.  Therefore, research, review, and confirm the precise documentation requirements to be met, then ensure that you take the time to fully and accurately document the work you have performed.

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

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

  • Any applicable National Coverage Determinations (NCDs).
  • Any applicable Local Coverage Determinations (LCDs).
  • Any Local Medical Review Policies (LMRPs).
  • The Medicare Policy Benefit Manual (MPBM).
  • The Medicare Program Integrity Manual (MPIM).
  • Any statutory provisions which cover the services.
  • Finally, any additional relevant guidance issued by Medicare which relates to the services at issue must also be carefully reviewed.

Element #6: Proper Coding – Were the services rendered correctly coded?

Unfortunately, even if the foregoing rules have been met, it is quite simple to make a coding mistake, therefore invalidating the claim.  The coding rules are both complicated and dynamic, potentially changing from year to year.  We recommend that you either engage a qualified third-party billing company to assist you with coding and billing or ensure that your in-house staff members handling these duties are experienced and provided regular opportunities for updated training.

Element #7: Proper Billing Practices – Were the services rendered correctly billed to Medicare?

As a final requirement, health care providers must ensure that the services or claims performed fully meet Medicaid and Medicare’s billing rules.  Once again, you need to ensure that your staff is properly trained to handle the organization’s billing responsibilities. As you review your billing practices, you should abide by the following:  First, “If it doesn’t belong to you, give it back.”  Conversely, “If you don’t owe the money, don’t automatically throw in the towel.”  One of the attorneys in our firm is regularly asked to speak at provider conventions around the country.  For years, we have told health care providers If it doesn’t belong to you, give it back.”  This simple concept covers a lot of ground when it comes to Medicare overpayments and is the single best policy you can employ as a good, compliant corporate citizen.

In summary, in order to qualify for payment, a claim must meet each of the seven components set out above.

II.     Handling Deficiencies:

The likelihood that your practice or organization will be subjected to a Medicare or Medicaid audit is increasing every day.  As a participating provider in one or more federal health care programs, you have an affirmative obligation to ensure that your claims are properly provided, documented, coded, and billed.  Unfortunately, many health care providers have never researched and reviewed the proper rules covering the care and treatment services they provide.  When conducting a “gap analysis” of your organization, a sample of your claims is an important proactive step you can take to help ensure that your current practices are fully compliant with applicable laws and regulations; such analyses do not have to be statistically significant.  Should you identify deficiencies, remedial steps should be taken (immediately) so that future claims for care and treatment will meet all applicable requirements.  Keep in mind—any identified overpayments must be repaid promptly to the government in order to avoid possible False Claims Act liability.

III.    Final Thoughts:

We strongly recommend that you foster a corporate culture which encourages coding and billing compliance.  ZPICs and RACs have increased their audit activities dramatically in numerous areas of the country.  Your organization’s compliance with federal and state regulations, coupled with a consistent message to your employees, is essential. Establishing good intake and records management procedures, and continuing employee education and training efforts, can greatly facilitate the adoption of an ethical, compliant corporate culture.

Robert W. Liles defends health care providers in Medicare auditsRobert W. Liles represents health care providers in Medicare post-payment audits and appeals, and similar appeals under Medicaid. In addition, Robert counsels clients on regulatory compliance issues, performs gap analyses, conducts internal reviews, and trains healthcare professionals on various legal and compliance issues. For a free consultation, call Robert today at 1 (800) 475-1906.


[1] 54 Fed. Reg. 4302-02 at 4304 (Jan. 30, 1989) and United States ex. rel. Colquitt v. Abbott Laboratories, 2012 WL 1081453, 29 (N. D. Tex. March 30, 2012); 42 C.F.R. § 411.15(o).

[2] 60 Fed. Reg. 48417-01 (Sept. 19, 1995).

[3] Under the § 510(k) certification process, a manufacturer must submit to the FDA a premarket notification submission, commonly known as a 510(k) notice, before a device may be introduced into interstate commerce.  21 U.S.C. § 360(k); 21 C.F.R. § 807.81 (2010).  The 510(k) notice must include, among other things, proposed labeling sufficient to describe the device, its intended use, and the directions for its use; a statement indicating the device is similar to or different from other products of comparable type in commercial distribution; and a statement that the submitter believes, to the best of the submitter’s knowledge, that all information in the 510(k) notice is truthful and accurate, and that no material fact has been omitted.  21 C.F.R. § 807.87(e)-(h), (k).

Along with the 510(k) notice, a manufacturer must submit a “510(k) summary,” which “shall be in sufficient detail to provide an understanding of the basis for a determination of substantial equivalence [to previously cleared devices].”  Id. § 807.92(a).  Among the information that must be contained in a 510(k) summary is “[a] description of the device …, including … the significant physical and performance characteristics of the device, such as device design, material used, and physical properties.”  Id. § 807.92(a)(4).  The 510(k) summary must also include “[a] statement of the intended use of the device … including a general description of the diseases or conditions that the device will diagnose, treat, prevent, cure, or mitigate.” Id. § 807.92(a)(5).

[4] Willowood of Great Barrington, Inc. v. Sebelius, 638 F.Supp. 2d 98, 105 (D. Mass. 2009); 42 U.S.C. §§ 1395ff(a)(1), 1395hh.

[5] 42 C.F.R. § 401.108.

[6] 42 C.F.R. §§ 401.108(c), 405.1063.

[7] 42 U.S.C.

Medicare Administrative Appeals Process – An Overview for New Providers

(August 15, 2012):  Is this your first time being audited by a Medicare Administrative Contractor (MAC) or a Zone Program Integrity Contractor (ZPIC)?  If so, the brief outline below can provide a handy summary of the Medicare appeals process.

I.  Step 1 — Request for Information:

Medicare AppealsIn most instances, a health care provider will receive notice of a Medicare post-payment audit by mail, either from the provider’s MAC or the ZPIC responsible for handling that region. This initial correspondence is significant. From this letter, a provider can usually surmise whether the initial review is merely a probe audit or an allegedly statistically relevant review.  Perhaps most importantly, a provider can typically learn the scope of the contractor’s review.  While many requests for documentation are limited to medical records and claims-related documentation, we are now seeing an increase in the number of audits where the ZPIC or MAC has also requested copies of “business” records, such as a listing of current and past employees, copies of contracts, and other materials which can assist the government in determining whether a provider is currently (or has) engaged in conduct which might violate the federal Anti-Kickback Statute or the Stark law.

While many providers feel comfortable responding to a MAC or ZPIC’s request for information, they do not always realize that pre-emptive steps can be taken at this point to help them present their documentation in its best light.  Equally important, a provider may not fully appreciate the importance of maintaining an accurate record for the Medicare appeals process.  Efforts to improperly supplement or correct an incomplete medical record can expose a provider to criminal liability. Providers must understand the rules. Don’t inadvertently turn a mere overpayment matter into a criminal case.

II.  1st Level of Appeal – Redetermination:

After assessing the documentation submitted, a MAC or ZPIC will then notify a provider in writing of their results.  Please note, if the initial Medicare audit was conducted by a ZPIC, you will first receive the ZPIC’s results – a demand letter from your MAC will likely arrive within a few days.  The Medicare audit decision letter and its attachments will identify any claims found to qualify for coverage and payment and should discuss why any denied claims did not Medicare’s payment requirements.

The MAC’s demand letter serves as a “revised initial determination.”  Unfortunately, a large part of the Medicare post-payment audits conducted by ZPICs find that the majority of claims should not have been paid.  Upon receipt of the MAC’s demand letter, you have 120 days to file an appeal with your MAC for redetermination. However, to avoid recoupment, you should file this appeal within 30 days of the date written on the MAC’s letter.  Rather than risk having monies recouped, the best practice is just to ensure that your appeal is received within 30 days of the date of the demand letter.  The first level of the Medicare administrative appeals process involves a contractor from the Centers for Medicare & Medicaid Services (CMS), highlighted on the HHS organizational chart in yellow.

III.  2nd Level of Appeal – Reconsideration:

After receiving a redetermination decision from the MAC (which, like the ZPIC’s finding, is usually unfavorable), you have 180 days to file a request for reconsideration with the Qualified Independent Contractor (QIC) assigned to your area. During this process, the QIC will review the documents you’ve submitted and make an independent determination about the propriety of coverage and payment for the claims at issue. To avoid recoupment at this level, you need to file an appeal within 60 days of the date of the redetermination decision.  Once again, the best practice is to base your filing deadline on the date of the QIC’s decision letter. This level of the Medical administrative appeals process  also involves a CMS contractor, again highlighted on the HHS org chart.

IV. 3rd Level of Appeal – Administrative Law Judge Hearing:

While the QIC sometimes issues favorable decisions, it often agrees with the contractors below and upholds the denial of your Medicare claims. At this point, you should file an appeal with an Administrative Law Judge (ALJ). This must be done within 60 days from the date of receipt of the QIC’s reconsideration decision letter. Keep in mind, in order to qualify to file the ALJ appeal, you must meet all other statutory requirements (such as an amount in controversy over $130). Notably, it has been our experience that the ALJ level of the Medicare appeals process has been the most reasonable and provider-friendly, although each ALJ is different. This level of appeal goes through the Office of Medicare Hearings and Appeals (OMHA), which is highlighted on HHS’ org chart.

V.   4th Level of Appeal – Medicare Appeals Council

If the ALJ decision is unfavorable and you choose to appeal (or in some cases, the decision is provider-favorable and the Administrative QIC (the AdQIC) asks for a review), the next level of the Medicare appeals process is the Medicare Appeals Council (the Council). The Council is made up of senior ALJs with significant skill and experience in Medicare administrative matters. The Council generally looks at errors of law and abuses of discretion, similar to an appellate court. There are also a number of statutory bars that an appellant must overcome to have the Council review its case. The Council is part of the Departmental Appeals Board (DAB), which is highlighted on the HHS chart here.

VI. 5th Level of Appeal – Federal District Court

If a provider has not yet obtained the relief they seek at the lower levels of appeal, they may appeal the unfavorable Medicare claims decision to a Federal District Court (usually the district the provider’s office is in, although it is possible that a provider may also appeal to the Federal District Court for the District of Columbia, since the Secretary of HHS is located here). Importantly, the District Court looks at Medicare appeals cases with a high degree of deference to the Agency’s determination. That is, the District Court Judge will often side with CMS and HHS unless the lower ALJ’s decision was “arbitrary and capricious” or “against the substantial weight of the evidence.” In the legal world, these are incredibly difficult standards to overcome, and providers generally do not have a great deal of success in court, especially considering the costs of the litigation. Nevertheless, it is an option that exists for dissatisfied providers. Since the District Court is not a part of HHS, it is not included in HHS’ organizational chart.

VII.  Final Remarks:

As you can imagine, the Medicare appeals process is ultimately much more complicated than this brief outline may suggest.  Representatives of the auditing ZPIC, the MAC and / or the QIC may choose to participate in the ALJ hearing in order to present their arguments in support of denial. Although these proceedings are technically non-adversarial,” these hearings can be both stressful and complicated, especially when both sides support their arguments with statistical and clinical experts. In any event, ALJs are experts at cutting through the smoke and determining whether claims do, in fact, qualify for coverage and payment.

While we recommend that providers avail themselves of the Medicare post-payment appeals process, it is essential that prior to filing an appeal, providers critically examine their claims and associated documentation.  Like it or not, sometimes the Medicare contractors are right – some claims shouldn’t be paid.   At the end of the day, providers need to conduct an honest assessment.  Does a particular claim truly qualify for coverage and payment?  If not, its post-payment denial should not be appealed.  As we always say, “if it’s not yours, give it back.” That is, if you can’t make a good faith argument about why certain claims are payable, they probably aren’t. Similarly, unrelated to the appeals process, have you identified claims that were erroneously paid?  It is often a good idea to consult with qualified health law counsel before reporting and returning an overpayment or going through the Medicare appeals process.

Robert LilesRobert Liles represents providers in Medicare post-payment audits and appeals, and similar appeals under Medicaid. In addition, Robert counsels clients on regulatory compliance issues, performs gap analyses and internal reviews, and trains healthcare professionals on various legal issues. For a free consultation, call Robert today at 1 (800) 475-1906.

Healthcare Data Mining Audits: Impact on Medicare Providers and Suppliers

(June 27, 2012):  Healthcare data mining has become quite routine.  For instance, in a recent case involving a Missouri psychologist, the provider was indicted and arrested on two counts of healthcare fraud and forgery. At the heart of this case was the fact that the psychologist allegedly submitted claims to Medicare and Medicaid that were virtually impossible for a single individual to perform. In fact, the indictment stated that the physician worked every day except for Christmas from mid-2008 to early 2012, when he was arrested. In other words, he worked three and a half years straight, seven days a week, with only four Christmases away from the practice. Obviously, this data raised a few red flags for Medicare fraud fighters. As both interest and concern in the provision of national health care has risen, the current administration has aggressively pursued fraudsters who have improperly billed Medicare, Medicaid and private health plan payors. Not surprisingly, additional funding has accompanied these increased investigative and prosecutorial efforts.

As the government has increased its pressure on fraudulent providers, both law enforcement organizations such as the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and contractors of the Centers for Medicare & Medicaid Services (CMS) have become increasingly adept at identifying and pursuing fraudulent and / or potentially fraudulent billing activities by abusive health care providers.

I.     How is the Government Using Healthcare Data Mining Audits?

Generally, the two primary targeting tools used by CMS contractors and law enforcement to identify wrongdoing are:  (1) Data Mining, and (2) Complaints.  This article focuses on the first targeting tool, the use of healthcare data mining. We will address “complaints” in detail in a later article.

At the outset, it is important to keep in mind that the government has been accumulating utilization, coding and billing data since the passage of the Medicare and Medicaid programs in 1965 as part of Title XVIII of the Social Security Act.  Over the past 40 years, the government has carefully studied this data, identifying trends and noting irregularities. Both HHS-OIG and CMS contractors (including, but not limited to Zone Program Integrity Contractors (ZPICs), Recovery Audit Contractors (RACs), and Medicaid Integrity Contractors (MICs)) are able to effectively use data mining to analyze various aspects of the coding and billing data submitted by billing health care providers. These entities employ experts in database management and use  sophisticated techniques to “slice and dice” the Medicare and Medicaid billing and coding data.  In doing so, they are able to compare providers by practice area, geography, time, and a practically endless number of other factors. They can then effectively identify any “outliers” which may be present when their billing patterns are compared to those of their peers.

For instance, in the case described above, healthcare data mining has become quite common.  It was clearly used to review the psychologist’s claims history and determine that what he was billing was likely both impossible and fraudulent.  Nevertheless, it is important to always keep in mind that although data mining may strongly suggest that a provider is engaging in improper conduct, at the end of the day, an outlier is merely a provider whose billing patterns differ from those of his / her peers.  A review of the documentation must still be conducted to ascertain whether, in fact, fraudulent conduct has occurred.  While ZPICs and MICs handle the majority of the data mining work being conducted, when the data appears to suggest that fraudulent conduct is taking place, providers should expect HHS-OIG and possibly the Department of Justice or the Federal Bureau of Investigations to step into investigation.  Unfortunately, while data mining can detect aberrant patterns in billing data, it can’t explain them, and often times, this leaves well-intentioned providers facing scrutiny if their billing history appears aberrant for an otherwise innocent reason.  For instance, a specialist who is renowned in his area of practice may be referred serious, highly complex patients by his peers. This could result in his billing patterns appearing to be different from those of similarly-situated physicians.  Despite the fact that there is an innocent explanation for the specialist’s billing patterns, the data alone may appear to suggest that fraud is taking place.  Health care providers should take affirmative steps to determine whether their coding and billing patterns are “normal” or whether their practices are irregular when compared to other providers.

To be clear, just because your coding and billing practices differ from those of your peers does not necessarily mean that you are engaging in improper conduct.  Nevertheless, if you are an outlier, we strongly recommend that you carefully analyze your internal practices in an effort to identify why your utilization history differs from those of your peers.  Perhaps you are, in fact, improperly coding or billing for services rendered.  If so, you will need to determine the scope of any overpayment and work with your legal counsel to promptly reimburse the government.  As we have repeatedly advised our clients, “If it isn’t yours, give it back.” Upon review, if your coding and billing practices appear skewed, you need to be ready to explain why your utilization rate is different if audited by a CMS contractor or investigated by law enforcement.

II.    Helpful Tools When Conducted an Internal Assessment:

If you are a Compliance Officer, part of your responsibilities includes the identification and repayment of any improper billings. While you can’t completely eliminate the risk of an audit, there are several tools that can help your organization determine how your utilization rates compare to those of your peers.  Among these tools is one of our personal favorites – DecisionHealth’s “E/M Bell Curve Data Book,” which gives a visual overview of the Center for Medicare and Medicaid Services’ (CMS’) Evaluation and Management (E/M) data rates for 59 different specialties. For instance, a general practitioner can look at his established patient office visits (CPT© codes 99211 – 99215) and compare his utilization rates to the national average for the same CPT© codes. This data can be extremely useful in assessing an office’s billing practices and patterns and give confidence to a provider whose rates are similar to the national average.

Another effective tool, especially for non-E/M practices, such as home health agencies and hospices, is the “The Dartmouth Atlas of Health Care,” which provides a variety of data tools to evaluate Medicare spending by county. Not only does this interactive website have average-spending-per-Medicare-beneficiary maps, it also has a tool which allows providers to examine national and state benchmarks for a variety of statistics. These include Medicare reimbursements, hospice, skilled nursing facility, and home health agency utilization rates, surgical procedures and more. Applied correctly, this data can be instrumental in a practice’s self-evaluation and gives providers significant insight into their own billing patterns.

III.     How Should You Respond to Healthcare Data Mining Audits?

Staying fully compliant with all of Medicare’s and / or Medicaid’s rules and regulations can be a quite a challenge.  Nevertheless, as a participating provider, you have affirmatively agreed to meet that obligation.  As providers are constantly reminded, serving as a participating provider is a privilege, not a right.  Unfortunately, even with the best tools, physicians, group practices, clinics, home health agencies and other providers may still find themselves subject to Medicare post-payment and / or prepayment audits by a ZPIC (and now by a RAC). Reviewers and auditors employed by Medicare contractors are highly experienced, knowledgeable and skilled in assessing the propriety of a claim.  They have years of experience handling audits and are quite good at identifying deficiencies in your documentation, regardless of how minor you may believe those  deficiencies might be.  While it is essential to understand your obligations as a Medicare participant, it is equally important to understand how and why practices get audited.  As discussed in earlier articles, while you may not be able to avoid an audit, you can do your very best to help ensure that upon review, a CMS contractor will find that your practices fully meet Medicare rules and regulations.  The development, implementation and adherence to an effective Compliance Plan is the single best step you can take to avoid regulatory problems.

Robert LilesRobert Liles is the managing member of Liles Parker PLLC. Robert represents providers in Medicare providers around the country in postpayment audits and appeals, and similar appeals under Medicaid. In addition, Robert counsels clients on regulatory compliance issues, performs gap analyses and internal reviews, and trains healthcare professionals on various legal issues. For a free consultation, call Robert today at: 1 (800) 475-1906.

Data Mining Tools Can Help Identify Possible Problems

February 8, 2012 by  
Filed under Health Law Provider Updates

(February 8, 2012):  While we all know that many Medicare post-payment audits are often generated as a result of sophisticated data mining analyses, the particular elements of concern which may give rise to a specific provider audit are not always so clear.  Health care providers interested in compliance can use data mining assessment tools to help determine how their coding and billing practices “stack up” when compared to the practices of their peers working in the same specialty area.  One question to be addressed is whether your coding and billing practices make you appear as an  “outlier.” If, in fact, you are an outlier, you should expect to be audited by the Centers for Medicare and Medicaid Services (CMS) or one of its contractors.  To be clear, just because you are an outlier does not necessarily mean that you are engaging in improper conduct.  Nevertheless, if you are an outlier, we strongly recommend that carefully analyze practices in an effort to identify why your practices differ from those of your peers.  Perhaps you are, in fact, improperly coding or billing for services rendered.  If so, you will need to determine the scope of any overpayment and work with your legal counsel to promptly reimburse the government.  As we have repeatedly advised our clients, “If it isn’t your’s, give it back.” If your practices appear to be correct, what other reasons my explain why your practices differ from those of your peers.

I.  Data Mining Tools You Can Use to Assess “Risk”:

While you can’t completely eliminate the risk of an audit, there are several tools that can help your organization determine how your utilization rates compare to those of your peers.  Among these data mining assessment tools is one of our personal favorites – DecisionHealth’s “E/M Bell Curve Data Book,” which gives a visual overview of the Center for Medicare and Medicaid Services’ (CMS’) Evaluation and Management (E/M) data rates for 59 different specialties. For instance, a general practitioner can look at his established patient office visits (CPT© codes 99211 – 99215) and compare his utilization rates to the national average for the same CPT© codes. This data can be extremely useful in assessing an office’s billing practices and patterns and give confidence to a provider whose rates are similar to the national average.

Another effective data mining assessment tool, especially for non-E/M practices, such as home health agencies and hospices, is the “The Dartmouth Atlas of Health Care,” which provides a variety of data tools to evaluate Medicare spending by county. Not only does this interactive website have average-spending-per-Medicare-beneficiary maps, it also has a tool which allows providers to examine national and state benchmarks for a variety of statistics. These include Medicare reimbursements, hospice, skilled nursing facility, and home health agency utilization rates, surgical procedures and more. Applied correctly, this data can be instrumental in a practice’s self-evaluation and gives providers significant insight into their own billing patterns.

II.      Know Your Appeal Rights:

Unfortunately, staying compliant with Medicare rules and regulations and avoiding audit can be a constant and ever-evolving challenge. Even with the best data mining tools, physicians, group practices, clinics, home health agencies and other providers may still find themselves subject to Medicare post-payment and / or prepayment audit by a Zone Program Integrity Contractor (ZPIC) or by another one of CMS’ contractors.  ZPICs, Recovery Audit Contractors (RACs) and other Medicare-contractors reviewers are highly knowledgeable and skilled at what they do.  They are experienced in handling audits and are quite good at identifying deficiencies in your documentation, regardless of how minor those deficiencies might be.  While it is essential to understand your obligations as a Medicare participant, it is equally important to understanding how and why practices get audited.  Moreover, it is also necessary to know how to appeal an adverse determination that you sincerely feel is unwarranted.

Robert LilesRobert W. Liles and other health law attorneys at Liles Parker PLLC have significant experience handling a wide range of health law matters and cases, ranging from transactional projects to representing health care providers in administrative appeals of Medicare post-payment audits.  For more information, feel free to call Robert for a free consultation.  Call Robert today at: 1 (800) 475-1906.

CMS is Actively Auditing EHR Incentive Funds

January 26, 2012 by  
Filed under Health Law Provider Updates

CMS Contractors are Auditing Providers That Received EHR Incentive Funds(January 26, 2012):  Interested in getting involved with Medicare’s Electronic Health Records (EHR) Incentive Program? No doubt about it, it’s a wonderful program – especially since electronic records will be mandatory in the not-too-distant future. Nevertheless, you need to be mindful of your various obligations should you choose to sign up for the incentive program at this time or in the near future. As discussed below, the Centers for Medicare and Medicaid Services (CMS) is serious about compliance with the program’s requirements, and audits of EHR incentive funds are now being conducted.

As you will recall, all Medicare and Medicaid providers are required to transition over to an electronic system of records by 2015. In fact, participating providers and hospitals will face significant penalties if they don’t implement and demonstrate meaningful use of EHR by the 2015 deadline. In light of this requirement, many health care providers are taking advantage of the government’s “incentive” program designed to encourage early and meaningful adoption and implementation of EHR. The government’s EHR incentive payments can be worth up to $44,000 over five years (assuming a provider started in 2011). Importantly, the last day to “attest” to meaningful use of EHR for 2011 is February 29, 2012. By that date, providers seeking to take advantage of the program for 2011 must essentially swear, or certify, that they have engaged in “meaningful use” of EHR during 2011.

While the incentive program has clear rewards, it is important that you carefully assess the program so that each and every requirement is fully understood before you decide whether to make the transition now (and reap the benefits of the incentive program), or later.

I.   Risks of Participation in the EHR Incentive Funds Program:

As we have discussed in prior articles, there are a number of “general” risks faced by health care providers seeking to transition over to an electronic medical records system. Several of those risks include:

  • Programming Related Problems  Over the past two years, we have seen two cases involving health care providers who were “early adopters” of electronic medical records. When they purchased their EHR system, it was often difficult to make changes to the format and / or standard language first established in the system without engaging a programmer. As a result, when audited by a Medicare contractor, information in the records sometimes appeared to be inconsistent and / or incorrect. When you finally make the decision to transition over to an electronic system, it is essential that you make sure that your system allows for each block to be easily modified so that over time, the information you are gathering and the format you are using can be revised to better document any points which appear to be problematic.
  • Cloning – It is essential that your EHR system be structured in such a way that treating providers are required to document the care provided in an individualized fashion. EHR systems which heavily rely on “drop-down” menus can be quite problematic due to the fact that when printed, they tend to look a lot alike. In some cases, Medicare contractors have alleged that a provider has “cloned” records, basing the allegation on the fact that multiple patient records appear to cite the same or similar language throughout the record.
  • Lack of Personalization  Regardless of whether you are currently documenting patient care on paper or electronically, Medicare contractors have repeatedly stated their concern that the patient evaluations conducted and the observations documented are often not sufficiently described to show that a one-on-one evaluation of the patient took place. Similar in some respects to “cloning,” this concern is really focused on the lack of personalized observations noted which lead up to a unique and individualized diagnosis and recommendations for treatment by the treating provider.
  • Electronic Signature Problems  In one recent matter (again involving an “early adopter” of EHR), it was difficult to tell whether the electronic signature of the provider had been affixed to the progress note. Although the provider’s name and title appeared at the end of the note, and a signature was printed above the name, the system did not electronically document when the note had been reviewed and approved by the provider. As a result, it was very difficult to tell whether the provider’s electronic signature has been formally affixed to the completed progress note. We recommend that you review your EHR system and verify that this is not a problem for your practice.

In addition to the myriad of “general” EHR risks faced by Medicare providers who have already transitioned to an electronic system of records, it is important to keep in mind that virtually every provider also faces practice-specific risks, unique to their circumstances. As with other risks faced by a practice, we strongly recommend that you conduct a “gap analysis” to assess your current compliance with applicable statutory and regulatory requirements. As you conduct the gap analysis, you should identify any and all general and / or practice-specific risks which should be either addressed now or monitored to help ensure that they do not result or cause a compliance violation.

II.   CMS Audits of EHR Incentive Funds:

Understandably, CMS is quite serious about compliance with the program requirements it has identified in connection with the EHR incentive program. As their website reflects, CMS refers to the review of incentive payment recipients as “EHR Incentive Program Post-Payment Audits.” While reference to post-payment audits may be confusing to those with experience handling traditional post-payment audits and appeals, that’s the way CMS has chosen to refer to these incentive program assessments.

According to their website, CMS contractors will be conducting audits of Medicare and dually-eligible providers, while States will each conduct their own audits of Medicaid-only providers. Importantly, the appeals process for the Federal and State audits will likely be different, with each State authorized to manage its own appeals process. However, both Federal and State contractors will be evaluating providers’ attestations of “meaningful use,” as well as compliance with eligibility, reporting and payment requirements.

Should a Medicare contractor determine that a health care provider has failed to comply with the program rules and is therefore ineligible for an EHR incentive payment (or should not have otherwise received payment in the first place), the incentive program payments made to the health care provider will be recouped. Importantly, CMS recommends maintaining documentation in support of “meaningful use” for six years, which may mean that CMS intends to conduct audits of providers until 2015 (when the incentive payments end) and even possibly later.

CMS will review both paper and electronic documentation that supports a provider’s attestation of EHR meaningful use, as well as Clinical Quality Measures.

III.   Possible Concerns with Audits of EHR Incentive Funds:

If a health care provider has yet to identify an EHR system which it feels fully addresses each of the current concerns identified by other providers, it may be in the provider’s best interests to hold-off making a selection at this time, despite the fact that delay could effectively cost the provider a significant amount of money. Although we applaud CMS’ efforts to encourage full participation as quickly as possible, it is very important that you identify a program which fully meets your documentation needs.

To the extent that you have already transitioned over to an electronic system, we strongly recommend that you review your participation obligations and ensure that you are continuing to meet those requirements. If a CMS contractor conducts an EHR-related audit of your practice (or a practice for whom you handle the coding and billing), it is important to keep in mind that there is nothing to restrict them from expanding their review to include an assessment of your medical necessity, documentation and coding practices. With the initiation of EHR incentive program-related audits, it is more important than ever that you ensure that your medical necessity, documentation, coding and billing practices fully comply with applicable statutory and regulatory requirements.

Liles Parker attorneys have extensive experience conducting “GAP Analyses,” and drafting / implementing tailored Compliance Plans for a wide variety of health care providers, group practices and third-party billing companies. In addition, our attorneys are skilled in handling administrative appeals of denied claims and in counseling providers on a variety of Medicare-related problems and concerns. For more information, please call Robert W. Liles, Esq. for a free consultation at 1-800 (475) 1906.

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