Health Law Attorney Blog

The Office of Inspector General ("OIG") has posted its Health Care Fraud Prevention and Enforcement Action Team ("HEAT") compliance training resources on its website wherein it provides videos and audio podcasts regarding a number of topics, including:

• An overview of the OIG


• Overviews of the healthcare fraud and abuse laws;


• Exclusion from Medicare;


• Compliance programs; and


• The importance of documentation.

In light of increased enforcement and prosecution, healthcare providers are encouraged to utilize these resources to better educate themselves on the myriad laws and regulations governing the practice of their profession.

Continue reading "OIG Posts HEAT Healthcare Provider Compliance Videos and Audio Podcasts" »

In a December 13, 2011 press release, the Department of Health and Human Services ("HHS") announced that the Department of Justice ("DOJ") has recovered over $5.6 billion in total fraud in 2011, an increase of over 167% since 2008. Of this $5.6 billion recovered in 2011, over $2.9 billion (over 51%) recovered was due to healthcare fraud. According to HHS,

This was driven in part by unprecedented cooperation between the Department of Justice and the Department of Health and Human Services to detect and halt fraud earlier. Specifically, the Obama Administration has greatly expanded the use of Medicare Fraud Strike Forces, specialized teams of agents and prosecutors who focus on catching health care fraud. The teams monitor Medicare data in real time and works together to prosecute fraud much more quickly than before. It now often takes months, not years, to bring a case to resolution. At the start of the administration, there were two Strike Force teams. Now, there are Strike Force teams in nine different cities. And they have been effective: in 2008, they brought cases involving $384 million in fraudulent claims. This year, they brought cases involving over $1 billion in fraudulent claims. For every dollar spent on this effort, the administration has recovered seven dollars.

Over the past few years, The Health Law Attorney Blog has emphasized the increase in government scrutiny and HHS has released the numbers to support it. Now, more than ever, healthcare providers and suppliers must be cognizant of the current regulatory landscape and increased enforcement and take proactive measures to enhance their compliance.

Continue reading "Over $2.9 Billion Recovered in Healthcare Fraud in 2011" »

On December 7, 2011, the Office of Inspector General ("OIG") posted a favorable Advisory Opinion 11-18 pertaining to Requestor's online service that would facilitate the exchange of information between healthcare practitioners, providers and suppliers ("Proposed Arrangement"). Requestor, a publicly traded company, currently provides web-based services that help physicians "achieve faster reimbursement from payors, reduce error rates, improve collection rates, improve patient compliance and satisfaction, and more efficiently manage clinical and billing information." To facilitate this goal, Requestor provides three (3) principal services:

1. Billing Service - This service automates and manages the physician practices' billing-related functions and assists with non-billing related, back-office operations (e.g., scheduling appointments, verifying insurance eligibility, reconciling accounts and reporting);

2. EHR Service - This service automates and manages physician offices' medical record-related functions; and

3. Messaging Service - This service automates practice communications with patients and includes patient messaging services, live operator services, and a patient web portal.

Under the Proposed Arrangement, Requestor proposes adding a new service--the Coordination Service--which "is intended both to facilitate the exchange of information between health care practitioners, providers, and suppliers (collectively, 'Health Professionals'), and to help them keep track of patients receiving services from other Health Professionals." In its evaluation of the Proposed Arrangement, the OIG reviewed four (4) sub-arrangements:

1. Making referrals using the Coordination Service;
2. Receiving referrals using the Coordination Service: Trading Partners;
3. Receiving referrals using the Coordination Service: Non-Trading Partners; and
4. Fees Associated with the Coordination Service.

Making Referrals Using the Coordination Service
The Requestor states that because much of the benefit of the Coordination Service rests in the data contained within the EHR Service, only those Health Professionals purchasing the EHR Service could use the Coordination Service to transmit patient information to other Health Professionals when making a referral. As such, the Requestor proposes offering the Coordination Service in combination with the EHR Service (collectively, the "Coordination Service Package"). The Coordination Service Package would reduce the expense and opportunity for error associated with Health Professionals wishing to make referrals ("Ordering Health Professionals") who communicate with other Health Professionals by facilitating the transmission of the following information:

• Sending the demographic, medical record, insurance and billing information of a patient when the patient is seen by other Health Professionals;
• Issuing appropriate referral reminders;
• Tracking communications with other Health Professionals; and
• Exchanging information about orders, order results, and healthcare recommendations.

Ordering Health Professionals would also utilize an electronic database ("Network") to identify Health Professionals to which they may make a referral. The Network would contain contact information (e.g., location, fax, and phone numbers) for physicians, laboratories, pharmacies, durable medical equipment suppliers and imaging providers. The Network would be populated by collecting information from Requestor's existing database of Health Professionals, publicly available Health Professional databases, Requestor's clients, and other Health Professionals that would like to be included. Inclusion in the Network would be free of charge.

Receiving Referrals Using the Coordination Service: Trading Partners
Requestor proposes that Health Professionals interested in receiving referrals through the Coordination Service would enter into Trading Partner Agreements with the Requestor. Those Professionals entering into the Trading Partner Agreements ("Trading Partners") would have the opportunity to customize their Network profiles to include additional information, including subspecialty areas, availability for appointments, and any clinical information required as part of a referral. Trading Partners would also be able to receive comprehensive referrals ("Formatted Orders") electronically from the Ordering Health Professionals. To become a Trading Partner would be free of charge; however, the services provided would be provided for a fee, as described below.

Receiving Referrals Using the Coordination Service: Non-Trading Partners
Being a Trading Partner is not required to receive referrals. However, Health Professionals that are not Trading Partners ("Non-Trading Partners") will not have the opportunity to customize their Network profiles and would not receive Formatted Orders.

Fees Associated with the Coordination Service
Under the Proposed Arrangement, Requestor would charge the Ordering Health Professionals the usual monthly subscription fee for the EHR Service component of the Coordination Service Package at a discounted rate. In addition to the monthly subscription fee, Requestor would charge three (3) types of transaction-based fees for the referrals made and received using the Coordination Service, all fees being set at fair market value, individually and in the aggregate:

1. Transmission Fee - The Transmission Fee is the base fee for transmitting the referral. This fee would be charged each time an Ordering Health Professional makes a referral using the Coordination Service. The party responsible for paying the fee, however, would vary depending on whether the receiving Health Professional is a Trading Partner or a Non-Trading Partner. If the receiving Health Professional is a Trading Partner, the Trading Partner would pay the Transmission Fee. Those Trading Partners that are Requestor's clients would pay a slightly lower fee (≤$1) as Requestor's costs would be lower to transmit information from one client to another within its own system. For receiving Health Professionals that are Non-Trading Partners, the Ordering Health Professional would pay the Transmission Fee.

2. Functionality Fee - The Functionality Fee includes Requestor's services of recording and maintaining the Trading Partner's preferences, attaching the clinical documentation in accordance with those preferences, facilitating the appointment scheduling with the Trading Partner, and providing "report builder" functionality. The Functionality Fee would be assessed each time an Ordering Health Professional uses the Coordination Service to make a referral to a Trading Partner. This fee would always be paid by the Trading Partner and would be a fixed fee.

3. Service Fee - The Service Fee is associated with the referrals made to Trading Partners and the work performed by Requestor to verify benefit eligibility and obtain the referral authorization. The Service Fee would always be paid by the Trading Partner and would vary based on the level of effort required to provide the services.

After evaluating the pertinent facts, in its analysis, the OIG determined that the Proposed Arrangement implicates the federal Anti-kickback Statute ("AKS") and does not fit within a regulatory safe harbor. However, an arrangements failure to fit within a safe harbor does not automatically imply violation of the AKS; instead, the OIG must make a determination, based on the facts, of whether the Proposed Arrangement adequately reduces the risk that the remuneration provided could be an improper payment for referrals or for arranging for referrals of Federal healthcare program business. The OIG concluded that, due to the following factors, the Proposed Arrangement appropriately minimizes the risk of AKS violation:

First - Inclusion in the Network is free of charge (however, payment could be made to obtain specific services) and Requestor would not control or influence the decision as to which Health Professional a referral would be made.

Second - Requestor certified that the Transmission Fee, Functionality Fee and Service Fee would all reflect fair market value of the actual services provided and the Requestor's service would provide value that is unrelated to inducing referrals. Moreover, the fees Requestor would charge are independent of the value of the items or services that are being referred or ultimately provided.

Third - Even though the Requestor would charge a "per-click" Transmission Fee, this fee is reasonable as the fee would be assessed regardless of whether the patient actually receives the items or services from the receiving Health Professional.

Fourth - The Proposed Arrangement's fee structure would unlikely materially influence an Ordering Health Professional's referral decisions for two reasons: the Transmission Fee is low and the aggregate amount of the Transmission Fees that could have been charged to an Ordering Health Professional would be capped to ensure that the Ordering Health Professionals would not pay more for the Coordination Service Package than they would have paid for the EHR Service alone.

Fifth - The Coordination service is intended to facilitate the exchange of information between Health Professionals and is not intended to impede on a patient's or provider's freedom of choice.

Sixth - A Trading Partner's payment of the Transmission Fee, Functionality Fee and Service Fee to the Requestor would not give the Trading Partner access to a referral stream not available to Non-Trading Partners.

Continue reading "OIG Views Favorably Online Service Facilitating the Exchange of Information Between Healthcare Practitioners, Providers and Suppliers" »

The Medicare and Medicaid Electronic Health Record ("EHR") Programs incentivize the meaningful use of certified EHR technology to achieve health and efficiency goals. Eligible professionals and hospitals that meet certain requirements using certified EHR technology (i.e., satisfy certain "meaningful use" criteria) will be eligible for incentive payments of up to $44,000 over a five-year participation period. To assist eligible professionals to better understand each step of the EHR Incentive Program, CMS just released an Introduction to the Medicare EHR Incentive Program for Eligible Professionals booklet. CMS also has a portion of its website dedicated to the EHR Incentive Programs.

Continue reading "CMS' Beginner's Guide to the Medicare EHR Incentive Program for Eligible Professionals Released" »

In the November 28, 2011 Federal Register, the Centers for Medicare and Medicaid Services ("CMS") retracted its requirement that physicians or non-physician practitioners ("NPPs") sign requisitions for clinical laboratory tests paid under the Clinical Laboratory Fee Schedule ("CLFS").

When it was first enacted ten years ago, in 2001, CMS revised 42 CFR 410.32(d)(2) to require that "[t]he physician or [sic] (qualified nonphysician practitioner, as defined in paragraph (a)(3) of this section), who orders the service must maintain documentation of medical necessity in the beneficiary's medical record." In its comments, CMS repeatedly noted that "[w]hile the signature of a physician on a requisition is one way of documenting that the treating physician ordered the test, it is not the only permissible way of documenting that the test has been ordered." Until CMS' release of the final CY 2011 Physician Fee Schedule ("PFS"), this remained CMS' position and the healthcare industry's practice.

In the CY 2011 PFS, CMS proposed and finalized a rule to require a physician's or NPP's signature on requisitions for clinical diagnostic laboratory tests paid on the basis of CLFS. However, after becoming increasingly aware of the difficulty with which this new requirement was being implemented and realizing the potential negative impact it could have on the delivery of care, CMS retracted its new signature requirements, reinstating the old rule:

After consideration of the public comments received, we are finalizing our proposal to retract the policy that was finalized in the CY 2011 PFS final rule with comment period, which required a physician's or NPP's signature on a requisition for clinical diagnostic laboratory tests paid under the CLFS (75 FR 73483) and to reinstate our prior policy that the signature of the physician or NPP is not required on a requisition for a clinical diagnostic laboratory test paid under the CLFS for Medicare purposes.

Therefore, physician or NPP signatures are no longer required on requisitions for clinical laboratory tests paid under CLFS.

Continue reading "CMS Reinstates Previous Rule Regarding Signatures on Requisitions: No Signature Required" »

Today, CMS held its Open Door Forum related to the CMS A/B Rebilling Demonstration. General information related to the CMS call is available at http://go.cms.gov/cert-demos. This website includes a Frequently Asked Question document, slides related to the call, and the enrollment application.

CMS outlines the process for the rebilling demonstration as follows:

Once a provider submits a short stay inpatient (Part A) claim, defined as two days or less within the same spell of illness
• Inpatient admission is deemed not medically necessary by MAC, Recovery Auditor, CERT, or Provider self-audit (should have been outpatient)
• Denials and voluntary refunds are for full amount
• If part of the demonstration, providers can re-bill for all outpatient services
- Payment will be made at 90% after co-insurance and deductible.

The demonstration will be limited to 380 hospitals, accepted on a first come, first served basis. The 380 hospitals will be broken down as follows:
• 80 "Large Facilities," defined as 300+ beds
• 120 "Moderate Facilities," defined as 100-299 beds
• 180 "Small Facilities," defined as fewer than 100 beds

Applications will be accepted beginning December 12, 2011 at 2:00 p.m. Applications will not be accepted prior to this. If a hospital is not one of the first 380 hospitals to apply, they will be placed on a waiting list. Additional information regarding this process is available at http://go.cms.gov/cert-demos.

There are two provisions of this demonstration project that may prove particularly troubling to hospitals, and may give some hospitals pause prior to applying to participate in this demonstration:
• If a hospital chooses to participate in the demonstration program, then the hospital must agree not to appeal any Part A short stay inpatient claim (defined as a claim for inpatient hospital services 2-days or less).
• Also, if the hospital chooses to re-bill, it may not re-bill for observation services.

Given the above considerations and also given many hospitals' success rate during the appeals process, many hospitals may choose not to participate in this demonstration.

Continue reading "RAC Part A/B Rebilling Demonstration Call Held" »

In Advisory Opinion 11-17, the Office of Inspector General ("OIG") reviewed an arrangement in which a laboratory services management company ("Requestor") "proposes to provide allergy testing and immunotherapy laboratory services and related items to primary care physicians and physician practices ("Physicians") within the Physicians' medical offices. Specifically, Requestor would enter into exclusive contracts with the Physicians to operate an allergy testing laboratory on the Physicians' behalf" ("Proposed Arrangement"). Requestor proposes it provide all of the necessities to conduct the testing (i.e., personnel, equipment, supplies, training, billing and collection services, etc.) and assist Physicians with marketing the services by reviewing patient files to identify candidates for Requestor's services. In consideration for Requestor's services, under the Proposed Arrangement, Physicians would pay Requestor a fee equal to 60% of the Physicians' gross collections from the testing and services, a fee that Requestor states is equal to fair market value.

The OIG determined that because Requestor would be paid a percentage of gross collections for the tests (i.e., compensation would not be set in advance) the Proposed Arrangement did not fit within any of the Anti-Kickback Statute ("AKS") safe harbors. Notwithstanding the fact that an arrangement does not fit within an AKS safe harbor, the arrangement could still be permissible if the OIG determines that it poses a low enough risk to be offered protection. However, for the following reasons, the OIG determined that the Proposed Arrangement would not be afforded protection:

1. Requestor's fee would not be tied to actual and necessary services provided by Requestor to Physicians; rather, Requestor's fee would be based upon a percentage of gross collections for the allergy testing and immunotherapy services; and


2. Requestor's review of patient files to identify candidates for its services would be "a suspect marketing activity," leading to unnecessary testing and overutilization.

Please note: While Requestor stated that the Proposed Arrangement was structured to comply with the Stark Law's In-Office Ancillary Services Exception, the OIG did not opine on the Proposed Arrangement's compliance with the exception. The OIG stated, "[e]ven if some features of the Proposed Arrangement were to comply with the Stark Law, such compliance would not affect our analysis under the anti-kickback statute."

Continue reading "OIG Does Not View Favorably Proposed Arrangement of a Laboratory Management Company Providing Services in PCP Offices" »

The Obama Administration announced that Centers for Medicare and Medicaid Services ("CMS") Administrator, Donald Berwick, MD, would be stepping down on December 2. His replacement, Marilyn Tavenner, served as Virginia's Secretary of Health and Human Services from 2006 to 2010 and then served as the CMS Principal Deputy Administrator and Chief Operating Officer.

Continue reading "Marilyn Tavenner to Replace Donald Berwick as CMS Administrator" »

According to a press release, the Department of Health and Human Services ("HHS") announced that it will be awarding $9 million from the Centers for Medicare and Medicaid Services ("CMS") to Senior Medicare Patrol ("SMP") programs across the country tasked at fighting Medicare fraud. SMP is operated by the Administration on Aging in close partnership with CMS and the HHS Office of Inspector General. The new grants will allow for increased awareness for Medicare beneficiaries about how to prevent, detect and report healthcare fraud.

According to the press release:

The SMP volunteers work in their communities to educate Medicare beneficiaries, family members, and caregivers about the importance of reviewing their Medicare notices, and Medicaid claims if dually-eligible, to identify errors and potentially fraudulent activity. Program volunteers also encourage seniors to make inquiries to the SMP Program when such issues are identified, so that the project may ensure appropriate resolution or referral.

Therefore, providers must continue to emphasize compliance within their practices and also have strong communications with patients to avoid misunderstandings by patients as scrutiny has spread beyond just government officials. The government is investing in patients to help them in the fight against Medicare fraud.

Continue reading "Providers and Suppliers Beware: Medicare Patients Now Looking for Fraud, Too" »

On November 17, 2011, the Centers for Medicare and Medicaid Services ("CMS") announced that it will delay enforcement action until March 31, 2012 for those Health Information Portability and Accountability Act ("HIPAA") covered entities that are not in compliance with the ASC X12 Version 5010, NCPDP Telecom D.0 and NCPDP Medicaid Subrogation 3.0 standards. CMS stated, however, that the compliance date remains January 1, 2012, but it will have discretionary application of its enforcement authority. In fact, according to an FAQ posted on the CMS website:

What will be the level of enforcement during the enforcement discretion period for X12 Version 5010 (Version 5010), NCPDP Telecom D.0 (NCPDP D.0) and NCPDP Medicaid Subrogation 3.0 (NCPDP 3.0) implementation?

The compliance date for implementation of these updated standards remains January 1, 2012. Because trading partner testing has not reached a threshold whereby a majority of covered entities may be able to comply by the compliance date, the Centers for Medicare & Medicaid Services' Office of E-Health Standards and Services (OESS), has announced that it would exercise its enforcement discretion with respect to any HIPAA covered entity that a complaint is filed against for violation of compliance with Version 5010, NCPDP D.0 and NCPDP 3.0 standards. The enforcement discretionary period is for 90 days after the January 1, 2012 compliance date.

If a complaint is received by CMS after January 1, 2012, the entity against which the complaint has been filed will be evaluated to determine its level of compliance. An assessment will be made of the filed-against entity's efforts to test and become compliant. OESS will take appropriate actions as permitted under the authority of the HIPAA enforcement rule, but will not assess any penalties and/or civil monetary penalties during this 90-day period.

Please note: this requirement applies to everyone who is covered by HIPAA, not just those who submit Medicare or Medicaid claims.

CMS' ICD-10 page may be found here.

Continue reading "CMS Announced 90-Day Discretionary Enforcement Period for Compliance with New HIPAA Standards" »

On November 2, 2011, the Centers for Medicare and Medicaid Services ("CMS") issued a Medicare Learning Network Matters article entitled Autologous Cellular Immunotherapy Treatment of Metastatic Prostate Cancer ("CR 7431") wherein it "instructs that, effective for services performed on or after June 30, 2011, CMS concludes that the evidence is adequate to support the use of autologous cellular immunotherapy treatment - Sipuleucel-T; PROVENGE® for Medicare beneficiaries with asymptomatic or minimally symptomatic metastatic castrate-resistant (hormone refractory) prostate cancer." Reimbursement for PROVENGE® (with a new HCPCS code of Q2043, replacing C9273), for the above-noted indication, is limited to one treatment regimen for the patient's lifetime, which consists of three doses that are administered roughly two weeks apart. The treatment period may not exceed 30 weeks from the first administration. Administration of the treatments is not included in Q2043.

On November 7, 2011, CMS revised CR 7431, in which it specifically affirmed that that the cost of administering PROVENGE® is not included in Q2043, but separate payment for the cost of administration is permissible.

Q2043 is all-inclusive and represents routine costs, except for the cost of administration. Please note that the cost of administration can now be billed separately.

Continue reading "Cost of Administering Sipuleucel-T (PROVENGE®) is Now Reimbursable by Medicare" »

In its November 14, 2011 Order List, the Supreme Court granted certiorari to hear the challenge to the Patient Protection and Affordable Care Act ("PPACA"). Challenges to the law have ranged on issues from the individual mandate, Medicaid expansion, the employer mandate and health benefits exchange. The Court will hear 5.5 hours of oral arguments on the issues and questions raised. According to the National Conference of State Legislatures, "between January and early November 2011, a total of 44 states had more than 200 measures filed, opposing elements of health reform or proposing alternative policies."

Continue reading "Supreme Court to Review Healthcare Reform Challenge" »

The Centers for Medicare and Medicaid Services ("CMS") defines an overpayment as a payment to a provider or supplier that exceeds the amounts payable under Medicare statutes and regulations. If CMS identifies an overpayment made to a provider or supplier, it will initiate a recovery process for those identified overpayments.

CMS' recovery process begins by sending the provider or supplier a demand letter, which requests overpayments it believes a provider or supplier wrongfully possesses. Typically, three notification letters are sent to providers/suppliers: (1) the demand letter, (2) a follow-up letter, and (3) an intent to refer letter.

Effective November 1, 2011, a second, follow-up letter (Day 30), will no longer be sent to providers/suppliers.

Those providers and suppliers receiving demand letters and wishing to appeal the audit decision should be prepared for part or all of this timeline

Continue reading "CMS Changes Medicare Overpayment Notification Process" »

In August, we posted an entry regarding the newly announced Health Information Portability and Accountability Act of 1996 ("HIPAA") audits that would be underway, pursuant to Section 13411 of the Health Information Technology for Economic and Clinical Health Act ("HITECH"). Section 13411 provides, in its entirety:

SEC. 13411. AUDITS.
The Secretary shall provide for periodic audits to ensure that covered entities and business associates that are subject to the requirements of this subtitle and subparts C and E of part 164 of title 45, Code of Federal Regulations, as such provisions are in effect as of the date of enactment of this Act, comply with such requirements.

In implementing this provision, the Office of Civil Rights ("OCR") is conducting a pilot program ("Pilot") in which it will "perform up to 150 audits of covered entities to assess privacy and security compliance. Audits conducted during the Pilot will begin November 2011 and conclude by December 2012." Business associates will not be audited at this time.

The OCR has promulgated a 3-step process for the Pilot:

(1) Developing audit protocols,
(2) Conducting a limited number of audits (20) to test the protocols, which includes the following four steps:

a. Auditee selection
b. Auditee notification
c. Test of protocol
d. Period of review and adjustment of protocols

(3) Conducting a full range of audits using revised protocol materials

The OCR aims at auditing a wide range of types and sizes of covered entities, including covered individual and organizational providers, health plans and healthcare clearing houses.

Covered entities being audited by the OCR can generally expect the following:

• Written notification by OCR that the covered entity has been selected for an audit and a request to provide documentation of the covered entity's privacy and security compliance efforts (OCR provides this sample Initial Notification Letter on its website)


• The covered entity will have 10 business days to supply the requested information


• Within 30-90 days from the date of the initial written notification, the OCR will conduct a site visit (lasting between 3 and 10 business days) involving interviews of key personnel and observations of processes and operations to determine compliance


• The auditors will develop a draft audit report and share it with the covered entity


• The covered entity will have 10 business days to discuss the identified concerns and describe corrective actions it has implemented to address the identified concerns


• Within 30 business days after receipt of the covered entity's response, the OCR will submit a final audit report, which will incorporate the steps the covered entity has already taken to resolve compliance issues

According to the OCR, "[a]udits are primarily a compliance improvement activity....Generally, OCR will use the audit reports to determine what types of technical assistance should be developed, and what types of corrective action are most effective. Should an audit report indicate a serious compliance issue, OCR may initiate a compliance review to address the problem."

Continue reading "HIPAA Audit Pilot Program Underway" »

The Medicare RAC program is expanding even further. By way of a Fact Sheet issued on November 15, 2011, CMS announced three new initiatives with respect to its Medicare RAC program. Beginning January 1, 2012, CMS will conduct demonstration projects with the goal to eliminate fraud, waste, and abuse in the Medicare program. The three demonstration projects are described by CMS as follows:

• Recovery Audit Prepayment Review: The Recovery Audit Prepayment Review demonstration will allow Medicare Recovery Auditors (RACs) to review claims before they are paid to ensure that the provider complied with all Medicare payment rules. The RACs will conduct prepayment reviews on certain types of claims that historically result in high rates of improper payments. These reviews will focus on seven states with high populations of fraud- and error-prone providers (FL, CA, MI, TX, NY, LA, IL) and four states with high claims volumes of short inpatient hospital stays (PA, OH, NC, MO) for a total of 11 states. This demonstration will also help lower the error rate by preventing improper payments rather than the traditional "pay and chase" methods of looking for improper payments after they have been made.

• Prior Authorization for Certain Medical Equipment: The second demonstration... will require Prior Authorization for certain medical equipment for all people with Medicare who reside in seven states with high populations of fraud- and error-prone providers (CA, FL, IL, MI, NY, NC and TX). This is an important step toward paying appropriately for certain medical equipment that has a high error rate. This demonstration will help ensure that a beneficiary's medical condition warrants their medical equipment under existing coverage guidelines...

• Part A to Part B Rebilling: The third initiative will allow hospitals to rebill for 90 percent 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. Currently, when outpatient services are billed as inpatient services, the entire claim is denied in full...

The third demonstration project, allowing hospitals to rebill for 90 percent of the Part B payment when a Medicare contractor denies a Part A inpatient short stay claim as not reasonable and necessary will have important financial implications for hospitals. Currently, if a RAC issues this type of denial, the entire claim is denied in full. In order to obtain reimbursement, the hospitals need to appeal the claim and seek relief through the Medicare appeals process. According to an FAQ on the CMS website:

Providers can re-bill for Inpatient Part B services, also known as ancillary services, but only for the services on the list in the Benefit Policy Manual. That list can be found in Ch. 6, Section 10: http://www.cms.hhs.gov/manuals/Downloads/bp102c06.pdf. Rebilling for any service will only be allowed if all claim processing rules and claim timeliness rules are met. There are no exceptions to the rules in the national program. Normal timely filing rules can be found in the Claims Processing Manual, Chapter 1, Section 70: http://www.cms.hhs.gov/manuals/downloads/clm104c01.pdf.

Of note, the third demonstration listed above, which would allow hospitals to rebill Part B claims when an inpatient hospital claim is denied as not reasonable and necessary due to the hospital billing for the wrong setting, will be limited to a representative sample of 380 hospitals nationwide that volunteer to be part of the program. A Fact Sheet regarding the rebilling initiative is also available on the CMS website.

Continue reading "RAC Program Further Expanding " »