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OIG’s Renewed Interest in Orthotic Audits and Investigations: What Your DME Company Needs to Know

UPIC Audits of Medicare Orthotic Claims are Increasing.(February 8, 2019):  A series of recent reports out of the Department of Health and Human Services (HHS), Office of Inspector General (OIG) underscore the Federal government’s renewed concerns with respect to orthotic braces, including underlying medical need for these items.  From 1994 to 2000, OIG issued half a dozen reports pertaining to orthotics audits and investigations.  However, since 2000, OIG’s focus shifted to other areas of program integrity concern (such as home health and hospice).  Between November 2018 and January 2019, however, OIG issued three reports regarding orthotic braces, highlighting that these items are on OIG’s radar once again. These three OIG reports are: “Medicare Improperly Paid Suppliers for Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Provided to Beneficiaries During Inpatient Stays” (A-09-17-03035) (November 2018); “Pacific Medical’s Billing of Medicare for Orthotic Braces” (A-09-17-03027) (December 2018); and “Kelley Medical Equipment and Supply, LLC, Received Unallowable Medicare Payments for Orthotic Braces” (A-09-17-03030) (January 2019).   Over the past month, we have seen a significant uptick in the number of new orthotic audits and investigations by Medicare contractors, including Unified Program Integrity Contractors (UPICs).  The purpose of this article is to discuss a number of the program integrity issues that Durable Medical Equipment (DME) suppliers are facing in connection with UPIC audits of orthotic claims billed to Medicare. 

I.     Medicare Coverage and Payment Requirements

Medicare Part B covers Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS), including orthotic braces. To be paid by Medicare, a service or an item must be reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member. Orthotic braces are defined as 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.” Examples of orthotic braces include back, knee, and ankle-foot braces.

The DME Medicare Administrative Contractors (MAC) have developed Local Coverage Determinations (LCDs) for most covered orthotic braces (one of the most notable exceptions, however, is shoulder braces). The LCDs outline the conditions under which DME MACs will pay suppliers for those braces. For example, the LCD for back braces or “spinal orthoses” (LCD L33790) provides that: “A spinal orthosis (L0450 – L0651) is covered when it is ordered for one of the following indications:

  1. To reduce pain by restricting mobility of the trunk; or
  2. To facilitate healing following an injury to the spine or related soft tissues; or
  3. To facilitate healing following a surgical procedure on the spine or related soft tissue; or
  4. To otherwise support weak spinal muscles and/or a deformed spine.

Before submitting a claim for an orthotic brace to the DME MAC, a supplier must have on file the following:

  • Written documentation of a verbal order or a preliminary written order from the treating physician,
  • A detailed written order from the treating physician,
  • Information from the treating physician concerning the beneficiary’s diagnosis,
  • Any information required for the use of specific modifiers, and
  • Proof of delivery of the orthotic brace to the beneficiary.

The Medicare Program Integrity Manual specifically emphasizes that a supplier should obtain as much documentation from the beneficiary’s medical record as it determines necessary to assure itself that the orthotic brace meets Medicare requirements”.

II.    OIG’s Recent Reports:

In the first of OIG’s recent reports, dated November 2018, OIG found that Medicare should not have paid suppliers any of the $34 million for DMEPOS items that were provided during inpatient stays. Notably, 43% of the total overpayment identified by OIG was for prosthetics and orthotics, including braces. Separate from the $34 million figure, OIG determined that Medicare beneficiaries inappropriately paid $8.7 million in deductibles and coinsurance to the suppliers for the DMEPOS items. Generally, during an inpatient stay, Medicare should not pay a supplier for DMEPOS items provided to a Medicare beneficiary. The items are supposed to be provided directly by the inpatient facility or under arrangements between the facility and the supplier. This is because the Medicare payments made to the facilities represent payments in full for all inpatient hospital services, including DMEPOS items. OIG attributed the inappropriate payments for these supplies, in part, to inadequate Common Working File (CWF) pre-payment and post-payment edits which failed to prevent or detect the overpayments. OIG determined that if the system edits had been designed properly since 2008, Medicare could have saved $223.1 million and beneficiaries could have saved $56.3 million in deductibles and coinsurance. Based on its findings, OIG recommended in part that the Centers for Medicare & Medicaid Services (CMS) recover the $34 million and that the suppliers refund the deductible and coinsurance amounts to the Medicare beneficiaries.

OIG’s other two reports, dated December 2018 and January 2019 respectively, were quite similar to one another. OIG audited a supplier of orthotic braces in Tracy, California and a supplier of orthotic braces in Durant, Oklahoma for the same audit period, January 1, 2015 through March 31, 2017. In both cases, the overpayments identified by OIG were exclusively attributed to the failure on the part of the suppliers to establish medical need for some of the orthotic braces. In the California case, OIG determined that the supplier billed for orthotic braces that were not medically necessary for nine claims and could not provide medical records for two claims. In the Oklahoma case, OIG determined that the supplier billed for orthotic braces that were not medically necessary for 67 beneficiaries and could not provide medical records for nine beneficiaries. OIG stated verbatim with respect to both suppliers: These deficiencies occurred because [the supplier] did not always obtain sufficient information from the beneficiaries’ medical records to assure itself that the claims for orthotic braces met Medicare requirements.” An example of a medically unnecessary back brace was provided by OIG as follows:

Medicare paid [the Oklahoma supplier] $754 for providing a back brace to a 62-year-old beneficiary. According to the physician order dated March 7, 2017, the brace was prescribed for lower back pain. However, the medical records did not indicate a complaint of back pain, and there was no mention of a back brace. Rather, according to the medical records, the beneficiary saw his physician on March 2, 2017, for relief of persistent cough and chest congestion. As a result, the independent medical review contractor found that the back brace was not medically necessary.

Based on its findings, OIG recommended to both suppliers that they (1) refund the identified overpayments; (2) assess their claims outside of OIG’s audit period and refund any identified overpayments within 60 days; and (3) obtain as much information from beneficiary medical records as the suppliers deem necessary to assure themselves that claims for orthotic braces meet Medicare requirements.

III.   Our Recommendations for Suppliers of Orthotic Braces:

Given the audit and investigation activity surrounding suppliers of orthotic braces, it is important for suppliers to reassess Medicare coverage and payment requirements and their documentation practices. In particular, suppliers need to ensure they are obtaining and maintaining sufficient medical records from the ordering providers. As we have discussed in previous articles, while suppliers are not entitled to make determinations regarding medical need, they are tasked with evaluating medical records and ensuring that the records support the Medicare beneficiary’s medical need for the orthotic brace prescribed. The OIG reports make very clear that the party responsible for an overpayment is the supplier, and not the ordering provider. In order to ensure you are satisfying your documentation obligations, we recommend that you:

  1. Consult with your healthcare attorney and have them review a sample of claims. The best way to ensure that your claims are satisfying Medicare coverage and payment rules, and that you are meeting your documentation obligations, is to have a third party with strong knowledge in this area assess a sample of your claims who can then give you objective feedback and constructive recommendations.
  2. Train and retrain your staff on Medicare coverage and payment rules and supplier documentation requirements. As a business owner, you are likely relying on a team of employees to obtain and review the necessary documentation and to process the claims for the orthotic braces. You are only as strong as your weakest link, as they say. Sharing these OIG reports with your employees and setting up a team conference to discuss them would be a great start! Your healthcare attorney can likely arrange a conference agenda and guide your team through OIG’s reports, as well as effectively educate you and your employees on Medicare coverage and payment rules and supplier documentation requirements.
  3. Implement a compliance plan tailored to the scale of your business and the DME supplies you distribute so that compliance will persist in the long-term. Ultimately, regular auditing of claims and regular training of employees, as well as sound policies and procedures, are the most effective ways to ensure long-term, ongoing compliance throughout the life of your business. Medicare rules and audit activity are constantly evolving. A compliance plan is the way to stay on your game.

We anticipate ongoing UPIC audits and investigations pertaining to orthotic braces on account of OIG’s findings and concerns. Our attorneys can assist you if you have received notice from your local UPIC, or if you are interested in taking proactive steps, like developing a compliance plan or auditing your claims internally.

Lorraine Rosado, JD, CMCO, CMRS, Lorraine Rosado, JD is an experienced health law attorney with the firm, Liles Parker, Attorneys & Counselors at Law.  She is also a Certified Medical Compliance Officer (CMCO) and a Certified Medical Reimbursement Specialist (CMRS). Lorraine represents DME suppliers and a wide variety of other healthcare providers around the country in connection with Medicare, Medicaid and private payor audits and investigations. You can reach Lorraine at (202) 298-8750

 

 

HHS Issues Final Rule to Address Record High Medicare Appeals Backlog

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

I.  Statistical Overview of the Medicare Appeals Backlog:

In any event, the statistics are astounding:

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

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

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

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

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

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

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

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

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

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

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

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

 

Sources:

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

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

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

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

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

Home Health: Pre-Claim Review Demonstration Project

January 9, 2017 by  
Filed under Home Health & Hospice

Home health claims are being audited in the pre-claim review demonstration project.(January 9, 2017):  As the Centers for Medicare and Medicaid Services (CMS) has announced, the alleged error rate associated with home health claims has risen from 17.3 % in FY 2013 to 51.38% in FY 2014 and 58.95% in FY 2015.  In light of these increases, CMS has taken steps to address the home health claims error rate.  Section 402(a)(1)(J) of the Social Security Amendments of 1967 authorizes the Secretary for the Department of Health and Human Services (HHS) to develop demonstration projects that:

“[D]evelop or demonstrate improved methods for the investigation and prosecution of fraud in the provision of care or services under the health programs established by the Social Security Act.”

Consistent with this authority, on February 5, 2016, the Centers for Medicare and Medicaid Services (CMS) published notice in the Federal Register that it intended to collect information that would be used by the agency to serve as a:

“[B]aseline estimate of probable fraud in payments for home health care     services in the fee-for-service Medicare program.”  42 U.S.C. 1395b-1(a)(1)(J).

On June 8, 2016, CMS announced in the Federal Register (81 Fed. Reg. 37598) that five states would be part of the new Pre-Claim Review Demonstration. These states included:  Illinois, Florida, Texas Michigan and Massachusetts.  While the program was implemented in Illinois on August 3, 2016, the rest of the implementation schedule was delayed due to a variety of implementation-related problems.

CMS has recently announced that the Pre-Claim Review Demonstration Project will be resumed and that it will be implemented in Florida on April 1, 2017.  While no implementation dates have been announced yet for Texas and the remaining test states, Texas home health providers could conceivably be facing this program as early as May 1, 2017.

In addition to providing an overview of the home health Pre-Claim Review Demonstration Project, this article examines the primary reasons for claims denial identified so far by Illinois home health agencies. In this first article, we are focusing on the denial reasons associated with errors identified with face-to-face and plans of care / certification / recertification documentation.

I. What are Medicare’s Home Health Benefit Requirements?

To qualify for the Medicare Home Health benefit, under 1814(a)(2)(C) and 1835(a)(2)(A) of the Social Security Act, a Medicare beneficiary must meet the following requirements:

  • Be confined to the home at the time of services;
  • Medicare considers the person homebound if:

1) There exist a normal inability to leave the home, and

2) Leaving home requires a considerable and taxing effort.

  • Additionally, one of the following must also be true:

1) Because of illness or injury, the person needs the aid of supportive devices such as crutches, canes, wheelchairs, and walkers; the use of special transportation; or the assistance of another person in order to leave their place of residence; or

2) The person has a condition such that leaving his or her home is medically contraindicated.

  • Under the care of a physician;
  • Receiving services under a plan of care established and periodically reviewed by a physician;
  • Be in need of skilled services;
  • Have a face-to-face encounter with an allowed provider type as mandated by the Affordable Care Act. This encounter must:

1) Occur no more than 90 days prior to the home health start of care date or within 30 days of the start of the home health care; and be related to the primary reason the patient requires home health services and was performed by a physician or non-physician practitioner.

II. Primary Reasons for the Denial of Home Health Claims Identified:

Based on the claims submitted by home health agencies in Illinois thus far, the following reasons for denial have been cited by Palmetto when reviewing agencies’ home health claims:

Denial Reason Code
Face-to-Face Errors


HH01A
The physician certification was invalid since the required face-to-face encounter document was missing (actual clinical note for the face-to face encounter visit for admissions on or after 1/1/15, or the narrative for admissions on or after 4/1/11and before 1/1/15) Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.5.1.1 and 30.5.1.2.


HH01B
The physician certification was invalid since the required face-to-face encounter document was untimely and/or the certifying physician did not document the date of the encounter. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.5.1.1.2


HH01A
The physician certification was invalid since the face-to-face encounter was not performed by an approved practitioner. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.5.1.1.1


HH01D
The physician certification was invalid since the required face-to-face encounter was not related to the primary reason for home health services. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.5.1.2


Denial Reason Code
Plan of Care / Certification / Recertification


HH02A
The Plan of Care was missing. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.2.


HH02B
The content of the Plan of Care submitted was insufficient. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.2.1.


HH02C
The Plan of Care submitted was not signed. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.2.3


HH02I
The Plan of Care submitted was not signed timely by a qualified physician. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.2.4.
|


HH02D
Missing physician certification/recertification. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.5


HH02E
The physician certification/recertification submitted does not support skilled need. Documentation in the certifying physician’s medical records and/or the acute/post- acute care facility’s medical records (if the patient was directly admitted to home health) shall be used as the basis for certification of home health eligibility. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.5 and 42CFR 424.22 (a) and (c).


HH02F
The physician certification / recertification submitted does not support homebound status. Documentation in the certifying physician’s medical records and/or the acute /post-acute care facility’s medical records (if the patient was directly admitted to home health) shall be used as the basis for certification of home health eligibility. Refer to CMS IOM Publication 100- 02, Chapter 7, Section 30.5 and 42CFR 424.22 (a) and (c).


HH02G
The physician recertification estimate of how much longer skilled services are required is missing. Refer to CMS IOM Publication 100-02, Chapter 7, Section 30.5.2.


HH02H
The home health agency generated record contained relevant clinical information addressing the “confined to the home” (homebound) eligibility requirement, which was corroborated by the certifying physician or the acute/post-acute facility documentation, but was NOT signed and dated by the certifying physician. Please have the certifying physician sign and date the relevant HHA-generated information and resubmit. Refer to CMS IOM Publication 100-08, Chapter 6, Section 6.2.3.


HH02J
The home health agency generated record contained relevant clinical information addressing the “need for skilled services” eligibility requirement, which was corroborated by the certifying physician or the acute/post-acute facility documentation, but was NOT signed and dated by the certifying physician. Please have the certifying physician sign and date the relevant HHA-generated information and resubmit. Refer to CMS IOM Publication 100-08, Chapter 6, Section 6.2.3.

III. Lessons to be Learned:

Home health agencies in Florida, Texas, Michigan and Massachusetts should carefully review the denial reasons outlined above and conduct internal audits of your home health claims documentation to determine whether your agency’s documentation is complete.  The experiences of home health agencies in Illinois can be invaluable to your efforts to better ensure the full compliance of your agency with applicable statutory and regulatory requirements.  In future installments of this article, we will examine other reasons for denial seen by Illinois home health agencies.

Home Health ClaimsRobert W. Liles, M.B.A., M.S., J.D., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Liles Parker is a boutique health law firm, with offices in Washington DC, Houston TX, San Antonio TX, McAllen TX and Baton Rouge LA. Robert represents home health agencies around the country in connection with Medicare audits and compliance matters. Our firm also represents health care providers in connection with federal and state regulatory reviews and investigations. For a free consultation, call Robert at: 1 (800) 475-1906.

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

November 23, 2016 by  
Filed under Firm News

(November 23, 2016): Michael Cook, co-chair of the Health Care Group, has an article published in the October issue of the American Health Lawyers Association Journal of Health Law & Life Sciences entitled “It’s Time for CMS and Congress to Review Outdated Medicare and Medicaid Provisions.”  The article discusses the fact that given the dramatic changes in payment and delivery system reform, there are a number of outdated, and in some instances counter-productive, rules that no longer make any sense and that should be reviewed by CMS and Congress.  The article cites three examples – the three day hospital stay requirement for Medicare SNF coverage, the limitations for coverage of care in Institutions for Mental Diseases and psychiatric hospitals under Medicaid, and for certain circumstances in alternative payment systems, the homebound requirement for Medicare home health coverage, but there likely are many more that will need examination in the coming years.  Ashley Hudson, an associate of the Firm, assisted in the research for the article.

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

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

Home Health Pre-Claim Review Demonstration Project Update!

September 20, 2016 by  
Filed under Home Health & Hospice

Pre-Claim Review Demonstration(September 20, 2016): On August 3, 2016, the Centers for Medicare and Medicaid Services (CMS) implemented its “Pre-Claim Review Demonstration” project in Illinois.  This demonstration project effectively requires that Illinois home health agencies submit home health claims for review by the Medicare Administrative Contractor (MAC) or face possible penalties (and be forced to have the claim evaluated through the pre-payment process).  As part of the pre-demonstration project, home health agencies are required to submit a complete set of medical records which show that the claim at issue is associated with medically necessary services, meets applicable documentation requirements, qualifies for Medicare coverage and has been coded and billed correctly.  As the demonstration project has been rolled out in Illinois, many home health agencies have experienced problems with the “affirmation” process.  It has been reported that the MAC has allegedly “missed” documentation that has been submitted and that very few of the claims reviewed have been affirmed by the reviewing contractor.  While CMS has not address these specific points, it has acknowledged that additional refinements in the program are required before expansion can continue. Earlier today, CMS announced that the home health pre-claim review demonstration project is temporarily being placed on hold to allow for additional provider education efforts to be conducted.  These provider educational efforts are expected to focus on the main reasons that pre-claim requests have been “non-affirmed” and the documentation that is required to support a home health claim.  Additional information regarding the home health pre-claim demonstration review project is set out below.

I. Background:

Section 402(a)(1)(J) of the Social Security Amendments of 1967[1] authorizes the Secretary for the U.S. Department of Health and Human Services (HHS) to develop demonstration projects that:

“develop or demonstrate improved methods for the investigation and prosecution of fraud in the provision of care or services under the health programs established by the Social Security Act.”[2]

The home health pre-claim review demonstration project was initiated by CMS due to the increase over the last three fiscal years of improper payment rates for home health claims. On June 8, 2016, CMS announced in the Federal Register[3] that five states would be involved in this new project to collect information to compile a “baseline estimate of probable fraud in payments for home health care services in the fee-for-service [FFS] Medicare program.” These five states include Illinois, Florida, Michigan, Massachusetts, and Texas. Furthermore, the goal of the project was to assess the use of pre-claim reviews as a means of reducing Medicare FFS expenditures for home health services by reducing improper payments while maintaining or improving the quality of care experienced by the beneficiary.”[4]

II. Pre-Claim Review Demonstration Process:

Under the pre-claim review demonstration process requires home health agencies are strongly encouraged to request a preliminary confirmation of coverage by submitting home health claims and associated clinical documentation, for review after services have begun but before the final claim for services is submitted for payment. The home health pre-claim review process is designed to better help ensure that applicable medical necessity, documentation, coverage, coding and billing rules are met before a claim is submitted to Medicare for payment.

The pre-claim review process does not create new clinical home health documentation requirements. Rather, home health agencies are only required to submit the same information they currently maintain for payment. As mentioned, they will do so earlier in the process, which will help assure that all relevant coverage and clinical documentation requirements are met before the claim is submitted for payment. CMS contends that the pre-claim review process will not delay care to Medicare beneficiaries and will not alter the Medicare home health benefit.

Home health agencies in one of the five demonstration states have been advised that if they do not submit their claims through the pre-claim review process, those claims will be flagged for prepayment review and will essentially treated like an ADR.  Moreover, after the first three months of the program, even if found to qualify for coverage and payment, CMS intends to reduce payment by 25% on each claim that is not submitted through the pre-claim demonstration review process.

III. Conclusion:

The decision by CMS to postpone the implementation of the pre-claim review demonstration in Florida was influenced, in large part, by the advocacy of supportive political and home health industry groups.  The postponement of the pre-claim review demonstration project is a major victory for health care providers in Florida, Michigan, Massachusetts, and Texas. Unfortunately, However, the implementation of the demonstration project is inevitable so providers should continue to prepare for the impact it will have on their health care practice. The exact start dates for Florida, Michigan, Massachusetts, and Texas have yet to be announced, but the dates will be provided on CMS’ website at least 30 days in advance to the implementation. Providers can expect a staggered start beginning with Florida, which provides additional time for preparation.

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

 

 

[1] 42 U.S.C. 1395b-1(a)(1)(J).

[2] Id.

[3] 81 Fed. Reg. 37598.

[4] “Pre-Claim Review Demonstration for Home Health Services in Illinois,” available at http://www.palmettogba.com/Palmetto/Providers.Nsf/files/Workshop_Home_Health_PCR_Workshop_Series.pdf/$File/Workshop_Home_Health_PCR_Workshop_Series.pdf

[5] See the Palmetto GBA website for helpful resources, available at http://www.palmettogba.com/palmetto/providers.nsf/docsCat/Providers~JM%20Home%20Health%20and%20Hospice~Home%20Health%20Pre-Claim%20Review.

Home Health Pre-Claim Reviews Are Here!

August 23, 2016 by  
Filed under Home Health & Hospice

Pre-Claim Reviews(August 23, 2016):  The home health pre-claim review demonstration project has now started and will be in place for at least the next three years. How did we get to this point?  Unfortunately, this demonstration project was initiated (in large part) based on the fact that  improper payment rate for home health claims has gone 17.3 % in FY 2013  to 51.38% in FY 2014 and 58.95% in FY 2015.

The Center for Medicare and Medicaid Services (CMS) has primarily attributed this increase due to the failure of home health agencies (and their referring physicians) to fully meet documentation requirements to support the medical necessity of the services.

I. Background:

Section 402(a)(1)(J) of the Social Security Amendments of 1967[1] authorizes the Secretary for the Department of Health and Human Services (HHS) to develop demonstration projects that “develop or demonstrate improved methods for the investigation and prosecution of fraud in the provision of care or services under the health programs established by the Social Security Act.”  Consistent with this authority, on February 5, 2016, the Centers for Medicare and Medicaid Services (CMS) published notice in the Federal Register that it intended to collect information that would be used by the agency to serve as a baseline estimate of probable fraud in payments for home health care services in the fee-for-service Medicare program.”  This baseline is to be comprised of information gathered from home health agencies, referring physicians and Medicare beneficiaries.

On June 8, 2016, CMS announced in the Federal Register (81 Fed. Reg. 37598) that five states would be part of the new Pre-Claim Review Demonstration project. For these states, preapproval is being required before final home health claims can be submitted.

  • Illinois (originally set to begin August 1, 2016)
  • Florida (no later than October 1, 2016).
  • Texas (no later than December 1, 2016).
  • Michigan (no later than January 1, 2016).
  • Massachusetts (no later than January 1, 2016).

II. What is CMS Telling Medicare Beneficiaries About the Pre-Claim Review Project?

CMS has notified beneficiaries by mail that a “new Pre-Claim Review Demonstration for Home Health Services” was to be initiated in Illinois on August 1, 2016.  (It was ultimately delayed until August 5, 2016). The letter sent to beneficiaries states that “This new demonstration doesn’t change your Medicare home health benefit and coverage requirements.”  CMS further outlines coverage requirements in its attached Fact Sheet, saying that a beneficiary must:

  • Be confined to the home at the time of services. Medicare considers you confined to the home (i.e., “homebound”) if:

(1) There exist a normal inability to leave the home, and

(2) Leaving home requires a considerable and taxing effort.

  • Additionally, one of the following must also be true:

(1) Because of illness or injury, you need the aid of supportive devices (such as a crutch, cane, wheelchair, or walker); the use of special transportation; or the assistance of another person in order to leave your home; or

(2) You have a condition such that leaving your home is medically contraindicated.

  • Be under the care of a physician;
  • Receive services under a plan of care established and periodically reviewed by a physician;
  • Need skilled services, which are services that only a skilled nurse or therapist can safely and effectively provide;
  • Have a face-to-face encounter (or visit) with a doctor or practitioner no more than 90 days before you start home health care or within 30 days after you start home health,

III. What is Palmetto GBA Telling Certifying Physicians and Practitioners?

By letter dated August 11, 2016, Palmetto GBA advised Illinois “Certifying Physician[s] / Practitioner[s]” patients that the Illinois Pre-Claim Review demonstration project for home health services began on August 1, 2016.   Palmetto GBA’s letter to certifying providers further stated that:

“As the certifying physician/practitioner, you are required under the Medicare program to supply the HHA or beneficiary face-to-face encounter visit notes as well as any other documentation that supports medical necessity for the home health care services ordered.”

Palmetto GBA’s letter further notes that to qualify for the Medicare home health care benefit, the patient must:

  • Be confined to the home;
  • Be under the care of a physician;
  • Be receiving services under a plan of care established and periodically reviewed by a physician;
  • Be in need of skilled nursing care on an intermittent basis or physical therapy or speech-language pathology; or have a continuing need for occupational therapy;
  • Have a face-to-face encounter with a medical provider as mandated by the Affordable Care Act for the initial episode of care.

Palmetto GBA’s letter to certifying providers concludes by stating that:

“What You Need to Know

. . . As the certifying physician/practitioner,  you are required under the Medicare program to supply the HHA or beneficiary face-to-face encounter visit notes as well as any other documentation that supports medical necessity for the home health care services ordered.”

Palmetto GBA’s letter concludes by noting: 

“Your Responsibility

If you are the certifying physician/practitioner for a Medicare patient, and plan to  order/refer home health care services, it is imperative that patient medical records include comprehensive clinical assessment data and are submitted to the HHA in a timely manner. Please watch this video on Home Health Face-to-Face  Documentation on Palmetto GBA’s website at www.PalmettoGBA.com/HHH.”

IV. Is Participation in the Pre-Claim Review Project Really Voluntary?

Both CMS and Palmetto GBA state that the demonstration project is “voluntary.”  Is it really voluntaryAs Palmetto GBA’s own website acknowledges:

“Final claims submitted without a Pre-Claim Review request during the first three months of the demonstration from the start date in that state will not be subject to a payment reduction.”

After this three month period:

“If a Home Health Agency in a demonstration state does not submit a Pre-Claim Review request, the final claim will be subject to pre-payment review. . . If no Pre-Claim Review request was submitted and the claim is determined  through pre-payment medical review to be payable, it will be paid with a 25 percent reduction of the full claim amount. . . The 25 percent payment reduction is non-transferable to the beneficiary. . . The 25 percent payment reduction is not subject to appeal.“  (emphasis added).

V. How Will a “Request for Anticipated Payment” (RAP) be Handled?

RAPs are not subject to the Pre-Claim Review process. At this time, no changes in the RAP submission process is anticipated – RAPs should be submitted in the normal process — there will not be any changes in the process and payment of a RAP.  A home health agency must submit a final claim within 120 days of the start of the episode OR 60 days after the paid date of the RAP. Please keep in mind, if a final claim has not been submitted in a timely fashion, the RAP will continue to be automatically cancelled.

VI. How Will a “Low Utilization Payment Adjustment” (LUPA) be Handled?

Home health services for less than 60days will still be subject to Pre-Claim Review, with the following exception:

  • LUPAs occur when four or fewer visits are provided in a 60 day episode. LUPAs are not subject to the Pre-Claim Review process.

VII. How Should Services With Modifier GY be Handled?

Home health services that are not covered by Medicare should be appended with a GY Modifier.  This modifier reflects the fact that the item or service does not meet the definition of a Medicare covered benefit.  Home health services billed with a GY Modifier are not subject to Pre-Claim Review.

VIII. How Should Services With Modifier GA be Handled?

Use of a GA Modifier indicates that that a provider expects an item or service to be denied because it is not reasonable and necessary.  The most common example of this situation would be for home health services that do not appear to meet the requirements under the applicable LCD.   It is appropriate to report this modifier when a beneficiary refuses to sign an ABN.  Importantly, the presence or absence of the GA Modifier does not influence Medicare’s determination for payment.  Therefore, Pre-Claim Review IS STILL REQUIRED for home health services billed with a GA Modifier.

IX. When Will Home Health Services in Texas be Subject to Pre-Claim Review?

Unless delayed (as it was for a few days in Illinois), the Pre-Claim Review process is currently scheduled to apply to all 60-day episodes of care that BEGIN on or after December 1, 2016.  This will include:

  • Initial certifications of care.
  • Recertifications of care. If a beneficiary is discharged and readmitted to the same agency within the same 60-day episode of care, these claims are subject to the Pre-Claim Review process.
  • If a new admission (start of care OASIS) is required, a new Pre-Claim Review request must be submitted by the agency.
  • If a beneficiary transfers to another home health agency during a 60-day episode of care, the RECEIVING home health agency must submit a Pre-Claim Review Please note, even if a beneficiary with a “provisionally affirmed decision” transfers to another home health agency during the same 60-day episode of care, the RECEIVING home health agency must still submit its own Pre-Claim Review request.

X. What Happens When a Claim is Submitted for Pre-Claim Review?

CMS is requiring that Palmetto make a decision and notify an agency within 10 business days (excluding federal holidays) of the initial submission for Pre-Claim Review.   Palmetto will assign a “Unique Tracking Number” (UTN) to each decision.  The decision will advise the submitting agency whether the claim is “affirmed” or non-affirmed.”   Each decision will include:

  • The UTN that has been assigned to the episode / decision.
  • Which HCPCS were affirmed.
  • A detailed explanation of which requirements were not met (if any).
  • Importantly, a provisional affirmation decision is only a preliminary finding that a future claim submitted to Medicare for the service likely meets Medicare’s coverage, coding and payment requirements.
  • A provisional affirmative decision only applies to the episode for which the Pre-Claim Review request was submitted.

XI. What Happens When Some HCPCS Codes Are Affirmed and Some are Denied?

In some instances, you may find that a Pre-Claim Review decision includes both affirmed and non-affirmed HCPCS codes. Should this occur, you can:

  • Submit the final claim with all the HCPCS codes with the UTN and the provisionally affirmed HCPCS will approve for payment and the non-affirmed HCPCS will deny with appeals rights.
  • Resubmit the PCR for the non-affirmed HCPCS codes which would result in a new UTN based on that decision which would then need to be used on the final claim.

XII. What Does it Mean When a Non-Affirmed Decision is Issued by Palmetto?

More often than not, it means that the documentation submitted does not meet one or more of Medicare’s requirements. Each notification of non-affirmation will include:

  • The UTN for the non-affirmed claim.
  • A listing of which HCPCS codes were not affirmed.
  • A detailed explanation of which requirements have not been met in order for the HCPCS codes at issue to qualify to be affirmed.

XIII. Impact of Home Health Pre-Claim Reviews on Small and Mid-Sized Home Health Agencies in Texas.

Your costs to process a claim will be significantly higher for the next three years.  The additional paperwork and effort to submit an episode for Pre-Claim Review are non-compensated and will likely prove challenging for agencies currently facing rising costs and ever-diminishing profit margins.

While CMS has issued deadlines (10 business days / 20 business days) for Palmetto to issue decisions in initial requests and resubmissions, it remains to be seen whether these deadlines will be met.  Home health agencies should anticipate delays, regardless of the goals that have been set for Palmetto. Even if Palmetto is able to process Pre-Claim review requests within its stated deadlines, home health agencies should expect to receive a significant percentage of denials (at least until it becomes more clear what Palmetto expect to see).  These denials will result in cash-flow delays.

Unfortunately, the administrative appeals process remains broken.  If you are unable to obtain a provisionally affirmed decision, you will likely face 3 – 5 years appealing a denial through Medicare’s appeal process.  Unless small and mid-sized agencies work to aggressively improve their compliance with applicable LCD rules, documentation, coverage and payment requirements, we anticipate a number of closures over the next three years.

Pre-Claim ReviewsRobert W. Liles, M.B.A., M.S., J.D., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Liles Parker is a boutique health law firm, with offices in Washington DC, Houston TX, San Antonio TX, McAllen TX and Baton Rouge LA. Robert represents home health agencies and other health care providers around the country in connection with Medicare, Medicaid and private payor audit actions. Our firm also represents health care providers in connection with federal and state regulatory reviews and investigations.

For a free consultation, call Robert at: 1 (800) 475-1900.

 

[1] 42 U.S.C. 1395b-1(a)(1)(J).

Coverage and Payment of New Products – CPT / HCPCS Code Issues

HCPCS Code(January 12, 2016): With the advent of the Affordable Care Act and the changes in the payment incentives that are being developed by payors, including the Medicare and Medicaid programs, many emerging companies are developing new products and devices for the market. While companies will take these products through the regulatory process of obtaining FDA approval, such as 510(k) approval, companies will frequently fail to take into consideration the need to determine whether and how third-party payors will cover the device or product at a sufficiently early stage in the process. If Medicare is involved, this requires determining whether the product is medically necessary and fits into one of the benefit categories, and then, if it does, how it will be reimbursed. A key element of determining if a product is medically necessary and whether it fits into a benefit category is ascertaining which, if any, of several types of codes is applicable to the product.

Additionally, many private insurers will “piggyback” onto Medicare in some manner with respect to these decisions. Finally, while coverage and payment determinations may differ, state Medicaid programs are also likely to consider Medicare decisions in this process. Both private insurers and state Medicaid programs will make these decisions based in large part on what codes apply to the device or product.

Many of these products or devices will go through clinical trials that are extremely costly, especially with respect to FDA approval. In designing these trials, it is also incumbent to consider whether they will be sufficient for coverage and payment decisions as well.

For example, where the manufacturer will be seeking Medicare coverage and payment for a device, it is important to take this fact into account when designing the composition and size of the subjects for the trial, e.g. whether there are a sufficient number of individuals who would be covered by Medicare in the trial. Otherwise, the manufacturer may discover that, after spending considerable funds on a study that is sufficient for the FDA, it cannot satisfy the Medicare program that the device meets Medicare coverage specifications without conducting a whole new trial. While there may have been reasons to do a two stage trial, consideration of these factors up front may avoid the necessity of doing so and save a substantial amount of time and money.

This article presents a brief discussion of the process that is involved in obtaining codes for new devices. There are two different types of codes that may be applicable – a HCPCS code which usually applies to a physical product or device and a CPT code which generally applies to a procedure. As part of a larger procedure, the CPT code may address use of a device or product.

I.  Analyzing HCPCS Code Issues:

In order to obtain reimbursement from any insurer or governmental program, a Healthcare Common Procedure Coding System (“HCPCS”) Level II code must be assigned to the device.[1] Determining the proper HCPCS code is critical, as that code will determine whether (a) the device is reimbursable at all and (b) what the amount of reimbursement will be.

The first decision that must be made is whether an existing HCPCS code is applicable or if the device requires a completely new HCPCS code. If the manufacturer believes that an existing code is appropriate and wishes to obtain verification of that belief, application must be made to the Pricing, Data Analysis and Coding (“PDAC”) contractor. Although obtaining a HCPCS code is voluntary for most devices, there are multiple benefits to doing so, not the least of which is avoiding retroactive denial of payments made by governmental and private healthcare programs resulting from billing under an incorrect HCPCS code and recoupment of the same following a post-payment review. Furthermore, many payers will not even consider reimbursement for a device absent a coding verification determination from the PDAC. Determination of the correct and appropriate HCPCS code initially is also important because once a HCPCS code is assigned, it is quite difficult to change the assigned code. In addition, as noted above, the assigned code will determine reimbursement.

Upon submission of an initial application, the PDAC reviews information supplied by the manufacturer, including marketing literature, usage instructions, labeling, FDA approval, any applicable Local Coverage Decisions (“LCDs”) and other relevant data. A manufacturer may suggest a HCPCS code, but the PDAC may determine that a different code is more appropriate. Once FDA approval has been received and a coding application has been submitted,[2] PDAC personnel may meet with a manufacturer, especially if the parties believe that a product demonstration is appropriate. Coding verification applications are accepted throughout the year.[3] Once the PDAC has all of the appropriate information, a decision letter can be expected 90 days after.

A recommended step prior to submitting a coding application is making informal calls to the PDAC to attempt to determine any threshold concerns or comments that the PDAC may have about a device and the coding proposed by the manufacturer and obtaining guidance as to specifically the types of documentation that should be submitted to the PDAC.

If the device is novel or contains breakthrough technology, then application must be made to Centers for Medicare and Medicaid Services (“CMS”) for a new code.   The information to be submitted for a new HCPCS code is similar to that for a coding verification. However, in this situation, a manufacturer should be careful to submit data that demonstrate how its device fails to fit into an existing HCPCS code. If the HCPCS code sought is under the durable medical equipment (“DME”) benefit, the manufacturer must submit 3 months of sales data to the PDAC and must demonstrate that its device represents 3% of the market “for that type of device.”[4] The deadline for submitting an application for a new HCPCS code is the first week of January. The CMS HCPCS Workgroup accepts new code applications throughout the year, but will not issue decisions on a rolling basis. The Workgroup issues preliminary coding decisions in April or May. CMS will subsequently hold a public meeting, during which the manufacturer may make a brief presentation if it did not receive a code that it thought was appropriate. Final codes are issued in November and become effective the following January.

II.  Investigate Proper CPT for Physician Use of Devices:

CPT codes are issued and maintained by the American Medical Association (“AMA”). Existing Category I CPT codes identify procedures or services that are generally accepted medical procedures performed by many physicians throughout the country. Category III CPT codes are temporary codes for new and emerging technologies. They are often used for data collection purposes to document widespread usage and thus justification for a Category I code.

Selection of an appropriate CPT code is the responsibility of the physician, but physicians often look to manufacturers for guidance, particularly if the CPT code relates to use of a particular equipment, machine or device (e.g., laboratory tests and equipment). If AMA members have questions about the most appropriate CPT code to use, they can submit questions online. Otherwise, physicians rely upon coders (usually certified) to review the medical documentation and select the most appropriate existing code.   The results of selecting the incorrect CPT code can range from a recoupment request from a payer all the way to accusations of fraud, especially if the incorrect code is not supported by underlying documentation or has been used incorrectly for an extended period of time.

If there is not an appropriate CPT code, an application may be submitted to the AMA for development of a new CPT code. Applications are accepted on a rolling basis, with deadlines approximately three months before the next CPT Editorial Panel meeting, which occurs three times per year. New CPT codes are issued in the fall of each year and become effective the following January.   An application for a new CPT code will often need the involvement and support of the relevant medical specialty society. In addition, if a new code is sought, the AMA will require significant supporting data, including clinical trial results, peer-reviewed articles, and FDA approval of the device or drug to be utilized in providing the services for which the new code is sought.

If the device and treatment involve telehealth, for example the development of an app that is used by the physician with the device, an open question at this point is whether one of the telehealth CPT codes may be appropriate for use for the physician services provided in connection with the device. Also in this regard, in October 2015 the AMA established a Telehealth Workgroup, with the specific objective of evaluating and recommending changes to, and almost certainly expansion of, the CPT codes for medical services involving telehealth technologies. The work product of this Workgroup will likely result in new codes. that may be more appropriate for the device and app than existing codes, so it behooves companies in the area to monitor developments from this process.

Finally, depending upon the issue, it may be appropriate to approach the Centers for Medicare and Medicaid Innovation (“CMMI”) along with a hospital or university system partner.

III.  Coverage / Reimbursement:

The above steps regarding HCPCS and CPT codes are only part of the process. If existing HCPCS and CPT codes are verified as appropriate, addressing actual coverage and reimbursement is likely to be an easier process, as there are often coverage and payment policies already in place for established codes and products. However, if a new HCPCS or CPT code is obtained, then the company will have to address the need for a (new) coverage and reimbursement policy or policies by potential payers. Simply because one obtains a new code does not necessarily mean that a payment policy is also developed and implemented.

Accordingly, if new codes are obtained, the manufacturer will likely need to approach the various payors such as the Medicare program, state Medicaid programs, or private insurers.

In order to justify coverage, the manufacturer must be prepared to submit various types of documentation, which may vary by payer. As noted, above, this may well involve clinical trial data demonstrating effectiveness, professional articles (preferably peer-reviewed) evidencing improvements in the patients’ conditions, and a cost-benefit analysis. In addition, the payors, particularly the private ones, may wish to see product demonstrations. Although the process may vary depending upon the population to be served by the product or device, if Medicare is to be involved, we generally will recommend early stage meetings with appropriate representatives of the Centers for Medicare and Medicaid Services (“CMS”) in order to try to ascertain whether the product fits into a covered benefit category, the types of studies that CMS will be seeking to make their determination, and other questions, to minimize the likelihood of having to go back and reinvent the wheel after having spent considerable sums of money only to prove the wrong facts for CMS’ purposes. In short, the process dictates the old adage that “an ounce of prevention is worth a pound of cure.”

Michael Cook and Heidi Kocher of our staff have considerable experience in assisting companies with new products in this process. They can be reached by contacting our office at 202-298-8750 or at mcook@lilesparker.com and hkocher@lilesparker.com.

HCPCS CodeHCPCS Code

[1] HCPCS Level I codes are Current Procedural Terminology (“CPT”) codes, which are used to classify procedures and services performed by physicians and other medical personnel. CPT codes are discussed below in more detail.

[2] Information submitted in the 510(k) application and the subsequent FDA approval may limit a manufacturer’s flexibility regarding HCPCS code assignment.

[3] For DME products covered by Medicare, during the interim period, manufacturers may well code the product as miscellaneous and seek payment from the contractor. The contractor will then review the claims on a case-by-case basis, which puts the manufacturer at risk during this interim period where the price and coverage are being determined.

[4] Precisely how to define “that type of device” is not clear.

How to Implement a Compliance Plan in Your Practice

Confused-Doctor(September 17, 2015): Despite the fact that Medicare and Medicaid requires that participating providers implement a compliance plan, most small providers have yet to complete the necessary steps to accomplish this requirement.  “My office manager went to a continuing education program, and she’s come back telling me we need a compliance program. I don’t know about that. I know I need to be in compliance with all those rules and regulations, but it seems to be complex and confusing. Do I really need one? How do I put a program into place without spending enormous sums? We’re a small practice and we don’t have a lot of extra time and money to spend on compliance activities.”

This is how my clients often approach me with questions about compliance programs. Or, they have been the recipient of an audit letter from either Medicare or a private insurer. Let’s face it, the requirements for compliance programs are here to stay. Not only are compliance programs now required by the federal government for any provider who receives Medicare or Medicaid reimbursement (see section 6401 of the Affordable Care Act), they are also required by many private insurance companies. Within the last year, I have seen increasing numbers of network provider contracts from private insurance companies include a requirement that the provider have a compliance program. So, having a functional compliance program is no longer an option but a requirement.

To that end, over the next year, we will be exploring the basic elements of an effective compliance program, as well as topics related to a solid compliance program. Let’s start with what a compliance program is and is not. A compliance program is not a document that is placed in a binder on a high shelf in your office, to be dusted off only annually or when faced with scrutiny by insurance companies or, God forbid, state or federal regulators. Instead, a compliance program should become part of the fabric of doing business in your practice. When implemented correctly, a compliance program can help identify potential trouble spots in your practice and give you a framework for addressing those trouble spots. Of course, a functioning and effective compliance program can also help minimize fines and, if things go south, could keep a civil matter from turning into a criminal matter.

A compliance program is also not a mumu – one size does NOT fit all. Just as there are differences between patients, there are differences between practices, the risks they face and the best methods of addressing those risks. An effective compliance program recognizes that while the structure of most compliance programs is similar, it takes into account the practice’s size and sophistication, the medical specialty, and the patient population. For this reason, compliance programs in a box or purchased off the Internet really are not desirable and often cost a practice more money in customization and sometimes tears down the road. A perfect example is the recent settlement by Anchorage Community Mental Health Services in relation to a HIPAA breach, where the government noted the ineffectiveness of the “sample” compliance policies and documents the provider put forward as its compliance program.

The basic elements of an effective compliance program are not complicated. They are:

  1. Designating an individual to serve as compliance officer and creating a compliance committee, particularly for larger organizations.
  2. Implementing a standard of conduct and policies and procedures relevant to the practice’s operations.
  3. Conducting effective training and education.
  4. Instituting effective methods of communication
  5. Conducting internal monitoring and auditing
  6. Enforcing the policies and standards through well-publicized disciplinary guidelines
  7. Responding promptly to violations and taking appropriate corrective action.

Each month we will explore each of these topics, discussing how to implement a compliance plan, and how to do so in a cost-effective fashion. Along the way, we will also discuss various forms of guidance available to practices when you implement a compliance plan that is tailored for the specific needs and risks of your individual practice. Let’s start with one right away – the federal government itself. The Office of Inspector General of the U.S. Department of Health and Human Services (“OIG”) has published a number of “Compliance Program Guidances”, intended to help different provider types understand and implement compliance practices specific to and appropriate for their particular branch. One of the guidances is specifically written for individual and small group physician practices and published in October 2000. It’s available here: http://oig.hhs.gov/authorities/docs/physician.pdf. In fact, this document is so basic to a physician practice’s compliance program that I strongly recommend that every compliance program have this document printed off, included among the compliance program documents, and readily available for staff member review. Although this document was published in 2000 (and therefore refers to CMS as HCFA and doesn’t make reference to the Affordable Care Act), it can be considered a bit like the U.S. Constitution – a document that creates the foundation for what comes after and points to a better future.

H-Kocher-photo-2-199x300Heidi Kocher, Esq. is a health law attorney with the firm, Liles Parker, Attorneys & Counselors at Law.  Liles Parker has offices in Washington DC, Houston TX, McAllen TX and Baton Rouge LA.  Do you need to implement a complaince plan?  Call one of our experienced health care attorneys for assistance. For a free consultation, please call: 1 (800) 475-1906.

The 2015 Mid-Year OIG Work Plan Has Been Released

Medical-Insurance-Audit(June 1, 2015):  As set out in the 2015 mid-year OIG Work Plan, the agency has once again announced its intentions to report on numerous types of potential fraud, waste, and abuse in HHS programs, as well as on the economy, efficiency, and effectiveness of the programs. The OIG plans to produce 193 reports in the near future, 65% of which will pertain to Medicare and Medicaid.

The OIG will study an array of provider and supplier types, including those that most often attract OIG scrutiny, such as home health agencies (HHAs), hospitals, and durable medical equipment companies. Although the OIG likes to revisit topics and measure progress in fraud, waste, and abuse prevention, it has announced the following new topics:

  • Intensity-modulated radiation therapy (IMRT) is an advanced mode of high-precision radiotherapy that uses computer-controlled linear accelerators. The OIG will review hospital outpatient payments for IMRT.

  • Hospital preparedness. The OIG will evaluate hospitals’ preparedness for public health emergencies resulting from infectious diseases, such as Ebola.

  • Access in competitive bid areas. There are anecdotal reports that competitive bidding within the Medicare program for some durable medical equipment (DME), prosthetics, orthotics, and supplies has curtailed access by beneficiaries. The OIG will study whether this proposition is true.

  • Clinical diagnostic laboratory tests. In anticipation of new Medicare payment rates for clinical diagnostic laboratory tests in 2017, as mandated by the Protecting Access to Medicare Act of 2014, the OIG will analyze payments for such tests in 2014. It will look at the top 25 tests according to expenditure.

  • IRF Issues. The OIG will report whether inpatient rehabilitation facilities (IRFs) have complied with the parameters of the IRF Prospective Payment System. In addition, the OIG will review whether documentation by IRFs has been compliant.

  • ACO use of EHR. Accountable care organizations (ACOs) promote accountability of hospitals, physicians, and other providers for patients, coordinate care, and encourage investment in infrastructure and redesigned care processes. The OIG will review the extent to which providers participating in ACOs use electronic health records (EHR) and will identify best practices and challenges to interoperability (the extent to which information systems can exchange data and interpret the shared data).

  • Overview of Part D. The OIG will summarize previous audits, legal opinions, and investigative work on the Medicare Part D program for drugs. It also will provide recommendations to improve oversight by the Centers for Medicare & Medicaid Services (CMS), Plan Sponsors, and the Medicare anti-fraud contractor.

  • Opioid trends. Opioid diversion and abuse and Part D fraud are perceived to be growing problems. In its upcoming report, the OIG will describe trends in billing for opioids and other drugs from 2006 to 2014, including trends associated with pharmacies.

  • Drug rebates. The Federal Government receives a share of drug rebates under Medicaid. The Affordable Care Act (ACA) increased rebates for Medicaid outpatient drugs.  The OIG will examine whether the States have been correctly reporting rebates.

  • T-MSIS. The Transformed Medicaid Statistical Information System (T-MSIS) is a repository of data about Medicaid and the Children’s Health Insurance Program to assist CMS in various areas, including program integrity. The OIG will determine whether the States report properly to the T-MSIS.

In addition to the above new topics, as discussed in the 2015 mid-year OIG Work Plan, the agency plans to study numerous other ways in which providers and suppliers may provide substandard care or receive payments to which they are not entitled. For example, it will examine hospice billing for general inpatient care. With respect to a DME item of great concern to the OIG—power mobility devices (PMDs)—the OIG will determine whether CMS can save money if Medicare beneficiaries rent certain PMDs over 13 months, rather than purchase them. Also, the OIG will continue to review payment rates for ambulatory surgical centers (ASCs).  One question is whether there is a disparity between ASC rates and those for hospital outpatient departments performing the same services.

Many of the studies pertain to Medicaid. For example, the 2015 mid-year OIG Work Plan notes that the OIG will be reviewing dental services under the Early and Periodic Screening, Diagnostic, and Treatment benefit for children.  As the Work Plan notes:  “In recent years, a number of dental providers and chains have been prosecuted for providing unnecessary dental procedures and causing harm to Medicaid children.  In addition, children’s access to dental services has been a longstanding Medicaid problem.” Also, States must terminate Medicaid providers who have been terminated by Medicare or by other State Medicaid programs. States must suspend a Medicaid provider if there are credible allegations of fraud against that provider. The OIG will review whether the States have followed these directives.

In addition to its stewardship over all HHS programs, the OIG will review key areas of ACA implementation, including emerging marketplace issues, Medicaid expansion and services, Medicare payment and delivery reform, program integrity, and public health program reform. The OIG will further look at HHS funds under the American Recovery and Reinvestment Act of 2009. In particular, it will review HHS’ award of incentive payments to providers for meaningful use of EHR. Some hospitals, including critical access hospitals, will be audited to determine whether they have conducted a security risk analysis of their EHR.

Gloria Frank_051815_0016-2Gloria Frank, Esq. is a health law attorney with the firm, Liles Parker, Attorneys & Counselors at Law.  Liles Parker has offices in Washington DC, Houston TX, McAllen TX and Baton Rouge LA.  Our attorneys represent health care professionals around the country in connection with government audits of Medicaid and Medicare claims, licensure matters and transactional projects.  Need assistance?  For a free consultation, please call: 1 (800) 475-1906.

The full OIG work plan may be located at http://oig.hhs.gov/reports-and-publications/archives/workplan/2015/WP-Update-2015.pdf.

The Medicare Appeals Process is Broken

The Medicare Appeals Process is Broken(May 5, 2015): As the health care providers and suppliers we represent can easily attest, there are serious problems plaguing the current Medicare appeals process. Rubber-stamp denials by contractors[1] at lower levels of appeal, the failure of Medicare contractors to apply the correct coverage rules and requirements when assessing a claim, and lengthy delays in obtaining a hearing before an Administrative Law Judge (ALJ) are just a few of the problems facing health care providers who appeal the denial of their Medicare claims.

I.  The Medicare Appeals Process is Broken:

On April 28, 2015, the Senate Finance Committee conducted a hearing entitled “Creating a More Efficient and Level Playing Field: Audit and Appeals Issues in Medicare.[2] Committee Chairman, Senator Orin Hatch, set the focus of the hearing in his opening statement. Several of Senator Hatch’s comments included:

“CMS has, of course, taken steps to identify and recover improper payments, including hiring contractors to conduct audits of the more than one billion claims submitted to the Medicare program every year.  These auditors have recovered billions for the Medicare program – over $3 billion in 2013 alone.  However, the increase in audits has led to a seemingly insurmountable increase in appeals, with a current backlog of over 500,000 cases, evidenced by this chart.

This increase in appeals has resulted in long delays for beneficiaries and providers alikeThere are so many appeals that the Office of Medicare Hearings and Appeals can’t even docket them for 20 to 24 weeks.  In FY 2009, most appeals were processed within 94 days.  In FY 2015, it will take, on average, 547 days to process an appeal – far too long for beneficiaries to find out whether their medical services will be covered or for providers to find out if they will be

Additionally, large portions of the initial payment determinations are reversed on appeal. The HHS Office of Inspector General reported that, of the 41,000 appeals that providers made to Administrative Law Judges in FY 2010, over 60 percent were partially or fully favorable to the defendant. 

Such a high rate of reversals raises questions about how the initial decisions are being made and whether providers and beneficiaries are facing undue burdens on the front end.  On the other hand, we need to recognize that ALJs have more flexibility in their decision-making than Medicare contractors do.” (emphasis added).

As this testimony suggests, the current system of administrative appeals is broken. Unfortunately, many health care providers are finding their organizations facing bankruptcy (primarily through mandatory recoupment) long before the provider has an opportunity to argue the merits of their case before an ALJ.

II.  The Current ALJ Hearing Backlog Has Increased 10-Fold in Two Years:

As Senator Ron Wyden noted during the Senate Finance Committee hearing, increases in the number of Medicare claims audits performed by CMS contractors have resulted in a ten-fold increase in the number of appeals cases ultimately being filed with the Office of Medicare Hearings and Appeals (OMHA). As Senator Wyden testified, the number of cases filed with OMHA in Fiscal Year (FY) 2011 was 60,000. By FY 2013, the number of filings had risen to 654,000.

III. What Does the Future Look Like?

A number of proposals intended to alleviate the current appeals backlog have been proposed by OMHA and included in the President’s proposed FY2016 budget. Unfortunately, a number of these proposals will likely result in additional hardships for small and mid-sized health care providers and providers. During the Senate Finance Committee hearing, OMHA’s Chief Administrative Judge outlined these proposals, which include:

Provide Office of Medicare Hearings and Appeals and Departmental Appeals Board Authority to Use RA Collections. This proposal would expand the Secretary’s authority to retain a portion of Recovery Audit (RA) program recoveries for the purpose of administering the recovery audit program and will allow RA program recoveries to fully fund the appeals process for RA related appeals at the OMHA and the DAB.

Comments: We recognize that the primary purpose of this proposal is to fund additional ALJ slots and support positions and to reduce the massive backlog of cases currently pending at OMHA. Nevertheless, we believe this proposal would create a conflict of interest for the OMHA. ALJ’s are supposed to give health care providers and suppliers a fair hearing and issue a ruling based on the merits. Under this proposal, the OMHA would essentially benefit (through the receipt of additional funding) from each ruling in which it ruled that an RA program denial was justified.  

Establish a Refundable Filing Fee. This proposal would institute a refundable per claim filing fee for providers, suppliers, and Medicaid State Agencies, including those acting as a representative of a beneficiary, at each level of appeal. Appeals filed by beneficiaries or representatives of beneficiaries other than providers, suppliers, and Medicaid State Agencies would be exempt from the fee. Fees will be returned to appellants who receive a fully favorable determination. Under current law, there is no administrative fee paid to the adjudicating entity for filing an appeal. A filing fee would encourage those who frequently file to more carefully assess the merits of their appeals before filing.

Comments: As discussed during the hearing, much of the current backlog can be traced to appeals filed by a relatively small number of providers. The purpose of this proposal is to encourage providers to conduct a careful review of claims denials before automatically filing an appeal. Unfortunately, this proposal will disproportionally affect small health care providers and providers, for whom a limited number of claims represent a significant portion of their overall revenues. Moreover, if enacted, a per-claim filing fee would be charged at each level of appeal.   This proposal will adversely impact small and mid-sized health care providers who wish to assert their appeal rights. Moreover, by discouraging the filing of appeals, the overall error rate of small and mid-sized providers will rise, making them an even larger target for Zone Program Integrity Contractor (ZPIC) and Medicare Recovery Auditor (RA)[3] data-mining efforts.

Sample and Consolidate Similar Claims for Administrative Efficiency. This proposal would allow the adjudication of large numbers of appeals through the use of sampling and extrapolation techniques without appellant consent. Additionally, this proposal would authorize the consolidation of similar appeals into a single administrative appeal at all levels of the appeals process for purposes of adjudicative efficiency. This provision would also require that all appeals that were included within an extrapolated overpayment or were consolidated previously would remain a part of the extrapolated or consolidated file on appeal.

Comments: Once again, this proposal is intended to streamline the appeals process and reduce the current backlog by consolidating similar claims into a single appeal. We are concerned with this proposal for several reasons. First, it places the responsibility for deciding what constitutes a “similar claim” in the hands of the CMS contractor. Past experience has shown that ZPICs and Program Safeguard Contractors (PSC) may fail to properly stratify samples prior to calculating estimated extrapolated damages.  

Remand to Redetermination Level upon Introduction of New Evidence. This proposal would require remand of a Medicare appeal to the first level of review at CMS when new documentary evidence is submitted into the administrative record at the second level of appeal or above. The proposal would include exceptions to mandatory remands if the basis for the submission is that new evidence was provided to the lower level adjudicator but erroneously omitted from the record, or an adjudicator denies an appeal on a new and different basis than earlier determinations. This proposal provides a strong incentive for all evidence to be produced early in the appeals process and to ensure the same record is reviewed and considered at the second and subsequent levels of appeal.

Comments: While we generally support this proposal, we are concerned that if abused by a CMS contractor, it could lead to significant delays in having a case heard by an ALJ. During this period of delay, the alleged overpayment would continue to accrue interest (at a rate far above the current market rate of interest), thereby making it even harder for a health care provider or supplier to make periodic payments on the debt while they are working their way through the appeals process.

Increase Minimum Amount in Controversy for ALJ Adjudication of Claims to Equal Amount Required for Judicial Review. This proposal would increase the minimum amount in controversy required for adjudication by an ALJ to the Federal district court amount in controversy requirement ($1,460 in 2015). It would also clarify the circumstances under which claims can be aggregated to meet the amount in controversy limit.

Comments: This proposal is intended to filter out small claims appeals that are currently contributing to the ALJ hearings backlog. We generally do not oppose this proposal. However, we have seen a number of cases where a Medicare Administrative Contractor (MAC) and / or a Qualified Independent Contractor (QIC) has broken an appeal into discrete claims and issued separate decisions for each claim. This could lead to the dismissal of appeals later in the case for failure to meet the amount in controversy requirement.

Establish Magistrate Adjudication for Claims with Amount in Controversy Below New ALJ Amount in Controversy Threshold. This proposal would allow OMHA to use attorney adjudicators to resolve those appeals that meet the current ALJ amount in controversy threshold ($150 in 2015) but fall below the amount currently required to file an appeal in federal district court ($1,460 in 2015), reserving ALJs for development of a record in more complex cases involving higher amounts in controversy, which have the potential for appeal to federal district court. Decisions of a Medicare Magistrate could be appealed to the DAB, but would not meet the amount in controversy required to be appealable to federal district court.

Comments: As with several of the other proposals, this recommendation would tend to adversely impact small to mid-sized health care providers and suppliers, effectively taking away their right to bring in federal court if they disagree with the denial of a claim that fails short of the new amount in controversy.

Expedite Procedures for Appeals with No Material Fact in Dispute. This proposal would allow OMHA to issue decisions without holding a hearing when there is no material fact in dispute and the decision is governed by a binding authority. These cases include, for example, appeals in which Medicare does not cover the cost of a particular drug or the ALJ cannot find in favor of an appellant due to binding limits on authority. This proposal would increase the efficiency of the Medicare appeals system and result in faster adjudications of appeals at the ALJ level of appeal.”

Comments: This proposal would effectively permit the OMHA to dismiss appeals it believes would be covered by one or more “binding authorities.” In doing so, a health care provider or supplier would be unable to effectively challenge an ALJ’s beliefs in this regard, thereby depriving the provider of an opportunity to show the ALJ why particular claims are not covered by a binding authority. 

IV.  Conclusion:

Small to mid-sized sized health care providers and suppliers are again slated to be adversely impacted by pending proposals to the current Medicare administrative appeals process. As you will recall, an earlier remedy of CMS to address the current case hearing backlog was to offer hospitals a “settlement” if they would drop their appeals. Physicians, small practices, dentists, home health agencies, hospices and other non-hospital providers were not given this option. We remain concerned that the current proposals will only further reduce the ability of small and mid-sized providers to contest the improper denial of Medicare claims by ZPICs, PSCs and RAC.

Robert Liles represents health care providers in RAC and ZPIC appeals.Robert W. Liles, JD, MS, MBA serves as Managing Partner at Liles Parker, Attorneys and Counselors at Law. Robert represents home health agencies of all sizes around the country in connection with a full range of ZPIC prepayment reviews, postpayment audits and suspension actions. He also handles home health False Claims Act cases. For a complimentary consultation, please call Robert at: 1 (800) 475-1906.

[1] Private contractors working for the Centers for Medicare and Medicaid Services (CMS).

[2] A video of the April 28, 2015 hearing, along with written witness statements, are available online at: http://www.finance.senate.gov/hearings/hearing/?id=d29af43d-5056-a032-526a-1de427f91aeb

[3] Previously referred to as Recovery Audit Contractors (RACs) by CMS.

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