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t-forceEDITOR'S NOTE: Healthcare attorney Thomas J. Force continues his discussion on the subject of out-of-network claims reimbursement.

"Insurers mislead and obfuscate in their policy language" - this was the language used by the U.S. Attorney General's Healthcare Industry Task Force back in 2009 in its healthcare report titled "The Consumer Reimbursement System is Code Blue."

So, what has changed since then? The answer to that question depends on who you ask.

The health insurance companies might tell you that they are doing the right thing and have contributed millions of dollars to fund the Fair Health Database, the third-party, neutral cousin of Ingenix. While this is technically correct, the Medical Society of the State of New York (MSSNY) does not think it accurately describes what is happening behind the scenes. As mentioned in the preceding article, the MSSNY found that while New York state insurance companies were funding this new initiative to be more transparent, some were simultaneously using "stealthy methodologies for determining out-of-network payments." Specifically, these insurance companies are seeking to use the percentages of the Medicare fee schedule. That's right - Medicare, the least-reimbursed of all payers with the exception of its cousin, Medicaid.

The aforementioned task force called for necessary reforms, including having "usual and customary" rates determined by an independent third party. It is no secret that Medicare reimbursements are not "usual and customary," so who was the neutral third party who determined that this was the solution? According to MSSNY, this actually will result in "substantially less coverage" than patients were getting under the Ingenix method.

This begs the question: do patients and physicians think anything has changed since 2009? With patients paying higher premiums for the privilege of getting an out-of-network option but then getting stuck with a majority of the physician's bill anyway, the answer is obvious. This in turn influences patients' decisions about which doctors to see. As MSSNY President Leah McCormick has pointed out, the current conduct of insurers seeking to reimburse out-of-network claims based on the percentages of Medicare threatens previously longstanding doctor-patient relationships.

Out-of-network physicians already are feeling the heat from what only can be viewed as a calculated strategy on the part of health insurers to all but eliminate out-of-network benefits in health insurance policies (please see "Out-of-Network Reimbursement: Don't Expect Insurers to Do the Right Thing," available at http://patriotcompli.com/files/RAC_Monitor_Article_-_dont_expect_insurers_to_do_the_right_thing.pdf). Insurers already are refusing to accept assignment of benefits, and this has resulted in checks being sent to patients and not to physicians' offices. Now those out-of-network physicians who are left are facing the probability that they will be reimbursed less than their in-network counterparts. If this trend continues, the livelihood of the out-of-network physician is in serious jeopardy.

What can be done about this latest attempt by health insurers to eliminate the out-of-network benefit option? A preemptive strike against insurance companies is absolutely warranted. This is a call to action to those out-of-network providers who want to reverse this trend. We would like to hear about every case in which out-of-network reimbursements are being based on a percentage of Medicare, Medicaid or the Resource-Based Relative Value Scale (RBRVS).

About the Author

Thomas J. Force, Esq. is a nationally recognized expert in revenue collection techniques, managed-care contracting and appeal strategies. He is the founder, president and chairman of the board of The Patriot Group in New York. As a state- and federally licensed attorney in both New Jersey and New York, Mr. Force has more than 21 years of experience in the healthcare and insurance industries. His success as a Wall Street insurance litigator and his tenure as general counsel for a New York-based accident and health insurance company where he served as chief compliance officer propelled the founding of The Patriot Group. He is co-founder of the Healthcare Reimbursement Attorneys Network, a national association of attorneys who represent physicians and hospital clients. Mr. Force also works closely with the American Medical Association and various state medical associations.

Contact the Author

tforce@patriotcompli.com.

To comment on this article please go to editor@racmonitor.com

Need a Silver Bullet? Try Adding a Physician Advisor

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Eleven more people have been charged in an alleged fraud scheme involving two Chicago-area home health agencies.

The original defendant, Jacinto "John" Gabriel Jr., operated the now-defunct home health agencies, one that billed Medicare $38 million between 2006 and 2011 and one that billed $6 million between 2008 and 2011, according to the U.S. Attorney's Office in northern Illinois.

Gabriel and three other defendants authorized payment of $200 to $800 to people including a physician for each patient they referred to home health, according to the U.S. Attorney's Office in northern Illinois.

Gabriel also directed employees to list false diagnoses, including joint disease and hypertension, to bill for higher reimbursement, the U.S. Attorney's Office stated.

Other charges for the defendants include failing to pay taxes and filing false tax returns, the U.S. Attorney's Office stated.

Also in recent fraud news:

  • Beth Israel Medical Center has settled a false claims lawsuit for $13 million, according to the U.S. Attorney's Office in southern New York. The hospital inflated its fees to obtain outlier payments though the services did not qualify for those payments, the U.S. Attorney's Office stated.
  • Nine people including five doctors were charged in a scheme that allegedly involved kickbacks for referrals for electrodiagnostic testing, physical therapy and home health services, according to U.S. Attorney's Office in western Michigan. Other kickbacks were disguised as mileage payments, medical director fees, continuing medical education and contractual labor, the U.S. Attorney's Office stated.

Region A: Watch for ADR Changes

In recovery auditor news, the Region A RAC DCS Healthcare will send one additional documentation request (ADR) letter that combines all issues into one letter, the RAC stated on its website. Previously, the RAC sent letters for each issue.

The size of the envelope could vary also depending on the number of pages in the letter, but the envelopes will be white with the blue DCS Healthcare logo, the RAC stated.

Other changes in the letter include an improved description of how to format and send medical documentation and references to the esMD program to submit documentation, the RAC stated.

For a template of the new letter, visit http://www.dcsrac.com/Portals/0/ADR%20New%20Letter%20Template%20-%20Final.pdf.

RACs Post Physician, Hospital Issues

Connolly, the Region C RAC posted two issues for physicians - one about visits to patients in nursing facilities and one about an incorrect fee schedule applied to carrier claims.

Connolly also posted one inpatient hospital issue along with five inpatient hospital issues posted by HealthDataInsights, the Region D RAC.

For more about the issues, see the chart below.


 

Physicians

Name of issue

Date posted or approved

Regions/states where it is active

Description of issue

Document sources

Visits to patients in nursing facilities

3/5/12

RAC Region C

If evaluation and management services are being rendered to patients in a skilled nursing facility, then the appropriate E&M codes are to be used.

CMS Pub. 100-04 chapter 12

Incorrect fee schedule applied to carrier claims

3/5/12

RAC Region C

Overpayments identified on carrier claims that were reimbursed in accordance with the wrong fee schedule.

RAC statement of work 9/1/11; CMS physician fee schedule search; MLN Matters articles MM6351, MM6397, MM6484, MM6617, MM7112, MM6974, MM6973, MM6796, MM7528, MM7430, MM5980, MM6087, MM6180; CMS Pub. 100-04 chapters 12, 26; CMS Transmittal 2353/change request 7634

 

Inpatient hospitals

Name of issue

Date posted or approved

Regions/states where it is active

Description of issue

Document sources

Acute inpatient hospitalization - major chest procedures (DRGs 163, 164, 165, 166, 167, 228, 229, 230)

3/6/12

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pub. 100-02 chapters 1, 6; CMS Pub. 100-08 chapter 6

Acute inpatient hospitalization - multiple significant trauma (DRGs 955, 956, 957, 958, 959, 965)

3/6/12

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pub. 100-02 chapters 1, 6; CMS Pub. 100-08 chapter 6

Acute inpatient hospitalization - procedures for obesity (DRGs 619, 620, 621)

3/5/12

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pub. 100-02 chapters 1, 6; CMS Pub. 100-08 chapter 6

Acute inpatient hospitalization - myeloproliferative disorders (DRGs 802, 803, 826, 827, 828, 829, 830, 837, 843)

3/5/12

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pub. 100-02 chapters 1, 6; CMS Pub. 100-08 chapter 6


Inpatient hospitals (CONT'D)

Name of issue

Date posted or approved

Regions/states where it is active

Description of issue

Document sources

Acute inpatient hospitalization - nonbacterial infections (DRGs 969, 970, 974, 975)

3/5/12

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pub. 100-02 chapters 1, 6; CMS Pub. 100-08 chapter 6

Late submissions of IRF-PAI data

3/5/12

RAC Region C

Inpatient rehabilitation facility patient assessment instrument (IRF-PAI) data, which is collected on Medicare Part A fee-for-service inpatients, must be transmitted to the CMS National Assessment Collection Database by the 17th calendar day from the date of the patient's discharge. Transmission of the IRF-PAI data record 28 or more calendar days after the discharge date, with the discharge date itself starting the counting sequence, will result in the claim incurring a 25 percent late-transmission penalty.

OIG report A-01-09-00507; CMS Pub. 100-04 chapter 3

 

About the Author

Karen Long is the compliance product manager for DecisionHealth and oversees products that relate to fraud and abuse and HIPAA compliance for physician offices and home health agencies, and accreditation compliance for hospitals. In her almost four years at DecisionHealth, Karen also has been the compliance editor and a reporter for Home Health Line, nation's leading independent authority on home healthcare business, regulation and reimbursement.

Contact the Author

KLong@decisionhealth.com

To comment on this article please go to editor@racmonitor.com

Reporting and Returning Overpayments

j-gillAs The Centers for Medicare & Medicaid Services (CMS)  announced its record-breaking recovery effort of $4.1 billion for 2011, providers and hospitals were bracing for new depths of audits by government contractors.

The issue lists for each RAC region slowly but surely are starting to turn a critical eye toward preventative services. For primary care, this can have a significant impact on managing preventative care, according to CMS. Benefits such as annual wellness visits (AWVs) and initial preventive physical examinations (IPPEs) go against the grain of true "annual wellness" based on traditional patient care.  Furthermore, these introduce a new burden on providers by requiring them to reeducate patients on what these visits are not  - and a challenge to providers to obtain data that, in their eyes, represents a small piece of true prevention.

Years ago, CPT® developed a host of age-specific codes that, using age, risk factors and gender, scrutinized "annual wellness" in order to assess a patient's overall heath and to develop long- and short-term plans of care. Insurance companies also long have relied on data published by the U.S. Preventative Task Force to serve as a guideline for age-specific prevention. As it did with many AMA/CPT-defined preventative services, CMS deemed these age-specific codes non-payable for Medicare beneficiaries. A host of new HCPCS codes, redefined by CMS, provide a more narrow scope of what the government deems medically necessary and payable for prevention.

In 2010 CMS announced it would be introducing an "annual wellness" series of codes to cover a more comprehensive benefit for managing patient care. As the final rule was published in 2011, providers were perplexed at the documentation requirements, as medically necessary areas such as "exam" were excluded as code components. The series of codes appears to be more of a building block for ACO models to delegate responsibility toward a primary care provider and to work toward better educating beneficiaries to take charge of portions of their own healthcare. The new codes essentially mirror IPPEs (welcome to Medicare), only with eligibility including beneficiaries presenting after the 12-month limitation. Both the IPPEs and AWVs are considered "once-in-a-lifetime" benefits.

If the benefit has been used, CMS requires a subsequent code to be billed to update patient plans of care after 11 months have passed from the original AWV service. From a compliance perspective, this becomes a billing risk, as primary care providers may not reside in the same practice and may not have the ability to validate that services have been billed and reimbursed. It came as no surprise that this was placed on the RAC issue lists for many regions starting in August 2011.

Believe it or not, there is an upside to providing IPPE/AWV services. Not only do they reimburse generously, but the guidelines also provide options in terms of who can perform the services. In a May 2011 Q&A session held by Noridian Administrative Service (a MAC), clarification was provided that not only can non-physician practitioners perform the services, but this extends to the level of RNs and LPNs if "incident-to" guidelines are met. Specific attention was directed toward qualifying the definition of "direct supervision," and that the supervising provider must be present in the office suite and immediately available to answer questions. This could allow an RN to provide and document the AWV criteria and then allow the physician to see the patient for other medically necessary follow-up issues. If both the RN and the supervising provider perform and document two separate services, both may be billed to the carrier or MAC.

As CMS implements new benefits to cover aspects of preventative care, the carrier interpretation is vital to ensuring that services are coded and documented properly - but it also lends itself to practice variations with regard to who may provide actual services.

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About the Author

Jana B. Gill, MA, CPC, is a product engineer and developer of Regulatory and Reimbursement software suites for Wolters Kluwer. Jana also is the principal of Gill Compliance Solutions, LLC which specializes in physician compliance, developing internal auditing programs, government appeals (RAC/CERT), coding risk assessments, due diligence for physician/hospital integrations and revenue analyses of hospitalist services.

Contact the Author

jana.gill@gillcompliance.com

To comment on this article please go to editor@racmonitor.com

CPT® is a registered trademark of the American Medical Association

Is That Observation Stay Medically Necessary

s-meyersonWith all the auditing of medical necessity for hospital inpatient admissions that has been going on, we have heard very little about medical necessity for observation. That may be changing now that the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) has put review of observation on its 2012 Work Plan:

Observation Services During Outpatient Visits

"We will review Medicare payments for observation services provided by hospital outpatient departments to assess the appropriateness of the services and their effect on Medicare beneficiaries' out-of-pocket expenses for health care services ... observation care includes certain short-term services such as treatment, assessment, and reassessment that are furnished while a decision is being made regarding whether patients will require further treatment as hospital inpatients or if they are able to be discharged from the hospital. (CMS's Medicare Claims Processing Manual, Pub. 100-04, ch. 4, § 290.) Improper use of observation services may subject beneficiaries to high cost sharing."

So on the one hand, the RACs, MACs, CERT and other Medicare auditors are demanding repayment for underutilization of observation when they determine a patient was admitted instead of being placed in observation. On the other hand, the OIG is investigating  overutilization of observation and its effect on beneficiary out-of-pocket costs, matters involving exposure to Part B deductibles and copayments, the cost of self-administered drugs, and failure to qualify for SNF coverage when some portion of the required three-day hospital stay is in observation instead of inpatient status.

This is the classic "caught between a rock and a hard place" predicament (or is it caught between a RAC and a hard place?)

Medicare does not provide a lot of guidance on medical necessity "appropriateness" for observation.  The Medicare Benefit Policy Manual, Section 70.4.A, states that "observation services are those services furnished by a hospital on the hospital's premises including use of a bed and periodic monitoring by a hospital's nursing or other staffwhich are reasonable and necessary to evaluate an outpatient's condition or determine the need for a possible admission to the hospital as an inpatient."

The Medicare Claims Processing Manual, Section 290.5.1, adds that "the medical record must include documentation that the physician explicitly assessed patient risk to determine that the beneficiary would benefit from observation care."

Hospitals need to be aware that their use of observation may come under scrutiny - and that they must be sure their physicians not only have placed patients into the proper level of care, but that the documentation supports medical necessity for both admission and observation, whichever has been ordered. The role of the physician advisor in obtaining and providing this documentation early in the stay, preferably at the point of admission, is more critical than ever.

There are some proactive steps hospitals can take now. Physician education always has been and remains the cornerstone of compliance. Hospitals need to emphasize the importance of physician documentation of medical necessity for the services they order, regardless of type of service or level of care. Observation orders and physician notes must communicate clearly the reasons hospital observation is required (the risk assessment) and treatment plans for services that require a hospital setting. Merely restating the patients' chief complaint (chest pain, abdominal pain, dizziness, etc.) will not be sufficient to establish risk. Adding a provisional diagnosis (such as an "R/O" diagnosis) and mention of a potential adverse outcome would help satisfy this requirement. The record should show why this particular patient can't be sent home and have an outpatient workup or treatment rendered there.

While CMS doesn't necessarily follow any one set of guidelines, the case manager documenting that the patient met InterQual or Milliman observation criteria will help justify the use of observation. However, it's the physician's role to "explicitly assess risk," so if there is evidence of communication on this subject between the case manager and the physician, it will show that objective criteria were used to assess risk.

Because it has been so easy to order observation rather than release patients, and because there has been so little oversight, observation has been widely overutilized. Now the OIG has joined the chase and may be looking at both overutilization and underutilization of observation. While this hasn't been a focus for enforcement yet, hospitals should not be complacent about the need for documentation of medical necessity for observation.

About the Author

Steven J. Meyerson, MD, is a Vice President of Accretive Physician Advisory Services®. He is Board Certified in Internal Medicine and Geriatrics. He has recently been the medical director of care management and a compliance leader of a large multi hospital system in Florida. He has distinguished himself by creating innovative service lines and managing education for Accretive PAS®.

Contact the Author

SMeyerson@accretivehealth.com

To comment on this article please go to editor@racmonitor.com

Be Prepared and Proactive for RAC with Clear and Precise Documentation for Infusion Therapy

In addition to conducting data analysis, it is the job of review Medicaid integrity contractors (MICs) to provide or recommend audit leads as well as to detect and prevent Medicaid fraud. However, between January 2010 and July 2010, they only conducted data analysis and, at the request of the Centers for Medicare & Medicaid Services (CMS), issued lists of providers ranked by the amount of their corresponding potential overpayments.

Review MICs did not single out any individual providers on their lists as specific audit leads, and their identification of providers with potentially fraudulent billing patterns was "limited."

The Department of Health & Human Services Office of Inspector General (OIG) summarized these findings and others in a recently issued report entitled Early Assessment of Review Medicaid Integrity Contractors (OEI-05-10-00200 issued February 2012). Although the OIG did not determine whether review MIC activities resulted in the recovery of actual overpayments, it achieved these objectives:

  • To determine the extent to which review MICs completed assignments, recommended audit leads, and identified potential fraud
  • To describe barriers that they encountered in their program integrity activities.

Even though the review MICs did not really do their jobs as expected, part of that reason lies with the directions given to them by the Centers for Medicare & Medicaid Services (CMS). For example, the MICs didn't recommend specific audit leads because CMS instead directed them to submit lists of providers ranked by the amount of their potential overpayments. The MICs identified 113,378 unique providers, and, from this list, CMS itself selected 244 audit targets.

The OIG urged CMS to direct review MICs to include specific recommendations of potential audit targets in their data analysis reports for follow-up. In December 2010, CMS did begin to provide review MICs with more explicit directions, including specific recommendations for potential audit targets.

Biggest Barrier: Lack of Data

"Compromised data" (i.e., missing or inaccurate data) in CMS's Medicaid statistical information system (MSIS) hindered the review MICs' abilities to accurately perform their data analyses. In addition to files of eligible Medicaid enrollees, MSIS includes four Medicaid claims files: inpatient care, long-term care, prescription drugs, and all other claims.

Clearly, reported the OIG, CMS must take steps to improve the data quality being used-a recommendation with which CMS agreed, and in its November 2011 response, reported that it plans to expand the MSIS to include additional data elements important for detecting Medicaid fraud, waste, and abuse.

By 2014, CMS intends to replace MSIS with an expansion known as transformed MSIS (T-MSIS), which will include new data that should be updated more frequently than MSIS. This upgrade effort began in 2007 and a pilot project of T-MSIS began in 10 states during late summer 2011.

CMS also is working directly with states to obtain and include their Medicaid data. In fact, CMS already has initiated a project whereby a review MIC in Louisiana is accessing the state's Medicaid data system instead of CMS's system.

Stats on Overpayments

CMS makes monthly assignments to review MICs to identify potential overpayments. For each assignment, CMS specifies the state, type of Medicaid claims data, and range of service dates to be reviewed. CMS also specifies the targets for oversight, known as algorithms, that review MICs must use to perform assignments, which generally must be performed within 60 days.

During the six-month period under OIG review, the MICs completed that assignment and provided CMS with the results. The reports of algorithm findings contained 113,378 unique providers with $282 million in potential overpayments, which were generated by approximately 1 million claims for Medicaid-covered services.

Although the amount of potential overpayments for each provider varied, most potential overpayments were modest, the OIG found. Of providers included in the ranked lists, 89 percent owed less than $1,000 in potential overpayments, including 107 providers with no potential overpayments. However, at the high end, one provider did owe the Medicaid program more than $3.6 million in potential overpayments.

Billing Issues Reviewed

Appendix A of the OIG's report provides a table that lists the review MICs assignments from CMS, including, among other items, the service type, billing issue reviewed, and amount of potential overpayments. The OIG's table is not limited to the service types listed below, but the following provides an idea of a few areas of vulnerability within the hospital.  See Appendix A of the report for the entire table.


 

Service Type

Billing Issued Reviewed

Inpatient services

  • Duplicate billings
  • Inappropriate service setting
  • Services after death

Outpatient services

  • Duplicate billings
  • Inappropriate service setting
  • Medically unlikely
  • Services after death
  • Upcoming

Pharmacy services

  • Duplicate billings
  • Early refill
  • Inaccurate quantity
  • Overprescribed
  • Services after death

 

For More Information

For the OIG's report discussed above, go to http://oig.hhs.gov/oei/reports/oei-05-10-00200.pdf.

About the Author

Janis Oppelt is an editor with Medical Learning, Inc. (MedLearn), a Panacea Healthcare Solutions Company, St. Paul, MN.

Contact the Author

joppelt@medlearn.com

To comment on this article please go to editor@racmonitor.com

j-Colagiovannij-langeOn Nov. 15, 2011 the Centers for Medicare & Medicaid Services (CMS) unveiled the Prior Authorization of Power Mobility Devices (PMD) Demonstration Program. After the announcement many affected providers and suppliers expressed to CMS concerns that the demonstration program, and particularly the pre-payment review phase, would be detrimental to suppliers' businesses. Industry leaders collaborated to communicate these concerns, resulting in members of Congress sending letters requesting that the CMS delay the program's implementation. The industry's efforts ultimately were effective, and on Dec. 29, 2011 CMS announced that the launch of the program was being postponed indefinitely. In early February CMS released a statement indicating that the demonstration program's implementation would take effect on or after June 1, 2012, but with important changes from the initial design.

As originally and currently intended, the PMD demonstration will implement a prior authorization process covering scooters and power wheelchairs for all Medicare beneficiaries in seven states with what CMS has described as high numbers of fraudulent and error-prone providers (California, Illinois, Michigan, New York, North Carolina, Florida and Texas). CMS's stated goal for the demonstration is to reduce the number of improper payments connected to PMDs, a process that will aid in further ensuring the sustainability of the Medicare trust funds and ultimately provide protection for Medicare beneficiaries. In addition, CMS believes that the demonstration will go a long way toward achieving three key objectives, which include:

1) Developing and demonstrating improved methods for the investigation and prosecution of fraud in the provision of care or services rendered under the healthcare programs established by the Social Security Act;

2) Ensuring that PMDs are warranted by beneficiaries' medical conditions under existing coverage guidelines; and

3) Assisting in the preservation of beneficiaries' ability to receive quality products from accredited suppliers.

CMS believes that the implementation of this demonstration will provide an opportunity to reduce waste and abuse. CMS bases this belief on the fact that PMDs are expensive and have a history of fraud and abuse issues. In response to these concerns, the prior authorization process requires that relevant documentation for review must be submitted before items are delivered. The following items, when paid for by Medicare, are subject to the prior authorization process:

  • All power-operated vehicles (K0800-K0805 and K0809-K0812);
  • All standard power wheelchairs (K0813 thru K0829);
  • All Group 2 complex rehabilitative power wheelchairs (K0835 thru K0843);
  • All Group 3 complex rehabilitative power wheelchairs without power options (K0848 thru K0855);
  • All pediatric and Group 4 power wheelchairs (K0887 thru K0891); and
  • Miscellaneous power wheelchairs (K0898).
  • Group 3 complex rehabilitative power wheelchairs with power options (K0856 thru K0864) are excluded.

As discussed above, in response to provider and supplier concerns CMS made a number of significant modifications to the PMD demonstration. First, the agency eliminated the 100 percent pre-payment review phase (formerly known as Phase 1) due to the financial impact this review likely would have had on suppliers. Next, because ordering physicians may not be in the best position to submit prior authorization requests, CMS will allow suppliers to perform the administrative function of submitting these requests on behalf of physicians or treating practitioners.  Finally, CMS completed a separate Paperwork Reduction Act (PRA) notification for the PMD demonstration in response to heightened concerns regarding the limited notice given prior to the proposed start date.

CMS announced that it will not begin the demonstration until an Office of Management and Budget (OMB) PRA number is obtained (this is anticipated to be completed ahead of the tentative launch date). In addition, CMS will provide a process through which physicians and suppliers will be able to provide comments and make recommendations on how to reduce the paperwork burden associated with this demonstration; the agency will be accepting feedback during a 60-dayperiod that subsequently will be followed by a 30-day period during which the OMB will be accepting feedback. Demonstration states also now will start prior authorization at approximately the same time instead of engaging in a staggered implementation as initially planned.


 

CMS intends to conduct extensive education and outreach before and during the demonstration program in order to make all of the demonstration requirements clear for ordering physicians, practitioners, suppliers and beneficiaries. It is important for providers and suppliers to become familiar with the new prior authorization process requirements for PMDs in order to avoid potential nonpayment by Medicare or becoming suspected of fraud. Therefore, providers and suppliers should implement an effective compliance plan to reduce the inherent compliance risks associated with the Prior Authorization PMD Demonstration Program.

About the Authors

Jennifer Colagiovanni is an attorney at Wachler & Associates, P.C.  Ms. Colagiovanni graduated with Distinction from the University of Michigan and Cum Laude from Wayne State University Law School.  Upon graduation, Ms. Colagiovanni was nominated to the Order of the Coif. Ms. Colagiovanni devotes a substantial portion of her practice to defending Medicare and other third party payer audits on behalf of providers and suppliers.  She is a member of the State Bar of Michigan Health Care Law Section.

Jessica Lange is an associate at Wachler & Associates, P.C.  Ms. Lange dedicates a considerable portion of her practice to defending healthcare providers and suppliers in the defense of RAC, Medicare, Medicaid and third party payer audits.  Her practice also includes the representation of clients in Stark, anti-kickback, and fraud and abuse matters.

Contact the Authors

jcolagiovanni@wachler.com

jlange@wachler.com

To comment on this article please go to editor@racmonitor.com

Prioritize Protecting Patient Records after HIPAA Breaches

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My report in last week's RAC Alert included an error that Maryland was not included in the Feb. 13 knee orthosis bundling issue was incorrect. Maryland is included in that issue. Thanks to a loyal Monitor Monday listener who brought that to my attention.

Recent breaches of patient information should prompt your organization to examine its practices for protecting patient records.

Patient information from five of St. Joseph Health System's 14 hospitals became available through Internet searches, according to news reports. The information of 31,800 patients included patient name, body mass index, blood pressure, lab results, smoking status, diagnoses, medication allergies, advance directive status and demographic information, stated a report on the website of St. Jude Medical Center, one of the five hospitals.

In a separate news report, a resident found a dumpster used by a Denver pharmacy with medical records for thousands of patients.

In another news report, Allina Hospitals & Clinics sent eight patients' information to 250,000 people because of a glitch in its mass email system.

Providers have more reason to be careful with patient information. The Office of Civil Rights has started conducting audits for HIPAA compliance. Audits of the first 20 providers have started, with 130 more to follow by the end of the year.

For more information, visit the Office of Civil Rights at www.hhs.gov/ocr.

RACs did not post new issues this week.

About the Author

Karen Long is the compliance product manager for DecisionHealth and oversees products that relate to fraud and abuse and HIPAA compliance for physician offices and home health agencies, and accreditation compliance for hospitals. In her almost four years at DecisionHealth, Karen also has been the compliance editor and a reporter for Home Health Line, nation's leading independent authority on home healthcare business, regulation and reimbursement.

Contact the Author

KLong@decisionhealth.com

To comment on this article please go to editor@racmonitor.com

Minor Surgery Billed as Inpatient Stay: Top Reason for Overpayments

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DCS, the Region A recovery auditor, will recoup payments for additions to knee orthoses because they are included in reimbursement for specific base knee orthoses.

The new issue, posted Feb. 13, applies to 11 states. Maryland was not included in the post.

Knee orthoses also were part of two Medicare schemes in Puerto Rico that led to indictments of 10 people announced in January.

Both cases involved submission of false claims for durable medical equipment (DME) including knee orthoses and power wheelchairs, according to the Office of Inspector General (OIG).

In the 39-count indictment, the government alleges that one company submitted more than 1,500 false claims for medically unnecessary DME totaling almost $3 million. Medicare paid $1.4 million but put the company on prepayment review. At that point, two defendants bought a second company and submitted at least 359 fraudulent claims. When that company was put on prepayment review, defendants bought another company and submitted more than 100 more false claims, OIG stated. Medicare paid a total of more than $1.9 million on those claims.

The government seeks forfeiture of more than $1.9 million including two bank accounts, an investment account and a condominium, OIG stated. In a 60-count indictment, defendants submitted 95 fraudulent claims for DME for which Medicare paid almost $108,000.

RACs Post DME, Physician, Hospital Issues

Along with DCS's knee orthoses issue, Region C RAC Connolly posted a DME issue about therapeutic footwear use. RACs also posted two physician issues and two inpatient hospital issues.

Durable medical equipment

Name of issue

Date posted or approved

Regions/states where it is active

Description of issue

Document sources

Therapeutic footwear utilization

2/15/12

RAC Region C

The LCD and policy article for therapeutic shoes for diabetes limit the use of shoes and inserts. For patients meeting these criteria, coverage is limited to one of the following within one calendar year (January through December): One pair of custom-molded shoes (A5501), which includes inserts provided with those shoes, and two additional pairs of inserts; or one pair of depth shoes (A5500) and three pairs of inserts.

CMS Pub. 100-02 chapter 15

Knee orthosis bundling

2/13/12

Conn., Del., D.C., Maine, Mass., N.H., N.J., N.Y., Pa., R.I., Vt.

Payments for knee orthoses additions, as specified in NHIC's LCD for knee orthoses (L27263), are bundled into the payment for specific base knee orthoses and should be recouped if paid separately.

LCD for knee orthoses (L27263); article for knee orthoses - policy article (A46762) DME MAC jurisdiction A

 


 

Physician

Name of issue

Date posted or approved

Regions/states where it is active

Description of issue

Document sources

Rituximab - non-covered/non-allowed service under Part B

2/13/12

RAC Region C

An overpayment exists when a provider bills for a services of J9310/Rituximab with an ICD-9 code that is not included in the list of covered ICD-9 codes for J9310/Rituximab with the applicable local coverage determination (LCD) documents.

CMS Pub. 100-02 chapter 15; First Coast Service Options LCD L29271; Pinnacle local coverage article A45248; TrailBlazer superseded LCD L26746; Palmetto retired LCD L26147

E/M billed without modifier 25 on same day as dialysis

2/10/12

RAC Region D

Except when reported with modifier 25, payment for certain evaluation and management services is bundled into the payment for dialysis services 90935, 90937, 90945 and 90947.

CMS Pub. 100-04 chapter 8

 

Inpatient hospital

Name of issue

Date posted or approved

Regions/states where it is active

Description of issue

Document sources

Acute care hospitalization - hepatobiliary procedures (DRGs 420, 421, 422, 424 and 425)

2/10/12

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pub. 100-02 chapters 1, 6; CMS Pub. 100-08 chapter 6

Acute care hospitalization - bowel and rectal procedures (DRGs 329, 330, 332, 333, 334, 344, 345 and 346)

2/10/12

RAC Region D

Medicare pays for inpatient hospital services that are medically necessary for the setting billed. Medical documentation will be reviewed to determine that services were medically necessary.

CMS Pub. 100-02 chapters 1, 6; CMS Pub. 100-08 chapter 6

 

About the Author

Karen Long is the compliance product manager for DecisionHealth and oversees products that relate to fraud and abuse and HIPAA compliance for physician offices and home health agencies, and accreditation compliance for hospitals. In her almost four years at DecisionHealth, Karen also has been the compliance editor and a reporter for Home Health Line, nation's leading independent authority on home healthcare business, regulation and reimbursement.

Contact the Author

KLong@decisionhealth.com

To comment on this article please go to editor@racmonitor.com

As discussed in prior articles, extrapolation is a statistical technique that is used to infer (or estimate) the results from studying a sample of the universe to the entire universe.

While there are those that object to its use, when applied properly, it can be an efficient, accurate and cost-effective way of determining potential overpayment amounts in an audit.  Again, as discussed in prior articles, the statistical validity of the random sample is critical to an accurate extrapolation.  Because this technique, in effect, amplifies the results from the sample, even a small mistake (e.g., $10), when applied to a large universe of claims (e.g., 30,000) can result in a huge error in estimated overpayment (i.e., $300,000).

So, without rehashing the issue of testing for randomness, how can we get a pretty good idea without doing a lot of math?  In essence, what would the error rate look like if the sample was randomly drawn as opposed to being biased?  This is a major point of contention among many of the practices I work with, and, the truth is, it's not that difficult to conduct a small test.  It is, however, a hugely important aspect since the recovery audit contractor (RAC) statement of work (SOW) says that an extrapolation is permitted when there is evidence of a sustained or high level of error.  And while the SOW does not legally define "sustained" and "high level," knowing whether the auditor uses these definitions based on a biased sample is very important.

How It Works

Let's take an example of a practice that has an initial audit conducted of 30 claims. Of these, the auditor determines that 15 were overpaid. Remember: When a claim is audited (i.e., at the claim level), the audit is really done on the individual lines within the claim. So let's say, for the sake of argument, there are an average of five claim lines per claim, for a total of 150 claims.

While I know this is a bit of a stretch, again for the sake of argument, let's say that only one claim line in those 15 claims determined to be overpaid contributed to that decision (meaning that, of the five claim lines in each claim, for the 15 found to be overpaid, only one claim line in each was found wanting).  So what we have, then, is 15 of the 150 claim lines with an overpayment determination.

Now, instead of a 50 percent overpayment rate (15 out of 30 claims), the overpayment rate should really be seen as 10 percent (15 out of 150 claim lines). But because the audit was at the claim level and not the claim-line level, the auditor can try to use that to warrant an extrapolation.

Spotting Biased Samples

The other issue involves the rate of error from a different perspective.

In the 2010 CERT study, CMS sampled about Part B 32,000 claims and reviewed about 31,000 claims. Of these, the agency determined that approximately 10.2 percent were paid in error. This would put the 95 percent confidence interval at somewhere between 9.67 percent and 10.34 percent. For every 100 practices audited, 95 would have a claims error rate of somewhere between 9.67 percent and 10.34 percent.

If the results of your audit are like those above, where the claims level error rate is 50 percent, either you are one of the unlucky 5 percent of practices or the sample has been biased. Even at a 99 percent confidence interval rate, 99 out of 100 practices would likely have an error rate of between 9.56 percent and 10.45 percent.

There are lots of ways to test for randomness and several of these have been discussed in prior articles I have written, but suffice it to say that, using the smell test above, pretty much any practice can at least determine whether there is a sustained or high level of potential bias in the sample.

Taking Action

The last part of this is determining what to do if this happens to you.

I have worked on several cases where the practice objected to the extrapolation and demanded a full audit or all claims. This is a huge hassle for the practice and potentially an expensive venture. But it's at least as big a hassle and more expensive for the payer.

What payer do you know that wants to audit 20,000 claims? If you have been following along with some of the past articles, you know that we discussed this in regards to the number of full time equivalents (FTEs) and the time required to audit all of the practice's claims.

However, if you think that the sample is biased, and there are tens if not hundreds of thousands of dollars at risk, consider a full audit as an option.  My experience is that that payer does not want to engage in this type of a brute-force audit situation and will either throw out the extrapolation (assessing damage at face value) or negotiate a lower amount.


 

As in the past, no one can make this decision for you but it is always a good idea to seek competent counsel when there is a lot at stake. Don't go this round unless you are ready to go the distance; bluffing doesn't always work and if you are called on it, expect a less than pleasant experience.

Bottom line? Take a hard look at what the auditor is telling you are the facts, but remember that there are three sides to every audit: yours, the auditor's, and, somewhere in the middle, the truth.

About the Author

Frank Cohen is the senior analyst for The Frank Cohen Group, LLC. He is a healthcare consultant who specializes in data mining, applied statistics, practice analytics, decision support and process improvement.

Contact the Author

frank@frankcohengroup.com

To comment on this article please go to editor@racmonitor.com

Increased Audit Scrutiny Aimed at Skilled Nursing Facilities

alert-powered-by-decision-health

 

 

 

 

 

 

 

Recovery auditors (RACs) have extended their reviews to another provider type following reports of overpayments and fraud.

Home health agencies, which have been under scrutiny for medical necessity of therapy services and patient eligibility, are now the target of an issue posted last week by Region C RAC Connolly.

The RAC will conduct automatic reviews to examine partial episode payments (PEPs), which occur when a patient transfers to another agency during a standard 60-day episode, for example.

While the first home health issue is an automatic review, agencies could see complex reviews in the future. Services, such as therapy, that have led to fraud allegations or overpayments would require auditors to examine documentation to determine medical necessity.

RACs Post 19 Issues

Including the home health issue, Connolly posted 18 issues that were approved Jan. 27 for inpatient hospitals, physicians, durable medical equipment (DME) suppliers, outpatient hospitals and ambulance providers.

HealthDataInsights, the Region D RAC, posted one physician issue.

CLICK TO DOWNLOAD RAC ISSUES

About the Author

Karen Long is the compliance product manager for DecisionHealth and oversees products that relate to fraud and abuse and HIPAA compliance for physician offices and home health agencies, and accreditation compliance for hospitals. In her almost four years at DecisionHealth, Karen also has been the compliance editor and a reporter for Home Health Line, nation's leading independent authority on home healthcare business, regulation and reimbursement.

Contact the Author

KLong@decisionhealth.com

To comment on this article please go to editor@racmonitor.com

Extrapolation v. a Complete Review—a Tough Choice for Practices