CMS announced that beginning January 1, 2012 they will start conducting the following demonstrations: 

Recovery Audit Prepayment Review – This demonstration will allow Medicare RACs to review claims before they are paid to ensure that the provider complied with all Medicare payment rules.  The focus will be on claims that have a history of high rates of improper payments.  The demonstration will be conducted in 11 states.  Seven states with high populations of fraud and error-prone providers which include CA, FL, IL, LA, MI, NY and TX.  Four states with high volumes of short inpatient hospital stays which include PA, OH, NC, and MO.

Prior Authorization for Certain Medical Equipment – This demonstration will require prior authorization for certain medical equipment for all Medicare beneficiaries who reside in CA, FL, IL, MI, NY, NC, and TX, states that have been deemed areas with high populations of fraud and error-prone providers.  The demonstration will be implemented in 2 phases.  The first phase will be a prepayment review on certain medical equipment claims to occur in the first 3-9 months.  The second phase of the 3 year demonstration will implement prior authorization.

Part A to Part B Rebilling – The third demonstration will allow hospitals to rebill for 90% of the Part B payment when a Medicare contractor denies a Part A inpatient short stay claim as not reasonable and necessary due to the hospital billing for the wrong setting.  The demonstration is limited to 380 hospitals on a first come first service basis that volunteer to be part of the program.

To access the publication go to the following link: 

http://tiny.cc/7hup0

Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance and a statistician that are available to provide expert assistance with your RAC compliance programs.

 DISCLAIMER:  This newsletter contains only summary information and highlights; it should be read in conjunction with the full article or document provided as a link.  Any advice or recommendations given is general and specific questions should be directed to professional counsel.

The FY 2011 Totals are as follows:

FY 2010 Total Corrections $92.3MFigures are provided in millions.

To access the quarterly report publication go to the following link:  https://www.cms.gov/Recovery-Audit-Program/Downloads/FY2011QtrlyReport.pdf.

To access the FY 2011 publication go to the following link:  https://www.cms.gov/Recovery-Audit-Program/Downloads/FY2011Corrections.pdf.

Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance and a statistician that are available to provide expert assistance with your RAC compliance programs.

DISCLAIMER:  This newsletter contains only summary information and highlights; it should be read in conjunction with the full article or document provided as a link.  Any advice or recommendations given is general and specific questions should be directed to professional counsel.

CMS has posted a summary of the Medicare FFS RAC corrections for the 4th quarter of fiscal year 2011.  The summary identifies the following amounts for overpayments, underpayments, and total corrections:

Figures are provided in millions.

Top issues per region:

Region A:  Medical necessity regarding renal and urinary tract disorders.

Region B:  Medical necessity regarding surgical cardiovascular procedures.

Region C:  Medical necessity regarding acute inpatient admission neurological disorders.

Region D:  Medical necessity regarding minor surgery and other treatment billed as inpatient.

Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance and a statistician that are available to provide expert assistance with your RAC compliance programs.

DISCLAIMER:  This newsletter contains only summary information and highlights; it should be read in conjunction with the full article or document provided as a link.  Any advice or recommendations given is general and specific questions should be directed to professional counsel.

The United States Sentencing Commission has published the updated 2011 Federal Sentencing Guidelines Manual at the following website:  http://www.ussc.gov/guidelines/2011_Guidelines/index.cfm.  Appendix C (Volume III) pages 102-120 cover the changes made to Chapter 8 Sentencing an Organization.

The following are the major changes noted in Chapter 8:

1. The following was added to the introductory commentary to clarify the factors that the sentencing court must consider, “Culpability generally will be determined by six factors that the sentencing court must consider.  The four factors that increase the ultimate punishment of an organization are: (i) the involvement in or tolerance of criminal activity; (ii) the prior history of the organization; (iii) the violation of an order; and (iv) the obstruction of justice.  The two factors that mitigate the ultimate punishment of an organization are (i) the existence of an effective compliance and ethics program; and (ii) self-reporting, cooperation, or acceptance of responsibility.” 
2. The criteria set forth in Note 3(k) under §8A1.2 Application Notes, summarizing an effective program to prevent and detect violations of law was removed.  The guidance may now be found under PART B – Remedying Harm from Criminal Conduct, and Effective Compliance and Ethics Program, Subpart 2 §8B2.1.  While the existing framework of the seven minimum requirements is still embedded in the guidance it is more specific and elaborates on the criteria and imposes greater responsibility on the governing authority and executive leadership.   It is important to note the following changes:
   • The manual now states to have an effective compliance and ethics program an organization SHALL (emphasis added) exercise due diligence to prevent and detect criminal conduct and promote organizational culture that encourages ethical conduct and a commitment to compliance with the law.
   • Due diligence now requires the organization’s governing authority to be knowledgeable about the content and operation of the compliance and ethics program and shall exercise reasonable oversight of the implementation and effectiveness of the program.
   • The manual now describes how high-level personnel of the organization are to ensure an effective compliance and ethics program.
   • Due diligence now includes employing specific individual(s) to be delegated day-to-day operational responsibility for the compliance program.  The individual(s) must also report to the governing authority regarding the effectiveness of the program.
3. The Sentencing Commission also expands on how to calculate the culpability score, makes compliance and ethics training mandatory, mandates the use of monitoring systems to detect criminal conduct, requires organizations to assess risk that criminal conduct will occur on a periodic basis, provides guidance on how to implement a compliance and ethics program in a small organization.

We recommend reviewing the updated Sentencing Guidelines for Organizations.  We also recommend reviewing current compliance policies to ensure they include all the elements specified in the Sentencing Guidelines.  

HC Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance, and statisticians that are available to provide expert assistance with your compliance programs.

DISCLAIMER:  This newsletter contains only summary information and highlights; it should be read in conjunction with the full article or document provided as a link.  Any advice or recommendations given is general and specific questions should be directed to professional counsel.

On November 1, 2011 CMS posted the 2012 Medicare Physician Fee Schedule (MPFS) with comment period.

The following items are the major changes included in the final rule with comment period:

1. 27.4% SGR downward adjustment for services provide on or after January 1, 2012 (unless Congress intervenes).  The reduction will be on the Conversion Factor CMS uses to convert the RVU assigned to each code to an actual dollar amount.
2. CMS is expanding its multiple procedure payment reduction policy to the professional interpretation of advance imaging services.
3. Absent any additional legislation, CMS is implementing the provision that an independent laboratory may not bill the Medicare contractor for the technical  component of physician pathology services furnished to fee-for-service Medicare beneficiaries who are inpatients or outpatients on or after January 1, 2012. 

The complete 2012 MPFS Final Rule with Comment Period may be found at the following link:  http://ofr.gov/OFRUpload/OFRData/2011-28597_PI.pdf.

We recommend Medicare providers review the 2012 MPFS Final Rule in its entirety.

HC Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance and statisticians that are available to provide expert assistance with your Medicare and Medicaid compliance programs.

DISCLAIMER:  This newsletter contains only summary information and highlights; it should be read in conjunction with the full article or document provided as a link.  Any advice or recommendations given is general and specific questions should be directed to professional counsel.

The OIG published their semi-annual report to Congress today.  The report summarized the OIG’s efforts for the 2011 fiscal year.  Highlights from their 2011 Medicare and Medicaid enforcement efforts include:

• $5.2 Billion in expected recoveries
• 2,662 Exclusions
• 723 Criminal actions
• 382 Civil actions

We recommend providers conduct ongoing auditing and monitoring of identified risk areas.  HC Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance and a statistician that are available to provide expert assistance and support with your compliance programs.

To access the publication go to the following link:  http://oig.hhs.gov/reports-and-publications/archives/semiannual/2011/fall/HHS-OIG-SAR-Fall2011.pdf

The Office of Inspector General (OIG) has published the fiscal year 2012 Work Plan which describes activities the OIG plans to initiate or continue with respect to HHS programs from October 1, 2011 through September 30, 2012.

 Below is a summary of the new activities and recurring issues for Home Health and Hospice Agencies.

Home Health Services

For HHS the OIG plans to initiate the following new activities:

• States’ Survey and Certification of Home Health Agencies: Timeliness, Outcomes, Follow-Up, and Medicare Oversight – The OIG will review the timeliness of home health agency (HHA) standard and complaint surveys conducted by State Survey Agencies and Accreditation Organizations, the outcomes of those surveys and the nature and follow-up of complaints against HHAs.
• Missing or Incorrect Patient Outcome & Assessment Data – The OIG will review HHA Outcome and Assessment Information Set (Oasis) data to identify payments for episodes for which OASIS data were not submitted or for which the billing code on the claim is inconsistent with OASIS data.
• Questionable Billing Characteristics of Home Health Services – The OIG will review home health claims to identify HHAs that exhibited questionable billing in 2010. Questionable billing refers to claims that exhibit certain characteristics that may indicate potential fraud.
• Medicare Administrative Contractors’ Oversight of Home Health Agency Claims – The OIG will review fraud and abuse prevention and services performed by the home health benefit Medicare Administrative Contractors (MACs). They will also review the reduction of payment errors by MACs.
• Wage Indexes Used to Calculate Home Health Payments – The OIG will determine whether Medicare home health payments were calculated using incorrect wage indexes and evaluate the adequacy of controls to prevent such inaccuracies.

The OIG plans to continue the following activities for HHS:

• Medicare’s Oversight of Home Health Agencies’ Patient Outcome & Assessment  Data – The OIG will review CMS’s oversight of OASIS data submitted by Medicare-certified HHAs, including CMS’s process for ensuring that HHAs submit accurate and complete OASIS data.
• Home Health Agency Claims’ Compliance with Coverage & Coding Requirements – The OIG will review Medicare claims submitted by HHAs to determine the extent to which the claims meet Medicare coverage requirements.
• Home Health Prospective Payment System Requirements – The OIG will review compliance with various aspects of the home health Prospective Payment System (PPS), including the documentation required in support of the claims paid by Medicare.
• Home Health Agency Trends in Revenues & Expenses – The OIG will review cost report data to analyze HHA revenue and expense trends under the home health PPS to determine whether the payment methodology should be adjusted.

Hospices

The OIG plans to initiate the following new activity in relation to hospices:

• Hospice Marketing Practices & Financial Relationships with Nursing Facilities – The OIG will review hospices’ marketing materials and practices and their financial relationships with nursing facilities.

In regards to hospices, the OIG plans to continue the following activity:

• Medicare Hospice General Inpatient Care – The OIG will review the use of hospice general inpatient care from 2005 to 2010. They will assess the appropriateness of hospices’ general inpatient care claims and hospice beneficiaries’ drug claims billed under Part D.

Home, Community, and Personal Care Services

For such services, the OIG will be implementing the following new activity:

• Home & Community Based Services (HCBS): Vulnerabilities in Providing Services – The OIG will determine the extent to which HCBS waiver participants have plans of care, receive the services in their plans and receive services from qualified providers.

The OIG will continue the following activities:

• Home Health Services: Screenings of Health Care Workers – The OIG will review health-screening records of Medicaid home health care workers to determine whether the workers were screened in accordance with Federal and State requirements.
• Home Health Services: Agency Claims – The OIG will review HHA claims to determine whether providers have met applicable criteria to provide services and whether beneficiaries have met eligibility criteria.

Other Medicaid Services and Payments

For other Medicaid services and payments, the OIG will continue the following activities:

• Hospice Services: Compliance with Reimbursement Requirements – The OIG will determine whether Medicaid payments for hospice services complied with Federal reimbursement requirements.
• Payments for Physical, Occupational, and Speech Therapy Services – The OIG will determine the extent to which payments for Medicaid physical, occupational and speech therapy services comply with State standards and limits on coverage.
• Payments for Transportation Services – The OIG will review payments to providers for transportation services to determine the appropriateness of State Medicaid agencies’ payments for such services.
• Overpayments: Medicaid Credit Balances – The OIG will review patient accounts of providers to determine whether there are Medicaid Overpayments in the accounts with credit balances.

These excerpts are from the OIG work plan issued on October 5, 2011. We encourage you to scan the entire work plan for further information that may impact your agency. The entire work plan is available at http://oig.hhs.gov/reports-and-publications/workplan/index.asp.

Today the Office of Inspector General (OIG) published the fiscal year 2012 Work Plan which describes activities the OIG plans to initiate or continue with respect to HHS programs from October 1, 2011 through September 30, 2012.

Below is a summary of the new activities and recurring issues for hospitals and physicians.

HOSPITALS

For hospitals the OIG plans to initiate the following new activities:

• Accuracy of Present-on-Admission Indicators – The OIG will focus on the accuracy of POA indicators hospitals are reporting on inpatient claims.
• Inpatient and Outpatient Payments to Acute Care Hospitals – The OIG will be reviewing compliance with billing requirements for payments made to hospitals.
• Acute-Care Hospital Inpatient Transfers to Inpatient Hospice Care – The OIG will be reviewing the relationship between the hospital and the hospice provider, either financial or common ownership, when the beneficiary is transferred from hospital to hospice care. The review will be compared to similar transfers from the acute-care setting to other settings.
• In-Patient Rehabilitation Facilities – The OIG will be reviewing the appropriateness of IRF admissions.
• Critical Access Hospitals – The OIG will be reviewing the CAHs profile to determine if the hospital meets the criteria of a CAH.

The OIG plans to continue the following activities for hospitals:

• Hospital Reporting of Adverse Events – The OIG will continue to review the hospitals’ internal incident-reporting systems and to what extent they are capturing adverse events and to what extent the hospitals are reporting the events to external patient-safety oversight entities.
• Hospital Admissions with Conditions Coded Present-on-Admission –The OIG will continue reviewing which types of facilities are most frequently transferring patients with POA conditions.
• Hospital Inpatient Outlier Payments: Trends and Hospital Characteristics – The OIG will continue to review hospital outlier payment trends and characteristics for unusually high or increasing rates of outlier payments.
• Medicare’s Reconciliations of Outlier Payments – The review of CMS’s timely reconciliation of outlier payments will continue.
• Hospital Claims with High or Excessive Payments – The OIG will continue the review to determine if payments are appropriate.
• Hospital Same-Day Readmissions – The OIG will continue to review same-day readmissions to determine trends and to verify claims submitted are accurate.
• Medicare Payments for Beneficiaries with Other Insurance Coverage – Claims for services provided to beneficiaries with other types of insurance will be reviewed for inappropriate Medicare payments.
• Inpatient Prospective Payment System: Hospital Payments for Nonphysician Outpatient Services – Payments made for nonphysician outpatient services that were provided shortly before or during a Medicare Part A-covered stay will continue to be reviewed.
• Medicare Inpatient and Outpatient Hospital Claims for the Replacement of Medical Devices – Claims will continue to be reviewed for compliance with Medicare regulations.
• Observation Services During Outpatient Visits – The OIG will continue to review claims for outpatient observation services for appropriateness and the effect on beneficiaries’ out-of-pocket expenses.
• Critical Access Hospitals – Payments to CAHs will continue to be reviewed for appropriateness.

PHYSICIANS

The OIG plans to initiate the following new activities related to physician services:

• High Cumulative Part B Payments – The OIG will review high cumulative Part B payments to determine if they are reasonable and necessary, adequately documented, and provided consistent with Federal Regulations.
• Incident-to-Services – The OIG will review whether “incident to” billing has a higher error rate than that for non-incident-to-services.
• E/M Services: Use of Modifiers During Global Surgery Period – The OIG will review the appropriateness of the use of certain claims modifier codes during the global surgery period to determine if Medicare payments were in accordance with Medicare requirements.

The OIG plans to continue the following activities for physician services:

• Compliance with Assignment Rules – The OIG will continue to review whether providers are complying with assignment rules and to determine to what extent beneficiaries are inappropriately billed in excess of amounts allowed by Medicare.
• Place-of-Service Errors – The OIG will continue to review whether payments made to physicians have the proper place-of-service code.
• E/M Services: Trends in Coding of Claims – The OIG will continue to identify providers that exhibit questionable billing of E/M codes.
• E/M Services Provided During Global Surgery Periods – The OIG will continue to review industry practices related to the number of E/M services provided by physicians and reimbursed as part of the global surgery fee to determine whether the practices have changed since the global surgery fee concept was introduced.
• E/M Services: Potentially Inappropriate Payments – The OIG will continue to review E/M services for inappropriate payments and identify EHR that appears cloned.
• Part B Imaging Services – Part B imaging services will continue to be reviewed to determine whether the services reflect expenses incurred and whether the utilization rates reflect industry practices.
• Diagnostic Radiology Services: Excessive Payments – Medical necessity will continue to be reviewed as well as duplicate services.

We recommend Medicare providers review the Work Plan for Fiscal Year 2012 in its entirety. We also recommend providers conduct proactive audits of the applicable areas identified in the newest Work Plan.

HC Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance and statisticians that are available to provide expert assistance with your Medicare and Medicaid compliance programs.

To read the complete OIG Fiscal Year 2012 Work Plan please go to the following link: http://oig.hhs.gov/reports-and-publications/archives/workplan/2012/Work-Plan-2012.pdf.

On September 1, 2011 Medicare posted an updated Recovery Audit Contractor (RAC) Statement of Work (SOW).  The original SOW was published November 7, 2007.

Below are the changes that are noted in the updated SOW:

The SOW now specifically identifies which provider types are allowed to be audited for improper payments they include:  inpatient hospital, outpatient hospital, physician/non-physician practitioner, home health agency, laboratory, ambulance, skilled nursing facility, home health agency, supplier, inpatient rehabilitation facility, critical access hospitals, long term care hospitals, ambulatory surgical centers and others.

CMS will be conducting reviews to identify if a Recovery Auditor is reviewing all claim/provider types.  If the Recovery auditor is not reviewing all claim/provider types CMS will issue an official warning to the Recovery Auditor.  If lack of reviews continue CMS will consider recalling specific claim/provider type(s) and issuing them to a new CMS contractor. 

An additional process for identifying a claims overpayment has been added to the SOW called the “semi-automated review”.  The review will entail an automated review using claims data and potential human review of a medical record or other documentation.  The “semi-automated review” will be used when a clear CMS policy does not exist but the items and services that are billed would be clinically unlikely or inconsistent with evidence-based medical literature.  The process begins with an automated review of the claim to identify claims with items or services billed that would be clinically unlikely or inconsistent with evidence-based medical literature.  The Recovery Auditor would then send a notification letter to the provider requesting additional documentation to support the claim within 45 days.  If the documentation does not support the claim then the claim will be adjusted and a demand letter will be sent to the provider.  If the documentation does support the claim the provider will be notified that the review has been closed. 

Recovery Auditors are now required to complete the complex reviews within 60 days of receipt of the medical records documentation.  If the review results letter is issued after 60 days the Recovery Auditor will not receive a contingency fee, unless CMS has granted an extension.

Under Section IV, Specific Tasks, Recovery Auditors are now charged with the responsibility to identify LCDs that are out of date, technically flawed, ambiguous or provides limited clinical detail to central office evaluation to help improve the integrity of the Medicare program and the performance of the Recovery Auditor program.

The SOW adds guidance regarding DRG validation versus clinical validation.  DRG validation shall be reviewed by a certified coder.  The coder will review physician documentation to  determine if the correct codes and sequencing was applied to bill the claim.  In addition, coders shall only review physician documentation and make determinations based on the guidance in Coding Clinic.  Clinical validation requires a separate process, which can only be performed by a clinician, to review the case to determine if the patient actually possesses the conditions that were documented.

Upon approval of audit issues Recovery Auditors are required to post the issue name, description, posting date, state applicable, provider type and any relevant HCPCS code or DRG code to the Recovery Auditor’s a website page dedicated to audit issues.  The issue listing must be sortable at a minimum by provider type.

CMS RAC Region C, Connolly, is currently not in compliance with the website requirements.

The normal appeals process is now available to providers for all underpayment determinations.

We recommend Medicare providers review these rules in their entirety.  HC Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance and statisticians that are available to provide expert assistance with your Medicare and Medicaid RAC compliance programs.

To read the complete revised Statement of Work please go to the following link:  http://www.cms.gov/Recovery-Audit-Program/Downloads/090111RACFinSOW.pdf

On September 16, 2011, CMS published the final rule providing guidance to States regarding Medicaid Recovery Audit Contractors (RACs), which will be effective on January 1, 2012.

The Medicaid RACs will operate similar to the current RAC program. 

• RACs are encouraged, although not required, to form a review team to approve new audit issues.  CMS will provide technical assistance for medical necessity reviews.
• The final rule does require the RAC to publish a list of the issues they will review.
• RACs must work with the State to develop an education and outreach program (including notification of audit policies and protocols).
• States must set limits on the number and frequency of medical records to be reviewed by the Medicaid RACs subject to requests for exceptions made by the RACs.
• RACs must not review claims that are older than 3 years from the date of the claim, unless it receives approval from the State.
• Payments must be made to Medicaid RACs under contract with a State only from amounts recovered, i.e. payments to Medicaid RACs may not exceed the total amount recovered.
• Payments to Medicaid RACs must be made on a contingent fee basis for collecting overpayments from the amounts recovered.  States are allowed discretion to set their fees within the guidelines set by CMS.
• If a provider appeals a Medicaid RAC overpayment determination and the determination is reversed, at any level, then the Medicaid RAC must return its contingency within a reasonable timeframe as prescribed by the State.
• States are to require their Medicaid RACs to employ trained medical professionals to review Medicaid claims.
• Each RAC must hire a minimum of 1.0 FTE Contractor Medical Director
• RACs must hire certified coders unless the State determines that certified coders are not required for the effective review of Medicaid claims.
• Payment may be made in any amount as the State may see fit for identifying underpayments, the only requirement is that the methodology must adequately incentivize the detection of underpayments.
• RACs must provide minimum customer service measures including: Providing a toll-free customer service telephone number in all correspondence sent to providers, and staffing the toll-free number during normal business hours from 8:00 a.m. to 4:30 p.m. in the applicable time zone; compiling and maintaining provider approved addresses and points of contact; mandatory acceptance of provider submissions of electronic medical records on CD/DVD or via facsimile at the providers’ request; notifying providers of overpayment findings within 60 calendar days.
• States must have an adequate appeals process for providers/facilities to challenge adverse Medicaid RAC determinations.  The States may utilize an existing appeals infrastructure to adjudicate Medicaid RAC appeals  or they may establish a separate appeals process, which must also ensure providers adequate due process in pursuing an appeal.
• States are to report to CMS elements describing the effectiveness of their Medicaid RAC program, for example: contract periods of performance, contractors’ names, number of audits conducted, recovery amounts and number of cases referred for potential fraud.
• Medicaid RACs are not intended to replace any State integrity or audit initiatives or programs.
• States are to coordinate Medicaid RAC audit activity with other entities that also conduct audits of Medicaid providers to minimize the administrative burden on providers.
• RACs should not audit claims that have already been audited or that are currently being audited by another entity. States should also ensure coordination with Medicaid RACs and law enforcement organizations so that suspected cases of fraud and abuse are processed through the appropriate channels.
• States must make referrals of suspected fraud and/or abuse to the MFCU or other appropriate law enforcement agency.

As of September 16, 2011:

• 56 (50 states, Washington D.C. and 5 territories) SPAs have been submitted and approved
• The 5 territories have all been exempted from the Medicaid RAC program
• 16 states have selected Medicaid RACs
• 10 states are seeking exemptions from the Medicaid RAC program
• 41 states are not seeking exemptions
• 16 states have published the scope of their Medicaid RACs

We recommend Medicaid providers review these rules in their entirety and modify or expand their current policies and procedures related to recovery audit contractors.  HC Healthcare Consulting staff includes certified coders, physicians, consultants certified in healthcare compliance and statisticians that are available to provide expert assistance with your Medicare and Medicaid RAC compliance programs.

To read the complete final rule please go to the following link:  http://www.gpo.gov/fdsys/pkg/FR-2011-09-16/pdf/2011-23695.pdf.