Provider Audits Hit the Ground Running Following Pause

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Original story posted on: September 23, 2020

Medicare audits expected soon.
Federal healthcare audits have resumed, and they are not limited to durable medical equipment (DME) or any one specific group of providers, any one type of contractor, or any one specific locality in the country. Since the announcement of the ramping up by the Centers for Medicare & Medicaid Services (CMS) on Aug. 3, it took only:

  • Twelve days for our first client to receive a notice of audit by a Unified Program Integrity Contractor (UPIC) and another client to receive a notice of overpayment demand from their Medicare Administrative Contractor (MAC).
  • At 15 days out, another group of clients received automated Recovery Audit Contractor (RAC) letters outlining assessed overpayments.
  • At 17 days out, a client received an “intent to refer” to the U.S. Department of Treasury letter for an audit that was filed to Level II (reconsideration). Upon contacting the MAC, they indicated that they had already recouped the money, even though they were notified prior to 60 days that the client intended to appeal to the Qualified Independent Contractor (QIC).
  • At 18 days out, another client received a Comprehensive Error Rate Testing (CERT) letter.

What’s most disturbing is the heavy-handed language used by the UPICs to demand obedience by providers or else face severe consequences. I’m not exaggerating. The fact is, their “new-and-improved” language almost borders on intimidation, along with threats against one’s ability to earn a living as a healthcare provider. In the conclusion of their letters, the UPIC states: “additionally, continuation of identified problems can result in exclusion from the Medicare Program in accordance with Section 1128(b) of the Social Security Act, Civil Monetary Penalties; and/or suspension of Medicare payments under 42 C.F.R. § 405.370 et seq. In addition, we remind you that our regulation at 42 C.F.R. § 424.535 authorizes us to revoke Medicare billing privileges under certain conditions. In particular, we note that per 42 C.F.R. § 424.535(a)(8)(ii), CMS has the authority to revoke a currently enrolled provider’s or supplier’s Medicare billing privileges if CMS determines that the provider or supplier has a pattern or practice of submitting claims that fail to meet Medicare Requirements.”

Does this statement not seem intended to intimidate, even though the findings in this particular letter reflect “a very cursory review, performed without a request for actual progress notes?”

payer auditors continue to hide behind “not medically necessary,” but what is that? The term "medical necessity" refers to what is medically necessary for a particular patient, and it entails an individual assessment, rather than a general determination of what works generally (Second Circuit Court of Appeals, cited in Kaminski, “Defining Medical Necessity,” www.cga.ct.gov/2007/rpt/2007-r-0055.htm). The terms "medically necessary" or medical necessity" are intended to mean healthcare services that a physician, exercising prudent clinical judgment, would provide to a patient for the purpose of preventing, evaluating, diagnosing, or treating an illness, injury, disease, or its symptoms, and that are provided a) in accordance with generally accepted standards of medical practice; b) clinically appropriate, in terms of type, frequency, extent, site, and duration, and considered effective for the patient's illness, injury, or disease; and c) not primarily for the convenience of the patient, physician, or other healthcare provider, and not more costly than an alternative service or sequence of services at least as likely to produce equivalent therapeutic or diagnostic results as to the diagnosis or treatment of that patient's illness, injury, or disease. For these purposes, "generally accepted standards of medical practice" means standards that are based on credible scientific evidence published in peer-reviewed medical literature, generally recognized by the relevant medical community or otherwise consistent with the standards set forth in policy issues involving clinical judgment (Second Circuit Court of Appeals, cited in Kaminski, “Defining Medical Necessity,” www.cga.ct.gov/2007/rpt/2007-r-0055.htm).

"Medical necessity" is defined as follows under Title XVIII of the Social Security Act, Section 1862 (a) (I) (a): "notwithstanding any other provision of this title, no payment may be made under Part A or Part B for any expenses incurred for items or services which, except for items and services described in a succeeding subparagraph, are not reasonable and necessary for the diagnosis or treatment of illness or injury, or to improve the functioning of a malformed body member."

The preceding is a legal doctrine by which evidence-based clinical standards are used to determine whether a treatment or procedure is reasonable, necessary, and/or appropriate. The Medicare statute requires that any "rule" or other statement of policy (other than a material coverage decision) that establishes or changes a substantive legal standard must be promulgated by regulation (42 U.S.C 1395hh). However, CMS often fails to promulgate a standard for determining whether a service is reasonable and necessary, which is why courts give deference to the determination of the "treating physician” (United States v. Prabhu, 442 F. Supp 2d 1008 D., Nev 2006). Definitions of medical necessity determine whether a claim is "false" and whether the requisite "knowledge" exists. “Claims are not 'false' under the False Claims Act (FCA) when reasonable persons can disagree regarding whether the service was properly billed to the government,” per the Prabhu decision, which also notes that “a defendant does not 'knowingly' submit a 'false' claim when his conduct is consistent with a reasonable interpretation of ambiguous regulatory guidance.”

It is important to keep in mind that "medical necessity" is evaluated on a case-by-case basis by the MACs, opening the door to subjectivity and interpretation as to what potentially benefits the payer. One of my favorite quotes is by Judge Sam Ervin III of the Fourth Circuit Court during Rehab Association of Virginia v. Kozlowski, 42 .3d 1444, 1450, wherein he stated that Medicare Law is “one of the most completely impenetrable texts within human experience” and “dense reading of the most tortuous kind.” This is why we defer to the "treating physician" rule: the first section of the Medicare statute is the prohibition reading that "nothing in this title shall be construed to authorize any federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided." From this, one could conclude that the beneficiary's physician should decide what services are medically necessary for the beneficiary, and a substantial line of authority in the Social Security disability benefits area holds that the treating physician's opinion is entitled to special weight, and is binding upon the Secretary of the U.S. Department of Health and Human Services even when contradicted by substantial evidence, since the practice of medicine and treatments for disease or injury continue to evolve.

To further illustrate the point above, In Holland v. Sullivan, the court concluded that “though the considerations bearing on the weight to be accorded a treating physician's opinion are not necessarily identical in the disability and Medicare context, we would expect the Secretary to place significant reliance on the informed opinion of a treating physician and either to apply the treating physician rule, with its component of ‘some extra weight’ to be accorded that opinion, even if contradicted by substantial evidence, or to supply a reasoned basis, in conformity with statutory purposes, for declining to do so.”

In the case of the UPIC letter referenced above, they failed to demonstrate and made no effort to define medical necessity, or to address its myriad complexities. That, combined with the fact that it makes allegations of overpayment without a review of progress notes, amounts to a deliberate and egregious discounting of the treating physician rule.

As compliance professionals, managers, internal auditors, etc. charged with the responsibility of handling claim appeals, it is vital to understand who the individuals making clinical decisions are. Under Section 3.1.1.1 of the Medicare Integrity Manual, “the MACs, CERT, and ZPIC/UPICs/UPICs shall ensure that medical record reviews for the purpose of making coverage determinations are performed by licensed nurses (RNs and LPNs) or physicians, unless this task is delegated to other licensed healthcare professionals.” The Medicare manual continues, “RACs and the SMRC shall ensure that the credentials of their reviewers are consistent with the requirements in their respective SOWs. The MACs, CERT, and ZPICs/UPICs shall ensure that services reviewed by other licensed healthcare professionals are within their scope of practice and that their MR strategy supports the need for their specialized expertise in the adjudication of particular claim type (i.e. speech therapy claim, physical therapy).”

The lesson to take away from this article is to remain diligent and not take any contractor or third party at their word. If you receive a harshly worded letter from a MAC, CERT, MIC, RAC, CERT, UPIC, PSC, SIU, etc., contact your healthcare attorney to ensure that your rights are protected, and you are on a level playing field.

Sean M. Weiss, CEMA, CMCO, CPMA, CPC-P, CMPE, CMPM, CPC-P

Sean Weiss is a partner and vice president of compliance with DoctorsManagement, LLC. Sean has dedicated his career to helping healthcare facilities reduce the risk of noncompliance and achieve measurable financial results. He has protected thousands of physicians, medical practice groups, and hospitals from undue compliance penalties.

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