Starting this year, the Centers for Medicare and Medicaid Services (CMS) will have three Medicare quality and safety incentive programs go into effect. As a result, more than three dozen hospitals across the U.S. will be penalized more than 3% on most of their CMS reimbursements.
I. Medicare Quality and Safety Incentive Programs Now in Effect
The three Medicare quality and safety incentive programs, established under the Affordable Care Act (ACA) that will take effect this year are the Hospital Value-Based Purchasing (VBP) Program, the Hospital Readmissions Reductions Program, and the Hospital-Acquired Condition (HAC) Reduction Program.
- Hospital Readmissions Reductions Program: Hospitals can be penalized up to 3% of revenue for excessive 30-day readmissions. This is the highest amount allowed under the ACA, and is a significant increase from the readmission penalty in 2014, which was 35%.
- VBP program: CMS will withhold 1.5% of payments for all hospitals and distribute incentive payments based on performance. This program establishes bonuses and penalties that will be based on different quality indicators.
- HAC Reduction Program: There will be a 1% penalty to any hospital that falls into the bottom 25% nationally for hospital-acquired conditions, such as urinary catheter or bloodstream infections and other issues related to patient safety.
II. Impact of Increased Penalties
To show the effect these increased penalties will have on certain hospitals, Modern Healthcare did an analysis of CMS data and found that when the penalties associated with these three programs are combined, two hospitals in particular will have considerable Medicare payments docked over 4%. The 180-bed Palisades Medical Center in North Bergen, N.J., will face a reduction of 4.44% in reimbursements, and the 455-bed Pennsylvania Hospital in Philadelphia will face a reduction of 4.21% reduction.
The escalating penalties are receiving a lot of criticism from advocates for teaching hospitals and critical-access hospitals, which make up the biggest number of worst-performing hospitals. According to these advocates, CMS programs need to be refined to ensure they are not creating additional hardships. Members of the American Association of Medical Colleges (AAMC) say that AAMC hospitals are disproportionately affected by these penalties because by their very nature they take on more complex cases and are more likely to report bad outcomes. Therefore, their stance is that they should not be compared to and held to the same standards as hospitals with different types of patients and different types of procedures.
Modern Healthcare also found that academic medical centers were among the more heavily penalized hospitals in the nation:
- The University of Colorado Hospital faces a 2.18% reduction from its Medicare reimbursements;
- Peter’s University Hospital faces a 2.5% reduction from its Medicare reimbursements; and
- Thomas Jefferson University Hospital faces a 3.01% reduction from its Medicare reimbursements.
Forty-two hospitals will face a combined penalty of 3% or higher on their 2015 Medicare revenue.
III. Improved Performance as a Result of New Programs
While some healthcare providers will surely struggle as a result of increased penalties, many facilities have already improved their performance from year to year and face low penalty rates. In fact, about 800 of the nation’s hospitals face either no penalties or will be earning rewards based on their performance in the value-based purchasing program.
For example, Bucks County Specialty Hospital in Pennsylvania earned the nation’s highest reward in the value-based purchasing program and will see a fiscal 2015 reimbursement boost of 2.09%. The acute-care hospital has not seen a 30-day readmission fine in the past three years, it will not face a HAC penalty in 2015, and it increased its VBP Program reward.
There has been no suggestion from CMS that new rules or exceptions will be made for critical-access or academic medical centers who are disproportionately affected by increased penalties. Penalties are expected to increase over the years, having a large combined financial impact. By 2017, the combined penalties for HAC 30-day readmissions and value-based purchasing will put as much as 5.5% of inpatient Medicare payments at risk. CMS is constantly updating penalties for providers that don’t meet their arbitrary requirements, and these penalties are getting more expensive. If you have questions about these new penalties or any other pre-existing Medicare payment penalties that you may be at risk for violating, please give us a call, toll-free, at 1-800-475-1906.
Liles Parker attorneys represent health care suppliers and providers around the country in connection with regulatory compliance reviews, Medicare audits, HIPAA Omnibus Rule risk assessments, privacy breach matters, and State Medical Board inquiries. Robert W. Liles, Esq., is a Managing Partner at Liles Parker, Attorneys & Counselors at Law. Call Robert for a free consultation at (800) 475-1906.
The Centers for Medicare & Medicaid (CMS) has instituted several methods to help combat the increase in waste, fraud, and abuse in the federal and state health care programs. One of the most recent trends involves pre-payment review of claims. In this process, government contractors will review a claim for problems before the claim may be paid. Unlike the traditional postpayment review process, if a health care provider is placed under prepayment review, there is very little you can do other try to identify the nature of deficiencies noted so that remedial action can be taken. Moreover, health care providers in prepayment review face expensive complications, including possible exclusion from Federal healthcare programs, if the problems which caused them to be subject to prepayment review go uncorrected. The key is to truly understand the prepayment review process and what you can do to minimize any potential problems.
I. The Prepayment Review Process Comes to Life
In 2012, CMS introduced the Recovery Audit Prepayment Review Demonstration, which allows Recovery Auditors (RACs) to conduct prepayment reviews on certain types of claims that historically result in high rates of improper Medicare payments. The demonstration focused on eleven states: California, Florida, Illinois, Louisiana, Michigan, Missouri, New York, North Carolina, Ohio, Pennsylvania, and Texas. Prepayment Claim Review Programs apply to the National Correct Coding Initiative (NCCI), Medically Unlikely Edits (MUEs), and Medical Review (MR).
NCCI Edits are performed by Medicare Audit Contractors (MACs). CMS developed the NCCI to promote national correct coding methods and to control improper coding that leads to inappropriate payment in Medicare Part B claims. NCCI edits prevent improper payments when incorrect code combinations are reported. NCCI edits are updated quarterly.
MACs also perform MUEs, which were created to reduce the paid claim error rate for Medicare claims. MUEs and NCCIs are automated prepayment edits. MACs analyze whether the procedure on the submitted claim complies with MUE policy.
MRs are performed by MACs, Zone Program Integrity Contractors (ZPICs), and Supplemental Medical Review Contractors (SMRCs). These contractors identify suspected billing problems through error rates produced by the Comprehensive Error Rate Testing (CERT) Program, vulnerabilities identified through the Recovery Audit Program, analysis of claims data, and evaluation of other information, such as complaints. CMS, MACs, and other claim review contractors target MR activities at identified problem areas appropriate for the severity of the problem. A MAC can place a provider with identified problems submitting correct claims on prepayment review. If this happens, a percentage of the provider’s claims undergo MR before the MAC authorizes payment. Once providers re-establish the practice of billing correctly, prepayment review ends at the discretion of the contractor.
II. Prepayment Review
A Medicare contractor will place a provider on prepayment review if they suspect the provider is billing the Medicare program inappropriately. Rather than paying these providers upon the submission of claims, the contractors require the providers to submit medical records and other documentation to support the claims. The records and documentation are then manually reviewed by nurses and other licensed practitioners. The submitted claims are then either approved or denied based on the manual review. Providers generally remain on prepayment review until their average rate of claims approval reaches a sufficiently high percentage, which is usually 80%.
CMS has directed its contractors to consider excluding physicians and other providers from Medicare and Medicaid if they have been on prepayment review for extended periods of time without correcting their “inappropriate behavior.” Exclusion from participation in Federal healthcare programs typically leads to other adverse consequences, such as loss of hospital privileges and being dropped from managed care networks.
Providers must make exhaustive efforts to avoid ending up on prepayment review and potentially facing exclusion. To do so, providers need to understand what contractors have the authority to put a provider on prepayment review, and what the contractors are looking for.
III. Providers and Prepayment Review – A Real Concern
Unfortunately, even the mere allegation of fraud leads to prepayment review. This, in turn, can harm even the most innocent provider. Last year in New Mexico, fifteen behavioral health care providers were put on prepayment review based on “credible allegations of fraud.” Because their Medicaid reimbursements were suspended, the providers could not afford to pay their staff, rent, or other bills. The providers tried suing the state and sought an injunction that would restore funding. The providers argued that they had been denied due process by not being told what the precise charges were against them, and that at the end of the day those suffering the most were their patients. However, they were denied the injunction.
As a result, the fifteen providers ended up filing for bankruptcy. Because the behavioral health care providers served 87% of New Mexico’s Medicaid recipients, the state of New Mexico had to bring in providers from Arizona to service residents. This caused state infighting, as New Mexico’s Legislative Finance Committee objected to the New Mexico Human Services Department moving $10 million from its budget to pay Arizona agencies to take over New Mexico providers. The deal with the Arizona providers eventually went through, and 2 of the fifteen New Mexico providers were ordered to make repayments to Medicaid.
IV. What Can Providers Do?
Unfortunately, health care providers may not be able to ignore the fact that being placed on prepayment review has become an inevitability. So what is a practitioner to do faced with this ordeal? Well, the best way for a provider to avoid a tragic situation that befell the providers in New Mexico is to have an ironclad and effective compliance plan that is followed by all provider employees and affiliates. It is best to prepare for the worst and have solid documentation of accuracy to show auditors than to lose one’s livelihood over false allegations of fraud. Have you implemented your effective compliance plan? If not, you increase the risk that your claims may not be paid for the services you have provided. Even if you do have a compliance plan in place, the plan may no longer be up to date or may simply be ineffective. It is imperative that you take action now to reduce the risks that come along with the prepayment review process. Give us a call today and we would be more than happy to assist you with the prepayment review process as well as implementing an effective compliance plan for your organization.
Robert Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Liles Parker attorneys represent a variety of health care providers around the country in connection with both regulatory and transactional legal projects. For a free consultation, call Robert at (800) 475-1906.
Long term care facilities are required to employ a physician to serve as its medical director. Medical directors are responsible for overseeing the medical care as well as implementing resident care policies. The Centers for Medicare and Medicaid Services (CMS) has promulgated guidance for that position that outlines the specific roles and duties. Long term care facilities that accept Medicare should pay particular attention to the CMS guidance during the medical director hiring process. Furthermore, this guidance gives providers an idea of how to avoid an Office of the Inspector General (OIG) enforcement action against them for alleged questionable medical directorship arrangements with physicians.
I. The Role of the Medical Director
Medical directors act as important leaders for long term care facilities and help them provide quality care. CMS requires all long term facilities to designate a physician to serve in this role in order to receive Medicare payments for services provided. That practitioner must be currently licensed in the State(s) in which the facility(ies) s/he serves is (are) located.
CMS guidance states that the Medical Director has two primary responsibilities:
- Implement resident care policies; and
- Coordinate medical care in the facility.
Moreover, the medical director’s roles and responsibilities require the practitioner serving in this capacity to be knowledgeable about current standards of practice in caring for long term care residents. That individual must be educated about how to coordinate and oversee related practitioners serving under his leadership. The medical director’s input promotes a facility’s goal of optimal resident outcomes, which may also be influenced by many other factors, such as resident characteristics and preferences, individual attending physician actions, and facility support.
II. Implementation of Resident Care Policies and Procedures
Long term care facilities must obtain the medical director’s ongoing guidance in developing and implementing resident care policies, including review and revision of existing policies. While medical directors are the ultimate force behind resident care policies, they are not required to single-handedly put the policies into practice or monitor implementation. Instead, the medical director should collaborate and consult with facility leadership, staff, other licensed practitioners, nurse practitioners, physician assistants, and other registered health care professionals to help develop, implement, and evaluate the resident care policies and procedures.
The policies and procedures that are put into place must also reflect the current standard of practice. Moreover, although CMS guidance and regulations do not require the medical director to sign the policies or procedures, the facility must have documented evidence that its development, review, and approval of resident care policies included the medical director’s input.
III. Coordination of Medical Care
The other critical role of the medical director is the coordination of medical care. In this sense, coordinating medical care includes organizing, directing, and managing care from appropriate health care providers to meet the health care and psychosocial needs of residents. The coordination of care must also meet current standards of practice and help the long term care facility meet its regulatory requirements.
The medical director is an important link between the facility, attending physicians, and other providers. That physician is tasked with promoting a common understanding of the “big picture” for individual residents. S/he should use the valuable information identified through the facility’s quality assessment and assurance committee and quality assurance program to address any issues related to the coordination of care.
IV. What the CMS Guidance Provides to Long Term Care Facilities
To reduce the risk of non-compliance with CMS guidelines, facility boards should implement certain policies and procedures specifically dealing with medical directors that reflect the CMS guideline policies. For one thing, medical directorships should be reflected in the facility’s written policies and procedures manual and satisfy the requirements of all other relevant laws, including the Stark law and Anti-Kickback law. An electronic database – as well as a physical hard copy – of all these agreements should be maintained and should include a reliable tracking system to ensure that each agreement is reviewed periodically. Such monitoring on an annual basis of all medical director agreements can ensure that in each case the medical director is actually providing the services required and is being paid the compensation set forth in his agreement.
To prove that the medical director is implementing resident care policies, facility boards should check to make sure medical directorship services are legitimate and important in order for the facility to carry out its clinical functions. To prove their role in coordinating medical care in the facility, medical directors should complete a daily written log specifying each task performed and the amount of time spent performing the task.
CMS’s guidance pertaining to the regulation on medical directors is a useful tool for all providers and medical directors. It shows what OIG will review to determine whether a legitimate, bona fide medical directorships exists at the long term care facility. If a medical director has real duties and responsibilities that are actually performed and documented, this will differentiate that physician from a sham medical directorship arrangement which is designed to reward referrals and pay kickbacks. This is especially important as the government continues to aggressively enforce efforts against providers who engage in illegal kickback practices and violations of the Stark law. As a long term care facility, it is important that you document all of the evidence related to the roles and responsibilities for, as well as the actions taken by, your medical director. These should be included in your facility’s compliance plan. Do you need assistance drafting policies and procedures related to an effective compliance plan? We would be more than happy to help you remain compliant with all CMS rules and regulations. Give us a call today.
Robert W. Liles, Esq., is a Managing Partner at Liles Parker, Attorneys & Counselors at Law. He Liles focuses his practice on internal audits/investigations, fraud defense, and compliance and regulatory matters. The attorneys at Liles Parker represent a wide variety of health care providers and suppliers in administrative and civil proceedings. For a free consultation, call Mr. Liles at (800) 475-1906.
 42 C.F.R. § 483.75(i).
Zone Program Integrity Contractors (ZPICs) and Medicare Administrative Contractors (MACs) have continued to focus on prepayment review. Unlike with post-payment audits, there is very little a provider placed on prepayment review can do to identify and remedy noted deficiencies. Prepayment audits have grave consequences for healthcare providers, as we’ve written previously . Often times, the result of a prepayment audit is that a provider will be placed on prepayment review for up to a year with little or no notice and no concrete way of getting out of the review.
Notice of Prepayment Review
A peril of prepayment review is that MACs and ZPICs do not typically inform providers before they are placed on prepayment audit. In rare cases, we have seen providers get a letter from the MAC, which informs the provider they are on prepayment review and that they should anticipate Additional Documentation Requests (ADR) soon. Most of the time, a provider finds out it has been placed on prepayment review only after receiving the ADR. A provider may be subject to an unannounced visit from the MAC or ZPIC, who will be looking for additional documentation. This lack of notice often takes providers by surprise. Unfortunately, sometimes the mere allegation of fraud leads to prepayment review, which sometimes harms innocent providers. Last year in New Mexico, fifteen behavioral health care providers were put on prepayment review based on “credible allegations of fraud.” Below is an interactive presentation outlining the ADR process (note: the outline focuses on CGS ADRs, but the information is useful for all other MACs)
Cost of Prepayment Review
Prepayment review is expensive for providers because claim determinations are made after the provider has already performed services, but before any claim payment is made. Once an Additional Documentation Request (ADR) is received for a particular claim, providers are tasked with compiling information and justifying that specific treatment date. CMS requires all pertinent records on that specific patient, not just the date under review, to not only justify the claim as billed, but also demonstrate medical necessity in general. Once receiving the ADR documentation, the MAC has 30 days to review the materials and make a decision on the status of the claim (60 days if the ADR is for third party Liability). Only once the claim has been reviewed will the provider receive an Explanation of Benefits (EOB) from its ZPIC or MAC. As explained in detail in the above presentation, the claim is either allowed, partially allowed, denied, or marked as having illegible/absent signatures. The previously referenced New Mexico Behavioral Health providers had their Medicaid reimbursements suspended during prepayment review and could not afford to pay their staff, rent, or other bills. They tried suing the state, seeking an injunction that would restore funding. The providers argued that they had been denied due process by not being told what the precise charges were against them, and that at the end of the day those suffering the most were their patients. They were denied the injunction
The Prepayment Review Solution
Upon receiving notice of prepayment review, providers often scramble for a solution, but there is no escaping the tedious process required to be released from prepayment review. Once every ADR is received and responded to, it is incumbent on the provider to seize this opportunity to improve their business. Prepayment reviews and ADRs are not randomly assigned, there are complex formulas and red flags that determine whether a provider is at risk for being placed under review. We recommend an on-site gap analysis performed by experts, a thorough review of the entire practice, and a complete compliance plan tailored to your practice’s exact requirements. While performing these tasks after receiving ADRs can go a long way to prevent further action, taking these crucial steps before an audit greatly improves your chances of quickly escaping prepayment review. Call us toll-free at 1-800-475-1906 to discuss any aspects of prepayment review and MAC/ZPIC
Robert W. Liles, Esq., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Liles Parker attorneys represent health care providers around the country in connection with both regulatory and transactional legal projects. For a free consultation, call Robert at (800) 475-1906.
The process of Medicare contractors – such as Zone Program Integrity Contractors (ZPIC) and Recovery Audit Contractors (RAC) – issuing adverse medical review findings and Medicare Administrative Contractors (MAC) subsequently demanding repayment of alleged overpayments can be very daunting for providers. This is particularly true when Medicare contractors employ statistical sampling methodologies which expand overpayment sums to a designated universe of claims beyond just the actual claims reviewed. A few thousand dollars worth of claims suddenly becomes tens or even hundreds of thousands of dollars. In many instances, providers will choose to appeal adverse determinations, ready to defend the good faith provision of services based on the medical needs of its patients. Understanding the financial implications and timeline of an overpayment assessment is hugely important. Should the provider pay the overpayment up front? If the provider can’t pay the overpayment sum immediately, how can it work with Medicare to repay the sum in a financially feasible manner? What if the provider doesn’t want to repay the overpayment – what steps will Medicare take? These questions are best addressed in reverse order.
I. Recoupment: Short-term Strategies for Delaying
Medicare expects providers to repay any overpayment as quickly as possible. If Medicare does not receive payment within 40 calendar days from the date of the MAC’s first demand letter, Medicare will recoup the full overpayment amount beginning on day 41, meaning the overpayment will be recovered from current payments due or from future claims submitted. There are multiple ways to delay recoupment, including by submitting a rebuttal to your MAC within 15 days of the initial demand letter (no guarantee) and filing appeal requests for the first two levels of appeal within specified time frames. Specifically, a provider must file the first level appeal – called the redetermination level – within 30 days of the initial demand letter to prevent recoupment through the time that a redetermination decision issues. If the redetermination decision is unfavorable, the provider must file the second level appeal – called the reconsideration level – within 60 days of the redetermination decision. If the reconsideration decision is also unfavorable, Medicare will initiate recoupment 30 days after the reconsideration decision is issued. If the reconsideration is partially favorable, and the overpayment sum requires recalculation, recoupment will begin 30 days after the recalculated demand.
It is important for providers to understand that even while recoupment is stalled, interest accrues starting with the date of the initial demand letter and is assessed every 30 days thereafter. While capitalization does not occur, the interest rate is quite high, at 10.50% as of January 21, 2015. Even if a provider is successful at postponing recoupment, the reality is that if a provider is at all unsuccessful through the first two levels of the Medicare administrative appeals process, recoupment will begin if the provider does not repay the overpayment and the provider likely must wait years to have a hearing scheduled before an Administrative Law Judge. Given that interest accrues and recoupment delay measures are really a short-term strategy, providers should use these tactics to buy time for serious financial planning. If a provider can repay some or all of the overpayment upon demand, the provider can lower or prevent the interest penalty, not to mention control the repayment process.
II. Extended Repayment Schedule or Cede to Recoupment?
A provider can set up an Extended Repayment Schedule (ERS) at any time once the first demand is made. If an unfavorable reconsideration decision is issued and the provider has not repaid the overpayment or established an ERS, the provider has two choices: allow Medicare to recoup or request an ERS. As long as a provider continues to appeal, Medicare cannot refer the debt to the Department of Treasury. Interest continues to accrue during recoupment and recoupment can be devastating to a provider whose payer mix is heavily weighted toward Medicare, effectively halting income. If an ERS is put into place, interest accrual ceases. Medicare also takes into consideration the financial hardship that an overpayment debt obligation imposes on a provider, and depending on whether the debt imposes a “hardship” or an “extreme hardship” on a provider, the ERS can be as long as 60 months. For a provider who is not a sole proprietor, the ERS application process can be tedious. The list of documents needed to support financial hardship is extensive, including balance sheets, income statements, cash flow statements, and lists of restricted cash funds, investments, and notes and mortgages payable. If a provider cannot establish genuine hardship, an ERS will be rejected or modified to reflect what Medicare believes is an appropriate repayment schedule based on the provider’s financials. Any repayments made under an ERS do not accrue interest in favor of the provider, if the provider is successful at reducing or eliminating the overpayment upon appeal; likewise, interest does not accrue in favor of Medicare either.
III. Controlling the Overpayment: Paying the Overpayment Upon Demand
If a provider is able to repay some or all of the overpayment upon demand, the provider has better control over the repayment process during the administrative appeals process, even if the provider adamantly disagrees with the overpayment assessment. The provider can avoid or limit recoupment and interest accrual. The provider will get its money back if it wins on appeal, though not with interest. Of course, if the provider does not win, Medicare keeps the money.
It is important for providers to understand the financial landscape of an overpayment demand. A provider familiar with the recoupment timeline and repayment options can immediately assess its finances and determine the best strategy for addressing the alleged overpayment during the administrative appeals process.
Do you have the policies and procedures in place to effectively deal with a Medicare Recoupment? Have you received correspondence from a ZPIC or RAC auditor and have delayed responding?
Lorraine Ater, Esq. is a health law attorney with the boutique 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.
(December 31, 2010): In case you missed it, Congress, President Obama and the healthcare regulators had a banner year with respect to regulatory activism in 2010. Over the next several weeks we will be releasing a series of articles on our website addressing these dramatic changes and the compliance risks they present for your practice, clinic or health care business in 2011:
Compliance Risk Number 1: Increased “HEAT” Activity and Enforcement: Perhaps the greatest risk to consider in 2011 is the increase in targeted health care fraud enforcement efforts by the government’s Health Care Fraud Prevention and Enforcement Action Team (HEAT). These teams are comprised of top level law enforcement and professional staff from the U.S. Department of Justice (DOJ), the Department of Health and Human Services (HHS), and their various operating divisions. HEAT team initiatives have been extraordinarily successful in coordinating multi-agency efforts to both prevent health care fraud and enforce current anti-fraud initiatives.
As DOJ noted in September 2010, over the previous Fiscal Year, DOJ (including its 94 U.S. Attorneys’ Offices), HHS’ Office of Inspector General (HHS-OIG), and the Centers for Medicare and Medicaid Services (CMS), jointly accomplished the following:
- Filed charges against more than 800 defendants.
- Obtained 583 criminal convictions.
- Opened 886 new civil health care fraud matters.
- Obtained 337 civil administrative actions against parties committing health care fraud.
- Through these efforts, more than $2.5 billion was recovered as a result of the criminal, civil and administrative actions handled by these joint agencies.
President Obama’s FY 2011 budget request includes an additional $60.2 million in funding for the HEAT program.These funds will be used to establish additional teams and further fund existing investigations. Now, more than ever, it is imperative that you ensure that your Compliance Plan is both up-to-date and fully implemented. Medicare providers are obligated to adhere to statutory and regulatory requirements and the government’s HEAT teams are aggressively investigating providers who fail to comply with the law.
Compliance Risk Number 2: Zone Program Integrity Contractor (ZPIC) / Program SafeGuard Contractor (PSC) / Recovery Audit Contractor (RAC) Audits of Medicare Claims: As you already know, private contractor reviews of Medicare claims are big business – one ZPIC was awarded a five-year contract worth over $100 million. In 2011, we should expect to see:
- The number of ZPIC / PSC / RAC audits of Physician Practices, Home Health Agencies, Hospice Companies, DME Suppliers and Chiropractic Clinics will greatly increase in 2011.
- The reliance of both contractors and the government on data mining will continue to grow. Providers targeted will likely be based on utilization rates, prescribing practices and billing / coding profiles.
- An increase in the number of Administrative Law Judge (ALJ) hearings in where ZPIC representatives choose to attend the hearing as a “participant.” In these hearings, the ZPIC representative will likely aggressively oppose any arguments in support of payment that you present.
Are you ready for an unannounced / unanticipated site visit or audit? When is the last time that you have conducted an internal review of your billing / coding practices? Are you aware of the hidden dangers when conducting these reviews? In 2011, your Compliance Officer may very well be your most important non-clinical staff member. Physicians and other providers should work with their Compliance Officer to better prepare for the unexpected audit or investigation.
Compliance Risk Number 3: Electronic Medical Records: Unfortunately, some early adopters of Electronic Medical Records (EMR) software are now having to respond to “cloning” and / or “carry over” concerns raised by ZPICs and Program SafeGuard Contractors (PSCs). In a number of cases, these audits appear to be the result (at least in part) of inadequately designed software programs which generate progress notes and other types of medical records that do not adequately require the provider to document individualized observations. Instead, the information gathered is often sparse and similar for each of the patients treated. Take care before converting your practice or clinic to an EMR system. Include your Compliance Officer in the selection and review process.
Compliance Risk Number 4: Physician Quality Reporting Initiative (PQRI) Issues: Under the Health Care Reform legislation passed last March. PQRI was changed from a voluntary “bonus” program to one in which penalties will be assessed if a provider does not properly participate. As of 2015, the penalty will be 1.5% and will increase to 2.0% in 2016 and subsequent years. Additionally, questions about the use of PQRI date in “Program Integrity” targeting remain unanswered. Once again, it is essential that your Compliance Officer provide guidance to your staff regarding this program and its potential impact.
Compliance Risk Number 5: Medicaid Integrity Contractors (MICs) and Medicaid Recovery Audit Contractors (MDRACs): In recent months, we have seen a marked increase in the number of MIC inquiries and audits initiated in southern States. Notably, the information and documentation requested has often been substantial. Medicaid providers must now also contend with MDRACs. As a result of health care reform, MDRACs are now mandatory in every State and are may initiate reviews and audits as soon as March 2011. Compliance Officers should review their current risk areas and ensure that Medicaid coding and billing activities are actively monitored to better ensure statutory / regulatory adhereance.
Compliance Risk Number 6: HIPAA / HITECH Privacy Violations: Failure to comply with HIPAA can result in civil and / or criminal penalties. (42 USC § 1320d-5).
- Civil Penalties – A large retail drug store company was recently fined $2.25 million for failure to properly dispose of protected information.
- Criminal Penalties – Earlier this year, a physician in Los Angeles, CA, was sentenced to four months in prison after admitting he improperly accessed individual health information.
As of mid-2010, there had been 93 breaches affecting 500 or more individuals. The total number of individuals whose information was disclosed as a result of these breaches was estimated at over 2.5 million. Out of the 93 breaches, 87 involved breach of hard copy or electronic protected health information (about 1/4 involved paper records and 3/4 involved electronic records. The vast majority of the 93 breaches involved theft or loss of the records. Many of these thefts could have been avoided with appropriate security. The government is serious about privacy and your practice, and in 2011 you will likely see increased HIPAA / HITECH enforcement. Your clinic or health care business must take appropriate steps to prevent improper disclosures of health information.
Compliance Risk Number 7: Increased Number of Qui Tams Based on Overpayments: Section 6402 of the recent Health Care Reform legislation requires that all Medicare providers, (a) return and report any Medicare overpayment, and (b) explain, in writing, the reason for the overpayment.
This law creates a minefield for physicians and other Medicare providers. First, providers have only 60 days to comply with the reporting and refund requirement from the date on which the overpayment was identified or, if applicable, the date any corresponding cost report is due, whichever is later. Of course, the legislation does not actually explain what it means to “identify” an overpayment.
From a “risk” standpoint, this change is enormous. Disgruntled employees try to file a Qui Tam (“whistleblower”) lawsuit based on a provider’s failure to return one or more Medicare overpayments to the program in a timely fashion. While the government may ultimately choose not to intervene in a False Claims Act case based on such allegations, a provider could spend a significant amount defending the case. Providers should ensure that billing personnel understand the importance of returning any overpayments identified as quickly as possible.
Compliance Risk Number 8: Third-Party Payor Actions: Third-party (non-Federal) payors are participating in Health Care Fraud Working Group meetings with DOJ and other Federal agents. Over the last year, we have seen an increase in the number of “copycat” audits initiated by third-party payor “Special Investigative Units” (SIUs). Once the government has announced the results of a significant audit, the third-party payor considers the services at issue and reviews whether it may have also been wrongly billed for such services. If so, their SIU opens a new investigation against the provider.
Compliance Risk Number 9: Employee Screening: With the expansion of the permissive exclusion authorities, more and more individuals will ultimately be excluded from Medicare. As we have seen, HHS-OIG is actively reviewing whether Medicare providers have employed individuals who have been excluded. In one recent case, HHS-OIG announced that it had assessed significant civil monetary penalties against a health care provider that employed seven individuals who the provider “knew or should have known” had been excluded from participation in Federal health care programs. These individuals were alleged to have furnished items and services for which the provider was paid by Federal health care programs. All providers should periodically screen their staff against the HHS-OIG and GSA databases to ensure that their employees have not been excluded from participation in Federal Health Benefits Programs.
Compliance Risk Number 10: Payment Suspension Actions: Last, but not least, we expect the number of payment suspension actions to increase in 2011. In late 2010, Medicare contractors recommended to CMS that this extraordinary step be taken against providers in connection with a wide variety of alleged infractions. Reasons given for suspending a provider’s Medicare number included, but were not limited to: (1) the provider failed to properly notify Medicare of a change in location, (2) the provider allegedly engaged in improper billing practices, and (3) the provider failed to fully cooperate during a site visit.
As each of these compliance risks reflect, health care providers are expected to fully comply with a wide myriad of Medicare and Medicaid statutory and regulatory requirements. Moreover, the failure to meet these obligations can subject a provider to penalties ranging from suspension from the program to criminal prosecution. Providers must take compliance seriously if they hope to thrive in 2011.
Liles Parker attorneys provide health law guidance and advice to health care providers around the country. Our attorneys have extensive experience working on compliance related matters and defending providers in connection with Medicare audits and investigations. Should you have questions regarding these and other issues, give us a call for a free consultation. We can be reached at 1 (800) 475-1906.
(December 11, 2010): Earlier this week, HHS-OIG announced that it had assessed significant civil monetary penalties (CMPs) against a health care provider that employed seven individuals who the provider “knew or should have known” had been excluded from participation in Federal health care programs. These individuals were alleged to have furnished items and services for which the provider was paid by Federal health care programs. Medicare exclusion screening is essential.
I. The Failure to Conduct Proper Medicare Exclusion Screening Activities Can Result in Significant CMPs.
The provider paid $376,432 to resolve these allegations. As Lewis Morris, Chief Counsel to the Office of Inspector General stated:
“Providers self-disclosing such violations will ultimately pay lower settlement amounts. . . But in cases initiated by the government — such as this one — providers will, as a matter of course, be required to pay more to resolve the matter.’
As Mr. Morris further noted:
“This case illustrates yet again that OIG will pursue CMPs when providers have employed an excluded person for the furnishing of items or services paid for by Federal health care programs,”
Notably, this matter was referred to HHS-OIG for investigation by the State Medicaid Fraud Control Unit (MFCU).
II. Lessons to be Learned.
This case illustrates a number of important lessons for all health care providers who participate in Federal Health Benefits Program, regardless of size. These lessons include:
Medicare exclusion screening of your employees is easy and quick: It takes very little effort for a provider to screen current and prospective employees against HHS-OIG list of excluded parties and GSA’ s list of parties who have been debarred from participation in Federal contracts. Notably, the failure to screen employees can be quite costly.
No mention of actual fraud or overpayment was mentioned in this case. Nevertheless, the employment of excluded individuals was found to be quite serious by HHS-OIG: HHS-OIG won’t hesitate to pursue civil monetary penalties against a provider who employs excluded individuals, despite the fact that no mention is made of any wrongful billings. Regular screenings of your employees should be made to ensure that none of your employees have been excluded from participation.
The government is serious about self-disclosing problems: HHS-OIG’s Chief Counsel went out of his way to point out that provider’s who self-disclose will ultimately pay a lower amount of damages to the government. While we recognize the government’s preference in this regard, should you identify a problem, you should contact legal counsel before making a self-disclosure. HHS-OIG’s voluntary disclosure protocol has a number of requirements that should be fully assessed prior to deciding to make a disclosure under the program. To be clear, if you owe money to the government, you must pay it back. The issue to be resolved is how to go about returning any monies to which you are not entitled. Depending on the circumstances, a provider may be better off working with their Medicare Administrative Contractor to resolve a problem. In other cases, HHS-OIG’s protocol may be the best option. Every situation is different and should be carefully assessed before action is taken.
Federal and State law enforcement teams are coordinating their actions and findings: Notably, these violations were first identified by a State MFCU who then contacted HHS-OIG. Similarly, we are seeing State Medical Boards advising ZPICs of actions they are taking against licensed health care providers. In several cases, the State Medical Board found that the provider was either not providing adequate supervision over subordinate Nurse Practitioners and Physician Assistants. The ZPIC has then used this as a basis to argue that the claims did not qualify for Medicare coverage.
In summary, health care providers should continually be reviewing their compliance efforts to ensure that basic mistakes such as the ones in this case (failure to properly conduct Medicare exclusion screening procedures of employees) do not occur.
Robert W. Liles serves as Managing Partner at Liles Parker. Robert and our other health law attorneys represent health care providers around the country in connection with compliance and other health law issues. Should you have questions about a health law issue, feel free to call us for a free consultation. We can be reached at: 1 (800) 475-1906.