August 2011 Archives

August 25, 2011

CMS Invites Providers to Apply for Bundled Payment Models

In a press release issued August 23, 2011, the Centers for Medicare & Medicaid Services (CMS) invited health care providers to apply to help test and develop four models of bundling payments.

CMS has been working with providers to develop models for bundling payments through the Bundled Payments for Care Improvement Initiative. Medicare currently makes separate payments to providers for services provided to beneficiaries for a single illness or course of treatment. CMS believes that bundling payment for services that a patient receives across a single episode of care will encourage health care providers to better coordinate care for patients, improve patient health, improve the quality of care received, and lower costs.

CMS is seeking applications for the four models of bundled payments. Three of the models would involve a retrospective bundled payment arrangement. In these models, CMS and providers would set a target payment amount for a defined episode of care, which would be proposed by the applicant health care provider. Participants in these models would be paid for their services under the original Medicare fee-for-service (FFS) system, but at a negotiated discount. The separate models will generally operate as follows:

In Model 1, the episode of care would be the inpatient stay in the general acute care hospital. Medicare will pay the hospital a discounted amount based on the payment rates established under the Inpatient Prospective Payment System (IPPS). Medicare will pay physicians separately for their services under the Medicare Physician Fee Schedule. Hospitals and physicians will be permitted to share gains arising from better coordination of care.

In Model 2, the episode of care would include the inpatient stay and post-acute care and would end, at the applicant's option, either a minimum of 30 or 90 days after discharge.
In Model 3, the episode of care would begin at discharge from the inpatient stay and would end no sooner than 30 days after discharge.

In both Models 2 and 3, the bundle would include physicians' services, care by a post-acute provider, related readmissions, and other services proposed in the episode definition such as clinical laboratory services; durable medical equipment, prosthetics, orthotics and supplies (DMEPOS); and Part B drugs. The target price will be discounted from an amount based on the applicant's historical fee-for-service payments for the episode. Payments will be made at the usual fee-for-service payment rates, after which the aggregate Medicare payment for the episode will be reconciled against the target price. Any reduction in expenditures beyond the discount reflected in the target price will be paid to the participants to share among the participating providers.

The fourth model will be a prospective payment arrangement. Under this model, CMS would make a single, prospectively determined bundled payment to the hospital that would encompass all services furnished during the inpatient stay by the hospital, physicians and other practitioners. Physicians and other practitioners would submit "no-pay" claims to Medicare and would be paid by the hospital out of the bundled payment.

Organizations interested in participating in the bundled payments initiative must submit materials to CMS. For those interested in Model 1, a nonbinding letter of intent must be received by September 22, 2011 and a final application must be received by October 21, 2011. For those interested in Models 2-4, a nonbinding letter of intent is due by November 4, 2011 and a final application by Match 15, 2012. If a health care provider wishes to receive historical Medicare claims data in preparation for Models 2-4, a separate research request packet and data use agreement must be filed in conjunction with the letter of intent. A thorough explanation of the bundled payment models, letter of intent and application process can be found here. The application materials can be found here.

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August 25, 2011

A Renewed Focus on Medicare's Signature Requirements

A common reason for claim denials through the Comprehensive Error Testing ("CERT") program and the medical review process is a lack of provider signatures on orders and medical documentation. Medicare requires that services provided and/or ordered be authenticated by the author. The method of authentication must be a handwritten or electronic signature. Stamped signatures are not acceptable. According to the Centers for Medicare and Medicaid Services ("CMS"), "a handwritten signature is a mark or sign by an individual on a document signifying knowledge, approval, acceptance or obligation." An electronic signature validates an electronic medical record in the same way a handwritten signature validates a written medical record. CMS delineates the obligations of the Medicare Administrative Contractor ("MAC"), Zone Protection Integrity Contractor ("ZPIC") and the CERT program, under the following three situations:


  1. Illegible Signature - MACs, ZPICs, and CERT must consider evidence in a signature log or attestation statement to determine the identity of the author of a medical record entry.

  2. Signature Missing from Order - MACs and CERT must disregard the order during review of the claim (e.g., the reviewer will proceed as if the order was not received).

  3. Signature Missing from Any Other Medical Documentation - MACs and CERT must accept a signature attestation form from the author of the medical entry. This does not apply to signatures missing from orders.


In cases in which providers include an attestation statement, the attestation statement will be valid so long as it is (a) signed and dated by the author of the medical record entry; and (b) it contains sufficient information to identify the beneficiary. CMS has provided a sample attestation statement that may (but is not required) be used.
I, [print full name of the physician/practitioner], hereby attest that the medical record entry for [date of service] accurately reflects signatures/notations that I made in my capacity as [insert provider credentials, e.g., M.D.] when I treated/diagnosed the above listed Medicare beneficiary. I do hereby attest that this information is true, accurate and complete to the best of my knowledge and I understand that any falsification, omission, or concealment of material fact may subject me to administrative, civil, or criminal liability.

MACs and CERT will not consider attestation statements that lack the medical record entry. Moreover, reviewers are not permitted to consider attestation statements from someone other than the author of the medical record entry in question. Therefore, it is impermissible for a member of the provider's group to sign for another member's medical record entries or attestation statements. Notably, reviewers are required to consider all attestation statements regardless of the date on which the statement was created.

CMS provided the following instances in which a the signature requirement had been met:

  • Legible full signature

  • Legible first initial and last name

  • Illegible signature above a typed or printed name

  • Illegible signature where the letterhead, addressograph or other information on the page indicates the identity of the signatory (e.g., An illegible signature appears on a prescription, but the letterhead of the prescription indicates three physicians' names, one of which is circled)

  • Illegible signature not above a typed/printed name and not on a letterhead, but the submitted documentation is accompanied by a signature log or an attestation statement

  • Initials above a typed or printed name

  • Initials not over a typed or printed name, but accompanied by a signature log or an attestation statement


CMS also provided a number of exceptions to the signature requirement rule; the following are excepted:

  • Faxes of original or electronic signatures for the certification of terminal illness for hospice;

  • Instances in which an order does not need to be signed (e.g., orders for some clinical diagnostic tests in which the treating physician has documentation showing that s/he intended the clinical diagnostic test to be performed); and

  • Instances in which other regulations and CMS instructions regarding conditions of payment in connection with signatures take precedence.


In sum, providers should keep the following points in mind to ensure compliance with the signature requirement:

  • The best practice is to ensure that all record are authenticated at the time of services or shortly thereafter.

  • Medicare only accepts handwritten or electronic signatures; it does not accept stamped signatures.

  • Attestation statements may be submitted for illegible signatures; however, they may not be submitted for unsigned orders.

  • Nobody can sign for the physician.

  • Physician offices should have a protocol in place to have physicians sign their records within a reasonable time. Wisconsin Physician Service ("WPS")--the Part B MAC for Illinois, Michigan, Minnesota and Wisconsin--suggests that a "reasonable time" is 48 to 72 hours after the encounter. Signatures must be obtained prior the submitting the claim to Medicare.

  • When dictating notes, the transcribed note must indicate the physician's signature--either handwritten or electronic. WPS provides, "it is not sufficient that the provider is designated as dictating the note or his/her name is present in the record."


More details on CMS' signature requirement can be found in Section 3.3.2.4 of the Medicare Program Integrity Manual.

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August 25, 2011

GEICO Alleges $12.1 Million in Insurance Fraud, Seeks $36 Million in Damages

In its over-300-page complaint filed on 8/19/2011, GEICO General Insurance Company, et. al (hereinafter referred to as "GEICO") asserts that the 32 defendants named in this case--13 physicians, 18 entities, and 1 entity owner-- ("Defendants") defrauded GEICO in an amount in excess of $12.1 million under New York's No-Fault Insurance law. GEICO also seeks to recover $36 million in treble damages for "services that the Defendants never rendered, or were not entitled to bill for or that they knew or should have known were not medically necessary or were so improperly performed as to be useless."

GEICO alleges that the Defendants submitted claims for nerve conduction velocity tests that were not performed and for which results were fabricated. Nerve conduction tests assist in determining whether a patient has sustained nerve damage. GEICO claims that the Defendants falsified the test results by copying results from other patients. In its opening paragraphs, GEICO asserts

The Defendants have exploited and abused the No-fault system and have engaged in some of the most abusive practices in the history of the New York No-fault system. The Defendants have submitted fraudulent claims. In claim after claim after claim they have falsified test results. They have billed for fictitious services that were never rendered as billed and in many cases their services have been incompetent and rendered without regard to the welfare of the patients. Indeed, in many cases the practices of the Defendants could have endangered the welfare of their patients.

Among its many allegations, GEICO also claims that the Defendants engaged in improper referrals to entities they controlled and/or in exchange for financial consideration and payments.

Notably, some of the Defendants in this case are also named defendants in a similar fraud action filed by Allstate (8/19/2009) in which Allstate seeks to recover more than $1,780,000.00 in damages for fraudulent billing of medical services under the NY No-Fault law. As of the date of this post, this case is still pending.

The HEALTH LAW ATTORNEY BLOG has written on countless instances in which healthcare providers and suppliers have become the target of criminal investigations and convictions; however, this suit, as well as the Allstate suit, are evidence that insurance companies have begun to take matters into their own hands.

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August 24, 2011

New York Audit Uncovers Millions of Dollars in Medicaid Overpayments

In a press release issued August 22, 2011, New York State Comptroller, Thomas DiNapoli, announced that New York State stopped or recovered more than $2.3 million in Medicaid overpayments after an audit of the Department of Health's eMedNY computer payment system.
The Comptroller's Office oversees the financial affairs of New York state agencies, public authorities and local government agencies. Their most recent audit of the eMedNY computer payment system covered the six-month period beginning April 1, 2010 and ending September 30, 2010.
During the audited period, eMedNY processed approximately 163 million claims resulting in payments to providers of about $24 billion. The claims were processed and reimbursed in weekly cycles which averaged about 6.2 million claims and $931 million in Medicaid payments to the providers.
Although the conclusion of the audit was that eMedNY reasonably ensured Medicaid claims were submitted by approved providers, were processed according to requirements, and resulted in correct payments to providers, the audit did identify actual and potential overpayments totaling almost $2.9 million. The overpayments identified included the following:
• about $1.4 million in overpayments resulting from improper claims from out-of-state hospitals;
• about $600,000 in overpayments for claims that had incorrect Medicare eligibility information or incorrect Medicare reimbursement amounts;
• about $550,000 in overpayments resulting from claims for inpatient stays for high levels of care that should have been based on less costly levels of care
• about $200,000 in overpayments resulting from neonatal inpatient claims that included incorrect claim information;
• about $56,000 in overpayments for vision care claims; and
• about $5,000 in overpayments due to forged prescriptions and billings for refills that were not provided to recipients.
At the time the audit was completed, approximately $2.3 million of the $2.9 million in actual and potential overpayments had been stopped or recovered by the Comptroller's Office.
In addition to the overpayments, the Comptroller's Office also advised the Department of Health of 21 providers who had been charged with abusing Medicaid, federal Medicare, or other health insurance systems. Eight of the 21 providers identified had already been terminated from the program by the Department of Health, however, the statuses of the remaining 13 providers identified in the audit were still under review when the audit concluded. Six of the 13 providers identified by the Comptroller's office had received approximately $200,000 in Medicaid payments since the beginning of the audit period.

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August 22, 2011

HIPAA Audit Procedures to Include Site Visits

The Health Information Technology for Economic and Clinical Health Act ("HITECH") requires the Office of Civil Rights ("OCR") to conduct periodic audits of covered entities in connection with complying with the privacy and security requirements set forth in Health Insurance Portability and Accountability Act ("HIPAA"). In June, the OCR awarded KPMG, LLP (the "Contractor") a $9.2 million contract to administer HIPAA audits. During the first phase of audits, the OCR plans to visit 150 covered entities.

According to the Federal Business Opportunities website, after developing the audit protocol, the Contractor must meet the entities and perform the following audit activities:

• Site Visits - Site visits include interviewing with leadership (e.g., CIO, Privacy Officer, legal counsel, health information management director, etc.), examining physical features and operations, evaluating the consistency of process to policy, and observing compliance with regulatory requirements;

• Audit Report - Submitting an audit report after each site visit consisting of the following:
o A timeline and methodology of the audit, best practices, raw data collection materials (e.g., completed checklists and interview notes), a certification indicating the audit is complete;

o Specific recommendations for actions the audited entity can take to address identified compliance problems through a corrective action plan;

o Recommendations to the contracting officer's technical representative ("COTR") regarding continued need for corrective action, if any, and description of future oversight recommendations; and

o A final report including, at a minimum:
- Identification and description of the audited entity--full name, address, EIN and contact person;

- Methods used to conduct the audit; and

- For each finding:
• Condition: The defect or non-compliant status observed, and evidence of each;

• Criteria: A clear demonstration that each negative finding is a potential violation of the Privacy or Security Rules;

• Cause: The reason that the condition exists, along with identification of supporting documentation used;

• Effect: The risk or non-compliant status that results from the finding;

• Recommendations for addressing each finding;

• Entity corrective actions taken, if any;

• Acknowledgement of any best practice(s) or success(es); and

• Overall conclusion paragraph.

Continue reading "HIPAA Audit Procedures to Include Site Visits" »

August 16, 2011

Philadelphia Takedown: 498-Count Indictment; 240 Counts of Healthcare Fraud; 53 Defendants

In a press release issued by the US Department of Justice of the Eastern District of Pennsylvania, a 498-count indictment--240 counts of which involved healthcare fraud--charged 53 defendants, including a physician and pharmacist, in a multi-million dollar drug conspiracy. The press release states that William Stukes--a drug trafficker of Philadelphia--and his alleged drug trafficking organization recruited large numbers of phony patients, taking them to Dr. Norman Werther's office for bogus medical examinations. In exchange for prescriptions for oxycodone-based drugs, the patients paid Dr. Werther $150. Stukes would arrange to have the patients driven to various pharmacies to fill the prescriptions, including Northeast Pharmacy where pharmacist Ihsanullah "Sean" Maaf filled the prescriptions. After the prescriptions were filled, they were turned over to Stukes or his drivers wherein the drug dealers would resell the narcotics. "It is estimated that between September 2009 and July 2011, the Stukes drug trafficking organization earned more than $5 million through these illegal prescriptions and that the defendants unlawfully acquired and distributed over 200,000 pills containing oxycodone."

"The crimes of conspiracy, distribution of controlled substance, possession with intent to distribute, and money laundering each carry a maximum possible sentence of 20 years in prison; health care fraud and aggravated structuring each carry a maximum sentence of 10 years in prison; structuring financial transactions carries a maximum possible sentence of five years in prison. Each defendant also faces possible fines, periods of supervised release, and special assessments."

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August 5, 2011

AHA Urges CMS to Reevaluate the HIPAA Privacy Rule Accounting of Disclosures Proposed Rulemaking

In an August 1, 2011 letter to the U.S. Department of Health and Human Services Secretary, Kathleen Sebelius, the American Hospital Association ("AHA") urges the Centers for Medicare and Medicaid Services ("CMS") to reevaluate its HIPAA Privacy Rule Accounting of Disclosures Proposed Rulemaking ("Proposed Rule"). The AHA is the latest healthcare organization to urge the reconsideration of the Proposed Rule.

In its plea, AHA writes that the Proposed Rule is unable to "appropriately balance the relevant privacy interests of individuals with the substantial burdens on covered entities, including hospitals." Further, AHA points out that the potential length of the reports required under the Proposed Rule would likely create a large burden for the covered entities without much benefit to the patients.

In conclusion, the AHA letter includes the organization's recommendations for improvements to the disclosure rule. The AHA requests that HHS:
• "clarify the discussion of designated record sets, adopt its proposed exclusions to the accounting requirement and maintain existing exclusions" and preserve "a 60-day response requirement and limit an accounting to three years,"
• "reissue a request for information aimed at better reflecting the statutory requirements, the technological realities, and better alignment of the regulation's effectiveness with the compliance burdens" instead of creating the "new individual right to an access report,"
• withdraw "the preamble discussion in order to reflect longstanding department guidance,"
• adopt other changes in the event that it does not to abandon the access report.

The entire text of the letter may be viewed here.

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August 4, 2011

OIG Report Addresses Concerns Regarding Hospice Care Provided to Nursing Facility Residents

Medicare beneficiaries with a terminal illness may choose to receive palliative care instead of curative treatment under the Medicare hospice benefit. In recent years, the Office of Inspector General ("OIG") has raised some concerns about the Medicare hospice care received by nursing facility residents. As a result, a number of OIG reports are anticipated to address these concerns.

The first report of the series, released in July 2010, describes the growth of hospice care from 2005 to 2009. Specifically, the report focuses on hospices which assisted a large portion of nursing facility residents in 2009.

The primary findings of the report state that:

• From 2005 to 2009, Medicare payments for hospice care provided to nursing facility residents have grown from $2.55 billion to $4.31 billion, a 69 percent increase.
• In 2009, 263 hospices (almost 8 percent of all hospices) had more than two-thirds of their beneficiaries in nursing facilities. Seventy-two percent of these hospices, referred to as high-percentage hospices, were for-profit. These high-percentage hospices "received more Medicare payments per beneficiary and served beneficiaries who spent more time in care." Further, these "hospices typically enrolled beneficiaries whose diagnoses required less complex care and who already lived in nursing facilities."

As a result of its findings, the OIG recommended that CMS "[m]onitor hospices that depend heavily on nursing facility residents" and "modify the payment system for hospice care in nursing facilities." CMS concurred with the two OIG recommendations. The OIG recommendations result from a belief that some hospices may seek out Medicare beneficiaries with particular characteristics because certain conditions require longer but less complex care and could result in higher profits for those hospices.

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August 3, 2011

Hospice Final Rule Issued

The Centers for Medicare & Medicaid Services ("CMS") recently released the final regulation regarding the hospice wage index for the fiscal year ("FY") 2012 ("Final Rule"). As a result of the Final Rule, a 2.5 percent increase in Medicare payments to hospices serving Medicare patients will be implemented for FY 2012.

In addition, the Final Rule includes key changes to the way CMS counts hospice patients beginning with the 2012 cap accounting year. The change comes in the wake of recent lawsuits successfully challenging the hospice cap calculation methodologies and the CMS-1355-R Ruling. The Final Rule allows for retroactive calculations under the new methodology in some circumstances and permits hospice providers to elect to continue using the current counting method.

The Final Rule also includes revisions to the hospice face-to-face requirement. Under the regulation, the hospice physician who performs the face-to-face encounter would not necessarily be the same physician who certifies the patient's terminal illness.

Lastly, the Final Rule implements a hospice quality reporting program. The program stems from Section 3004 of the Affordable Care Act. Hospices will be required to begin quality data collection in October 2012 and will need to submit the data in 2013. Hospices have the option of earlier voluntary data collection (beginning in October 2011) and submission (2012), but hospices which fail to report quality data in 2013 will be penalized.

The entire text of the Final Rule may be viewed here.

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